o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class
|
Name of each exchange on which registered
|
|
None
|
None
|
* | Not for trading, but only in connection with the listing on the Nasdaq Global Market of American Depository Shares each representing 5 ordinary shares pursuant to the requirements of the Securities and Exchange Commission |
2
| we, us, our company and our refer to China Finance Online Co. Limited, or CFO Hong Kong, its subsidiaries, China Finance Online (Beijing) Co., Ltd., or CFO Beijing, Fortune Software (Beijing) Co., Ltd., or CFO Software, Stockstar Information Technology (Shanghai) Co., Ltd., or CFO Stockstar, Shenzhen Genius Information Technology Co., Ltd., or CFO Genius, Jujin Software (Shenzhen) Co., Ltd. or Jujin, Zhengning Information Technology (Shanghai) Co., Ltd., or Zhengning and, in the context of describing our operations, also include our PRC-incorporated affiliate, Fuhua Innovation Technology Development Co., Ltd., or Fuhua, and Shanghai Meining Computer Software Co., Ltd., or CFO Meining, Fuhuas wholly owned subsidiary; | ||
| shares and ordinary shares refer to our ordinary shares, preferred shares refers to our preferred shares, all of which were converted into our ordinary shares upon the completion of our initial public offering on October 20, 2004, ADSs refers to our American depositary shares, each of which represents five ordinary shares, and ADRs refers to the American depositary receipts which evidence our ADSs; | ||
| China or PRC refers to the Peoples Republic of China, excluding Taiwan, Hong Kong and Macau; | ||
| Hong Kong refers to the Hong Kong Special Administrative Region of the Peoples Republic of China; and | ||
| all references to Renminbi, RMB or yuan are to the legal currency of China, all references to U.S. dollars, dollars, $ or US$ are to the legal currency of the United States and all references to Hong Kong dollars or HK$ are to the legal currency of Hong Kong. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. |
| our goals and strategies, including how we effect our goals and strategies; | ||
| our future business developments, business prospects, financial condition and results of operations; | ||
| our future pricing strategies or policies; |
3
| our plans to expand our service offerings; | ||
| our plans to use acquisitions and strategic investments as part of our corporate strategy; | ||
| competition in the PRC financial data and information services industry; | ||
| performance of Chinas securities markets; | ||
| growth in our subscriber base; | ||
| PRC governmental policies relating to taxes and how they will impact our business; | ||
| PRC governmental policies relating to the Internet and Internet content providers; | ||
| PRC governmental policies relating to the distribution of content, especially the distribution of financial content over the Internet; and | ||
| PRC governmental policies relating to mobile value-added services. |
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
F-1
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
F-27
F-28
F-29
F-30
F-31
F-32
F-33
F-34
For the year ended December 31,
(in thousands of U.S. dollars, except per share or per ADS data)(1)
2002
2003
2004
2005
2006 (4)
1,050
2,271
6,016
7,482
7,128
(254
)
(298
)
(394
)
(482
)
(1,468
)
796
1,973
5,622
7,000
5,660
(253
)
(400
)
(727
)
(1,740
)
(2,956
)
(157
)
(149
)
(173
)
(236
)
(742
)
(275
)
(284
)
(801
)
(1,795
)
(2,666
)
(685
)
(833
)
(1,701
)
(3,771
)
(6,364
)
111
1,140
3,921
3,229
(704
)
95
51
294
1,486
1,003
(4
)
(1
)
(2
)
115
366
267
(1,322
)
203
1,190
4,213
5,081
(641
)
384
(457
)
41
$
203
$
1,190
$
4,597
$
4,624
$
(600
)
(352
)
$
203
$
838
$
4,597
$
4,624
$
(600
)
$
0.01
$
0.04
$
0.12
$
0.05
$
(0.01
)
$
0
$
0.01
$
0.05
$
0.04
$
(0.01
)
$
0.06
$
0.21
$
0.59
$
0.25
$
(0.03
)
$
0.01
$
0.06
$
0.26
$
0.22
$
(0.03
)
$
0.01
For the year ended December 31,
(in thousands of U.S. dollars)(1)
2002
2003
2004
2005
2006
$
4,451
$
5,806
$
70,596
$
46,168
$
44,956
3,565
4,306
67,590
45,227
38,011
4,929
6,606
71,861
63,113
71,119
934
1,278
3,487
1,859
6,419
982
1,875
3,773
2,282
8,521
$
3,947
$
4,731
$
68,088
$
60,831
$
62,453
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(1)
For the results of operations for a specified period, all translations from Renminbi to U.S.
dollars were calculated at the average exchange rate for that period, calculated by using the
average of the exchange rates on the last day of each month during the period. All
translations from Renminbi to U.S. dollars were calculated for the periods listed below at
the corresponding rates:
For the years ended December 31,
RMB per US$1.00
8.2770
8.2770
8.2768
8.1472
7.9693
For consolidated balance sheet data, all translations from Renminbi to U.S. dollars were calculated
at the exchange rate at the end of that year. The exchange rates were as set forth below as of the
corresponding dates:
As at December 31,
RMB per US$1.00
8.2800
8.2769
8.2765
8.0702
7.8087
(2)
Each ADS represents five ordinary shares.
(3)
Current working capital is the difference between total current assets and total current
liabilities.
(4)
In 2006, the Company changed its method of accounting for stock-based compensation to conform
to Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payment,
effective on January 1, 2006.
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Average(1)
High
Low
Period-end
(RMB per U.S.$1.00)
8.2770
8.2800
8.2669
8.2800
8.2770
8.2800
8.2765
8.2769
8.2768
8.2774
8.2764
8.2765
8.1472
8.2765
8.0702
8.0702
7.9693
8.0705
7.8051
7.8087
7.7450
7.8135
7.6739
7.6948
(1)
Averages are calculated from month-end rates.
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the acquisition may not further our business strategy, or we may pay more than it is
worth;
we may not realize the anticipated increase in our revenues if we are unable to sell
the acquired companys products to our customer base, or the acquired contract models of
acquired contract models companies;
we may have difficulty identifying suitable acquisition opportunities and integrating
acquired companies with our existing operations or their products and services with our
existing products and services;
we may have higher than anticipated costs in continuing support and development of
acquired products;
we may have multiple and overlapping product lines that are offered, priced and
supported differently, which could cause customer confusion and delays;
our due diligence process may fail to identify problems, such as issues with unlicensed
use of intellectual property;
we may have legal and tax exposures or lose anticipated tax benefits as a result of
unforeseen difficulties in our legal entity integration activities;
we may face contingencies related to intellectual property, financial disclosures and
accounting practices or internal controls;
our ongoing business may be disrupted and our managements attention may be diverted by
transition or integration issues; and
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to the extent that we issue a significant amount of equity securities in connection
with future acquisitions, existing ADS holders and shareholders may be diluted and
earnings per share may decrease.
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Exempting the company from enterprise income tax for 2003 and 2004; and
Providing the company a preferential enterprise income tax rate of 12% from 2005 to
2007, the rate currently applicable to wholly foreign-owned enterprises based in Beijing
and not subject to other tax holidays.
Exempting the company from enterprise income tax from 2005 to 2007; and
Providing the company a preferential enterprise income tax rate of 7.5% from 2008 to
2010, and 15% for taxable years thereafter, the rate currently applicable to companies
classified as high-technology companies based in Beijing and not subject to other tax
holidays.
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Any break-downs or system failures resulting in a sustained shutdown of all or a
material portion of our servers, including failures which may be attributable to sustained
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power shutdowns, or efforts to gain unauthorized access to our systems causing loss or
corruption of data or malfunctions of software or hardware; and
Any disruption or failure in the national backbone network, which would prevent our
users from logging on to our website or accessing our services.
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Revoking business and operating licenses of CFO Beijing, CFO Software, Fuhua, CFO
Stockstar or CFO Genius;
Discontinuing or restricting our operations or those of CFO Beijing, CFO Software,
Fuhua, CFO Stockstar or CFO Genius;
Imposing conditions or requirements with which we, CFO Beijing, CFO Software, Fuhua,
CFO Stockstar or CFO Genius may not be able to comply;
Requiring us, CFO Beijing, CFO Software, Fuhua, CFO Stockstar or CFO Genius to
restructure the relevant ownership structure or operations;
Restricting or prohibiting our use of the proceeds of our initial public offering in
2004 to finance our business and operations in China; or
Taking other regulatory or enforcement actions, including levying fines that could be
harmful to our business.
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Our articles of association provide for a staggered board, which means that our
directors, excluding our chief executive officer, are divided into two classes, with half
of our board, excluding our chief executive officer, standing for election every two
years. Our chief executive officer will at all times serve as a director, and will not
retire as a director, so long as he remains our chief executive officer. This means that,
with our staggered board, at least two annual shareholders meetings, instead of one, are
generally required in order to effect a change in a majority of our directors. Our
staggered board can discourage proxy contests for the election of our directors and
purchases of substantial blocks of our shares by making it more difficult for a potential
acquirer to take control of our board in a relatively short period of time.
Hong Kong law permits shareholders of a company to remove directors by a shareholders
resolution. Our articles of association require any shareholder who wishes to remove a
director in this way to give us at least 120 days notice of the resolution, making it
more difficult and time consuming for a potential acquirer who has accumulated a
substantial voting position to obtain control of our board by removing opposing directors.
Our articles of association provide that our board can have no less than five and no
more than nine directors. Our board currently has five directors. Any increase in the
maximum number of directors on our board beyond nine directors can only be accomplished by
amending our articles of association, which under Hong Kong law requires a shareholders
supermajority vote of 75% and at least 21 days notice. These restrictions can make it
more difficult for a potential acquirer who has accumulated a majority of our shares to
take control of us by promptly increasing the size of our board and appointing new
directors that are its nominees.
Hong Kong does not have merger laws that permit Hong Kong companies to merge in the
same way as U.S. companies could in the U.S. However, the Hong Kong Companies Ordinance
has provisions that facilitate arrangements for the reconstruction and amalgamation of
companies. The arrangement must be approved by a majority in number of each class of
shareholders and creditors with whom the arrangement is to be made, representing
three-fourths in value of each such class of shareholders or creditors
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that are present and voting either in person or by proxy at meetings convened by the High
Court of Hong Kong. The arrangements must be sanctioned by the High Court of Hong Kong
after shareholders or creditors approve it at the court-convened meeting.
Our shareholders have authorized our board of directors, without any further action by
shareholders, to issue additional shares. Under Hong Kong law, the authority granted by
our shareholders will remain valid until the conclusion of our next annual general
meeting, or the time when our next annual general meeting is required to be held. For as
long as this approval remains effective, or is renewed, our board of directors will have
the power to issue additional ordinary shares (including ordinary shares represented by
ADSs) and preference shares without any further action by shareholders.
to recognize or enforce against us judgments of courts of the United States based on
the civil liability provisions of U.S. securities laws; or
to allow original actions brought in Hong Kong, based on the civil liability provisions
of U.S. securities laws that are penal in nature.
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financial analysis tools that permit users to calculate and analyze quantitatively
financial data;
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current and historical financial data and information for Chinas listed company
stocks, bonds and mutual funds;
categorized news and research reports; and
online forums and bulletin boards.
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increase our subscriber base by expanding distribution channels such as banks, mutual
funds and brokerage firms;
upgrade our existing service offerings and expand our present service offerings to
include data and information relating to other financial instruments such as mutual funds,
currencies, futures and commodities; and
continue to encourage our subscribers to migrate to newer, more comprehensive and
higher priced service offerings.
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fundamental analysis tools, which are designed to enable investors to analyze data
based on company fundamentals; and
technical analysis tools, which are designed to enable investors to analyze data based
on trends formulated by historical trading data.
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to attract visitors and market our subscription based service offerings;
to store content and serve as an integral part of our information platform;
to serve as download platforms for our service offerings; and
to display online advertisements.
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Categorized macro information
. This feature allows subscribers to search and sort
up-to-date and comprehensive news and information relating to the broader financial
markets or a specific financial topic or industry sector. We have a dedicated team of
professional editors who collect, organize, categorize and index macro-economic and
financial market information on a daily basis, according to user feedback and
classification methods that we believe are accepted practice in securities markets in
China.
Industry sector analysis
. Many investors in China seek to distinguish between listed
companies with investment potential and those prone to financial trouble by analyzing
listed companies financial data published in their financial statements and comparing
such data among companies within the same industry sector. We collect and process listed
company financial data and information according to classification methods set by relevant
PRC regulatory authorities, and allow subscribers to view the relative standings of listed
companies in the same industry sector or geographical locations based on market accepted
performance parameters such as price-to-earnings ratios and profit margins.
Fundamental analysis
. Historical and real-time financial information are important to
investors because they provide insight into company fundamentals. This research tool
integrates the historical and real-time trading information we maintain in our database,
as well as fundamental financial information such as earnings-per-share, shareholdings and
other related data and information. Our subscribers can receive fundamental financial and
trading information organized by their specifications and display these results on a
graphical interface that we designed to be easy to visualize and navigate.
Mutual fund analysis
. Our mutual fund research tool focuses on categorizing information
relating to the portfolio holdings of mutual funds. This feature allows subscribers to
study the collective effect of large market players on individual stocks. This feature
also offers information relating to the performance of individual mutual funds, allowing
subscribers to assess the risks and rewards of investing in mutual funds.
Technical analysis
. This feature allows investors interested in trends formulated by
historical trading data to perform technical analysis on listed companies. With over 60
markets accepted technical indicators and a complete database of historical data and
information on all of Chinas listed company stocks, our subscribers can perform extensive
chart analysis and pattern recognition on any stock listed on Chinas stock exchanges.
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to increase the breadth of our service offerings through the addition of new features
and functions to our service packages;
to enhance our subscribers experience by improving the quality of our research tools
and website;
to develop additional research tools, features and content specifically targeting the
high-end subscribers; and
to design and build new financial instrument service products that fit our strategies.
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publishers and distributors of traditional media, including print, radio and
television, such as China Securities News, Shanghai Securities News, International
Financial Times, 21st Century Economic Reports, as well as radio and television programs
and news focused on financial news and information;
internet portals providing information on business, finance and investing, such as
sina.com.cn and sohu.com;
financial information web pages offered by websites such as hexun.com;
personal stock research software vendors, such as Shanghai Qian Long High Tech
Corporation, that develop and market stock research software through stock brokerage
companies; and
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stock brokerage companies, especially stock brokerage companies with online trading
capabilities, such as Haitong Securities.
the Ministry of Information Industry;
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the China Securities Regulatory Commission;
the Ministry of Culture;
the State Press and Publications Administration;
the State Copyright Bureau;
the State Administration of Industry and Commerce;
the Ministry of Public Security; and
the Ministry of Commerce.
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Percentage of
Country of
Beneficial Ownership
Name
Incorporation
Interest
China
100
China
100
China
100
China
100
China
100
China
100
China
100
China
100
*
Denotes variable interest entity
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an equipment leasing agreement, pursuant to which Fuhua leases a substantial majority
of its operating assets from CFO Beijing;
a technical support agreement, pursuant to which CFO Beijing provides technical support
for Fuhuas operations; and
an amended and restated strategic consulting agreement, pursuant to which CFO Beijing
provides strategic consulting services to Fuhua, including consulting services in relation
to Fuhuas online advertising business.
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the shareholders of Fuhua have granted us or individuals designated by us an
irrevocable proxy to exercise all their voting rights as shareholders of Fuhua, including
the right to appoint directors, the general manager and other senior management of Fuhua;
Fuhua will not enter into any transaction that may materially affect its assets,
liabilities, equity or operations without our prior written consent;
Fuhua will not distribute any dividends;
we may purchase the entire equity interest in, or all the assets of, Fuhua when and if
such purchase is permitted by PRC law or the current shareholders of Fuhua cease to be
directors or employees of Fuhua;
the shareholders of Fuhua have pledged their equity interest in Fuhua to CFO Beijing to
secure the payment obligations of Fuhua under the equipment leasing agreement, the
technical support agreement and the amended and restated strategic consulting agreement
between CFO Beijing and Fuhua; and
the shareholders of Fuhua will not transfer, sell, pledge, dispose of or create any
encumbrance on their equity interest in Fuhua without the prior written consent of CFO
Beijing.
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performance of Chinas securities markets, and user demand for market intelligence on
Chinas securities markets, as well as the overall performance of Chinas economy;
contribution of alternative revenue resources such as revenues from online advertising;
seasonality associated with the level of activity of our users and subscribers and the
trading activities of Chinas securities markets;
tax refund from the PRC tax authorities for value-added-taxes we are required to pay on
the sale of subscriptions to our service packages;
other tax incentives we receive from PRC tax authorities resulting from CFO Beijing
being a foreign invested software development company and CFO Software being a foreign
invested high-technology company;
our cost structure, including, in particular, our cost for raw data;
the desirability of our service packages relative to other products and offerings
available in the market;
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our ability to benefit from the acquisition of CFO Stockstar and CFO Genius; and
PRC telecommunication and regulatory policies.
the number of registered user accounts on our websites;
the number of fee-based active subscribers; and
the service packages selected by our subscribers.
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if we enter into additional commercial agreements for purchasing data from new sources
or if we obtain different or additional data from existing sources or
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due to rate increases we may experience in the future upon renewal of our existing
agreements.
advertising expenses relating to our sponsorship arrangements with portals, search
engines and other websites;
salary and benefits for our employees, particularly our sales and marketing personnel
and our management team;
professional services and other related costs associated with being publicly listed in
the U.S.; and
expansion in operating scale associated with the acquisition of CFO Stockstar and CFO
Genius.
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For the year ended December 31,
(in thousands of U.S. dollars, except as % of net revenues)(1)
2004
2005
2006
$
6,064
100.8
%
$
7,627
101.9
%
$
7,337
102.9
%
(48
)
(0.8
)
(145
)
(1.9
)
(209
)
(2.9
)
6,016
100
%
7,482
100
%
7,128
100
%
(394
)
(6.5
)
(482
)
(6.4
)
(1,468
)
(20.6
)
5,622
93.5
7,000
93.6
5,660
79.4
(727
)
(12.1
)
(1,740
)
(23.3
)
(2,956
)
(41.5
)
(173
)
(2.9
)
(236
)
(3.2
)
(742
)
(10.4
)
(801
)
(13.3
)
(1,795
)
(24.0
)
(2,666
)
(37.4
)
(1,701
)
(28.3
)
(3,771
)
(50.5
)
(6,364
)
(89.3
)
3,921
65.2
3,229
43.2
(704
)
(9.9
)
294
4.9
1,486
19.9
1,003
14.1
(2
)
115
1.6
366
4.9
267
3.7
(1,322
)
(18.5
)
4,213
70.1
5,081
67.9
(641
)
(9.0
)
384
6.4
(457
)
(6.1
)
41
0.58
$
4,597
76.4
%
$
4,624
61.8
%
$
(600
)
(8.4
%)
(1)
For the results of operations for a specified period, all
translations from Renminbi to U.S. dollars were calculated at the
average exchange rate for that period. For the years ended
December 31, 2004, 2005 and 2006, all translations from Renminbi
to U.S. dollars were calculated at RMB8.2768, RMB8.1472 and
RMB7.9693 per US$1.00, respectively.
(2)
We receive subscription fees at the beginning of
the subscribers subscription periods. Revenues
from the subscription fees are deferred and
recognized ratably over the twelve month
subscription period.
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For the year ended December 31,
(in thousands of U.S. dollars)
2004
2005
2006
$
7,023
$
3,059
$
5,892
(200
)
(15,235
)
(8,202
)
57,968
(12,923
)
76
64,791
(24,428
)
(1,213
)
5,806
70,596
46,168
$
70,596
$
46,168
$
44,956
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aggregate loans by us to CFO Beijing, a foreign invested enterprise, to finance its
activities, cannot in the aggregate exceed the difference between CFO Beijings currently
approved total investment amount and its currently approved registered capital amount, and
must be registered with the State Administration of Foreign Exchange for the loans to be
effective. The maximum amount we may loan to CFO Beijing, given CFO Beijings currently
approved registered capital and total investment amounts, is $18.0 million;
aggregate loans by us to CFO Software, a foreign invested enterprise, to finance its
activities, cannot in the aggregate exceed the difference between CFO Softwares currently
approved total investment amount and its currently approved registered capital amount, and
must be registered with the State Administration of Foreign Exchange for the loans to be
effective. The maximum amount we may loan to CFO Software, given CFO Softwares currently
approved registered capital and total investment amounts, is $18.0 million; and
loans by us to Fuhua, which is a domestic PRC enterprise, must be approved by the
relevant government authority and must also be registered with the State Administration of
Foreign Exchange, although in practice we could make loans to CFO Beijing or CFO Software,
and CFO Beijing or CFO Software could in separate transactions make loans to Fuhua through
financial or CFO Software, intermediaries, without approval from any PRC governmental
agencies.
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increase the breadth of our service offerings through the addition of new features and
functions to our service packages;
enhance our subscribers experience by improving the quality of our research tools and
website; and
develop additional research tools, features and content specifically targeting the
high-end subscribers.
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Office Premises
Data premises
Total
(in U.S. dollars)
709,818
70,819
780,637
1,696,184
3,437
1,699,621
53,753
53,753
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Name
Age
Position
44
Chief Executive Officer and a member of the Board of Directors
51
Chairman of the Board of Directors
59
Director
44
Director
51
Director
36
Chief Financial Officer
(1)
Member, audit committee
(2)
Member, compensation committee
(3)
Member, nominations committee
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Number of
ordinary Shares to
be issued upon
Exercise price per
exercise of options
ordinary share
Date of grant
Date of expiration
400,000
$
1.120
November 15, 2005
November 15, 2015
400,000
$
1.070
July 5, 2006
July 5, 2016
800,000
$
0.960
January 18, 2007
January 17, 2017
*
$
0.160
January 5, 2004
March 5, 2009
*
$
1.040
June 15, 2004
March 5, 2009
*
$
1.314
February 18, 2005
February 18, 2015
*
$
0.960
January 18, 2007
January 17, 2017
*
$
0.160
February 18, 2004
March 5, 2009
*
$
1.040
June 15, 2004
March 5, 2009
*
$
1.314
February 18, 2005
February 18, 2015
*
$
0.960
January 18, 2007
January 17, 2017
*
$
0.160
January 5, 2004
March 5, 2009
*
$
1.040
June 15, 2004
March 5, 2009
*
$
1.314
February 18, 2005
February 18, 2015
*
$
0.960
January 18, 2007
January 17, 2017
*
$
0.160
January 5, 2004
March 5, 2009
*
$
1.040
June 15, 2004
March 5, 2009
*
$
1.314
February 18, 2005
February 18, 2015
*
$
0.960
January 18, 2007
January 17, 2017
*
$
1.070
July 5, 2006
July 5, 2016
*
$
0.960
January 18, 2007
January 17, 2017
*
$
1.314
February 18, 2005
February 18, 2015
*
Upon exercise of all options granted, would beneficially own less
than 1% of our outstanding ordinary shares.
Table of Contents
recommending to our shareholders, if appropriate, the annual re-appointment of our
independent registered public accounting firm and pre-approving all auditing and
non-auditing service fees permitted to be performed by the independent registered public
accounting firm;
annually reviewing an independent registered public accounting firms report describing
the independent registered public accounting firms internal quality-control procedures,
any material issues raised by the most recent internal quality control review, or peer
review, of the independent registered public accounting firm and all relationships between
the independent registered public accounting firm and our company;
setting clear hiring policies for employees or former employees of the independent
registered public accounting firm;
reviewing with the independent registered public accounting firm any audit problems or
difficulties and managements response;
reviewing and approving all proposed related-party transactions, as defined in Item 404
of Regulation S-K under the U.S. securities laws;
discussing the annual audited financial statements with management and the independent
registered public accounting firm;
discussing with management and the independent registered public accounting firm major
issues regarding accounting principles and financial statement presentations; reviewing
reports prepared by management or the independent auditors relating to significant
financial reporting issues and judgments;
reviewing reports prepared by management or the independent registered public
accounting firm relating to significant financial reporting issues and judgments;
discussing earnings press releases, as well as financial information and earnings
guidance provided to analysts and rating agencies;
reviewing with management and the independent registered public accounting firm the
effect of regulatory and accounting initiatives, as well as off-balance sheet structures
on our financial statements;
discussing policies with respect to risk assessment and risk management;
reviewing major issues as to the adequacy of our internal controls and any special
audit steps adopted in light of material control deficiencies;
timely reviewing annual reports from the independent registered public accounting firm
regarding all critical accounting policies and practices to be adopted by our company, all
alternative treatments of financial information within U.S. GAAP that have been discussed
with management and all other material written communications between the independent
registered public accounting firm and management;
establishing procedures for the receipt, retention and treatment of complaints received
from our employees regarding accounting, internal accounting controls or auditing
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matters
and the confidential, anonymous submission by our employees of concerns regarding
questionable accounting or auditing matters;
annually reviewing and reassessing the adequacy of our audit committee charter;
such other matters that are specifically delegated to our audit committee by our board
of directors from time to time;
meeting separately, periodically, with management and the independent registered public
accounting firm; and
reporting regularly to the full board of directors.
determining and recommending the compensation of our Chief Executive Officer;
reviewing and making recommendations to our board of directors regarding our
compensation policies and forms of compensation provided to our directors and officers;
reviewing and determining bonuses for our officers and other employees;
reviewing and determining stock-based compensation for our directors, officers,
employees and consultants;
administering our equity incentive plans in accordance with the terms thereof; and
such other matters that are specifically delegated to the compensation committee by our
board of directors from time to time.
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convening shareholders meetings and reporting its work to shareholders at such
meetings;
implementing shareholders resolutions;
determining our business plans and investment proposals;
formulating our profit distribution plans and loss recovery plans;
determining our debt and finance policies and recommending proposals for the increase
or decrease in our share capital and the issuance of debentures;
formulating our major acquisition and disposition plans, and plans for consolidation,
division or dissolution;
proposing amendments to our articles of association; and
exercising any other powers conferred at shareholders meetings or under our memorandum
and articles of association.
Table of Contents
each person known to us to own beneficially more than 5% of our ordinary shares; and
each of our directors and executive officers who beneficially own any of our ordinary
shares.
Number of Shares Beneficially Owned
Name
Number
Percent
20,580,652
19.49
%
6,723,115
6.37
%
14,481,319
13.72
%
7,156,121
6.78
%
8,746,370
8.28
%
*
*
*
*
*
*
*
*
*
*
*
*
1,056,800
1.00
%
1,854,400
1.74
%
*
Upon exercise of all options currently exercisable
or vesting within 60 days of the date of this
annual report, would beneficially own less than 1%
of our ordinary shares.
(1)
Includes 20,580,652 ordinary shares held by IDG
Technology Venture Investment, Inc. IDG Technology
Venture Investment, Inc. is the limited partner of
IDG Technology Venture Investments, LP and does not
control IDG Technology Venture Investments, LP. IDG
Technology Venture Investment, Inc., a
Massachusetts corporation, is wholly owned by
International Data Group Inc., a Massachusetts
corporation, which is controlled by Patrick
McGovern, the majority shareholder, founder and
chairman of International Data Group Inc. IDG
Technology Venture Investment, Inc. disclaims
beneficial ownership of all of the ordinary shares
owned by IDG Technology Venture Investments, LP.
The registered address of IDG Technology Venture
Investment, Inc. is 5 Speen Street, Framingham, MA
01701, U.S.A.
(2)
Includes 6,723,115 ordinary shares held by IDG
Technology Venture Investments, LP. The general
partner of IDG Technology Venture Investments, LP
is IDG Technology Venture
Table of Contents
Investments, LLC. Messrs.
Patrick McGovern and Quan Zhou are managing members
of IDG Technology Venture Investments, LLC, both of
whom disclaim beneficial ownership of our shares
held by IDG Technology Venture Investments, LLC.
IDG Technology Venture Investment, Inc. is a
limited partner of IDG Technology Venture
Investments, LP, and does not control IDG
Technology Venture Investments, LP. IDG Technology
Venture Investments, LP disclaims beneficial
ownership of all of the ordinary shares owned by
IDG Technology Venture Investment, Inc. The
registered address of IDG Technology Venture
Investments, LP is Corporation Service Company,
1013 Centre Road, Wilmington, County of New Castle,
Delaware 19805-1297, U.S.A.
(3)
Includes 14,481,319 ordinary shares held by Vertex
Technology Fund (III) Ltd. The majority shareholder
of Vertex Technology Fund (III) Ltd is Vertex
Venture Holdings Ltd, who may be deemed to have
power to vote and dispose of the shares held of
record by Vertex Technology Fund (III) Ltd. Vertex
Management (II) Pte Ltd is the fund manager of
Vertex Technology Fund (III) Ltd, and may be
deemed to have power to vote and dispose of the
shares held of record by Vertex Technology Fund
(III) Ltd. The address of Vertex Technology Fund
(III) Ltd is 51 Cuppage Road, #10-08 Starhub
Centre, Singapore 229469.
(4)
Includes (i) 4,028,156 ordinary shares held by Cast
Technology, Inc.; and (ii) 3,127,965 ordinary
shares held by Fanasia Capital Limited. Both Cast
Technology, Inc. and Fanasia Capital Limited are
held 45% and 55% by Jianping Lu and Ling Zhang,
respectively.
(5)
Includes (i)4,923,302 ordinary shares held by Cast Technology,
Inc.; and (ii) 3,823,068 ordinary shares held by Fanasia Capital
Limited. Both Cast Technology, Inc. and Fanasia Capital Limited are
held 45% and 55% by Jianping Lu and Ling Zhang, respectively.
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the fifth anniversary of the consummation of our initial public offering;
upon such holder holding less than 1% of our outstanding ordinary shares after our
initial public offering; and
upon such holder becoming eligible to sell all of such holders registrable securities
pursuant to Rule 144 under the Securities Act within any three-month period without volume
limitations, under Rule 144(k), or under any comparable securities law of a jurisdiction
other than the United States for sale of registrable securities in such jurisdiction.
Table of Contents
Sales Price
High
Low
15.99
8.30
11.14
5.22
9.68
3.95
Table of Contents
Sales Price
High
Low
11.14
5.80
7.17
5.22
6.52
5.50
6.90
5.52
9.68
5.66
7.37
4.74
6.60
4.95
5.60
3.95
7.27
4.53
9.60
6.04
5.60
3.95
4.61
4.20
5.74
4.53
7.27
5.00
6.45
5.80
7.03
6.04
9.60
6.51
Table of Contents
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dealers in securities or currencies;
traders in securities that elect to use a mark-to-market method of accounting for
securities holdings;
banks or other financial institutions;
insurance companies;
tax-exempt organizations;
partnerships and other entities treated as partnerships for U.S. federal income tax
purposes or persons holding ADSs through any such entities;
persons that hold ADSs as part of a hedge, straddle, constructive sale, conversion
transaction or other integrated investment;
U.S. Holders (as defined below) whose functional currency for tax purposes is not the
U.S. dollar;
persons liable for alternative minimum tax; or
persons who actually or constructively own 10% or more of the total combined voting
power of all classes of our shares (including ADSs) entitled to vote.
a citizen or resident of the United States for U.S. federal income tax purposes;
a corporation, or other entity taxable as a corporation, that was created or
organized in or under the laws of the United States or any political
subdivision thereof;
an estate the income of which is subject to U.S. federal income tax regardless
of its source; or
a trust if (a) a court within the United States is able to exercise primary
supervision over its administration and one or more U.S. persons have the
authority to control all
Table of Contents
substantial decisions of the trust, or (b) the trust
has a valid election in effect to be treated as a U.S. person.
Table of Contents
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that gain is effectively connected with the conduct of a U.S. trade or
business and, if an applicable income tax treaty so requires as a
condition for you to be subject to U.S. federal income tax with
respect to income from your ADSs, such gain is attributable to a
permanent establishment that you maintain in the United States; or
you are a nonresident alien individual and are present in the United
States for at least 183 days in the taxable year of the sale or other
disposition and either (1) your gain is attributable to an office or
other fixed place of business that you maintain in the United States
or (2) you have a tax home in the United States.
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For the Year Ended December 31,
2006
2005
US$
257,000
US$
192,500
(1)
Audit fees means the aggregate fees billed in each of the fiscal years listed
for professional services rendered by our principal auditors for the audit of our annual financial
statements, review of interim financial statements and attestation services that are provided in
connection with statutory and regulatory filings or engagements.
Table of Contents
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Exhibit
Number
Description
Loan Agreement dated November 20, 2006 by and between China
Finance Online Co., Limited by and Zhiwei Zhao
Purchase Option and Cooperation Agreement dated November 20,
2006 among China Finance Online Co. Limited, Zhiwei Zhao, Wu
Chen, Fuhua Innovation Technology Development Co., Ltd. and
China Finance Online (Beijing) Co., Ltd.
Share Pledge Agreement dated November 20, 2006 among Zhiwei
Zhao, Wu Chen, Fuhua Innovation Technology Development Co.,
Ltd. and China Finance Online (Beijing) Co., Ltd.
Equipment Lease Agreement between China Finance Online
(Beijing) Co., Ltd. and Fuhua Innovative Technology
Development Co., Ltd. dated May 27, 2004 (incorporated by
reference to Exhibit 10.7 from our Registration Statement on
Form F-1 (File No. 333-119166) filed with the Securities and
Exchange Commission on September 21, 2004)
Technical Support Agreement between China Finance Online
(Beijing) Co., Ltd. and Fuhua Innovative Technology
Development Co., Ltd. dated May 27, 2004 (incorporated by
reference to Exhibit 10.8 from our Registration Statement on
Form F-1 (File No. 333-119166) filed with the Securities and
Exchange Commission on September 21, 2004)
Amended and Restated Strategic Consulting Agreement between
China Finance Online (Beijing) Co., Ltd. and Fuhua
Innovative Technology Development Co., Ltd. dated May 27,
2004 (incorporated by reference to Exhibit 10.9 from our
Registration Statement on Form F-1 (File No. 333-119166)
filed with the Securities and Exchange Commission on
September 21, 2004)
Shanghai Stock Exchange Level-II Quotations License
Agreement dated June 15, 2006 between SSE Infonet Ltd. and
Fortune Software (Beijing) Co., Ltd.
Shenzhen Stock Exchange Proprietary Information License
Agreement dated March 20, 2007 between Fortune Software
(Beijing) Co., Ltd. and Shenzhen Securities Information Co.,
Ltd.
Domain Name Transfer Agreement dated October 30, 2006 by and
among China Finance Online Co., Ltd., China Finance Online
(Beijing) Co., Ltd. and Being Fuhua Innovation Technology
Development Co., Ltd.
Domain Name Transfer Agreement dated October 30, 2006
between Stockstar Information Technology (Shanghai) Co.,
Ltd. and Shanghai Meining Computer Software Company Limited
Lease Contract for Housing Unit of Corporate Square dated
January 19, 2006 between Fortune Software (Beijing) Co. Ltd.
and China Galaxy Securities Company Limited (incorporated by
reference to Exhibit 4.20 from our Annual Report on Form
20-F filed with the Securities and Exchange Commission on
May 23, 2006)
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Exhibit
Number
Description
CEO Certification Pursuant to Rule 13a-14(a) (17 CFR
240.13a-14(a)) (17 CFR 240.13a-14(a)) or Rule 15d-1(a) (17
CFR 240.15d-14(a))
CFO Certification Pursuant to Rule 13a-14(a) (17 CFR
240.13a-14(a)) or Rule 15d-1(a) (17 CFR 240.15d-14(a))
CEO Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
CFO Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Table of Contents
CHINA FINANCE ONLINE CO. LIMITED
/s/ Jeff Wang
Title: Chief Financial Officer
Table of Contents
CONTENTS
PAGE
F - 2
F - 3
F - 4
F - 5
F - 6
F - 7
F - 31
Table of Contents
CHINA FINANCE ONLINE CO. LIMITED
Beijing, China
May 25, 2007
Table of Contents
December 31,
2005
2006
$
46,168,385
$
44,955,553
144,694
477,778
1,131,515
927,697
64,036
170,478
47,508,630
46,531,506
15,000,000
12,606,571
512,179
1,697,481
41,393
86,216
2,045,224
50,534
8,151,851
$
63,112,736
$
71,118,849
$
1,859,321
$
6,418,502
381,693
2,096,552
40,762
5,483
2,281,776
8,520,537
145,533
13,077
13,474
64,564,534
65,756,313
(13,200,394
)
(13,200,394
)
(67,129
)
671,122
1,634,269
8,849,750
8,249,117
60,830,960
62,452,779
$
63,112,736
$
71,118,849
Table of Contents
Years ended December 31,
2004
2005
2006
$
6,016,449
$
7,482,166
$
7,128,078
393,841
482,068
1,467,745
5,622,608
7,000,098
5,660,333
727,349
1,740,117
2,955,948
172,997
236,438
742,728
801,481
1,794,569
2,665,847
1,701,827
3,771,124
6,364,523
3,920,781
3,228,974
(704,190
)
293,862
1,486,276
1,002,975
(1,579
)
365,965
381,875
(1,322,000
)
4,213,064
5,081,215
(641,340
)
384,277
(457,028
)
40,707
$
4,597,341
$
4,624,187
$
(600,633
)
$
0.12
$
0.05
$
(0.01
)
$
0.05
$
0.04
$
(0.01
)
38,912,491
94,341,061
93,650,653
90,092,668
104,781,492
101,961,727
Table of Contents
Accumulated
other
Retained
Series A convertible
Series B convertible
Additional
Deferred
comprehensive
earnings
Total
preference shares
preference shares
Ordinary shares
paid-in
stock-based
income
(accumulated
shareholders
Comprehensive
Shares
Amount
Shares
Amount
Shares
Amount
capital
Treasury shares
compensation
(loss)
deficit)
equity
income
30,643,000
$
3,954
20,833,333
$
2,688
22,123,600
$
2,852
$
5,093,384$
$
$
186
$
(371,778
)
$
4,731,286
730,000
94
94
72,764
72,764
541,791
(541,791
)
216,570
216,570
25,000,000
3,226
58,527,492
58,530,718
(30,643,000
)
(3,954
)
(20,833,333
)
(2,688
)
51,476,333
6,642
(60,299
)
(60,299
)
(197
)
(197
)
$
(197
)
4,597,341
4,597,341
4,597,341
99,329,933
12,814
64,175,132
(325,221
)
(11
)
4,225,563
68,088,277
$
4,597,144
(13,200,394
)
(13,200,394
)
2,000,000
263
276,713
276,976
112,689
112,689
258,092
258,092
671,133
671,133
$
671,133
4,624,187
4,624,187
4,624,187
101,329,933
13,077
64,564,534
(13,200,394
)
(67,129
)
671,122
8,849,750
60,830,960
$
5,295,320
(67,129
)
67,129
3,000,000
390
66,453
66,843
55,000
7
8,793
8,800
1,183,662
1,183,662
963,147
963,147
$
963,147
(600,633
)
(600,633
)
(600,633
)
$
$
104,384,933
$
13,474
$
65,756,313
$
(13,200,394)
$
$
1,634,269
$
8,249,117
$
62,452,779
$
362,514
Table of Contents
Years ended December 31,
2004
2005
2006
$
4,597,341
$
4,624,187
$
(600,633
)
289,334
370,781
1,183,662
133,208
129,833
301,941
(386,325
)
322,289
(40,081
)
463
9,686
1,322,000
(116,071
)
(33,921
)
(110,773
)
122,363
268,711
14,573
(239,513
)
(799,572
)
334,687
(7,161
)
(10,657
)
(31,955
)
2,209,155
(1,627,937
)
3,840,892
191,328
95,997
(388,662
)
40,762
(36,041
)
7,022,620
3,059,169
5,892,102
(8,346,856
)
1,187,500
(199,857
)
(234,696
)
(1,042,423
)
(15,000,000
)
(199,857
)
(15,234,696
)
(8,201,779
)
94
276,976
66,843
8,800
(13,200,394
)
58,530,718
(502,552
)
(60,299
)
57,967,961
(12,923,418
)
75,643
(197
)
671,133
1,021,202
64,790,527
(24,427,812
)
(1,212,832
)
5,805,670
70,596,197
46,168,385
$
70,596,197
$
46,168,385
44,955,553
$
16,621
$
93,977
$
36,089
$
6,642
$
$
Table of Contents
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES
China Finance Online Co. Limited (China Finance Online) was incorporated in Hong Kong on
November 2, 1998. China Finance Online and its subsidiaries including its variable interest
entity (collectively, the Company) are principally engaged in the sale of online financial
services analyzing financial and listed company information in the Peoples Republic of
China (PRC). The services are provided through downloadable proprietary software research
tools on their website www.jrj.com.
Details of China Finance Onlines subsidiaries and variable interest entity as of December
31, 2006 were as follows:
Beneficial
Place of
ownership
Company name
incorporation
interest
Beijing, PRC
100
%
Beijing, PRC
100
%
Beijing, PRC
100
%
Shenzhen, PRC
100
%
Shanghai, PRC
100
%
Shanghai, PRC
100
%
*
Represents a variable interest entity
PRC regulations prohibit direct foreign ownership of business entities providing internet
content, or ICP, services in the PRC such as the Companys business of providing financial
information and data to Internet users as certain licenses are required for the provision of
such services. China Finance Online and CFO Beijing are foreign or foreign invested
enterprises under PRC law and accordingly are ineligible for a license to operate ICP
services. In order to comply with these regulations, in December 2000, China Finance Online
established Beijing Fuhua Innovation Technology Investment Co., Ltd. (Fuhua), a variable
interest entity, (VIE) as defined by the Financial Accounting Standards Board (FASB)
Interpretation No. 46 (revised) (FIN 46(R)) through two designated equity owners who are
PRC citizens and legally own Fuhua.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES continued
In 2004 China Finance Online signed a series of agreements with Fuhua and its
shareholders that provide the Company with the substantial ability to control Fuhua.
Pursuant to these contractual arrangements with Fuhua, China Finance Online provides
equipment, services and a domain name license to Fuhua in exchange for fees. The principal
equipment lease, services and domain name license agreements that China Finance Online has
entered into with Fuhua include:
an equipment leasing agreement, pursuant to which Fuhua leases a
substantial majority of its operating assets from CFO Beijing;
a technical support agreement, pursuant to which CFO Beijing provides
technical support for Fuhuas operations;
an amended and restated strategic consulting agreement, pursuant to
which CFO Beijing provides strategic consulting services to Fuhua, including
consulting services in relation to Fuhuas online advertising business; and
a domain name licensing agreement, pursuant to which CFO Beijing
licenses to Fuhua its domain name, www.jrj.com.cn.
the shareholders of Fuhua have granted China Finance Online or
individuals designated by China Finance Online an irrevocable proxy to exercise
all their voting rights as shareholders of Fuhua, including the right to appoint
directors, the general manager and other senior management of Fuhua;
Fuhua will not enter into any transaction that may materially affect
its assets, liabilities, equity or operations without China Finance Onlines
prior written consent;
Fuhua will not distribute any dividends;
China Finance Online may purchase the entire equity interest in, or
all the assets of, Fuhua when and if such purchase is permitted by PRC law or the
current shareholders of Fuhua cease to be directors or employees of Fuhua;
the shareholders of Fuhua have pledged their equity interest in Fuhua
to CFO Beijing to secure the payment obligations of Fuhua under the equipment
leasing agreement, the technical support agreement and the amended and restated
strategic consulting agreement between CFO Beijing and Fuhua; and
the shareholders of Fuhua will not transfer, sell, pledge, dispose of
or create any encumbrance on their equity interest in Fuhua without the prior
written consent of CFO Beijing.
December 31,
2005
2006
816,882
3,294,204
445,079
2,915,166
Years ended December 31,
2004
2005
2006
125,090
1,222,747
1,286,614
1,391
435
(4,999
)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America (U.S. GAAP).
Basis of consolidation
The consolidated financial statements include the financial statements of China Finance
Online, its subsidiaries and a variable interest entity. All inter-company transactions and
balances have been eliminated upon consolidation.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and highly liquid investments which are
unrestricted as to withdrawal or use, and which have remaining maturities of three months or
less when purchased.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities
and revenue and expenses in the financial statements and accompanying notes. Significant
accounting estimates reflected in the Companys financial statements include valuation allowance for
deferred tax assets,
stock-based compensation expense, and impairment of cost method investment. Actual results could differ
from those estimates.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Property and equipment, net
Property and equipment, net are carried at cost less accumulated depreciation. Depreciation
is calculated on a straight-line basis over the following estimated useful lives:
5 years
5 years
5 years
5 years
Shorter of the lease term or 5 years
Acquired intangible assets, net
Acquired intangible assets consists of intangible assets acquired through various
acquisitions as described in note 3 and are amortized on a straight-line basis over their
expected useful economic lives.
If an intangible asset is determined to have an indefinite useful life, it should not be
amortized until its useful life is determined to be no longer indefinite. The Company
reviews intangible assets remaining useful lives in each reporting period. If such an asset is later
determined to have a finite useful life, the asset will be tested for impairment. That
asset will then be amortized prospectively over its estimated remaining useful life and
accounted for in the same way as intangible assets subject to amortization. An intangible
asset that is not subject to amortization is tested for impairment at least annually.
Impairment of long-lived assets
The Company reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may no longer be recoverable.
When these events occur, the Company measures impairment by comparing the carrying value of
the long-lived assets to the estimated undiscounted future cash flows expected to result
from the use of the assets and their eventual disposition. If the sum of the expected
undiscounted cash flow is less than the carrying amount of the assets, the Company would
recognize an impairment loss based on the fair value of the assets.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Goodwill
The excess of the purchase price over the fair value of net assets acquired is recorded on
the consolidated balance sheet as goodwill.
The Company tests goodwill annually following a two-step process. The first step compares
the fair values of each reporting unit to its carrying amount, including goodwill. If the
fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to
be impaired and the second step will not be required. If the carrying amount of a reporting
unit exceeds its fair value, the second step compares the implied fair value of goodwill to
the carrying value of a reporting units goodwill. The implied fair value of goodwill is
determined in a manner similar to accounting for a business combination with the allocation
of the assessed fair value determined in the first step to the assets and liabilities of the
reporting unit. The excess of the fair value of the reporting unit over the amounts
assigned to the assets and liabilities is the implied fair value of goodwill. An impairment loss
is recognized for any excess in the carrying value of goodwill over the implied fair value
of goodwill.
The Company performs a goodwill impairment test annually on
one reporting unit on December 31 and another two reporting units
on October 1 by comparing the
book value to the fair value of each reporting unit. Based on the Companys assessment,
there was no impairment of goodwill for the years ended December 31, 2004, 2005 and 2006.
Revenue recognition
The Company generates revenue primarily from annual subscription fees from subscribers to
their financial data and information services including their downloadable proprietary
software research tools. The Company recognizes revenue under the provisions of Statement
of Position No 97-2 (SOP 97-2) entitled Software Revenue Recognition (as amended by SOP
98-9). Accordingly, the Company recognizes revenues when all of the following criteria are
met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the
fee is fixed or determinable and (4) collectibility is probable. Upon receipt of the
upfront cash payments from the subscriber, the Company will activate the subscribers account
and provide the subscriber the access code. This will commence the one-year subscription
period and the full payment will be deferred and recognized ratably over the one-year
subscription period. Since the Company does not have sufficient vendor specific objective
evidence to allocate revenue to the various elements of the arrangement, the Company
recognizes revenue ratably over the life of the arrangement.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Revenue recognition
continued
The Company provides short messaging services ("SMS") which
are delivered primarily through intermediary companies licensed to
provide SMS services on behalf of mobile phone service providers.
The Company evaluates the criteria outlined in EITF No. 99-19,
"Reporting Revenue Gross as Principal Versus Net as an Agent," in
determining whether it is appropriate to record the gross amount of
revenues and related costs or the net amount earned after deducting
service and network fees paid to the mobile phone service providers.
The Company records the net amount of revenue received from the intermediary company after deducting service
and network fees when the Company is the agent in transactions
primarily working through an intermediary of the mobile phone service
provider, has little latitude in establishing prices, and is not
involved in the determination of the service specification. The
Company records the gross amounts billed to its customers when the
Company is the primarily obligor in these transactions as it has
latitude in establishing prices, is involved in the determination of the
service specifications and has the right to select suppliers. When
recording the gross revenue, the Company measures its revenues based
on the total amount paid by its customers, for which
the mobile phone service provider bills and collects on the
Companys
behalf. Accordingly, the 15-35% service fee paid to the mobile phone
service provider is included in the cost of revenues.
The Company generally derives its advertising fees from advertising sales on their Website
principally for a fixed period of time, generally less than one year. Revenues from
advertising arrangements are recognized ratably over the period the advertising is
displayed.
Business taxes and value added taxes
Revenue is recorded net of business taxes when incurred. The Company is subject to business
taxes of approximately 5% on taxable services provided to its customers. During the years
ended December 31, 2004, 2005, and 2006, business taxes totaled $47,914, $144,590, and
$208,559, respectively.
The Companys PRC subsidiaries are subject to value added tax at a rate of 17% on
subscription-based revenue. Value added tax payable on subscription-based revenue is
computed net of value added tax paid on purchases. In respect of subscription-based
revenue, however, if the net amount of value added tax payable exceeds 3% of
subscription-based revenue, the excess portion of value added tax can be refunded
immediately. The Company therefore is subject to an effective net value added tax burden of
3% from subscription-based revenue and records value added tax on a net basis. Net amount
of value added tax is recorded either in the line item of other current liabilities or
prepaid expenses and other current assets on the face of consolidated balance sheet.
Subscription-based revenue includes the benefit of the rebate of value added taxes on sale
of the downloadable software received from the Chinese tax authorities as part of the PRC
government policy of encouraging software development in the PRC. In 2004, 2005 and 2006,
the Company recognized $613,050, $708,613 and $516,773, respectively, in value added tax
refunds.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Deferred revenue
Payments received in advance of service are recorded as deferred revenue until earned and
when the relevant revenue recognition requirements have been met.
Cost method investment
For investments in an investee over which the Company does not have significant influence,
the Company carries the investment at cost and recognizes income as any dividends received
from distribution of investees earnings. The Company reviews the cost investments for
impairment whenever events or changes in circumstances indicate that the carrying value may
no longer be recoverable. An impairment loss is recognized in earnings equal to the
difference between the investments cost and its fair value at the balance sheet date of the
reporting period for which the assessment is made. The fair value of the investment would
then become the new cost basis of the investment. The Company recorded an impairment charge
totaling $1,322,000 during the year ended December 31, 2006. No impairment charges were
recorded during the years ended December 31, 2004 and 2005.
Foreign currency translation
The functional currency of China Finance Onlines subsidiaries and variable interest entity
is Renminbi (RMB). Monetary assets and liabilities denominated in other currencies are
translated into the applicable functional currencies at rates of exchange in effect at the
balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable
functional currencies at historical exchange rates and transactions denominated in other
currencies are translated using the average rate for the year. Exchange gains and
losses are recorded in the consolidated statement of operations.
China Finance Online uses the U.S. dollar as its functional and reporting currency.
Accordingly assets and liabilities are translated using the exchange rates in effect on the
balance sheet date. Transactions in currencies other than the U.S. dollar are translated
using the average exchange rate prevailing in the period when transactions occurred.
Translation adjustments are reported as cumulative transition adjustments and are shown as a
separate component of other comprehensive income (loss) in the accompanying consolidated
statements of shareholders equity and comprehensive income (loss).
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Foreign currency risk
The RMB is not a freely convertible currency. The State Administration for Foreign
Exchange, under the authority of the Peoples Bank of China, controls the conversion of
Renminbi into foreign currencies. The value of the RMB is subject to changes in central
government policies and to international economic and political developments affecting
supply and demand in the China Foreign Exchange Trading System market. Cash and cash
equivalents of the Company included aggregate amounts of $42,676,039 at December 31, 2005
and $39,197,490 at December 31, 2006 which were denominated in RMB.
Cost of data
Cost of data is expensed as incurred and is recorded in cost of revenues.
Product development expenses
Costs of product development, including database technology, are expensed as incurred until
technological feasibility has been established, at which time any additional costs would be
capitalized. To date, the Company has essentially completed its development concurrently
with the establishment of technological feasibility, and, accordingly, no costs have been
capitalized.
Advertising costs
The Company expenses advertising costs as incurred. Total advertising expenses were
$414,907, $1,389,899 and $921,365 for the years ended December 31, 2004, 2005 and 2006,
respectively, and have been included as part of sales and marketing expenses.
Income taxes
Deferred income taxes are recognized for temporary differences between the tax basis of
assets and liabilities and their reported amounts in the financial statements, net operating
loss carry forwards and credits by applying enacted statutory tax rates applicable to future
years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Current income taxes are provided for in accordance with the laws of
the relevant taxing authorities.
Comprehensive income
Comprehensive income includes net income (loss) and foreign currency translation
adjustments. Comprehensive income is reported as a component of the consolidated statements
of shareholders equity and comprehensive income.
Fair value of financial instruments
Financial instruments include cash and cash equivalents and accounts receivable. The carrying values of
cash and cash equivalents and accounts receivable approximate
their fair value due to their short-term maturities.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Concentrations of credit risk
Financial instruments that potentially expose the Company to concentrations of credit risk
consist principally of cash and cash equivalents and accounts receivable. The Company
places its cash and cash equivalents with financial institutions with high-credit ratings
and quality.
The Company conducts ongoing credit evaluations of its customers and generally does not
require collateral or other security from its customers. The Company manages its credit
risk by collecting up-front retainers from its customers and billing at regular intervals
during the contract period. The Company assesses the adequacy of allowance for doubtful
accounts primarily based upon the age of the receivables and factors surrounding the credit
risk of specific customers.
There were no customers with 10% or more of the Companys revenues and accounts receivable
during 2004, 2005, and 2006.
Stock-based compensation
Effective January 1, 2006, the Company adopted the fair value recognition provisions of
Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based
Payment (SFAS 123(R)), using the modified prospective transition method. Under this
method, stock-based compensation expense recognized beginning January 1, 2006 includes: (a)
compensation expense for all stock-based compensation awards granted prior to, but not yet
vested as of January 1, 2006 based on the fair market value as of the grant date, measured
in accordance with SFAS 123, and (b) compensation expense for all stock-based compensation
awards granted on or subsequent to January 1, 2006, based on grant-date fair vale estimated
in accordance with the provisions of SFAS 123(R). The Company recognizes stock-based
compensation costs on a graded-vesting attribution method over the requisite service period
which is generally the vesting period.
For options vested prior to January 1, 2006, the Company accounted for share-based
compensation plans in accordance with Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, as amended (APB 25). Accordingly, the Company
recognized compensation expense only when options were granted with a discounted exercise
price. The compensation expense was recognized ratably over the requisite service period,
which was generally the vesting period of the options.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Income (loss) per share
Basic income (loss) per share is computed by dividing net income (loss) by the weighted
average number of ordinary shares outstanding during the period. Diluted income (loss) per
ordinary share reflects the potential dilution that could occur if securities or other
contracts to issue ordinary shares were exercised or converted into ordinary shares.
Recent accounting standards
In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets an
amendment of APB Opinion No. 29, which amends Accounting Principles Board Opinion No. 29,
Accounting for Nonmonetary Transactions, to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. The Company adopted
SFAS No. 153 on January 1, 2006 and the adoption of SFAS No. 153 did not have a material
effect on its consolidated financial position or results of operations.
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, which
replaces Accounting Principles Board Opinions No. 20 Accounting Changes and SFAS No. 3,
Reporting Accounting Changes in Interim Financial Statements An Amendment of APB Opinion
No. 28. SFAS No. 154 provides guidance on the accounting for and reporting of accounting
changes and error corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. The Company adopted SFAS No. 154 on January 1,
2006 and the adoption of SFAS No. 154 did not have a material effect on its consolidated
financial position or results of operations.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157,
Fair Value Measurements (SFAS No. 157), which provides enhanced guidance for using fair
value to measure assets and liabilities. SFAS No. 157 also responds to investors requests
for expanded information about the extent to which companies measure assets and liabilities
at fair value, the information used to measure fair value, and the effect of fair value
measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit)
assets or liabilities to be measured at fair value. SFAS No. 157 does not expand the use of
fair value in any new circumstances. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 12, 2007, and interim periods within those
fiscal years. The Company is currently evaluating whether the adoption of SFAS No. 157 will
have a material effect on its consolidated results of operations and financial position.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Recent accounting standards
continued
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of
FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 provides companies with an option to
report selected financial assets and liabilities at fair value. SFAS No. 159 requires
companies to provide additional information that will help investors and other users of
financial statements to more easily understand the effect of the companys choice to use
fair value on its earnings. It also requires entities to display the fair value of those
assets and liabilities for which the Company has chosen to use fair value on the face of the
balance sheet. SFAS No. 159 is effective as of the beginning of an entitys first fiscal
year beginning after November 15, 2007. The Company is currently evaluating whether the
adoption of SFAS No. 159 will have a material effect on its consolidated results of
operations and financial position.
In September 2006, the SEC issued SAB 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB
108). SAB 108 provides guidance on the consideration of the effects of prior year
misstatements in quantifying current year misstatements for the purpose of a materiality
assessment. SAB 108 establishes an approach that requires quantification of financial
statement errors based on the effects of each on a companys balance sheet and statement of
operations and the related financial statement disclosures. The
Company adopted SAB 108 on November 15, 2006 and the adoption of SAB 108 did not have a material impact
on the Companys consolidated financial position, results of operations or cash flows.
In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income
Taxes an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an entitys financial statements in
accordance with SFAS No. 109, Accounting for Income Taxes, and prescribes a recognition
threshold and measurement attribute for financial statement disclosure of tax positions
taken or expected to be taken on a tax return. Additionally, FIN 48 provides guidance on
derecognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning after December
15, 2006. The Company is in the process of implementing FIN 48 and has not yet determined
the effect, if any, on its consolidated financial statements as a result of adopting FIN 48.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
3.
ACQUISITIONS
To expand in markets in which the Company is not established or lacks experience and
expertise, during 2006, China Finance Online made a number of acquisitions of businesses.
Each acquisition has been recorded using the purchase method of accounting, and accordingly
the acquired assets and liabilities were recorded at their fair values on the dates of
acquisitions and the results of their operations have been included in the Companys results
of operations since the dates of their acquisitions. The fair values of the assets and
liabilities acquired were estimated using a combination of valuation methods, such as
income approach, market approach and cost approach method, considering, among other
factors, forecasted financial performance of the acquired business, market performance, and
market potential of the acquired business in China.
Acquisition of CFO-Genius
On September 21, 2006 China Finance Online entered into an agreement to acquire all the
equity interest in CFO-Genius, CFO-Genius engages in the business of constructing and
maintaining financial information databases and providing networked information solution.
It was the first company of its kind in China to build databases and to provide electronic
information networks for domestic securities and investment firms at the time of its
establishment in 1994. The acquisition is expected to strengthen the Companys position in
the industry and provide future opportunities to develop database products. CFO-Genius is a
financial information database provider primarily serving domestic securities and investment
firms, for a total cash consideration of $1,040,081, including $40,081 in transaction costs.
Amortization
period
$
35,802
14,174
14,023
42,506
3-5 years
332,545
5.3 years
75,866
Indefinite
117,592
5.3 years
632,508
(361,361
)
(231,904
)
(67,520
)
(28,277
)
1,068,358
$
1,040,081
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
3.
ACQUISITIONS continued
The following unaudited pro forma information summarizes the results of operations for the
years ended December 31, 2005 and 2006 of China Finance Online as if the acquisition
occurred on January 1, 2005 and January 1, 2006. The following pro forma financial
information is not necessarily indicative of the results that would have occurred had the
acquisition been completed at the beginning of the periods indicated, nor is it indicative
of future operating results:
Years ended December 31,
2005
2006
(unaudited)
(unaudited)
8,707,507
7,909,324
4,762,141
449,072
4,762,141
(832,221
)
0.05
(0.01
)
94,341,061
93,650,653
104,781,492
101,961,727
Acquisition of CFO-Meining and CFO-Stockstar
On October 1, 2006, China Finance Online acquired two companies to expand its business in
China. The Company acquired all the equity interests of CFO-Stockstar and CFO-Meining.
Stockstar is a leading finance and securities website in China, it will alter the China
Finance Onlines overall composition. For the acquisition, total cash consideration was
$8,135,269 including transaction costs of $117,953. The following table summarizes the
estimated fair values of the assets acquired and liabilities assumed at the date of
acquisition.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
3.
ACQUISITIONS continued
Aggregate purchase price allocation CFO-Meining and CFO-Stockstar
Amortization
Period
$
792,692
432,753
78,298
297,024
652,446
Indefinite
402,089
5.3 year
10,495
3 year
475,426
4.3 year
23,392
3.3 year
3,164,615
(222,868
)
(1,702,727
)
(136,710
)
1,102,310
7,032,959
$
8,135,269
CFO-Meining and CFO-Stockstar are identified as a single
reporting unit for goodwill allocation purposes and the goodwill
arising from this
acquisition is fully allocated to this reporting unit.
The following unaudited pro
forma information summarizes the results of operations for the
years ended December 31, 2005 and 2006 of China Finance Online as if the acquisition
occurred as of January 1, 2005 and January 1, 2006. The following pro forma financial
information is not necessarily indicative of the results that would have occurred had the
acquisition been completed at the beginning of the periods indicated, nor is it indicative
of future operating results:
Year ended December 31,
2005
2006
(unaudited)
(unaudited)
10,026,915
10,080,846
4,776,422
(365,203
)
4,685,359
(1,264,639
)
0.05
(0.01
)
0.04
(0.01
)
94,341,061
93,650,653
104,781,492
101,961,727
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
4.
PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
December 31,
2005
2006
$
562,673
$
415,441
470,926
167,655
75,612
330,343
22,304
14,258
$
1,131,515
$
927,697
Interest receivable is interest earned from the Companys bank deposits.
5.
COST METHOD INVESTMENT
In December 2005, the Company purchased 9,800,000 Series B preferred shares in Moloon
International Inc. (Moloon) for $15,000,000, which represents a 25% interest in Moloon on
an if-converted basis. China Finance Online's investment in these
preferred shares is not in-substance common stock, and accordingly, the investment has been recorded as a
cost method investment.
In April 2006, the Company sold part of its investment
in Moloon to a third party for a cash
consideration of $1,187,500, resulting in a gain of $116,071 which has been recorded as a
non operating income in the consolidated statements of operations. As a result of this
disposal, the Companys investment in Moloons preferred shares decreases to 9,100,000
shares.
Moloon is a Chinese wireless technology and service provider. During the second half of
2006, China Mobile Communication Corporation announced policy changes which, among others,
required mobile value added service, or MVAS, providers to extend free trial periods for
customers prior to subscriptions and to send reminders to customers confirming new and
existing subscriptions. These policy changes had a substantial negative impact on Moloons
MVAS business. Consequently, following an independent valuation, the Company determined
that its investment in Moloon was impaired and recorded an impairment loss of $1,322,000 in
the accompanying consolidated statements of operations for 2006.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
6.
PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of:
December 31,
2005
2006
$
626,188
$
1,277,972
113,569
255,246
88,580
354,488
62,288
64,374
354,399
890,625
2,306,479
(378,446
)
(608,998
)
$
512,179
$
1,697,481
December 31, 2006
$
744,042
600,612
10,629
23,692
737,638
2,116,613
(71,389
)
$
2,045,224
Amortization expense for the years ended December 31,
2004, 2005, and 2006 was $71,389. Future amortization expenses of acquired intangible assets with
determinable lives are $285,559 for 2007, $285,559 for 2008, $284,673 for 2009, $280,795 for
2010, and $167,157 for 2011.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
8.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of:
December 31,
2005
2006
$
262,889
$
1,035,656
51,612
386,806
40,303
56,811
26,889
18,891
598,388
$
381,693
$
2,096,552
9.
STOCK OPTIONS
In January 2004, the Company adopted the 2004 stock incentive plan (the Plan) which allows
the Company to offer a variety of incentive awards to employees, directors, officers and
other eligible persons in the Company. Options to purchase 5,688,488 ordinary shares are
authorized under the Plan. In September 2004 and December 2006, the Company increased the
total number of ordinary shares available for issuance under the Plan by an additional
5,000,000 shares, respectively, resulting in a total of 15,688,488 options to purchase
ordinary shares under the Plan. Options are generally granted at a price equal to the fair
market value of the Companys shares at the date of grant. Prior to the Companys initial
public offering the market value of the ordinary shares underlying the stock option was
determined by the Board of Directors. As of December 31, 2006, options to purchase
14,843,688 shares of ordinary shares were outstanding. All of the options granted under the Plan to our
directors and managers have vesting period of one to four years, while options granted under the Plan to
our other employees vest over a period of three to five years. The options we granted to consultants and advisers
vested immediately upon grant or from two to three years after grant. A specified portion of the shares subject
to each option vests at the end of the first year and the balance vests each month thereafter. The amortization of
options granted is based on the graded vesting schedule.
Options to employees
In February 2005, the Company granted 4,053,000 stock options to directors, officers and
employees at an exercise price that equaled the trading price of the stock upon the stock
option grant. In November 2005, the Company granted 400,000 stock options to the Companys
CEO and 200,000 stock options to the Companys Vice President. The company accounted for
these options under APB 25.
In July 2006, the Company granted an additional 400,000 stock options to the companys CEO
and 300,000 stock options to the Chief Financial Officer. The exercise prices equaled the
trading price of the stock at the grant date of the option. These options are vested over 2
years. China Finance Online recorded compensation expense of $158,760 in 2006, estimated on
the basis of the Black-Scholes Option Pricing model with the following assumptions:
5.24
%
5.75 years
58.84
%
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
9.
STOCK OPTIONS continued
Options to non-employees
The Company granted stock options to purchase up to 6,829,500 ordinary shares outside of the
stock option plan, which vested immediately and 90,000 options to purchase ordinary shares
under the Plan to consultants and strategic advisors, which vested over 2 years in 2004.
The Company also granted 350,000 options under the Plan to consultants and strategy advisors
in 2005. The Company recorded a compensation expense of approximately $112,689 and $16,615
for the years ended December 31, 2005 and 2006, respectively, estimated using the
Black-Scholes option pricing model as such method provided a more accurate estimate of the
fair value of services provided by the consultants and strategic
advisers. The fair value of the stock options is remeasured as of the end of each reporting period until the
services of these non-employees are complete under the service contracts.
The following assumptions were used in the option pricing model:
Years ended December 31,
2004
2005
2006
2
%
3.48
%
4.70
%
2 years
2.14 years
5.76 years
73.78
%
56.96
%
73.33
%
Year ended December 31,
2004
2005
2006
Weighted
Weighted
Weighted
Number
average
Number
average
Number
average
of options
exercise price
of options
exercise price
of options
exercise price
12,492,988
$
0.18
15,250,488
$
0.52
12,517,988
$
0.18
5,003,000
$
1.29
700,000
$
1.07
(1,731,500
)
$
0.16
(473,000
)
$
0.17
(25,000
)
$
0.17
(514,000
)
$
1.05
(633,800
)
$
0.69
12,492,988
$
0.18
15,250,488
$
0.52
14,843,688
$
0.56
8,482,988
$
0.16
9,986,488
$
0.29
11,705,508
$
0.43
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
9.
STOCK OPTIONS continued
The following table summarizes information with respect to stock options outstanding at
December 31, 2006:
Options outstanding
Options exercisable
Weighted
average
Weighted
Weighted
remaining
average
average
Number
contractual
exercise
Number
exercise
outstanding
life
price
exercisable
price
9,512,488
2.18 years
$
0.16
8,852,788
$
0.16
320,000
2.18 years
$
1.04
320,000
$
1.04
3,661,200
8.14 years
$
1.31
2,210,720
$
1.31
50,000
8.14 years
$
1.32
22,000
$
1.32
400,000
8.88 years
$
1.12
200,000
$
1.12
200,000
8.92 years
$
1.16
100,000
$
1.16
700,000
9.52 years
$
1.07
14,843,688
4.92 years
11,705,508
$
0.43
As of December 31, 2006, options to purchase 5,469,800 ordinary shares were available for
future grant.
The effect on net income and earnings per share would have been as follows if the fair value
method of recognizing stock compensation was adopted in 2004 and 2005:
Years ended December 31,
2004
2005
$
4,597,341
4,624,187
33,192
13,589
(256,947
)
(1,935,649
)
$
4,373,586
2,702,127
$
0.12
$
0.05
$
0.11
$
0.04
$
0.05
$
0.04
$
0.05
$
0.03
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
9.
STOCK OPTIONS continued
The fair value of each option and share granted is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions used for grants during the
applicable period.
Years ended
December 31,
2004
2005
1.87
%
3.37
%
2.41 years
2.94 years
73.78
%
65.08
%
The Company recognizes the compensation costs net of a forfeiture rate. The estimate of
forfeitures will be adjusted over the requisite service period to the extent that actual
forfeitures differ or are expected to differ, from such estimates. Changes in estimated
forfeitures will be recognized through a cumulative catch-up adjustment in the period of
change and will also impact the amount of stock compensation expense to be recognized in the
future periods. There has been no change in estimated forfeitures in the year ended
December 31, 2006.
In January 2007, the Company granted additional options under the Plan with the right
to purchase a total of 3,272,000 ordinary shares to employees.
10.
INCOME TAXES
The Company has not recorded a tax provision for Hong Kong tax purposes as the Company does
not have any assessable profit in Hong Kong.
CFO Beijing, is subject to PRC income tax at a rate of 27% (24% PRC state income tax plus 3%
PRC local income tax). In accordance with the approval by the tax authority in March 2004,
CFO Beijing was exempted from PRC state income taxes for the years
2003 and 2004 and is
entitled to a 50% tax relief commencing from 2005 through 2007; and is entitled to an
exemption from PRC local income taxes from 2003 to 2007 and a 50% tax relief commencing from
2008 through 2012. Income taxes paid by CFO Beijing in 2003 before the notice of tax
exemption were received were recorded as income taxes recoverable on the consolidated
balance sheets. The amounts of the tax refunds were received during 2004 and 2005.
CFO Software is subject to PRC income taxes at a rate of 15%. In accordance with the local
tax law, CFO Software is exempted for three years from PRC state income taxes through 2007
and is entitled to a 50% tax relief commencing from 2008 and through 2010.
CFO Genius is registered in Shenzhen Special Economic Zone and enjoys a preferential tax
rate 15%. CFO Meining and CFO Stockstar are registered and operate in the High and New
Technology Industry Development Zone in Guangzhou, China, and are classified as high and
new technology enterprises. The effective income tax rate, subject to the approval of the
relevant tax authorities, for high and new technology enterprises registered in High and
New Technology Industry Development Zones is 15%.
Fuhua is subject to PRC income taxes at a rate of 33%. For the years ended December 31,
2004, 2005 and 2006, provision for income taxes for Fuhua were $2,048, nil and $416,
respectively.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
10.
INCOME TAXES continued
The principal components of deferred income taxes were as follows:
December 31,
2005
2006
$
64,036
$
135,658
34,820
$
64,036
$
170,478
$
47,781
$
802,010
(204,043
)
47,781
597,967
(47,781
)
(743,500
)
$
$
(145,533
)
A valuation allowance of $47,781 and $743,500 were established as of December 31, 2005 and
2006, respectively, for the entities that have incurred losses. As such, it is considered
more likely than not that the related deferred tax assets will not be realized. The
valuation allowance at December 31, 2006 increased from 2005 as some subsidiaries tax loss
carryforwards will expire. At December 31, 2006, tax loss
carryforwards amounting to
approximately $4.2 million which will expire by 2011, and $1 million which will carry forward
indefinitely.
During the years ended December 31, 2004, 2005 and 2006, if the China Finance Onlines
subsidiaries in the PRC were neither in the tax holiday period nor had they been
specifically allowed special tax concessions, they would have recorded additional income tax
expense of $1,230,873, $1,448,866 and $786,385 respectively, and basic and diluted income
per share would have been decreased to $0.09, $0.03 and ($0.01) and $0.04,$0.03 and ($0.01)
for the years ended December 31, 2004, 2005 and 2006, respectively.
A reconciliation between the statutory PRC enterprise income
tax rate of 33% and the effective tax rate is as follows:
Years ended December 31,
2004
2005
2006
%
%
%
33.0
33.0
(33.0
)
(32.0
)
(18.0
)
(92.1
)
4.1
3.6
139.9
(14.1
)
(10.3
)
(54.8
)
(0.1
)
0.7
33.7
(9.1
)
9.0
(6.3
)
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
2004
2005
2006
$
$
365,965
$
267,302
116,071
(1,579
)
(1,498
)
$
(1,579
)
$
365,965
$
381,875
Exchange gain is primarily derived from intercompany transactions and cash and cash
equivalents in foreign currency.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
13.
INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted income (loss) per share
for the years indicated:
Years ended December 31,
2004
2005
2006
$
4,597,341
$
4,624,187
$
(600,633
)
38,912,491
94,341,061
93,650,653
40,505,966
10,674,211
10,440,431
8,311,074
90,092,668
104,781,492
101,961,727
$
0.12
$
0.05
$
(0.01
)
$
0.05
$
0.04
$
(0.01
)
Ordinary share equivalents are calculated using the treasury stock method.
14.
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION
Full time employees of the Company in the PRC participate in a government-mandated
multi-employer defined contribution plan pursuant to which certain pension benefits, medical
care, unemployment insurance, employee housing fund and other welfare benefits are provided
to employees. Chinese labor regulations require the Company to accrue for these benefits
based on certain percentages of the employees salaries. The total provisions for such
employee benefits were $53,660, $107,552 and $270,576 for the years ended December 31, 2004,
2005 and 2006 respectively.
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
15.
COMMITMENTS
The Company leases certain office premises and purchases data
under non-cancelable leases. The office lease expires in 2011.
Rent expense under operating leases for 2004, 2005 and 2006 were $191,789, $242,765 and
$520,590, respectively.
Future minimum lease payments under non-cancelable operating leases agreements were as
follows:
Year ending
$
780,637
670,919
667,482
361,220
53,753
$
2,534,011
16.
SEGMENT AND GEOGRAPHIC INFORMATION
The Company has one operating segment as of and for the years ended December 31, 2004, 2005
and 2006. The Companys chief operating decision maker has been identified as the Companys
Chief Executive Officer, who reviews consolidated results when making decisions about
allocating resources and assessing performance of the Company. The Company operates
primarily in the PRC and all of the Companys long-lived assets are located in the PRC.
The Company derives revenue from external customers for each of the following services
during the years presented:
Years ended December 31,
2004
2005
2006
$
5,476,400
$
5,811,395
$
5,075,830
115,500
996,311
1,337,630
424,549
674,460
714,618
$
6,016,449
$
7,482,166
$
7,128,078
Table of Contents
FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
(In U.S. dollars)
17.
RESTRICTED NET ASSETS
PRC legal restrictions permit payments of dividends by China Finance Onlines PRC
subsidiaries only out of their retained earnings, if any, determined in accordance with PRC
accounting standards and regulations. The general reserve (Note 14), which requires annual
appropriations of 10% of after-tax profit should be set aside prior to the payment of
dividends. As a result of these PRC laws and regulations, the Companys PRC subsidiary and
variable interest entity are restricted in their abilities to transfer a portion of their
net assets to the Company. As of December 31, 2006, the amount of restricted net assets was
approximately $45,958,914.
Pursuant to the laws applicable to the PRCs Foreign Investment Enterprises, the Companys
subsidiary in the PRC must make appropriations from after-tax profit to non-distributable
reserves as determined by the Board of Directors of the Company. These reserves include a
(i) general reserve, (ii) enterprise expansion reserve, and (iii) staff bonus and welfare
reserve. Subject to certain cumulative limits, the general reserve requires annual
appropriations of 10% of after-tax profit (as determined under PRC GAAP at each year-end);
amounts to be appropriated for the other two reserves are determined at the Board of
Directors discretion. These reserves can only be used for specific purposes and are not
distributable as cash dividends. Appropriations to the staff welfare and bonus reserve are
charged to general and administrative expenses and amounted to $24,165 and $26,889 in 2004
and 2005, respectively. Appropriation to the general reserve amounted to $674,205 and
$268,891 in 2004 and 2005, respectively. There were no appropriations to the staff welfare
and bonus reserve or the general reserve during 2006.
Table of Contents
Condensed Financial information of Parent Company
Balance sheets
December 31,
(in U.S. dollars)
2005
2006
$
2,782,027
$
5,758,063
37,026
93,618
64,172
2,473,269
2,819,053
8,389,122
29,111,000
37,615,158
15,000,000
12,606,571
13,990,000
4,000,000
50,534
50,534
$
60,970,587
62,661,385
$
121,040
148,072
18,587
60,534
$
139,627
208,606
13,077
13,474
64,564,534
65,756,313
(13,200,394
)
(13,200,394
)
(67,129
)
671,122
1,634,269
8,849,750
8,249,117
60,830,960
62,452,779
$
60,970,587
62,661,385
Table of Contents
Condensed Financial information of Parent Company
Statements of operations
December 31,
(in U.S. dollars)
2004
2005
2006
$
60,094
$
692,453
$
873,496
289,334
370,781
1,183,662
349,428
1,063,234
2,057,158
184,836
560,772
202,484
4,761,933
5,126,649
2,395,622
180,419
(1,322,000
)
$
4,597,341
$
4,624,187
$
(600,633
)
Table of Contents
Condensed Financial information of Parent Company
Statements of cash flows
December 31,
(in U.S. dollars)
2004
2005
2006
4,597,341
4,624,187
(600,633
)
289,334
370,781
1,183,662
1,322,000
(116,071
)
(4,761,933
)
(5,126,649
)
(2,467,062
)
(2,473,269
)
(76,040
)
42,226
(56,221
)
271,953
(64,543
)
128,160
(27,234
)
27,032
496,428
(477,841
)
41,947
945,243
(594,530
)
(3,203,158
)
(13,990,000
)
9,990,000
1,187,500
(6,095,151
)
(500,000
)
(20,500,000
)
(15,000,000
)
(500,000
)
(49,490,000
)
5,082,349
94
276,976
66,843
8,800
(13,200,394
)
5,373,182
58,530,718
(502,552
)
(60,299
)
57,967,961
(7,550,236
)
75,643
(197
)
671,133
1,021,202
58,413,007
(56,963,633
)
2,976,036
1,332,653
59,745,660
2,782,027
$
59,745,660
$
2,782,027
$
5,758,063
$
6,642
$
$
Table of Contents
Exhibit 4.1
CHINA FINANCE ONLINE CO. LTD.
2004 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of the China Finance Online Co. Ltd. Stock Incentive Plan (this "PLAN") is to promote the success of the Corporation and to increase shareholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons of the Group. As used herein, "CORPORATION" means China Finance Online Co. Ltd., a company incorporated in the Hong Kong Special Administrative Region, People's Republic of China; "SUBSIDIARY" means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation, or in which the Corporation has a variable interest; "GROUP" means the Corporation and its Subsidiaries, collectively; and "BOARD" means the Board of Directors of the Corporation.
2. ELIGIBILITY
The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan only to those persons that the Administrator determines to be Eligible Persons. An "ELIGIBLE PERSON" is any person who is either: (a) an officer (whether or not a director) or employee of the Group; (b) a director of any member of the Group; or (c) an individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Company in a capital-raising transaction or as a market maker or promoter of the Company's securities) to the Company and who is selected to participate in this Plan by the Administrator. Notwithstanding the foregoing, a person who is otherwise an Eligible Person under clause (c) above may participate in this Plan only if such participation would not compromise the Corporation's ability to rely on Rule 701 to exempt from registration under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or use Form S-8 to register under the Securities Act, the offering and sale of securities issuable under this Plan by the Corporation or the Corporation's compliance with any other applicable laws. An Eligible Person who has been granted an award (a "PARTICIPANT") may, if otherwise eligible, be granted additional awards if the Administrator shall so determine.
3. PLAN ADMINISTRATION
3.1 THE ADMINISTRATOR. This Plan shall be administered by and all awards under this Plan shall be authorized by the Administrator. The "ADMINISTRATOR" means the Board or one or more committees appointed by the Board or another committee (within its delegated authority) to administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one or more directors or such number of directors as may be required under applicable law. A committee may delegate some or all of its authority to another committee so constituted. Unless otherwise provided in the Memorandum and Articles of Association of the Corporation or the applicable charter of any Administrator: (a) a majority of the members of the acting Administrator shall constitute a quorum, and (b) the vote of a majority of the members present assuming the presence of a quorum or the unanimous written
consent of the members of the Administrator shall constitute action by the acting Administrator.
With respect to awards intended to satisfy the requirements for performance-based compensation under Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the "CODE"), this Plan shall be administered by a committee consisting solely of two or more outside directors (as this requirement is applied under Section 162(m) of the Code); provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. To the extent required by any applicable listing agency, this Plan shall be administered by a committee composed entirely of independent directors (within the meaning of the applicable listing agency).
3.2 POWERS OF THE ADMINISTRATOR. Subject to the express provisions of this Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of awards and the administration of this Plan (in the case of a committee, within the authority delegated to that committee or person(s)), including, without limitation, the authority to:
(a) determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive an award under this Plan;
(b) grant awards to Eligible Persons, determine the price at which securities will be offered or awarded and the number of securities to be offered or awarded to any of such persons, determine the other specific terms and conditions of such awards consistent with the express limits of this Plan, establish the installments (if any) in which such awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based schedules), or determine that no delayed exercisability or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of such awards;
(c) approve the forms of award agreements (which need not be identical either as to type of award or among participants);
(d) construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation and participants under this Plan, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the awards granted under this Plan;
(e) cancel, modify, or waive the Corporation's rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consent under Section 8.6.5;
(f) accelerate or extend the vesting or exercisability or extend the term of any or all such outstanding awards (in the case of options or stock appreciation rights, within the maximum ten-year term of such awards) in such
circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a termination of employment or services or other events of a personal nature) subject to any required consent under Section 8.6.5;
(g) adjust the number of shares subject to any award, adjust the
price of any or all outstanding awards or otherwise change
previously imposed terms and conditions, in such circumstances as
the Administrator may deem appropriate, in each case subject to
Sections 4 and 8.6, and provided that in no case (except due to
an adjustment contemplated by Section 7 or any repricing that may
be approved by shareholders) shall such an adjustment constitute
a repricing (by amendment, cancellation and regrant, exchange or
other means) of the per share exercise or base price of any
option or stock appreciation right to a price that is less than
the fair market value of a share (as adjusted pursuant to Section
7) on the date of the grant of the initial award;
(h) determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator's action (unless otherwise designated by the Administrator, the date of grant of an award shall be the date upon which the Administrator took the action granting an award);
(i) determine whether, and the extent to which, adjustments are required pursuant to Section 7 hereof and authorize the termination, conversion, substitution or succession of awards upon the occurrence of an event of the type described in Section 7;
(j) acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration; and
(k) determine the fair market value of the shares or awards under this Plan from time to time and/or the manner in which such value will be determined.
3.3 BINDING DETERMINATIONS. Any action taken by, or inaction of, the Corporation, any Subsidiary, or the Administrator relating or pursuant to this Plan and within its authority hereunder or under applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board nor any Board committee, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys' fees) arising or resulting therefore to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage that may be in effect from time to time.
3.4 RELIANCE ON EXPERTS. In making any determination or in taking or not taking any action under this Plan, the Board or a committee, as the case may be, may obtain and may rely upon the advice of experts, including employees and professional
advisors to the Corporation. No director, officer or agent of any member of the Group shall be liable for any such action or determination taken or made or omitted in good faith.
3.5 DELEGATION. The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of any member of the Group or to third parties.
4. ORDINARY SHARES SUBJECT TO THE PLAN; SHARE LIMITS
4.1 SHARES AVAILABLE. Subject to the provisions of Section 7.1, the
capital stock that may be delivered under this Plan shall be shares of
the Corporation's authorized but unissued ordinary shares ("ORDINARY
SHARES"). For purposes of this Plan, "PLAN SHARES" shall mean the
Ordinary Shares of the Corporation and such other securities or
property as may become the subject of awards under this Plan, or may
become subject to such awards, pursuant to an adjustment made under
Section 7.1.
SHARE LIMITS. The maximum number of Ordinary Shares that may be delivered pursuant to awards granted to Eligible Persons under this Plan (the "SHARE LIMIT") is equal to 15,688,488 Ordinary Shares. The following limits also apply with respect to awards granted under this Plan:
(a) The maximum number of Ordinary Shares that may be delivered pursuant to options qualified as incentive stock options granted under this Plan is 3,000,000 Ordinary Shares.
(b) The maximum number of Ordinary Shares subject to those options and stock appreciation rights that are granted during any calendar year to any individual under this Plan is 2,000,000 Ordinary Shares.
(c) The maximum number of Ordinary Shares subject to all awards that are granted during any calendar year to any individual under this Plan is 2,000,000 Ordinary Shares. This limit does not apply, however, to shares delivered in respect of compensation earned but deferred.
(d) The maximum number of shares of Ordinary Shares that may be delivered pursuant to awards granted under this Plan, other than pursuant to stock option and stock appreciation right grants, is 3,000,000 Ordinary Shares. This limit does not apply, however, to shares delivered in respect of compensation earned but deferred.
(e) Additional limits with respect to Performance-Based Awards are set forth in Section 5.2.3.
Each of the foregoing numerical limits is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.
4.1 AWARDS SETTLED IN CASH, REISSUE OF AWARDS AND SHARES. To the extent that an award is settled in cash or a form other than Plan Shares, the Plan Shares that would have been delivered had there been no such cash or other settlement shall not be counted against the Ordinary Shares available for issuance under this Plan. In the event that Plan Shares are delivered in respect of a dividend equivalent, stock appreciation right, or other award, only the actual number of Plan Shares delivered with respect to the award shall be counted against the share limits of this Plan. Plan Shares that are subject to or underlie awards which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under this Plan shall again be available for subsequent awards under this Plan. Plan Shares that are exchanged by a participant or withheld by the Corporation as full or partial payment in connection with any award under this Plan, as well as any Plan Shares exchanged by a participant or withheld by the Group to satisfy the tax withholding obligations related to any award under this Plan, shall be available for subsequent awards under this Plan. Refer to Section 8.10 for application of the foregoing share limits with respect to assumed awards. The foregoing adjustments to the share limits of this Plan are subject to any applicable limitations under Section 162(m) of the Code with respect to awards intended as performance-based compensation thereunder.
4.2 RESERVATION OF SHARES; NO FRACTIONAL SHARES; MINIMUM ISSUE. The Corporation shall at all times reserve a number of Ordinary Shares sufficient to cover the Corporation's obligations and contingent obligations to deliver Plan Shares with respect to awards then outstanding under this Plan (exclusive of any dividend equivalent obligations to the extent the Corporation has the right to settle such rights in cash). No fractional Plan Shares shall be delivered under this Plan. The Administrator may pay cash in lieu of any fractional Plan Shares in settlements of awards under this Plan. No fewer than 1,000 Ordinary Shares may be purchased on exercise of any award (or, in the case of stock appreciation or purchase rights, no fewer than 1,000 rights may be exercised at any one time) unless the total number purchased or exercised is the total number at the time available for purchase or exercise under the award.
5 AWARDS
5.1 TYPE AND FORM OF AWARDS. The Administrator shall determine the type or types of award(s) to be made to each selected Eligible Person. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Group. The types of awards that may be granted under this Plan are:
5.1.1 STOCK OPTIONS. A stock option is the grant of a right to
purchase a specified number of Plan Shares during a specified
period as determined by the Administrator. An option may be
intended as an incentive stock option within the meaning of
Section 422 of the Code (an "ISO") or a nonqualified stock option
(an option not intended to be an ISO). The award agreement
for an option will indicate if the option is intended as an ISO, otherwise it will be deemed to be a nonqualified stock option. The maximum term of each option (ISO or nonqualified) shall be ten (10) years. The per share exercise price for each option shall be not less than 100% of the fair market value of a Plan Share on the date of grant of the option, except as follows: (a) in the case of a stock option granted retroactively in tandem with or as a substitution for another award, the per share exercise price may be no lower than the fair market value of a Plan Share on the date such other award was granted (to the extent consistent with Sections 422 and 424 of the Code in the case of options intended as incentive stock options); and (b) in any other circumstances, a nonqualified stock option may be granted with a per share exercise price that is less than the fair market value of a Plan Share on the date of grant, provided that such exercise price shall not be less than the per share purchase price of the preference shares of the Corporation; and provided further that any Plan Shares delivered in respect of such option shall be charged against the limit of Section 4.2(d) (the limit on full-value awards) as well as any other applicable limit under Section 4.2. When an option is exercised, the exercise price for the Plan Shares to be purchased shall be paid in full in cash or such other method permitted by the Administrator consistent with Section 5.5.
5.1.2 ADDITIONAL RULES APPLICABLE TO ISOS. To the extent that the aggregate fair market value (determined at the time of grant of the applicable option) of stock with respect to which ISOs first become exercisable by a participant in any calendar year exceeds $100,000, taking into account both Plan Shares subject to ISOs under this Plan and stock subject to ISOs under all other plans of the Group (or any parent or predecessor corporation to the extent required by and within the meaning of Section 422 of the Code and the regulations promulgated thereunder), such options shall be treated as nonqualified stock options. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Administrator may, in the manner and to the extent permitted by law, designate which Plan Shares are to be treated as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted to employees of the Corporation or one of its subsidiaries (for this purpose, the term "subsidiary" is used as defined in Section 424(f) of the Code, which generally requires an unbroken chain of ownership of at least 50% of the total combined voting power of all classes of stock of each subsidiary in the chain beginning with the Corporation and ending with the subsidiary in question). There shall be imposed in any award agreement relating to ISOs such other terms and conditions as from time to time are required in order that the option be an "incentive stock option" as that term is defined in Section 422 of the Code.
5.1.3 STOCK APPRECIATION RIGHTS. A stock appreciation right is a right to receive a payment, in cash and/or Plan Shares, equal to the excess of the fair market value of a specified number of Plan Shares on the date the stock
appreciation right is exercised over the fair market value of a
Plan Share on the date the stock appreciation right was granted
(the "base price") as set forth in the applicable award
agreement, except as follows: (a) in the case of a stock
appreciation right granted retroactively in tandem with or as a
substitution for another award, the base price may be no lower
than the fair market value of a Plan Share on the date such other
award was granted; and (b) in any other circumstances, a stock
appreciation right may be granted with a base price that is less
than the fair market value of a Plan Share on the date of grant,
provided that any shares delivered in respect of such award shall
be charged against the limit of Section 4.2(d) (the limit on
full-value awards) as well as any other applicable limit under
Section 4.2. The maximum term of a stock appreciation right shall
be ten (10) years. The Administrator may grant limited stock
appreciation rights which are exercisable only upon a change in
control or other specified event and may be payable based on the
spread between the base price of the stock appreciation right and
the fair market value of a Plan Share during a specified period
or at a specified time within a specified period before, after or
including the date of such event.
5.1.4 OTHER AWARDS. The other types of awards that may be granted under this Plan include: (a) stock bonuses, restricted stock, performance stock, stock units, phantom stock, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to the Plan Shares, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof; (b) any similar securities with a value derived from the value of or related to the Plan Shares and/or returns thereon; or (c) cash awards granted consistent with Section 5.2 below.
5.2 SECTION 162(M) PERFORMANCE-BASED AWARDS. Without limiting the
generality of the foregoing, any of the types of awards listed in
Section 5.1.4 above may be, and options and stock appreciation rights
granted with an exercise or base price not less than the fair market
value of a Plan Share at the date of grant ("QUALIFYING OPTIONS" and
"QUALIFYING STOCK APPRECIATION RIGHTS," respectively) typically will
be, granted as awards intended to satisfy the requirements for
"performance-based compensation" within the meaning of Section 162(m)
of the Code ("PERFORMANCE-BASED AWARDS"). The grant, vesting,
exercisability or payment of Performance-Based Awards may depend (or,
in the case of Qualifying Options or Qualifying Stock Appreciation
Rights, may also depend) on the degree of achievement of one or more
performance goals relative to a pre-established targeted level or
level using one or more of the Business Criteria set forth below (on
an absolute or relative basis) for the Corporation on a consolidated
basis or for one or more of the Corporation's subsidiaries, segments,
divisions or business units, or any combination of the foregoing. Any
Qualifying Option or Qualifying Stock Appreciation Right shall be
subject only to the requirements of Section 5.2.1 and 5.2.3 in order
for such award to satisfy the requirements for "performance-based
compensation" under Section 162(m) of the Award. Any other
Performance-Based Award shall be subject to all of the following
provisions of this Section 5.2.
5.2.1 CLASS; ADMINISTRATOR. The eligible class of persons for Performance-Based Awards under this Section 5.2 shall be officers and employees of any member of the Group. The Administrator approving Performance-Based Awards or making any certification required pursuant to Section 5.2.4 must be constituted as provided in Section 3.1 for awards that are intended as performance-based compensation under Section 162(m) of the Code.
5.2.2 PERFORMANCE GOALS. The specific performance goals for
Performance-Based Awards (other than Qualifying Options and
Qualifying Stock Appreciation Rights) shall be, on an absolute or
relative basis, established based on one or more of the following
business criteria ("BUSINESS CRITERIA") as selected by the
Administrator in its sole discretion: earnings per share, cash
flow (which means cash and cash equivalents derived from either
net cash flow from operations or net cash flow from operations,
financing and investing activities), total shareholder return,
gross revenue, revenue growth, operating income (before or after
taxes), net earnings (before or after interest, taxes,
depreciation and/or amortization), return on equity or on assets
or on net investment, cost containment or reduction, or any
combination thereof. These terms are used as applied under
generally accepted accounting principles or in the Group's
financial reporting. To qualify awards as performance-based under
Section 162(m), the applicable Business Criterion (or Business
Criteria, as the case may be) and specific performance goal or
goals ("targets") must be established and approved by the
Administrator during the first 90 days of the performance period
(and, in the case of performance periods of less than one year,
in no event more than 25% of the performance period has elapsed)
and while performance relating to such target(s) remains
substantially uncertain within the meaning of Section 162(m) of
the Code. Performance targets shall be adjusted to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and
losses, accounting changes or other extraordinary events not
foreseen at the time the targets were set unless the
Administrator provides otherwise at the time of establishing the
targets. The applicable performance measurement period may not be
less than three months nor more than 10 years.
5.2.3 FORM OF PAYMENT; MAXIMUM PERFORMANCE-BASED AWARD. Grants or
awards under this Section 5.2 may be paid in cash or Plan Shares
or any combination thereof. Grants of Qualifying Options and
Qualifying Stock Appreciation Rights to any one participant in
any one calendar year shall be subject to the limit set forth in
Section 4.2(b). The maximum number of Ordinary Shares which may
be delivered pursuant to Performance-Based Awards (other than
Qualifying Options and Qualifying Stock Appreciation Rights, and
other than cash awards covered by the following sentence) that
are granted to any one participant in any one calendar year shall
not exceed 2,000,000 shares, either individually or in the
aggregate, subject to adjustment as provided in Section 7.1. In
addition, the aggregate amount of compensation to be paid to any
one participant in respect of all Performance-Based Awards
payable only in cash and not related to
Ordinary Shares and granted to that participant in any one calendar year shall not exceed $5,000,000. Awards that are cancelled during the year shall be counted against these limits to the extent permitted by Section 162(m) of the Code.
5.2.4 CERTIFICATION OF PAYMENT. Before any Performance-Based Award under this Section 5.2 (other than Qualifying Options and Qualifying Stock Appreciation Rights) is paid and to the extent required to qualify the award as performance-based compensation within the meaning of Section 162(m) of the Code, the Administrator must certify in writing that the performance target(s) and any other material terms of the Performance-Based Award were in fact timely satisfied.
5.2.5 RESERVATION OF DISCRETION. The Administrator will have the discretion to determine the restrictions or other limitations of the individual awards granted under this Section 5.2 including the authority to reduce awards, payouts or vesting or to pay no awards, in its sole discretion, if the Administrator preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise.
5.2.6 EXPIRATION OF GRANT AUTHORITY. As required pursuant to
Section 162(m) of the Code and the regulations promulgated
thereunder, the Administrator's authority to grant new awards
that are intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code (other than
Qualifying Options and Qualifying Stock Appreciation Rights)
shall terminate upon the first meeting of the Corporation's
shareholders that occurs in the fifth year following the year in
which the Corporation's shareholders first approve this Plan.
5.3 AWARD AGREEMENTS. Each award shall be evidenced by a written award agreement in the form approved by the Administrator and executed on behalf of the Corporation and, if required by the Administrator, executed by the recipient of the award. The Administrator may authorize any officer of the Corporation (other than the particular award recipient) to execute any or all award agreements on behalf of the Corporation. The award agreement shall set forth the material terms and conditions of the award as established by the Administrator consistent with the express limitations of this Plan.
5.4 DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of cash, Plan Shares, other awards or combinations thereof as the Administrator shall determine, and with such restrictions as it may impose. The Administrator may also require or permit participants to elect to defer the issuance of shares or the settlement of awards in cash under such rules and procedures as it may establish under this Plan. The Administrator may also provide that deferred settlements include the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in shares.
5.5 CONSIDERATION FOR PLAN SHARES OR AWARDS. The purchase price for any award granted under this Plan or the Plan Shares to be delivered pursuant to an award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator, including, without limitation, one or a combination of the following methods:
- services rendered by the recipient of such award;
- cash, check payable to the order of the Corporation, or electronic funds transfer;
- notice and third party payment in such manner as may be authorized by the Administrator;
- the delivery of previously owned Plan Shares;
- by a reduction in the number of Plan Shares otherwise deliverable pursuant to the award; or
- subject to such procedures as the Administrator may adopt, pursuant to a "cashless exercise" with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards.
In no event shall any shares newly-issued by the Corporation be issued
for less than the minimum lawful consideration for such shares or for
consideration other than consideration permitted by applicable law. In
the event that the Administrator allows a participant to exercise an
award by delivering Plan Shares previously owned by such participant
and unless otherwise expressly provided by the Administrator, any
shares delivered which were initially acquired by the participant from
the Corporation (upon exercise of a stock option or otherwise) must
have been owned by the participant at least six months as of the date
of delivery. Plan Shares used to satisfy the exercise price of an
option shall be valued at their fair market value on the date of
exercise. The Corporation will not be obligated to deliver any Plan
Shares unless and until it receives full payment of the exercise or
purchase price therefor and any related withholding obligations under
Section 8.5 and any other conditions to exercise or purchase have been
satisfied. Unless otherwise expressly provided in the applicable award
agreement, the Administrator may at any time eliminate or limit a
participant's ability to pay the purchase or exercise price of any
award or shares by any method other than cash payment to the
Corporation.
5.6 DEFINITION OF FAIR MARKET VALUE. For purposes of this Plan, "fair market value" with shall mean, until such time that the Plan Shares are listed or admitted to trade on a national securities exchange, reported on the National Market Reporting System, or bid and asked prices for the Plan Shares are furnished by the NASD or a similar organization, the value as established by the Administrator at such time for purposes of this Plan. Thereafter, unless otherwise determined or provided by the Administrator in the circumstances, the last price for a Plan Share, respectively, as furnished by the National Association of Securities Dealers, Inc. ("NASD") through the NASDAQ National Market Reporting System for the date in question
or, if there were no sales of Plan Shares reported by the NASD on that
date, the last price for a Plan Share as reported by the NASD through
the NASDAQ National Market Reporting System for the next preceding day
on which sales of Plan Shares were reported by the NASD. The
Administrator may, however, provide with respect to one or more awards
(1) if the last price for the date in question is not yet known as of
the time of the determination, that the fair market value shall equal
the last price of a share of Plan Share as of the immediately
preceding trading day, or (2) that the fair market value shall equal
the average of the high and low sales prices for a Plan Share for the
date in question or the most recent trading day. The Administrator
also may adopt a different methodology for determining fair market
value with respect to one or more awards if a different methodology is
necessary or advisable to secure any intended favorable tax, legal or
other treatment for the particular award(s) (for example, and without
limitation, the Administrator may provide that fair market value for
purposes of one or more awards will be based on an average of closing
prices (or the average of high and low daily trading prices) for a
specified period preceding the relevant date). Notwithstanding the
foregoing, the fair market value of Plan Shares for purposes of grants
of ISOs shall be determined in compliance with applicable provisions
of the Code.
5.7 TRANSFER RESTRICTIONS.
5.7.1 LIMITATIONS ON EXERCISE AND TRANSFER. Unless otherwise expressly provided in (or pursuant to) this Section 5.7, by applicable law and by the award agreement, as the same may be amended, (a) all awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the participant; and (c) amounts payable or shares issuable pursuant to any award shall be delivered only to (or for the account of) the participant.
5.7.2 EXCEPTIONS. The Administrator may permit awards to be exercised by and paid to certain persons or entities related to the participant, including but not limited to members of the participant's immediate family, trusts or other entities controlled by or whose beneficiaries or beneficial owners are the participant and/or members of the participant's immediate family, pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator may establish. Consistent with Section 8.1, any permitted transfer shall be subject to the condition that the Administrator receive evidence satisfactory to it that the transfer (a) is being made for essentially donative, estate and/or tax planning purposes on a gratuitous or donative basis and without consideration (other than nominal consideration or in exchange for an interest in a qualified transferee), and (b) will not compromise the Corporation's ability to rely on Rule 701, or register Plan Shares issuable under this Plan on Form S-8, under the Securities Act. Notwithstanding the foregoing or anything in Section 5.7.3, ISOs and restricted stock awards shall be subject to any and all additional transfer restrictions under the Code to the extent necessary to maintain the intended tax consequences of such awards.
5.7.3 FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and transfer restrictions in Section 5.7.1 shall not apply to:
(a) transfers to the Corporation,
(b) the designation of a beneficiary to receive benefits in the event of the participant's death or, if the participant has died, transfers to or exercise by the participant's beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution,
(c) subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations order if approved or ratified by the Administrator,
(d) if the participant has suffered a disability, permitted transfers or exercises on behalf of the participant by his or her legal representative, or
(e) the authorization by the Administrator of "cashless exercise" procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of awards consistent with applicable laws and the express authorization of the Administrator.
5.8 INTERNATIONAL AWARDS. One or more awards may be granted to Eligible Persons who provide services to the Group outside of the United States. If necessary, awards granted to such persons may be granted pursuant to the terms and conditions of any applicable sub-plans, if any, appended to this Plan and approved by the Administrator.
6 EFFECT OF TERMINATION OF SERVICE ON AWARDS
6.1 GENERAL. The Administrator shall establish the effect of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of award. Notwithstanding the foregoing, unless the Board expressly otherwise provides, if the participant is not an employee of any member of the Group and provides other services to the Group, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the award otherwise provides) of whether the participant continues to render services to the Group and the date, if any, upon which such services shall be deemed to have terminated. Unless the Board otherwise expressly provides, (1) to the extent an outstanding option granted under this Plan has not become vested and exercisable on the date the participant's employment by or service to the Group terminates, the option to the extent unvested and unexercisable shall terminate, and (2) any shares subject to a restricted stock award that remain subject to restrictions at the time the participant's employment by or service to the Group terminates shall not vest and the Corporation shall have the right to reacquire any such unvested shares subject to such award in such manner and on such terms as the Administrator provides, which terms shall include return or repayment of the lower of the Fair Market Value or the original purchase price of the restricted shares, without interest, to the participant to the extent not prohibited by law.
6.2 EVENTS NOT DEEMED TERMINATIONS OF SERVICE. Unless Group policy or the Administrator otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence authorized by the Group or the Administrator; provided that unless reemployment upon the expiration of such leave is guaranteed by contract or law, such leave is for a period of not more than 90 days. In the case of any employee of any member of the Group on an approved leave of absence, continued vesting of the award while on leave from the employ of such member of the Group may be suspended until the employee returns to service, unless the Administrator otherwise provides or applicable law otherwise requires. In no event shall an award be exercised after the expiration of the term set forth in the award agreement.
6.3 EFFECT OF CHANGE OF SUBSIDIARY STATUS. For purposes of this Plan and any award, if an entity ceases to be a Subsidiary of the Corporation a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of another member of the Group after giving effect to the Subsidiary's change in status.
7 ADJUSTMENTS; ACCELERATION
7.1 ADJUSTMENTS. Upon or in contemplation of: any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split ("stock split"); any merger, combination, consolidation, or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Plan Shares (whether in the form of securities or property); any exchange of Plan Shares or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Plan Shares; or a sale of all or substantially all the business or assets of the Corporation as an entirety; then the Administrator shall, in such manner, to such extent (if any) and at such time as it deems appropriate and equitable in the circumstances:
7.1.1 proportionately adjust any or all of (1) the number and type of Plan Shares (or other securities) that thereafter may be made the subject of awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan), (2) the number, amount and type of Plan Shares (or other securities or property) subject to any or all outstanding awards, (3) the grant, purchase, or exercise price (which term includes the base price of any stock appreciation right or similar right) of any or all outstanding awards, (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, or (5) (subject to Sections 7.7 and 8.8.3(a)) the performance standards applicable to any outstanding awards, or
7.1.2 make provision for a cash payment or for the assumption, substitution or exchange of any or all outstanding share-based awards or the cash, securities or property deliverable to the holder of any or all outstanding share-based awards, based upon the distribution or consideration payable to holders of the Plan Shares upon or in respect of such event.
The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property settlement and, in the case of options, stock appreciation rights or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess if any of the per share amount payable upon or in respect of such event over the exercise or base price of the award. With respect to any award of an ISO, the Administrator may make such an adjustment that causes the option to cease to qualify as an ISO without the consent of the affected participant.
In any of such events, the Administrator may take such action prior to such event to the extent that the Administrator deems the action necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares in the same manner as is or will be available to shareholders generally. In the case of any stock split or reverse stock split, if no action is taken by the Administrator, the proportionate adjustments contemplated by clause (a) above shall nevertheless be made.
7.2 AUTOMATIC ACCELERATION OF AWARDS. Upon a dissolution of the Corporation or other event described in Section 7.1 that the Corporation does not survive (or does not survive as a public company in respect of its Ordinary Shares), then each then outstanding option and stock appreciation right shall become fully vested, all shares of restricted stock then outstanding shall fully vest free of restrictions, and each other award granted under this Plan that is then outstanding shall become payable to the holder of such award; provided that such acceleration provision shall not apply, unless otherwise expressly provided by the Administrator, with respect to any award to the extent that the Administrator has made a provision for the substitution, assumption, exchange or other continuation or settlement of the award, or the award would otherwise continue in accordance with its terms, in the circumstances.
7.3 POSSIBLE ACCELERATION OF AWARDS. Without limiting Section 7.2, in the event of a Change in Control Event (as defined below), the Administrator may, in its discretion, provide that any outstanding option or stock appreciation right shall become fully vested, that any share of restricted stock then outstanding shall fully vest free of restrictions, and that any other award granted under this Plan that is then outstanding shall be payable to the holder of such award. The Administrator may take such action with respect to all awards then outstanding or only with respect to certain specific awards identified by the Administrator in the circumstances. For purposes of this Plan, "CHANGE IN CONTROL EVENT" means any of the following:
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "PERSON")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then-outstanding Ordinary Shares of the Corporation (the "OUTSTANDING ORDINARY SHARES") or (2) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the "OUTSTANDING VOTING SECURITIES"); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in
Control Event; (A) any acquisition directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any affiliate of the Corporation or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1), (2) and (3) below;
(b) Individuals who, as of the Effective Date, constitute the Board (the "INCUMBENT BOARD") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of its Subsidiaries (each, a "BUSINESS COMBINATION"), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Ordinary Shares and the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding ordinary shares and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation's assets directly or through one or more subsidiaries (a "PARENT")) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Ordinary Shares and the Outstanding Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or a Parent or any employee benefit plan (or related trust) of the Corporation or such entity resulting from such Business Combination or Parent) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding ordinary shares of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 20% existed prior to the Business Combination,
and (3) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination or a Parent were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
(d) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation other than in the context of a transaction that does not constitute a Change in Control Event under clause (c) above.
7.4 EARLY TERMINATION OF AWARDS. Any award that has been accelerated as required or contemplated by Section 7.2 or 7.3 (or would have been so accelerated but for Section 7.5, 7.6 or 7.7) shall terminate upon the related event referred to in Section 7.2 or 7.3, as applicable, subject to any provision that has been expressly made by the Administrator, through a plan of reorganization or otherwise, for the survival, substitution, assumption, exchange or other continuation or settlement of such award and provided that, in the case of options and stock appreciation rights that will not survive, be substituted for, assumed, exchanged, or otherwise continued or settled in the transaction, the holder of such award shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding options and stock appreciation rights in accordance with their terms before the termination of such awards (except that in no case shall more than ten days' notice of accelerated vesting and the impending termination be required and any acceleration may be made contingent upon the actual occurrence of the event).
7.5 OTHER ACCELERATION RULES. Any acceleration of awards pursuant to this
Section 7 shall comply with applicable legal requirements and, if
necessary to accomplish the purposes of the acceleration or if the
circumstances require, may be deemed by the Administrator to occur a
limited period of time not greater than 30 days before the event.
Without limiting the generality of the foregoing, the Administrator
may deem an acceleration to occur immediately prior to the applicable
event and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur. The Administrator may
override the provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by express
provision in the award agreement and may accord any Eligible Person a
right to refuse any acceleration, whether pursuant to the award
agreement or otherwise, in such circumstances as the Administrator may
approve. The portion of any ISO accelerated in connection with a
Change in Control Event or any other action permitted hereunder shall
remain exercisable as an ISO only to the extent the applicable
$100,000 limitation on ISOs is not exceeded. To the extent exceeded,
the accelerated portion of the option shall be exercisable as a
nonqualified stock option under the Code.
7.6 POSSIBLE RESCISSION OF ACCELERATION. If the vesting of an award has been accelerated expressly in anticipation of an event or upon shareholder approval of an event and the Administrator later determines that the event will not occur, the Administrator may rescind the effect of the acceleration as to any then outstanding and unexercised or otherwise unvested awards.
7.7 GOLDEN PARACHUTE LIMITATION. Notwithstanding anything else contained in this Section 7 to the contrary, in no event shall an award be accelerated under this Plan to an extent or in a manner which would not be fully deductible by the Group for federal income tax purposes because of Section 280G of the Code, nor shall any payment hereunder be accelerated to the extent any portion of such accelerated payment would not be deductible by the Group because of Section 280G of the Code. If a participant would be entitled to benefits or payments hereunder and under any other plan or program that would constitute "parachute payments" as defined in Section 280G of the Code, then the participant may by written notice to the Corporation designate the order in which such parachute payments will be reduced or modified so that the Group is not denied federal income tax deductions for any "parachute payments" because of Section 280G of the Code. Notwithstanding the foregoing, an employment or other agreement with the participant may expressly provide for benefits in excess of amounts determined by applying the foregoing Section 280G limitations.
7.8 SECTION 162(M) LIMITATIONS. To the extent limited by Section 162(m) of the Code in the case of an award intended as performance-based compensation thereunder and necessary to assure the deductibility of the compensation payable under the award, the Administrator shall have no discretion under this Plan (a) to increase the amount of compensation or the number of shares that would otherwise be due upon the attainment of the applicable performance target or the exercise of the option or SAR, or (b) to waive the achievement of any applicable performance goal as a condition to receiving a benefit or right under the award.
8 OTHER PROVISIONS
8.1 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of awards under this Plan, the offer, issuance and delivery of Plan Shares, the acceptance of promissory notes and/or the payment of money under this Plan or under awards are subject to compliance with all applicable national, federal and state laws, rules and regulations (including but not limited to state and federal securities law, federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Group, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation, provide such assurances and representations to the Corporation as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.
8.2 EMPLOYMENT STATUS. No person shall have any claim or rights to be granted an award (or additional awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the contrary.
8.3 NO EMPLOYMENT/SERVICE CONTRACT. Nothing contained in this Plan (or in any other documents under this Plan or in any award) shall confer upon any Eligible Person or other participant any right to continue in the employ or other service of any member of the Group, constitute any contract or agreement of employment or other
service or affect an employee's status as an employee at will, nor shall interfere in any way with the right of such member of the Group to change a person's compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 8.3, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract other than an award agreement.
8.4 PLAN NOT FUNDED. Awards payable under this Plan shall be payable in Plan Shares or from the general assets of the Corporation, and no special or separate reserve, fund or deposit shall be made to assure payment of such awards. No participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including Plan Shares, except as expressly otherwise provided) of any member of the Group by reason of any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between any member of the Group and any participant, beneficiary or other person. To the extent that a participant, beneficiary or other person acquires a right to receive payment pursuant to any award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Group.
8.5 TAX WITHHOLDING. Upon any exercise, vesting, or payment of any award or upon the disposition of Plan Shares acquired pursuant to the exercise of an ISO prior to satisfaction of the holding period requirements of Section 422 of the Code, the Group shall have the right at its option to:
(a) require the participant (or the participant's personal representative or beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Group may be required to withhold with respect to such award event or payment; or
(b) deduct from any amount otherwise payable in cash to the participant (or the participant's personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Group may be required to withhold with respect to such cash payment.
In any case where a tax is required to be withheld in connection with the delivery of Plan Shares under this Plan, the Administrator may in its sole discretion (subject to Section 8.1) grant (either at the time of the award or thereafter) to the participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, to have the Corporation reduce the number of Plan Shares to be delivered by (or otherwise reacquire) the appropriate number of Plan Shares, valued in a consistent manner at their fair market value or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy the minimum applicable withholding obligation on exercise, vesting or payment. In no event shall the Plan Shares withheld exceed the minimum whole number of shares required for tax withholding under applicable law. The Corporation may, with the Administrator's approval, accept one or more promissory notes from any Eligible Person in connection with taxes required to be
withheld upon the exercise, vesting or payment of any award under this Plan; provided that any such note shall be subject to terms and conditions established by the Administrator and the requirements of applicable law.
8.6 EFFECTIVE DATE, TERMINATION AND SUSPENSION, AMENDMENTS.
8.6.1 EFFECTIVE DATE. This Plan is effective as of January 3, 2004, the date of its approval by the Board (the "EFFECTIVE DATE"). This Plan shall be submitted for and subject to shareholder approval no later than twelve months after the Effective Date. Unless earlier terminated by the Board, this Plan shall terminate at the close of business on the day before the tenth anniversary of the Effective Date. After the termination of this Plan either upon such stated expiration date or its earlier termination by the Board, no additional awards may be granted under this Plan, but previously granted awards (and the authority of the Administrator with respect thereto, including the authority to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.
8.6.2 BOARD AUTHORIZATION. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan.
8.6.3 SHAREHOLDER APPROVAL. To the extent then required by applicable law or any applicable listing agency or required under Sections 162, 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to shareholder approval.
8.6.4 AMENDMENTS TO AWARDS. Without limiting any other express authority of the Administrator under (but subject to) the express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on awards to participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a participant, and (subject to the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and conditions of awards. Any amendment or other action that would constitute a repricing of an award is subject to the limitations set forth in Section 3.2(g).
8.6.5 LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS. No amendment, suspension or termination of this Plan or change of or affecting any outstanding award shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the participant or obligations of the Group under any award granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not be deemed to constitute changes or amendments for purposes of this Section 8.6.
8.7 PRIVILEGES OF SHARE OWNERSHIP. Except as otherwise expressly authorized by the Administrator or this Plan, a participant shall not be entitled to any privilege of share ownership as to any Plan Shares not actually delivered to and held of record by the participant. No adjustment will be made for dividends or other rights as a shareholder for which a record date is prior to such date of delivery.
8.8 GOVERNING LAW; CONSTRUCTION; SEVERABILITY.
8.1.1 CHOICE OF LAW. This Plan, the awards, all documents evidencing awards and all other related documents shall be governed by, and construed in accordance with the laws of the Hong Kong Special Administrative Region, People's Republic of China.
8.1.2 SEVERABILITY. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.
8.1.3 PLAN CONSTRUCTION. Awards under Section 5.1.4 to persons
described in Section 5.2 that are either granted or become
vested, exercisable or payable based on attainment of one or more
performance goals related to the Business Criteria, as well as
Qualifying Options and Qualifying Stock Appreciation Rights
granted to persons described in Section 5.2, that are approved by
a committee composed solely of two or more outside directors (as
this requirement is applied under Section 162(m) of the Code)
shall be deemed to be intended as performance-based compensation
within the meaning of Section 162(m) of the Code unless such
committee provides otherwise at the time of grant of the award.
It is the further intent of the Group that (to the extent the
Group or awards under this Plan may be or become subject to
limitations on deductibility under Section 162(m) of the Code)
any such awards and any other Performance-Based Awards under
Section 5.2 that are granted to or held by a person subject to
Section 162(m) will qualify as performance-based compensation or
otherwise be exempt from deductibility limitations under Section
162(m).
8.2 CAPTIONS. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.
8.3 STOCK-BASED AWARDS IN SUBSTITUTION FOR STOCK OPTIONS OR AWARDS GRANTED BY OTHER CORPORATION. Awards may be granted to Eligible Persons under this Plan in substitution for or in connection with an assumption of employee stock options, stock appreciation rights, restricted stock or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Group, in connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Group, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need not comply with other specific terms of this Plan, provided the awards reflect only adjustments giving effect to the assumption or substitution consistent with
the conversion applicable to the Plan Shares in the transaction and any change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Corporation, as a result of the assumption by the Corporation of, or in substitution for, outstanding awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by any member of the Group in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of Plan Shares available for issuance under this Plan.
8.4 NON-EXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant awards or authorize any other compensation, with or without reference to the Plan Shares, under any other plan or authority.
8.5 NO CORPORATE ACTION RESTRICTION. The existence of this Plan, the award
agreements and the awards granted hereunder shall not limit, affect or
restrict in any way the right or power of the Board or the
shareholders of the Corporation to make or authorize: (a) any
adjustment, recapitalization, reorganization or other change in the
capital structure or business of the Corporation or any subsidiary,
(b) any merger, amalgamation, consolidation or change in the ownership
of the Corporation or any subsidiary, (c) any issue of bonds,
debentures, capital, preferred or prior preference stock ahead of or
affecting the capital stock (or the rights thereof) of the Corporation
or any subsidiary, (d) any dissolution or liquidation of the
Corporation or any subsidiary, (e) any sale or transfer of all or any
part of the assets or business of the Corporation or any subsidiary,
or (f) any other corporate act or proceeding by the Corporation or any
subsidiary. No participant, beneficiary or any other person shall have
any claim under any award or award agreement against any member of the
Board or the Administrator, or the Corporation or any employees,
officers or agents of the Corporation or any subsidiary, as a result
of any such action.
8.6 OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits received by a participant under an award made pursuant to this Plan shall not be deemed a part of a participant's compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any subsidiary, except where the Administrator expressly otherwise provides or authorizes in writing. Awards under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation or its subsidiaries.
CHINA FINANCE ONLINE CO., LTD.
2004 STOCK INCENTIVE PLAN
FORM OF [EMPLOYEE] STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") dated
_____________________ by and between CHINA FINANCE ONLINE CO., LTD., a company
formed under the laws of Hong Kong Special Administration Region, P.R. China
(the "CORPORATION"), and ___________________________ (the "GRANTEE") evidences
the nonqualified stock option (the "OPTION") granted by the Corporation to the
Grantee as to the number of the Corporation's Ordinary Shares first set forth
below.
NUMBER OF ORDINARY SHARES:(FN 1) __________ AWARD DATE: ______________________
EXERCISE PRICE PER SHARE:(FN 1) $__________ EXPIRATION DATE:(FN 1),(FN 2) ____
VESTING(FN 1),(FN 2) The Option shall become vested as to [__]% of the total number of Ordinary Shares subject to the Option on each of the first, second, third and fourth anniversaries of the Award Date.
The Option is granted under the CHINA FINANCE ONLINE CO., LTD. 2004 Stock Incentive Plan (the "PLAN") and subject to the Terms and Conditions of Stock Option (the "TERMS") attached to this Option Agreement (incorporated herein by this reference) and to the Plan. The Option has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. Capitalized terms are defined in the Plan if not defined herein. The parties agree to the terms of the Option set forth herein. The Grantee acknowledges receipt of a copy of the Terms, the Plan and the Prospectus for the Plan.
"GRANTEE" CHINA FINANCE ONLINE CO., LTD. ------------------------------------- By: Signature ------------------------------------ Print Name: ---------------------------- ------------------------------------- Title: Print Name --------------------------------- ---------- |
1. Subject to adjustment under Section 7.1 of the Plan.
2. Subject to early termination under Section 4 of the Terms and Section 7.4 of the Plan.
TERMS AND CONDITIONS OF STOCK OPTION
1. VESTING; LIMITS ON EXERCISE.
The Option shall vest and become exercisable in percentage installments of the aggregate number of shares subject to the Option as set forth on the cover page of this Option Agreement. The Option may be exercised only to the extent the Option is vested and exercisable.
- Cumulative Exercisability. To the extent that the Option is vested and exercisable, the Grantee has the right to exercise the Option (to the extent not previously exercised), and such right shall continue, until the expiration or earlier termination of the Option.
- No Fractional Shares. Fractional share interests shall be disregarded, but may be cumulated.
- Minimum Exercise. No fewer than [__](FN 1) Ordinary Shares may be purchased at any one time, unless the number purchased is the total number at the time exercisable under the Option.
- Nonqualified Stock Option. The Option is a nonqualified stock option and is not, and shall not be, an incentive stock option within the meaning of Section 422 of the Code.
2. CONTINUANCE OF EMPLOYMENT/SERVICE REQUIRED; NO EMPLOYMENT/SERVICE COMMITMENT.
The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Option and the rights and benefits under this Option Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 4 below or under the Plan.
Nothing contained in this Option Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Subsidiaries, affects the Grantee's status, if he or she is an employee, as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or service, or affects the right of the Corporation or any Subsidiary to increase or decrease the Grantee's other compensation.
3. METHOD OF EXERCISE OF OPTION.
The Option shall be exercisable by the delivery to the Secretary of the Corporation (or such other person as the Committee may require pursuant to such administrative exercise procedures as the Committee may implement from time to time) of:
- a written notice, in the form approved by the Company, stating the number of Ordinary Shares to be purchased pursuant to the Option or by the completion of such other administrative exercise procedures as the Committee may require from time to time,
- payment in full for the Exercise Price of the shares to be purchased in cash, check or by electronic funds transfer to the Corporation, or (subject to compliance with all applicable laws, rules, regulations and listing requirements and further subject to such rules as the Administrator may adopt as to any non-cash payment) by notice and third party payment in such manner as may be authorized by the Administrator or in Ordinary Shares already owned by the Grantee, valued at their Fair Market Value on the exercise date, provided, however, that any shares initially acquired upon exercise of a stock option or otherwise from the Corporation must have been owned by the Grantee for at least six (6) months before the date of such exercise;
- any written statements or agreements required pursuant to Section 8.1 of the Plan; and
- satisfaction of the tax withholding provisions of Section 8.5 of the Plan.
4. EARLY TERMINATION OF OPTION.
4.1 POSSIBLE TERMINATION OF OPTION UPON CHANGE IN CONTROL. The Option is subject to termination in connection with a Change in Control Event or certain similar reorganization events as provided in Section 7.4 of the Plan.
4.2 TERMINATION OF OPTION UPON A TERMINATION OF GRANTEE'S EMPLOYMENT OR SERVICES. Subject to earlier termination on the Expiration Date of the Option or pursuant to Section 4.1 above, if the Grantee ceases to be employed by or ceases to provide services to the Corporation or a Subsidiary, the following rules shall apply (the last day that the Grantee is employed by or provides services to the Corporation or a Subsidiary is referred to as the Grantee's "SEVERANCE DATE"):
- other than as expressly provided below in this Section 4.2, the
Grantee will have until the date that is [__] days after his or her
Severance Date to exercise the Option (or portion thereof) to the
extent that it was vested on the Severance Date, (b) the Option, to
the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the
[__]-day period following the Severance Date and not exercised during
such period, shall terminate at the close of business on the last day
of the [__]-day period;
- if the termination of the Grantee's employment or service is the
result of the Grantee's voluntary Retirement (as defined below and
other than a termination by the Corporation or a Subsidiary for cause
as provided below), then the Grantee will have until the date that is
[__] years after his or her Severance Date to exercise the Option (or
portion thereof) to the extent that it was vested on the Severance
Date, (b) the Option, to the extent not vested on the Severance Date,
shall terminate on the Severance Date, and (c) the Option, to the
extent exercisable for the [__]-year period following the Severance
Date and not exercised during such period, shall terminate at the
close of business on the last day of the [__]-year period;
- if the termination of the Grantee's employment or service is the result of the Grantee's death or Disability (as defined below), then the Grantee (or his beneficiary or personal representative, as the case may be) will have until the date that is [__] years after the
Grantee's Severance Date to exercise the Option, (b) the Option, to
the extent not vested on the Severance Date, shall terminate on the
Severance Date, and (c) the Option, to the extent exercisable for the
[__]-year period following the Severance Date and not exercised during
such period, shall terminate at the close of business on the last day
of the [__]-year period;
- if the termination of the Grantee's employment or service is the result of a termination by the Corporation or a Subsidiary for Cause (as defined below), the Option (whether vested or not) shall terminate on the Severance Date.
For purposes of the Option, "Disability" means a permanent disability (within the meaning of Section 22(e)(3) of the Code or as otherwise determined by the Administrator). For purposes of the Option, "Retirement" means a termination of employment or service by the Grantee that occurs upon or after the Grantee's attainment of age 65 and in accordance with the retirement policies of the Corporation (or the Subsidiary that employs the Grantee) then in effect. For purposes of the Option, "Cause" means that the Grantee: (a) has been repeatedly negligent in the discharge of his or her duties to the Corporation or a Subsidiary or has refused to perform stated or assigned duties (other than by reason of a disability or analogous condition); (b) has been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information; (c) has breached a fiduciary duty, or violated any other duty, law, rule, regulation or policy of the company or an affiliate; (d) has been convicted of, or plead guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations or similar offenses); (e) has materially breached any of the provisions of any agreement with the Corporation or a Subsidiary; (f) has engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the Corporation or a Subsidiary; or has improperly induced a vendor or customer to break or terminate any contract with the Corporation or a Subsidiary or induced a principal for whom the Corporation or a Subsidiary acts as agent to terminate such agency relationship.
In all events the Option is subject to earlier termination on the Expiration Date of the Option or as contemplated by Section 4.1. The Administrator shall be the sole judge of whether the Grantee continues to render employment or services for purposes of this Option Agreement.
5. NON-TRANSFERABILITY.
The Option and any other rights of the Grantee under this Option Agreement or the Plan are nontransferable and exercisable only by the Grantee, except as set forth in Section 5.7 of the Plan. Any Ordinary Shares issued on exercise of the Option are subject to substantial restrictions on transfer, and are subject to other rights in favor of the Corporation as set forth herein.
6. SECURITIES LAW COMPLIANCE.
The Grantee acknowledges that the Option and Ordinary Shares are not being registered under the Securities Act, based, in part, in reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act of 1933, and a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Grantee, by executing this Option Agreement, hereby makes the following representations to the Corporation and acknowledges that the Corporation's reliance on federal and
state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:
- The Grantee is acquiring the Option and, if and when he/she exercises the Option, will acquire Ordinary Shares solely for the Grantee's own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the shares within the meaning of the Securities Act, or other applicable state securities laws.
- The Grantee has had an opportunity to ask questions and receive answers from the Corporation regarding the terms and conditions of the Option and the restrictions imposed on any Ordinary Shares purchased upon exercise of the Option. The Grantee has been furnished with, and/or has access to, such information as he or she considers necessary or appropriate for deciding whether to exercise the Option and purchase Ordinary Shares. However, in evaluating the merits and risks of an investment in the Ordinary Shares, the Grantee has and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors.
- The Grantee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Ordinary Shares to an amount in excess of the Exercise Price, and that any investment in common shares of a closely held corporation such as the Corporation is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.
- The Grantee understands that any Ordinary Shares acquired on exercise of the Option will be characterized as "restricted securities" under the federal securities laws, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act, as presently in effect, with which the Grantee is familiar.
- The Grantee has read and understands the restrictions and limitations set forth in the Plan, this Option Agreement (including these Terms), which are imposed on the Option and any Ordinary Shares which may be acquired upon exercise of the Option.
- At no time was an oral representation made to the Grantee relating to the Option or the purchase of Ordinary Shares and the Grantee was not presented with or solicited by any promotional meeting or material elating to the Option or the Ordinary Shares.
7. LOCK-UP AGREEMENT.
Neither the Grantee (nor any permitted transferee) may, directly or indirectly,
offer, sell or transfer or dispose of any of the Ordinary Shares acquired upon
exercise of the Option (the "SHARES") or any interest therein (or agree to do
any thereof) (collectively, a "TRANSFER") during the period commencing as of
[__] days prior to and ending one year, or such lesser period of time as the
relevant underwriters may permit, after the effective date of a registration
statement covering any public offering of the Corporation's securities of which
the Grantee has notice. (The term "Grantee" includes, where the context so
requires, any permitted direct or indirect transferee of the
Grantee.) The Grantee shall agree and consent to the entry of stop transfer instructions with the Corporation's transfer agent against the Transfer of the Corporation's securities beneficially owned by the Grantee and shall conform the limitations hereunder by agreement with and for the benefit of the relevant underwriters by a lock-up agreement or other agreement in customary form. Notwithstanding anything else herein to the contrary, this Section 7 shall not be construed so as to prohibit the Grantee from participating in a registration or a public offering of the Ordinary Shares with respect to any shares which he or she may hold at that time, provided, however, that such participation shall be at the sole discretion of the Board.
8. NOTICES.
Any notice to be given under the terms of this Option Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the address last reflected on the Corporation's payroll records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 6.
9. PLAN.
The Option and all rights of the Grantee under this Option Agreement are subject to, and the Grantee agrees to be bound by, all of the terms and conditions of the Plan, incorporated herein by this reference. In the event of a conflict or inconsistency between the terms and conditions of this Option Agreement and of the Plan, the terms and conditions of the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan and this Option Agreement (including these Terms). The Grantee acknowledges having read and understanding the Plan and this Option Agreement. Unless otherwise expressly provided in other sections of this Option Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.
10. ENTIRE AGREEMENT.
This Option Agreement (including these Terms) and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Option Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.
11. GOVERNING LAW.
This Option Agreement shall be governed by and construed and enforced in accordance with the laws of Hong Kong without regard to conflict of law principles thereunder.
12. EFFECT OF THIS AGREEMENT.
Subject to the Corporation's right to terminate the Option pursuant to Section 7.4 of the Plan, this Option Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation. The Option does not place any limit on the corporate authority of the Corporation as set forth in Section 8.12 of the Plan.
13. COUNTERPARTS.
This Option Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
14. SECTION HEADINGS.
The section headings of this Option Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
Exhibit 4.7
FRAMEWORK AGREEMENT
[Translated from the Chinese original]
FRAMEWORK AGREEMENT ON EXERCISING PURCHASE OPTION
The framework agreement is entered into as of the date of November 20, 2006 in Beijing by and among the following parties:
PARTY A: CHINA FINANCE ONLINE CO., LTD.
REGISTERED ADDRESS: UNIT C, 8/F, EAST WING, SINCERE INSURANCE BUILDING 4-6, HENNESSY ROAD, HONG KONG SAR, CHINA
PARTY B: NING JUN
ADDRESS: NO. 655-43 JIEFANG ROAD, DALIAN, LIAONING PROVINCE, CHINA
ID NO.: __________________
PARTY C: CHEN WU
ADDRESS: ROOM 616, TOWER A, COFCO PLAZA, 8 JIANGUOMENNEI DAJIE, BEIJING, CHINA
ID NO: __________________
PARTY D: ZHAO ZHIWEI
ADDRESS: FLOOR 9, TOWER C, CORPORATE SQUARE, NO. 35 FINANCIAL STREET, XICHENG DISTRICT, BEIJING, CHINA
ID NO. : __________________
PARTY E: BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO., LTD.
REGISTER ADDRESS: ROOM 615, PING'AN MANSION, NO. 23 FINANCIAL STREET, XICHENG
DISTRICT, BEIJING, CHINA
POSTAL CODE: 100032
PARTY F: CHINA FINANCE ONLINE (BEIJING) CO., LTD.
REGISTERED ADDRESS: ROOM 610B, PING'AN MANSION, NO. 23 FINANCIAL STREET, XICHENG
DISTRICT, BEIJING, CHINA
POSTAL CODE: 100032
WHEREAS:
1. Party B and Party C are current shareholders of Party E which have made registrations at the Administration of Industry and Commerce authorities, and each
FRAMEWORK AGREEMENT
holding 45% and 55% shares in Party E respectively;
2. Party A is a limited liability company duly organized and validly existing under the laws of Hong Kong Special Administration Region of the People's Republic of China, and through its wholly owned enterprise in China - Party F to provide technical support, strategic consultation and other relevant services to Party E;
3. To finance the investment by Party B and Party C in Party D, Party A has entered into Loan Agreements with Party B and Party C respectively on May 27, 2004, providing Party B and Party C with loans of RMB 1,350,000 and RMB 1,650,000, respectively. Pursuant to the Loan Agreement, Party B and Party C has invested the full amount of the loans in Party D's registered capital;
4. As the consideration for the loans provided by Party A to Party B and Party C, Party B and Party C entered into a Purchase Option and Cooperation Agreement ("Purchase Option Agreement") with Party A, Party E and Party F on May 27, 2004, granting Party A the exclusive option to purchase all or part of shares/assets in Party E holding by both parties or either party of Party B and Party C at any time, in accordance with China laws;
5. For making securities of the payment obligations of Party E under numerous agreements executed between Party E and Party F, Party B and Party C entered into a Share Pledge Agreement ("Pledge Agreement") with Party F on May 27, 2004, pledging their respective shares in Party E to Party F;
6. Party A is intended to exercise the purchase option to purchase entire shares in Party E holding by Party B in accordance with the Purchase Option Agreement, and designates Party D as the subject to exercise the aforesaid purchase option.
THEREFORE, in accordance with the principle of sincere cooperation, mutual benefit and joint development, through friendly negotiation, the Parties hereby enter into the following agreements:
1. EXERCISE OF THE PURCHASE OPTION
1.1. Party A hereby authorizes Party D in accordance with the purchase option granted to Party A under Article 2.1 of the Purchase Option Agreement, and Party D agrees to accept the aforesaid authorization, on behalf of Party A, to purchase entire shares in Party E holding by Party B in accordance with the conditions stipulated in the Purchase Option Agreement.
1.2. In accordance with Article 4 under the Purchase Option Agreement, the purchase price of entire shares in Party E holding by Party B, purchased by Party D in accordance with Party A's authorization, shall be the sum of the loan principal lent by Party A to Party B, which is equivalent to RMB 1,350,000. ("Purchase Price").
2. SHARE TRANSFER
2.1. Party B shall enter into a Share Transfer Agreement with Party D, in accordance
FRAMEWORK AGREEMENT
with the content and form of Appendix II hereto, within thirty (30) days after receiving exercise notice from Party A ("Appendix I"), in accordance with Article 2.3 of the Purchase Option Agreement, and other documents required to make change registrations at industrial and commerce authorities.
2.2. Party C hereby agrees to waive its shareholder's first right of refusal for the shares in Party E holding by Party B, which is enjoyed by Party C in accordance with articles of association of Party E or relevant laws and regulations.
3. LOAN ARRANGEMENTS
3.1. The purchase price of entire shares in Party E holding by Party B, purchased by Party D shall be contributed in full amount by Party A. However, Party D shall enter into a loan agreement with Party A to the satisfaction of Party A, in accordance with the content and form of Appendix III hereto.
3.2. Party D agrees and irrevocably instructs Party A to pay the aforesaid loan provided to Party D, which used to purchase Party B's shares, directly to Party B, in accordance with the conditions and terms stated in the frame agreement.
3.3. Party B agrees to contribute its entire income obtained from selling the shares in Party E in accordance with the agreement, to perform its repayment obligations to Party A under the Loan Agreement. The Loan Agreement between Party B and Party A will be terminated when Party B pay off all the loans in accordance with Article 4.2 hereof.
4. PAYMENT AND OBLIGATION SET-OFF
4.1. In accordance with article 3.2 hereof, the parties agree the purchase price shall be paid by Party A to Party B directly, at the day of share change registration procedures at industrial and commerce authorities are completed, concerning entire shares in Party E holding by Party B, purchased by Party D ("registration day"). Whereas Party B shall pay off all the loans when Party A exercises the purchase option, in accordance with article 1.1 of Loan Agreement, Party A and Party B agree the aforesaid payment made by Party A to Party B will then be set off by the loan principal which shall be paid by Party B to Party A under the Loan Agreement. As the aforesaid set-off is completed, Party A is not required to make any other payments to Party B for the purpose of paying for the purchase price, and Party B is not required to make any other payments to Party A for the purpose of repaying the loan.
4.2. Notwithstanding the foregoing agreement, when the set-off is completed, Party B shall issue a receipt to Party D for all purchase price it received ("Party B's receipt", as Appendix IV hereto), and shall expressly acknowledge Party D's payment obligation under the Share Transfer Agreement has been carried out. Party A shall issue immediately a receipt to Party B for entire loan principal it received ("Party A's receipt", as Appendix V hereto) after Party B have issued the aforesaid party B's receipt, and shall expressly acknowledge Party B's payment obligation under the Loan Agreement has been carried out.
5. CHANGE OF PURCHASE OPTION AGREEMENT
5.1. The parties agree that, as one prerequisite to Party A's contribution of purchase price to Paty D, Party D shall enter into a new purchase option and cooperation
FRAMEWORK AGREEMENT
agreement with Party A, Party C, Party E and Party F, in accordance with the content and form stipulated in Appendix VI hereto, at the date of the execution of the Share Transfer Agreement.
5.2. Except as otherwise stated or agreed by the parties, all obligations of Party B under the original Purchase Option Agreement will be terminated at the registration day.
6. CHANGE OF PLEDGE AGREEMENT
6.1. The parties agree that, as one prerequisite to Party A's contribution of purchase price to Paty D, Party D shall enter into a new pledge agreement with Party C, Party F and Party A, in accordance with the content and form stipulated in Appendix VII hereto, at the date of the execution of the Share Transfer Agreement.
6.2. The original Pledge Agreement will be terminated at registration day. Except as otherwise stated or agreed by the parties, all obligations of Party B under the original Pledge Agreement will be terminated at the registration day.
7. CONFIDENTIALITY
Without prior approval of the parties, any party shall keep confidential
the content of the agreement, and shall not disclose to any other person the
content of the agreement or make any public disclosure of the content hereof.
However, the article does not make any restrictions on (i) any disclosure made
in accordance with relevant laws or regulations of any stock exchange market;
(ii) any disclosed information which may be obtained through public channels,
and is not caused so by the defaulting of the disclosing party; (iii) any
disclosure to shareholders, legal consultants, accountants, financial
consultants and other professional consultants of any parties; or (iv)
disclosure made to one party's potential buyer of shares/assets, other
investors, debt or share financing providers, and the receiving party shall make
proper confidentiality undertakings (in the event that the transfer party is not
Party A, the approval from Party A shall be obtained as well).
8. NOTIFICATION
8.1. Any notice, request, requirement and other correspondences required by the agreement or made in accordance with the agreement, shall be made in written form and sent to the addresses of the parties first above written herein.
8.2. Notices hereunder shall be sent to the other party's address and/or number, by ways of personal delivery, prepaid registered airmail, acknowledged carrier or fax. Such notices shall be deemed to have been effectively given on the following dates: (1) notices delivered by person shall be deemed to have been effectively served on the date of personal delivery; (2) notices sent by prepaid registered airmail shall be deemed to have been effectively served on the seventh day after the day they were delivered for mailing (as indicated by the postmark); (3) notices sent by courier service shall be deemed to have been effectively served on the third day after they were delivered to an acknowledged courier; (4) notices sent by facsimile shall be deemed to have been effectively served on the first working day after being transmitted.
FRAMEWORK AGREEMENT
9. DISPUTE RESOLUTION
9.1. Any dispute arises from the interpretation or performance of terms hereof by the parties, shall be settled through friendly consultation. If the parties fail to make an written agreement after consultation, the dispute shall be submitted for arbitration in accordance with the agreement. The arbitration shall be final and exclusive. Unless otherwise expressly stipulated herein, any party waives expressly its right to submit a dispute to court for a legal action, and the waiver is irrevocable.
9.2. The arbitration shall be submitted to China International Economic and Trade Arbitration Committee ("Arbitration Committee") to be arbitrated in accordance with then-in-force arbitration rules. The place of arbitration shall be Beijing. Unless otherwise stipulated in the arbitration award, the arbitration fee (including reasonable attorney fees and expenses) shall be borne by the losing party.
10. SUPPLEMENTARY PROVISIONS
10.1. The failure or delay of any party hereof to exercise any right hereunder shall not be deemed as a waiver thereof, nor any single or partial exercise of any right preclude further exercise thereof in future by the party.
10.2. The headings of articles herein are provided for the purpose of index. Such headings shall in no event be used or affected interpretations of the terms herein.
10.3. The conclusion, effectiveness, interpretation of the agreement and the settlement of disputes in connection therewith, shall be governed by laws of Hong Kong Special Administration Region of the People's Republic of China.
10.4. Each party hereunder concludes the agreement with legal purpose. Each term hereof is severable and independent from the others. If at any time one or more of such terms is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining terms hereof shall not in any way be affected thereby; and the parties shall make every endeavor to negotiate and arrive at new terms to substitute the invalid, illegal and unenforceable terms, and preserve as near as possible business purposes of the original terms.
10.5. Upon the effectiveness of the agreement, the parties shall fully perform the agreement. Any modifications of the agreement shall only be effective in written form, through consultations of the parties, and obtained necessary authorization and approval by Party A, Party E and Party F respectively (including Party A shall obtain approval from its board's auditing committee conforming to Sarbanes-Oxley Act and NASDAQ rules or other independent organizations).
10.6. Matters not covered in the agreement shall be dealt with in a supplementary agreement, and annexed hereto. The supplementary agreement shall have the same legal force as the agreement.
FRAMEWORK AGREEMENT
10.7. The agreement is executed in six original copies, and are equally authentic. Each party hereto shall hold one copy.
10.8. The agreement shall be effective upon execution.
(The reminder of this page is intentionally left blank.)
FRAMEWORK AGREEMENT
[Signature page, no body text]
THE FRAME AGREEMENT IS EXECUTED BY THE FOLLOWING PARTIES:
PARTY A: CHINA FINANCE ONLINE CO., LTD.
SEAL: /S/ COMPANY SEAL ------------------------------- AUTHORIZED REPRESENTATIVE (SIGNATURE): |
PARTY B: NING JUN
(SIGNATURE): /S/ JUN NING ------------------------ |
PARTY C: CHEN WU
(SIGNATURE): /S/ WU CHEN ------------------------ |
PARTY D: ZHAO ZHIWEI
(SIGNATURE): /S/ ZHIWEI ZHAO ------------------------ |
PARTY E: BEIJING FUHUA INNOVATION
TECHNOLOGY DEVELOPMENT CO., LTD.
SEAL: /S/ COMPANY SEAL ------------------------------- AUTHORIZED REPRESENTATIVE (SIGNATURE): |
PARTY F: CHINA FINANCE ONLINE
(BEIJING) CO., LTD.
SEAL: /S/ COMPANY SEAL ------------------------------- AUTHORIZED REPRESENTATIVE (SIGNATURE): |
Exhibit 4.8
SHARE TRANSFER CONTRACT
IN RELATION TO SHARES IN
BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO.,LTD.
THE TRANSFEROR: NING JUN
AND
THE TRANSFEREE: ZHAO ZHIWEI
NOVEMBER 20, 2006
TABLE OF CONTENT
ARTICLE 1 DEFINITIONS..................................................... 1 1.1 Definitions..................................................... 1 1.2 Interpretation.................................................. 2 ARTICLE 2 TRANSFER........................................................ 2 ARTICLE 3 CONSIDERATION................................................... 2 ARTICLE 4 TERM AND TERMINATION............................................ 2 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR................ 3 ARTICLE 6 NOTICES......................................................... 3 ARTICLE 7 GOVERNING LAW AND DISPUTE RESOLUTION............................ 3 7.1 Governing Law................................................... 3 7.2 Arbitration..................................................... 3 ARTICLE 8 MISCELLANEOUS................................................... 4 8.1 Further Assurance............................................... 4 8.2 Non-Assignability............................................... 4 8.3 Waivers......................................................... 4 8.4 Amendments...................................................... 4 8.5 Severability.................................................... 4 8.6 Entire Agreement................................................ 5 8.7 Force Majeure................................................... 5 8.8 Successors and Assigns.......................................... 5 8.9 Counterparts.................................................... 6 8.10 Signature and Language.......................................... 6 8.11 Third Party Agreements.......................................... 6 8.12 No Third Party Beneficiaries.................................... 6 |
SHARE TRANSFER CONTRACT
This Share Transfer Contract is entered into by the following Parties on November 20, 2006:
(1) NING JUN (the "TRANSFEROR"),
Address: 655-43, Jiefang Road, Dalian City, Liaoning Province, P.R.China ID Number: __________; and (2) ZHAO ZHIWEI, (the "TRANSFEREE") Address: 9th Floor of Tower C, Corporate Square, 35 Financial Street, Xicheng District, Beijing 100032, P.R.China ID Number: _________ |
WHEREAS:
1. Fuhua Innovation Technology Development Co., Ltd. (the "Company") is a limited liability company duly organized and validly existing under the laws of China, and its registered capital is RMB 3,000,000.
2. The Transferor is a shareholder of the Company, and the beneficiary owner of 45% of equity shares of the Company, and contributed its full investment in accordance with laws.
3. The Transferor intends to sell to the Transferee, and the Transferee intends to purchase from the Transferor, all shares of the Company owned by the Transferor, representing 45% of the total share capital of the Company.
THEREFORE, after friendly consultations conducted in accordance with the principles of equality, the Transferor and the Transferee hereby agree as follows:
ARTICLE 1 DEFINITIONS
1.1 Definitions
The following terms as used in this Contract shall have the meanings set forth below unless otherwise specified herein:
(1) CONTRACT: shall mean this Share Transfer Contract;
(2) SHARES: shall mean all shares of the Company owned by the Transferor, representing 45% of the total share capital of the Company;
(3) RMB: shall mean the lawful currency of China;
(4) PRC/CHINA: shall mean the People's Republic of China which, for the purposes of this Contract, does not include the
Hong Kong Special Administrative Regions, the Macau Special Administrative Region, and Taiwan.
1.2 Interpretation
(1) The articles of the Whereas clause and the Schedule of this Contract form an integral part of this Contract and shall have the same effect as if set out in the body of this Contract. References to this Contract shall be construed as this Contract in its form as so supplemented, revised, altered, or amended, and shall include their articles under the Whereas section and Schedules;
(2) The headings of each article and schedule are for convenience of reference only and shall not affect or restrict the meaning or interpretation of this Contract;
(3) Each of the Transferor and the Transferee is also be referred to as "a Party" and collectively as "the Parties" to this Contract; and
ARTICLE 2 TRANSFER
Subject to the terms and conditions of this Contract, the Transferor agrees to sell the Shares to the Transferee, and the Transferee agrees to purchase the Shares from the Transferor.
ARTICLE 3 CONSIDERATION
Both Parties agree after negotiation that the consideration for the transfer of the Shares shall be an aggregate of the RMB 1,350,000.
ARTICLE 4 TERM AND TERMINATION
4.1 This Contract and the rights and obligations of the Parties to this Contract shall take effect upon the execution of this Contract and shall continue in full force and effect unless earlier terminated as provided herein.
4.2 This Contract may be terminated as follows:
(1) The Parties unanimously agree to terminate this Contract through consultation.
(2) If any Party enters into any voluntary or involuntary bankruptcy proceedings unless the same are dismissed within 90 days after their commencement or such Party is declared bankrupt by courts or any other Governing Authorities, any of the other Parties may terminate this Contract upon written notice to such Party.
(3) This Contract may be terminated due to the occurrence of any event of Force Majeure.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
5.1 The execution and performance by the Transferor of this Contract does not contravene any law or contract binding on it.
5.2 The Transferor is the legal owner of the Shares and has full legal right, power and authority to enter into this Contract, and to perform all its obligations hereunder.
5.3 As of the Execution Date, the Company is duly incorporated and validly existing. All required approval and permission relating to the production and operations have been properly obtained. To the knowledge of the Transferor in its capacity as the controlling shareholder of the Company, the Company is not in material violation of any statute, rule or regulation and is not subject to any ongoing or potential litigation, arbitration, or disputes.
ARTICLE 6 NOTICES
Any and all notices, requests, demands and other communications required or
otherwise contemplated to be made under this Contract shall be in writing and in
English and Chinese and shall be provided by one or more of the following means,
and the effective date thereof shall be deemed to be (a) when received, if
delivered personally, (b) on the date of transmission with receipt of a
transmittal confirmation, if transmitted by facsimile, or (c) on the fourth
(4th) Business Day following the date of deposit with a courier service, or such
earlier delivery date as may be confirmed in writing to the sender by a courier
service, if sent by EMS or other courier service. All such notices, requests,
demands and other communications shall be addressed as follows or as a Party may
notify the other Party from time to time:
Transferor: Ning Jun Address: 655-43, Jiefang Road, Dalian City, Liaoning Province, P.R.China Telephone: [__________] Fax: [__________] Transferee: Zhao Zhiwei Address: Floor 9 of Tower C, Corporate Square, 35 Financial Street, Xicheng District, Beijing 100032, P.R.China Telephone: [__________] Fax: [__________] |
ARTICLE 7 GOVERNING LAW AND DISPUTE RESOLUTION
7.1 Governing Law
This Contract shall be governed by and construed under the laws of China.
7.2 Arbitration
Any dispute arising out of or in connection with, or related to, this Contract, (including any question regarding its existence, validity or termination or as to rights or obligations of the Parties hereunder) which is not settled by friendly discussions shall be referred to the Beijing Arbitration Commission for final resolution in accordance with its Arbitration Rules from time to time in force which rules are deemed to be incorporated by reference into this Article.
The Parties hereby exclude any rights of appeals to any court on the merits of the dispute subject to arbitration.
ARTICLE 8 MISCELLANEOUS
8.1 Further Assurance
During all time after the Execution Date, for the realization of the interests of the other Party, and in consummation of the Transaction described herein, each Party shall take all necessary action and execute all documents as reasonably requested by the other Party, and shall act as reasonably requested by the other Party. The Parties shall use their best efforts to cause any other third party to execute such documents and to perform such acts.
8.2 Non-Assignability
Unless otherwise agreed in writing by the Parties to this Contract, neither this Contract nor any of the rights, interests or obligations hereunder may be assigned by either of the Parties without the prior written consent of the other Party.
8.3 Waivers
No waiver of any right of a Party under this Contract will be effective unless evidenced by an instrument in writing duly executed by such Party. No failure on the part of a Party to exercise, and no delay in exercising, any of its rights hereunder will operate as a waiver thereof (for the avoidance of doubt, if the exercise of any right is subject to a term, such right shall be exercised within such term), nor will any single or partial exercise by either Party of any right preclude any other or future exercise thereof or the exercise of any other right.
8.4 Amendments
Amendments to this Contract (or documents mentioned herein) shall be made in writing and signed by the Parties or their duly authorized representatives and shall be subject to the completion of the examination and approval procedures as required by laws and regulations (if applicable).
8.5 Severability
If any provision of this Contract should be or become fully or partly invalid,
illegal or unenforceable in any respect for any reason whatsoever, such provision shall have no effect to the extent that it is invalid or unenforceable and shall be deemed to be excluded from this Contract. The validity and enforceability of the remaining provisions of this Contract shall not be impaired. The Parties shall use their best reasonable efforts to substitute such invalid or unenforceable provision with a suitable and equitable provision that serves the intent and purpose of such invalid or unenforceable provision. If the exclusion of a provision of this Contract results in the inability of the Parties to achieve the material objectives of this Contract, the Parties will negotiate in good faith to amend or terminate this Contract on mutually acceptable terms.
8.6 Entire Agreement
This Contract and the Cooperation Framework Contract constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof.
8.7 Force Majeure
"Force Majeure" shall mean unforeseeable, unavoidable and insurmountable objective conditions (such conditions include but shall not be limited to earthquakes, typhoons, flood, fire, strikes, war, or riots). If an event of Force Majeure occurs and affects a Party's performance of its obligations under this Contract, such performance shall be suspended during the period of delay caused by the Force Majeure and shall be extended, without penalty, for a period equal to such suspension. The Party claiming Force Majeure shall promptly inform the other Party in writing and shall, within seven (7) Business Days of the occurrence of the event of Force Majeure, or in the event of communication disruption, within seven (7) Business Days upon the restoration of the communication facilities, furnish the other Party by fax and by express-mail with sufficient detailed information regarding the event of Force Majeure and shall provide proof of the occurrence and duration of such Force Majeure.
If such Party claiming Force Majeure fails to notify the other Party and furnish it with proof pursuant to the above provision, such Party shall not be excused from the non-performance of its obligations hereunder. The Party so affected by the event of Force Majeure shall use the reasonable efforts to minimize the consequences of such Force Majeure and to promptly resume performance hereunder whenever the causes of such excuse are cured. Should the Party so affected by the event of Force Majeure fail to resume performance hereunder when the causes of such excuse are cured, such Party shall be liable to the other Party.
In the event of Force Majeure, the Parties shall immediately consult with each other in order to find an equitable solution and shall use all reasonable endeavours to minimize the consequences of such Force Majeure.
8.8 Successors and Assignees
This Contract is executed for the interests of the Parties and their respective successors and authorized assignees and shall be binding among them.
8.9 Counterparts
This Contract may be executed in any number of counterparts, and each counterpart, upon execution and delivery, shall constitute an original instrument, but all such separate counterparts shall constitute only one and the same instrument.
8.10 Signature and Language
This Contact shall be executed in 2 original copies in Chinese with equal validity.
8.11 Third Party Agreements
Neither Party shall make any separate agreement with any third party that is inconsistent with any of the provisions of this Contract.
8.12 No Third Party Beneficiaries
No provisions of this Contract, whether expressed or implied, are intended or shall be construed to confer upon or give to any person or entity other than the specific parties hereto any rights, remedies or other benefits under or by reason of this Contract.
(Execution Page)
IN WITNESS WHEREOF, the Parties hereto have signed this Contract as of the date first written above.
Transferor: Ning Jun
/s/ Jun Ning (signature) ------------------------- |
Transferee: Zhao Zhiwei
/s/ Zhiwei Zhao (signature) ------------------------- |
Exhibit 4.9
LOAN AGREEMENT
The Loan Agreement (the "Agreement") is entered into as of November 20, 2006 between the following two parties:
(1) CHINA FINANCE ONLINE CO., LTD. (the "Lender"), a limited liability company established and registered in Hong Kong, SAR.
REGISTERED ADDRESS: Unit C, 8/F, East Wing, Sincere Insurance Building 4-6, Hennessy Road, Hong Kong, SAR.
(2) ZHAO ZHIWEI (the "Borrower")
PRC ID NUMBER: _____________
ADDRESS: 9th Floor of Tower C, Corporate Square, 35 Financial Street,
Xicheng District, Beijing 100032, P.R.China
Lender and Borrower will each be referred to as a "Party" and collectively referred to as the "Parties."
WHEREAS, Borrower is to acquire from an existing shareholder (Mr. Ning Jun) 45% of the equity ("Fuhua Equity") of Fuhua Innovation Technology Development Co., Ltd. ("Fuhua"), a limited liability company established and registered in the People's Republic of China (the "PRC") corresponding to the registered capital contribution of RMB 1,350,000.
WHEREAS, Borrower wishes to borrow a loan from Lender to finance his investment in Fuhua and Lender agrees to provide such loan to Borrower.
NOW THEREFORE, the Parties agree as follows:
1. LOAN
1.1 Lender agrees to provide a loan to Borrower with the principal amount equal to the US Dollar equivalent of RMB 1,350,000 in accordance with the terms and conditions set forth herein (the "Loan"). Term for such loan shall be ten (10) years which may be extended upon the agreement of the Parties (the "Term"). Notwithstanding the foregoing, in the following circumstances, Borrower shall repay the Loan regardless if the Term has expired:
(1) Borrower deceases or becomes a person without legal capacity or with limited legal capacity;
(2) Borrower commits a crime or is involved in a criminal act; or
(3) Lender or its designated assignee can legally purchase Borrower's interest in Fuhua under the PRC law and Lender chooses to do so.
1.2 Borrower hereby irrevocably instructs Lender to remit the amount of the Loan direct to Ning Jun as Borrower's payment of the purchase price of the equity.
1.3 The Loan shall only be used by Borrower to acquire the equity of Fuhua. Without Lender's prior written consent, Borrower shall not use the Loan for any other purpose or transfer or pledge his interest in Fuhua to any third party.
1.4 Borrower can only repay the Loan by transferring all of his interest in Fuhua to Lender or a third party designated by Lender when such transfer is permitted under the PRC law.
1.5 In the event Borrower transfers his interest to any third party other than Lender, Borrower shall pay the full amount of the proceeds it receives from such transfer to Lender regardless if the amount of such proceeds exceeds the amount of the Loan.
1.6 Lender and Borrower hereby jointly agree and confirm that Lender has the right to, but has no obligation to, purchase or designate a third party (legal person or natural person) to purchase all or part of Borrower's interest in Fuhua at a price equal to the amount of the Loan when such purchase is allowed under the PRC law. If Lender or the third party assignee designated by Lender only purchases part of Borrower's interest in Fuhua, the purchase price shall be reduced on a pro rata basis.
1.7 In the event when Borrower transfers his interest in Fuhua to Lender or a third party transferee designated by Lender, (i) if the actual transfer price paid by Lender or the third party transferee equals or is less than the principal amount of the Loan, the Loan shall be deemed as interest free; or (ii) if the actual transfer price paid by Lender or the third party transferee is higher than the principal amount of the Loan, the amount exceeding the principal amount of the Loan shall be deemed as an interest accrued on the Loan and paid by Borrower to Lender in full.
2. CONDITIONS PRECEDENT TO DISBURSEMENT
The following conditions must be satisfied before the Loan is disbursed to Borrower:
2.1 The representation and warranties under Section 3 remain true and correct on the day when the disbursement notice is delivered to Lender and on the date the Loan is disbursed to Borrower as if such representations and warranties are made as of such dates.
2.2 Borrower has not materially breached any terms or conditions hereof.
3. REPRESENTATION AND WARRANTIES
3.1 Lender hereby represents and warrants to Borrower that:
(a) Lender is a company registered and validly existing under the laws of Hong Kong, SAR;
(b) subject to its Memorandum and Articles of Association and other organizational documents, Lender has full right, power and all necessary approvals and authorizations to execute and perform this Agreement;
(c) the execution and the performance of this Agreement will not contravene any provision of law applicable to Lender or any contractual restriction binding on or affecting him; and
(d) this Agreement shall constitute the legal, valid and binding obligations of Lender, which is enforceable against Lender in accordance with its terms upon its execution.
3.2 Borrower hereby represents and warrants to Lender that:
(a) Fuhua is a limited liability company registered and validly existing under the laws of PRC;
(b) Borrower has full right, power and all necessary and appropriate approval and authorization to execute and perform this Agreement;
(c) the execution and the performance of this Agreement will not contravene any provision of law applicable to Borrower or any contractual restriction binding on or affecting Borrower;
(d) this Agreement shall constitute the legal and valid obligations of Borrower, which is enforceable against Borrower in accordance with its terms upon its execution; and
(e) there are no legal or other proceedings before any court, tribunal or other regulatory authority pending or threatened against Borrower.
4. NOTIFICATIONS
Notice or other communications under this Agreement shall be delivered personally or sent by facsimile transmission or by registered mail to the address set forth below, except that such address has been changed in writing. The date noted on the return receipt of the registered mail is the service date of the notice if the notice is sent by registered mail; the sending date is the service date of the notice if the notice is sent personally or by facsimile transmission. The original of the notice shall be sent personally or by registered mail to the following address after the notice is sent by facsimile.
Lender: China Finance Online Co., Ltd. Address: Unit C, 8/F, East Wing Sincere Insurance Building 4-6 Hennessy Road, Hong Kong, SAR. Borrower: Zhao Zhiwei Address: 9th Floor of Tower C, Corporate Square, 35 Financial Street, Xicheng District, Beijing 100032, P.R.China |
5. CONFIDENTIALITY
The Parties acknowledge and confirm that any oral or written materials concerning this Agreement exchanged between them are confidential information. The Parties shall protect and maintain the confidentiality of all such confidential data and information and shall not disclose to any third party without the other party's written consent, except (a) the data or information that was in the public domain or later becomes published or generally known to the public, provided that it is not released by the receiving party, (b) the data or information that shall be disclosed pursuant to applicable laws or regulations, and (c) the data or information that shall be disclosed to One Party's legal counsel or financial counsel who shall also bear the obligation of maintaining the confidentiality similar to the obligations hereof. The undue disclosing of the confidential data or information of One Party's legal counsel or financial counsel shall be deemed the undue disclosing of such party who shall take on the liability of breach of this Agreement.
6. GOVERNING LAW AND SETTLEMENT OF DISPUTES
6.1 The execution, validity, interpretation, performance, implementation, termination and settlement of disputes of this Agreement shall be governed by the laws of Hong Kong, SAR.
6.2 In event of any dispute arising from or in connection with this Agreement, the Parties shall attempt to resolve the dispute through friendly consultations. In the event that satisfactory resolution is not reached within thirty (30) days after commencement of such consultation, the dispute shall be submitted (which submission may be made by either Borrower or Lender) to resolution by arbitration administered by Hong Kong International Arbitration Center(the "Center") in Hong Kong, in accordance with the procedural rules of the Center, which are in effect at the time the application for arbitration is made. The arbitral award shall be final and binding upon all parties hereto.
6.3 In case of any disputes arising out of the interpretation and performance of this Agreement or any pending arbitration of such dispute, the Parties shall continue to perform their rights and obligations under this Agreement, except that such maters are involved in the disputes.
7. MISCELLANEOUS
7.1 This Agreement can only be amended by written agreements jointly executed by the parties.
7.2 Any provision of this Agreement that is invalid or unenforceable shall not affect the validity and enforceability of any other provisions hereof.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the date and year first hereinabove set forth.
LENDER:
CHINA FINANCE ONLINE CO., LTD
/s/ company seal ---------------------------------------- By: ------------------------------------ Title: --------------------------------- |
BORROWER:
ZHAO ZHIWEI
/s/ ZHIWEI ZHAO ---------------------------------------- |
Exhibit 4.10
PURCHASE OPTION AND COOPERATION AGREEMENT
Among
CHINA FINANCE ONLINE CO., LTD.
ZHAO ZHIWEI
CHEN WU
and
BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO., LTD.
November 20, 2006
BEIJING, CHINA
PURCHASE OPTION AND COOPERATION AGREEMENT
This Purchase Option and Cooperation Agreement ("this Agreement") is entered into in Beijing, People's Republic of China (the "PRC") on this 20th day of November, 2006 by and among:
Party A: China Finance Online Co., Limited. Address: Unit C, 8/F, East Wing, Sincere Insurance Building 4-6, Hennessy Road, Hong Kong Special Administrative Region ("SAR"), China Party B: ZHAO ZHIWEI Address: 9th Floor of Tower C, Corporate Square, 35 Financial Street, Xicheng District, Beijing 100032, P.R.China ID Number: _______________ Party C: CHEN WU Address: Room 616, Tower A, COFCO Plaza, 8 Jianguomennei Dajie, Beijing, China ID Number: _______________ Party D: Beijing Fuhua Innovation Technology Development Co., Ltd. Address: Room 615, Ping'an Mansion, No. 23 Financial Street, Xicheng District, Beijing, China Party E: China Finance Online (Beijing) Co., Ltd. Address: Room 610B, Ping'an Mansion, No. 23 Financial Street, Xicheng District, Beijing, China |
WHEREAS,
(1) Party A, a company with limited liability duly organized and validly existing under the laws of the Hong Kong SAR, provides through its wholly owned subsidiary in the PRC, Party E, certain technical support, strategic consulting and other services to Party D, and currently is a major business partner of Party D;
(2) To finance the investment by Party B and Party C in Party D, Party A has entered into loan agreements (hereafter the "Loan Agreement" respectively with Party B and Party C on November 20, 2006 and May 27, 2004, providing Party B and Party C with loans of 1,350,000 RMB Yuan and 1,650,000 RMB Yuan, respectively. Pursuant to the Loan Agreement, Party B and Party C has invested the full amount of the loans in Party D's registered capital, and each holds 45% and 55% equity interests in Party D, respectively;
(3) To guarantee the payment obligations of Party D to Party E pursuant to certain
contractual agreements, Party B and Party C have entered into a share pledge agreement (hereafter the "Share Pledge Agreement") with Party E on November 20, 2006, pledging Party B's and Party C's respective Share Equity in Party D to Party E; and
(4) The Parties hereto wish to grant Party A the exclusive purchase option to acquire, at any time upon satisfaction of the requirements under the PRC law, the entire or a portion of Party D's share equity/assets owned by Party B and/or Party C. Unless expressly provided otherwise, Party E may exercise all rights granted to Party A hereunder as authorized by Party A
NOW AND THEREFORE, in accordance with the principle of sincere cooperation, mutual benefit and joint development and after friendly negotiations, the Parties hereby enter into the following agreements pursuant to the provisions of relevant laws and regulations of the PRC
ARTICLE 1 DEFINITIONS
The terms used in this Agreement shall have the meanings set forth below:
1.1. "This Agreement" means this Purchase Option and Cooperation Agreement and all appendices thereto, including written instruments as originally executed and as may from time to time be amended or supplemented by the Parties hereto through written agreements;
1.2. "The PRC" means, for the purpose of this Agreement, the People's Republic of China, excluding Hong Kong, Taiwan and Macao
1.3. "Date" means the year, month and day. In this Agreement, "within" or "no later than", when used before a year, month or day, shall always include the relevant year, month or day
ARTICLE 2 THE GRANT AND EXERCISE OF PURCHASE OPTION
2.1 The Parties hereto agree that Party A shall be granted an exclusive purchase option to acquire, at any time upon satisfaction of the requirements under applicable laws and conditions as agreed in this Agreement (including, without limitation, as under applicable laws, when Party B and/or Party C cease to be Party D's directors or employees, or Party B and/or Party C attempt to transfer their share equity in Party D to any party other than the existing shareholders of Party D; when Party C is no longer owned by IDG Technology Venture Investment, Inc. and IDG Technology Venture Investment, LP; or when neither IDG Technology Venture Investment, Inc. nor IDG Technology Venture Investment, LP is a shareholder of Party A), the entire or a portion of Party D's share equity owned by Party B and/or Party C, or the entire or portion of
the assets owned by Party D. The purchase option granted hereby shall be irrevocable during the term of this Agreement and may be exercised by Party A or any eligible entity designated by Party A.
2.2 Party A may exercise the aforesaid purchase option by delivering a written notice to any of Party B, Party C and Party D (the "Exercise Notice").
2.3 Within thirty (30) days of the receipt of the Exercise Notice, Party B, Party C or Party D (as the case may be) shall execute a share/asset transfer contract and other documents (collectively, the "Transfer Documents") necessary to effect the respective transfer of share equity or assets with Party A (or any eligible party designated by Party A).
2.4 When applicable laws permit the exercise of the purchase option provided hereunder and Party A elects to exercise such purchase option, Party B, Party C and Party D shall unconditionally assist Party A to obtain all approvals, permits, registrations, filings and other procedures necessary to effect the transfer of relevant share equity or assets.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
Each party hereto represents to the other parties that:
3.1 Each party hereto represents to the other parties that: (1) it has all the necessary rights, powers and authorizations to enter into this Agreement and perform its duties and obligations hereunder; and (2) the execution or performance of this Agreement shall not violate any significant contract or agreement to which it is a party or by which it or its assets are bounded.
3.2 Party B and Party C hereto represent to Party A and Party E that: (1).they
are both legally registered shareholders of party D and have paid Party D the
full amount of their respective portions of Party D's registered capital
required under Chinese law; (2) neither Party B nor Party C has created any
mortgage, pledge, secured interests or other form of debt liabilities over the
Share Equity other than the Pledge created under the Share Pledge Agreement; and
(3) neither Party B nor Party C has sold or will sell to any third party its
Share Equity in Party D.
3.3 Party D hereto represents to Party A and Party E that: (1) it is a limited
liability company duly registered and validly existing under the PRC law; and
(2) its business operations are in compliance with applicable laws of the PRC in
all material respect.
ARTICLE 4 EXERCISE PRICE
When it is permitted by applicable laws, Party A (or any eligible party
designated by Party A) shall have the right to acquire, at any time, all of Party D's assets or its share equity owned by Party B and Party C, at a price equal to the sum of the principles of the loans from Party A to Party B and Party C under the Loan Agreement (RMB3,000,000). If Party A (or any eligible party designated by Party A) elects to purchase a portion of Party D's share equity or assets, then the exercise price for such purpose shall be adjusted accordingly based on the percentage of such share equity or assets to be purchased over the total share equity or assets. When Party A (or a qualified entity designated by party A) is to acquire all or a portion of Party D's equity share or assets from Party B and Party C pursuant to this Agreement, Party A has the right to substitute the principle amounts Party B and Party C respectively owe Party A under the Loan Agreement for the purchase prices payable to Party B and Party C, respectively. When acquiring share equity or assets from Party B, Party C, or Party D pursuant to this Agreement, Party A shall pay an actual exercise price based on the exercise price under applicable Chinese laws or requirements of relevant authorities, if the exercise price under applicable laws or requirements of relevant authorities is higher than the exercise price under this Agreement.
ARTICLE 5 COVENANTS
The Parties further agree as follows:
5.1 Before Party A has acquired all the equity/assets of Party D by exercising the purchase option provided hereunder, Party D shall not:
5.1.1 sell, assign, mortgage or otherwise dispose of, or create any encumbrance on, any of its assets, operations or any legal or beneficiary interests with respect to its revenues (unless such sale, assignment, mortgage, disposal or encumbrance is relating to its daily operation or has been disclosed to and agreed by Party A in writing);
5.1.2 enter into any transaction which may materially affect its assets, liability, operation, equity or other legal rights (unless such transaction is relating to its daily operation or has been disclosed to and agreed by Party A in writing); and
5.1.3 distribute any dividend to its shareholders in any manner.
5.2 Before Party A has acquired all the equity/assets of Party D by exercising the purchase option provided hereunder, Party B and/or Party C shall not individually or collectively:
5.2.1 supplement, alter or amend the articles of association of Party D in any manner to the extent that such supplement, alteration or amendment may have a material effect on Party D's assets, liability, operation, equity or other legal rights (except for pro rata increase of registered capital mandated by applicable laws);
5.2.2 cause Party D enter into any transaction to the extent such transaction may have a material effect on Party D's assets, liability, operation, equity or other legal rights (unless such transaction is relating to Party D's daily operation or has been disclosed to and agreed by Party A in writing); and
5.2.3 cause Party D's board of directors adopt any resolution on distributing dividends to its shareholders.
5.3 After the execution of this Agreement, Party B and Party C (the "Principals") shall each execute and deliver a proxy to the agents (the "Agents") to the satisfaction of Party A to grant the Agents all voting rights as shareholders of Party D, including without limitations the right to appoint and elect Party D's directors, general manager and other senior officers in Party D's shareholders meetings. The initial term of such proxies shall be twenty (20) years, and the initial term shall be renewed automatically upon expiration of the proxies unless Party A notifies the Principals in writing thirty (30) days prior to the expiry date to terminate the proxies. Such proxies shall be based on the conditions that the Agents are Chinese citizens employed by Party A or Party E and shall be subject to Party A's consent. Once the Agents cease to be employed by Party A or Party A delivers a written notice to the Principals requesting the proxies to be terminated, the Principals shall revoke the relevant proxy immediately and grant the same rights as provided in the proxies to other PRC citizens employed and designed by Party A. The Agents have agreed to act with due care and diligence in exercising their rights under the proxies and indemnify and keep the Principals harmless from any loss or damages caused by any action in connection with exercise of their rights under the proxies (unless any loss or damage is caused by the Principals' own intentional or material negligent actions).
5.4 Party B and Party C shall, to the extent permitted by applicable laws, cause
Party D's operational term to be extended to equal the operational term of Party
A.
5.5 Party A shall provide or arrange other parties to provide financings to Party D to the extent Party D needs such financing to finance its operation. In the event that Party D is unable to repay such financing due to its losses, Party A shall waive or cause the relevant parties to waive all recourse against Party D with respect to such financing.
5.6 To the extent Party B and/or Party C are subject to any legal or economic liabilities to any institution or individual other than Party A or Party E as a result of performing their obligations under this Agreement or any other agreements between them and Party A or Party E, Party A shall provide all support necessary to enable Party B and/or Party C to duly perform their obligations under this Agreement and any other agreements and to hold Party B and/or Party C harmless against any loss or damage caused by their performance of obligations under such agreements.
ARTICLE 6 CONFIDENTIALITY
Each Party shall keep confidential all the content of this Agreement. Without the prior consent of all Parties, no Party shall disclose any content of this Agreement to any other party or make any public announcements with respect to any content of this Agreement. Notwithstanding the forgoing provisions of this Article 6, the following disclosure shall be permitted: (i) disclosure made pursuant to any applicable laws or any rules of any stock exchange; (ii) disclosure of information which has become public information other than due to any breach by the disclosing party; (iii) disclosure to any Party's shareholders, legal counsel, accountants, financial advisors or other professional advisors, or (iv) disclosure to any potential purchasers of a Party or its shareholders' equity/assets, its other investors, debts or equity financing providers, provided that the receiving party of confidential information has agreed to keep the relevant information confidential (such disclosure shall be subject to the consent of Party A in the event that Party A is not the potential purchaser).
ARTICLE 7 APPLICABLE LAW AND EVENTS OF DEFAULT
The execution, effectiveness, interpretation, performance and dispute resolution of this Agreement shall be governed by the laws of the PRC.
Any violation of any provision hereof, incomplete performance of any obligation provided hereunder, any misrepresentation made hereunder, material concealment or omission of any material fact or failure to perform any covenants provided hereunder by any Party shall constitute an event of default. The defaulting Party shall assume all the legal liabilities pursuant to the applicable laws.
ARTICLE 8 DISPUTE RESOLUTION
8.1 Any dispute arising from the performance of this Agreement shall be first subject to the Parties' friendly consultations. In the event any dispute cannot be solved by friendly consultations, the relevant dispute shall be submitted for arbitration;
8.2 The arbitration shall be administered by the Beijing branch of China International Economic and Trade Arbitration Commission in accordance with the then effective arbitration rules of the Commission.
8.3 The arbitration award shall be final and binding on the Parties. The costs of the arbitration (including but not limited to arbitration fee and attorney fee) shall be borne by the losing party, unless the arbitration award stipulates otherwise.
ARTICLE 9 EFFECTIVENESS
This Agreement shall be effective upon the execution hereof by all Parties hereto and shall remain effective thereafter.
This Agreement may not be terminated without the unanimous consent of all the Parties except Party A may, by giving a thirty (30) days prior notice to the other Parties hereto, terminate this Agreement.
ARTICLE 10 AMENDMENT
All Parties hereto shall fulfill their respective obligations hereunder. No amendment to this Agreement shall be effective unless such amendment has been agreed by all of the Parties and Party A and Party D have obtained necessary authorization and approvals with respect to such amendment (including the approval that Party A must obtain from the audit committee or other independent body established under the Sarbanes-Oxley Act, the NASDAQ Rules under the board of directors of its overseas holding company - China Finance Online Co., Limited).
ARTICLE 11 COUNTERPARTS
This Agreement is executed in five (5) counterparts. Party A, Party B, Party C, Party D and Party E shall each hold one counterpart.
ARTICLE 12 MISCELLANEOUS
12.1 Party B and Party C's obligations, covenants and liabilities to Party A hereunder are joint and several, and Party B and Party C shall assume joint and several liabilities with respect to such obligations, covenants and liabilities. With respect to Party A, a default by Party B shall automatically constitute a default by Party C, and vice versa;
12.2 The title and headings contained in this Agreement are for convenience of reference only and shall not in any way affect the meaning or interpretation of any provision of this Agreement;
12.3 The Parties may enter into supplementary agreements to address any issue not covered by this Agreement. The supplementary agreements so entered shall be an appendix hereto and shall have the same legal effect as this Agreement.
[execution page only]
Party A: China Finance Online Co. Limited [COMPANY SEAL]
Authorized Representative (Signature): /s/ ZHIWEI ZHAO ------------------------------------- |
Party B: ZHAO ZHIWEI
(Signature): /s/ ZHIWEI ZHAO ------------------------------------- |
Party C: CHEN WU
(Signature): /s/ WU CHEN ------------------------------------- |
Party D: Beijing Fuhua Innovation Technology Development Co., Ltd. [COMPANY
SEAL]
Authorized Representative (Signature): /s/ ZHIWEI ZHAO ------------------------------------- |
Party E: China Finance Online (Beijing) Co., Ltd. [COMPANY SEAL]
Authorized Representative (Signature): /s/ ZHIWEI ZHAO ------------------------------------- |
Exhibit 4.11
SHARE PLEDGE AGREEMENT
This Share Pledge Agreement (this "Agreement") is executed by and among the following parties on November 20, 2006.
PLEDGOR A: Zhiwei Zhao
ID NUMBER: ___________
ADDRESS: 9th Floor of Tower C, Corporate Square, 35 Financial Street,
Xicheng District, Beijing 100032, P.R.China
PLEDGOR B: Wu Chen
ID NUMBER: ___________
ADDRESS: Room 616, Tower A, COFCO Plaza, 8 Jianguomennei Dajie, Beijing, China
PLEDGEE: China Finance Online (Beijing) Co., Ltd.
REGISTERED ADDRESS: Room 610B, Ping'an Mansion, No. 23 Financial Street, West
District, Beijing, China
Unless otherwise provided hereunder, Pledgor A and Pledgor B shall hereinafter be referred to collectively as the "Pledgors".
WHEREAS:
1. Zhiwei Zhao, Pledgor A, and Wu Chen, Pledgor B, are both citizens of the People's Republic of China (the "PRC"), and each holds 45% and 55% interests in Beijing Fuhua Innovation Technology Development Co., Ltd. ("Fuhua"), respectively. Fuhua is a company registered in Beijing, PRC, engaged in the business of network operation.
2. Pledgee is a wholly foreign-own enterprise registered in Beijing, PRC, with approvals from the relevant PRC authorities to engage in the business of, among others, internet technology consulting and technology services. Fuhua and Pledgee have entered into the agreements listed in Appendix 1 hereto (collectively, the "Service Agreements").
3. To secure the fees payable under the Service Agreements (the "Service Fee") from Fuhua to Pledgee, Pledgors hereby pledge their respective interests in Fuhua to Pledgee.
Pursuant to the provisions of the Service Agreements, Pledgors and Pledgee have agreed to enter into this Agreement according to the following terms and conditions.
1. DEFINITIONS
Unless otherwise provided herein, the terms below shall have the following meanings:
1.1 "Pledge Rights" means the rights set forth in Article 2 of this Agreement.
1.2 "Share Equity" means the equity interest held by Pledgors in Fuhua.
1.3 "Pledged Property" means the share interest and the dividends deriving therefrom pledged by Pledgors to Pledgee under this Agreement.
1.4 "Secured Indebtedness" means all the amounts payable by Fuhua to Pledgee under the Service Agreements, including the Service Fee and interests accrued thereon, liquidated damages, compensations, costs and expenses incurred by Pledgee in connection with collection of such fees, interest, damages and compensations, and losses incurred to Pledgee as a result of any default by Fuhua and other expenses payable under the Service Agreements.
1.5 "Term of Pledge" means the term stated in Section 4.1 of this Agreement.
1.6 "Service Agreements" means all the agreements entered into by Fuhua and Pledgee as set forth in Appendix 1 hereto.
1.7 "Event of Default" means any event set forth in Article 9 of this Agreement.
1.8 "Notice of Default" means the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default.
2. PLEDGE RIGHTS
2.1 Pledgors hereby pledge to Pledgee all of their Share Equity in Fuhua to secure the Secured Indebtedness of Fuhua. Pledge Rights shall mean Pledgee's priority right in receiving compensation from the sale or auction proceeds of the Pledged Property (including the dividends generated by the Share Equity during the term of this Agreement).
3. SCOPE OF PLEDGE SECURITY
3.1 The scope of pledge security hereunder shall cover all of the Secured indebtedness, including all the Service Fee and interest accrued thereon, liquidated damages, compensation, costs and expenses incurred by Pledgee to collect such fee, interests, damages and compensation, and losses incurred to Pledgee as a result of any default by Fuhua and all other expenses payable under the Service Agreements.
4. TERM OF PLEDGE AND REGISTRATION
4.1 This Agreement shall become effective on the date when the Pledge hereunder is registered in the Shareholders' List of Fuhua. The term of the Pledge shall be the same as the term of the Strategy Consulting Services Agreement (should the term of the Strategy Consulting Services Agreement be extended, the term of the Pledge shall be extended accordingly). Pledgors shall cause Fuhua to register the Pledge hereunder in its Shareholders' List within three (3) days after this Agreement is executed.
4.2 In the event that any change of the matters registered in Fuhua's Shareholders' List is required as a result of change of any matters relating to the Pledge, Pledgors and Pledgee shall cause the matters registered in Fuhua's Shareholders' List be changed accordingly within fifteen (15) days after such change takes place.
5. CUSTODY OF CERTIFICATES
Pledgors shall deliver to Pledgee the capital contribution certificates with respect to their interest in Fuhua and Fuhua's Shareholders' List within seven (7) days after this Agreement is executed.
6. REPRESENTATIONS AND WARRANTIES OF PLEDGORS
6.1 Pledgors are legally registered shareholders of Fuhua and have paid Fuhua the full amount of their respective portions of Fuhua's registered capital required under Chinese law. Pledgors neither have sold nor will sell to any third party their Share Equity in Fuhua.
6.2 Pledgors fully understand the contents of the Service Agreements and have entered into this Agreement voluntarily. The signatories signing this Agreement on behalf of Pledgors have the rights and authorizations to do so.
6.3 All documents, materials and certificates provided by Pledgors to Pledgee hereunder are correct, true, complete and valid.
6.4 When Pledgee exercises its right hereunder in accordance with this Agreement, there shall be no intervention from any other parties.
6.5 Pledgee shall have the right to dispose of and transfer the Pledge Rights in accordance with the provisions hereof.
6.6 Pledgors have not created any mortgage, pledge, secured interests or other form of debt liabilities over the Share Equity other than the Pledge created hereunder.
7. COVENANTS OF PLEDGORS
7.1 For the benefit of Pledgee, Pledgors hereby make the following covenants, during the term of this Agreement:
7.1.1 without the prior written consent of Pledgee, Pledgors shall not transfer the Share Equity, or create or consent to any creation of any pledge over, the Share Equity that may affect Pledgee's rights and interests hereunder, or cause the shareholders' meetings of Fuhua to adopt any resolution on sale, transfer, pledge or in other manner disposal of the Share Equity or approving the creation of any other security interest on the Share Equity, provided that the Share Equity may be transferred to Pledgee or any party designated by Pledgee according to Purchase Option and Cooperation Agreement dated [__], 2007 among Pledgee, Pledgors, China Finance Online Co., Ltd. and Fuhua and Pledgors may transfer the Share Equity to China Finance Online Co., Ltd. or to each other to the extent such transfer will not effect Pledgee's interest (the transferring Pledgor shall deliver a prior notice to Pledgee before making the transfer).
7.1.2 Pledgors shall comply with all laws and regulations applicable to the Pledge. Within five (5) days of receipt of any notice, order or recommendation issued or promulgated by competent government authorities relating to the Pledge, Pledgors shall deliver such notice, order or recommendation to Pledgee, and shall comply with the same, or make objections or statements with respect to the same upon Pledgee's reasonable request or with Pledgee's consent.
7.1.3 Pledgors shall promptly notify Pledgee of any event or notice received by Pledgors that may have a material effect on Pledgee's rights in the Pledged Property or any portion thereof, as well as promptly notify Pledgee of any change to any warranty or obligation of Pledgors hereunder, or any event or notice received by Pledgors that may have a material effect to any warranty or obligation of the Pledgors hereunder.
7.2 Pledgors warrant that Pledgee's exercise of the Pledge Rights as pledgee pursuant to this Agreement shall not be interrupted or impaired by Pledgors or any successors or representatives of Pledgors or any other parties through any legal proceedings.
7.3 Pledgors hereby warrant to Pledgee that, to protect or perfect the security interest created by this Agreement to secure the Secured Indebtedness, Pledgors will execute in good faith, and cause other parties who have an interest in the Pledge Rights to execute, all certificates of rights and instruments as requested by Pledgee, and/or take any action, and cause other parties who have an interest in the Pledge Rights to take any action, as requested by Pledgee, and facilitate the exercise by Pledgee of its rights and authority provided hereunder, and execute all amendment documents relating to certificates of Share Equity with Pledgee or its designated person(s) (natural persons/legal persons), and shall provide Pledgee, within a reasonable period of time, with all notices, orders and decisions regarding the Pledge Rights requested by Pledgee. Pledgors hereby warrant to Pledgee that, for Pledgee's benefit, Pledgors shall comply
with all warranties, covenants, agreements, representations and conditions provided hereunder. In the event that Pledgors fail to comply with or perform any warranties, covenants, agreements, representations and conditions, Pledgors shall indemnify Pledgee for all of its losses resulting therefrom.
8. EVENTS OF DEFAULT
8.1 Each of the following events shall constitute an Event of Default:
8.1.1 Fuhua fails to pay in full any Secured Indebtedness on time;
8.1.2 Any representation or warranty made by Pledgors under Article 6 of this Agreement is misleading or untrue, or Pledgors have violated any of the warranties in Article 6 of this Agreement;
8.1.3 Pledgors breach any of the covenants in Article 7 of this Agreement;
8.1.4 Pledgors breach any other provisions of this Agreement;
8.1.5 Pledgors give up all or any part of the Pledged Property, or transfer all or any part of the Pledged Property without the written consent of Pledgee (except the transfers permitted hereunder);
8.1.6 Any of Pledgors' loans, guarantees, indemnification, commitment or other indebtedness to any third party (1) have been subject to a demand of early repayment due to an event of default; or (2) have become due but failed to be repaid in a timely manner, thus leading Pledgee to believe that Pledgors' ability to perform their obligations under this Agreement has been impaired;
8.1.7 Pledgors are unable to repay any other material debts;
8.1.8 Any applicable laws have rendered this Agreement illegal or made it impossible for Pledgors to continue to perform their obligations hereunder;
8.1.9 All approvals, licenses, permits or authorizations from government agencies that make this Agreement enforceable, legal and effective have been withdrawn, terminated, invalidated or substantively revised;
8.1.10 Any adverse change has taken place to any properties owned by Pledgors, which leads Pledgee to believe that Pledgors' ability to perform their obligations under this Agreement has been affected;
8.1.11 The successor or trustee of Fuhua is only able to partially perform or refuses to perform the payment obligations under the Service Agreements;
8.1.12 Any breach of other provisions of this Agreement resulting from any action or omission by Pledgors; and
8.1.13 Any other event whereby Pledgee is unable to exercise its right with respect to the Pledge hereunder pursuant to relevant laws.
8.2 Pledgors shall immediately notify Pledgee in writing of any event set forth in Section 8.1 or any circumstance which may lead to any such event as soon as Pledgors know or are aware of such event.
8.3 Unless an Event of Default set forth in this Section 8.1 has been resolved to the satisfaction of Pledgee, Pledgee may, upon the occurrence of an Event of Default or at any time thereafter, issue a Notice of Default to Pledgors in writing and demand that Pledgors immediately pay all the amounts due under the Service Agreements and all other amounts payable due to Pledgee, or exercise Pledge Rights in accordance with the provisions of this Agreement.
9. EXERCISE OF PLEDGE RIGHTS
9.1 Prior to the full payment of Secured Indebtedness under the Service Agreements, Pledgors shall not assign, or in any manner dispose of, the Pledged Property without Pledgee's written consent.
9.2 Pledgee shall issue a Notice of Default to Pledgors when exercising the Pledge Rights.
9.3 Subject to the provisions of Section 8.3, Pledgee may exercise the right to dispose of the Pledged Property concurrently with the issuance of the Notice of Default in accordance with Section 8.3 or at any time after the issuance of the Notice of Default.
9.4 Pledgee shall have the right to dispose of the Pledged Property under this Agreement in part or in whole in accordance with legal procedures (including but not limited to negotiated transfer, auction or sale of the Pledged Property) and receive a priority payment from the proceeds of the Pledged Property until all of the Secured Indebtedness have been fully repaid.
9.5 When Pledgee exercises its rights under the Pledge in accordance with this Agreement, Pledgors shall not create any impediment, and shall provide necessary assistance to enable Pledgee to exercise the Pledge Rights.
10. ASSIGNMENT
10.1 Without Pledgee's prior consent, Pledgors cannot give away or assign to any party
their rights and obligations under this Agreement.
10.2 This Agreement shall be valid and binding on each Pledgor and their respective successors.
10.3 Pledgee may assign any and all of its rights and obligations under the Service Agreements to its designated person(s) (natural/legal persons) at any time, in which case the assignees shall have the rights and obligations of Pledgee under this Agreement, as if it were a party to this Agreement.
10.4 In the event that the Pledgee changes due to any transfer permitted hereunder, the new parties to the Pledge shall execute a new pledge agreement.
11. TERMINATION
This Agreement shall be terminated when the Secured Indebtedness has been fully repaid and Fuhua is no longer obliged to undertake any obligations under the Service Agreements. In this circumstance, Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable.
12. HANDLING FEES AND OTHER EXPENSES
12.1 All fees and out of pocket expenses relating to this Agreement, including but not limited to legal fees, cost of documentation, stamp duty and any other taxes and fees, shall be borne by Pledgors. In the event that the law requires Pledgee to pay any taxes, Pledgors shall reimburse Pledgee for such taxes paid by Pledgee.
12.2 In the event that Pledgors fail to pay any taxes or fees in accordance with the provisions of this Agreement, or due to any other reasons, Pledgee has to recover such taxes and fees payable by Pledgors through any means or in any manner, all costs and expenses (including but not limited to all the taxes, handling fees, management fees, cost of litigation, attorney's fees and insurance premiums) resulting therefrom shall be borne by Pledgors.
13. FORCE MAJEURE
13.1 In the event that the performance of this Agreement is delayed or impeded by "an event of force majeure", the party affected by such event of force majeure shall not be liable for any liability hereunder with respect to the part of performance being delayed or impeded. "An event of force majeure" means any event beyond the reasonable control of the effected party and cannot be avoided even if the affected party has exercised reasonable care, which include but not limited to government actions, acts of God, fire, explosions, geographic changes, storms, flood, earthquakes, tides, lightning and war. Notwithstanding the foregoing, a lack of credit, funds or financing shall not
be deemed as a circumstance beyond the reasonable control of an effected party. The party affected by "an event of force majeure" and seeking to relieve the performance liability under this Agreement or any provisions thereof shall notify the other party of its intention for seeking such relief and the measures it will take to reduce the impact of the force majeure as soon as possible.
13.2 The party affected by force majeure shall not be liable for any liability with respect to the part of performance being delayed or impeded if the effected party has taken reasonable efforts to perform this Agreement. As soon as the course of such relief is eliminated, the Parties shall use their best efforts to resume the performance of this Agreement.
14. RESOLUTION OF DISPUTES
14.1 This Agreement shall be governed by and construed according to the laws of PRC.
14.2 In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the parties shall first try to resolve the dispute through friendly consultations. Upon failure of such consultations, any party may submit the relevant disputes to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The arbitration shall be administered in Beijing and the language used for the arbitration shall be Chinese. The arbitration award shall be final and binding on all parties.
15. NOTICES
Notices sent by the parties hereto shall be in writing ("in writing" shall include facsimiles and telexes). If sent by hand, such notice shall be deemed to have been delivered upon actual delivery; if sent by telex or facsimile, such notice shall be deemed to have been delivered at the time of transmission. If the date of transmission is not a business day or if transmission is after working hours, then the next business day shall be deemed as the date of delivery. The address of delivery shall be the addresses of the Parties stated on the first page of this Agreement or addresses notified in writing at any time after this Agreement is executed.
16. AMENDMENTS, TERMINATION AND CONSTRUCTION
16.1 No amendment to this Agreement shall be effective unless such amendment has been agreed by all of the Parties and Party A and Party D have obtained necessary authorization and approvals with respect to such amendment (including the approval that Party A must obtain from the audit committee or other independent body established according to the Sarbanes-Oxley Act and the NASDAQ Rules under the board of directors of its overseas holding company - China Finance Online Co.,
Limited).
16.2 The provisions to this Agreement are severable from each other. The invalidity of any provision hereof shall not effect the validity or enforceability of any other provision hereof.
17. EFFECTIVENESS AND OTHERS
17.1 This Agreement shall take effect upon satisfaction of the following conditions:
(1) This Agreement has been executed by all parties hereto; and
(2) Pledgors have recorded the Pledge hereunder in the Shareholders' List of Fuhua.
17.2 This Agreement is written in Chinese in three counterparts. Each of the Parties shall hold one counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement executed by their duly authorized representatives in Beijing on the date first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[execution page only]
Pledgor A: Zhiwei Zhao
/s/ Zhiwei Zhao ------------------------------------- Signature: |
Pledgor B: Wu Chen
/s/ Wu Chen ------------------------------------- Signature: |
Pledgee: China Finance Online(Beijing) Co., Ltd. [ COMPANY SEAL]
Authorized representative:
/s/ Zhiwei Zhao ------------------------------------- |
Exhibit 4.15
[Translated from the original Chinese version]
[***] -- Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
SHANGHAI STOCK EXCHANGE LEVEL-2
QUOTATIONS LICENSE AGREEMENT
Agreement No.: ZQB06IN002
Party A: SSE INFONET LTD.
Address: No.528, Pudong Nan Lu, Shanghai
Party B: Fortune Software (Beijing) Co. Ltd.
Address: Floor 9, Tower C, Corporate Square, No. 35 Financial Street,
Xicheng District, Beijing, China
Whereas:
Party A hereto is an organization authorized by the Shanghai Stock Exchange, and solely deals with stock information of the Shanghai Stock Exchange, with full rights; Party B hereto is an information management company willing to pay for the use of the information of the Shanghai Stock Exchange.
Through friendly consultation, both parties enter into this agreement concerning Party A's license grant to Party B to manage Level-2 quotations of the Shanghai Stock Exchange.
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- 1. DEFINITIONS 1 "SSE" means the Shanghai Stock Exchange. |
2. "SSE Real Time Quotations" means the essential trading information announced to the market in real time by SSE, for the purpose of guaranteeing fair centralized trading, in accordance with Securities Law of People's Republic of China and relevant business regulations of the Securities Regulatory Commission and Shanghai Stock Exchange.
3. "SSE Level-2 Quotations" means the securities trading quotations
information including relevant content and index
information in addition to real time quotations of SSE.
The right to interpret the definition belongs to
Party A.
4. "SSE Level-2 Quotations License Certificate" (hereinafter referred to as
"License")
means the certifying documents issued by Party A to
Party B, approving Party B to manage Level-2 quotations
of SSE within a limited scope and term, and in certain
ways.
5. "Nonexclusive License" means, notwithstanding Party A granting approval to
Party B to manage SSE Level-2 Quotations in accordance with the license, that Party A reserves the right to manage SSE Level-2 Quotations, and is entitled to grant a license to any other entities or individuals to manage Level-2 quotations other than Party B. 6. "End Users" means the end users receiving and using SSE Level-2 Quotations transmitted by Party B. Such end users shall not provide any, or part of any, SSE Level-2 Quotations to any organization or individuals, or use them for the purpose of developing derivatives. 7. "License Fee" means a license fee charged by Party A to Party B on an annual basis for managing SSE Level-2 Quotations. 8. "User Charge" means the charge by Party A to Party B for the SSE Level-2 Quotations on a monthly basis according to the number of End Users of Party B. |
2. RECEIVING INFORMATION
1. Party B shall receive SSE Level-2 Quotations with the receiving
methods approved by Party A in writing. If Party B's receiving methods
fail to get approval from Party A, Party A is entitled to refuse to
transmit SSE Level-2 Quotations to Party B.
2. If Party B encounters technical problems while receiving SSE Level-2
Quotations, it may contact Party A on a timely basis, and Party A
shall assist in
solving the problems to enable Party B to obtain SSE Level-2
Quotations in a customary fashion.
3. Party A has the right to change the transmitting method, but shall
notify Party B in writing one month in advance of such change.
4. In the event of the following events, Party A is entitled to revoke
the license, and cease providing SSE Level-2 Quotations to Party B.
Party B shall not continue managing SSE Level-2 Quotations, and shall
be responsible for dealing with subsequent matters of its users. Party
A bears no liability to Party B for the aforesaid actions:
(1) Party B goes bankrupt, or applies for bankruptcy;
(2) Party B breaches Item 1, 2, 3, 4, 6, 7 of Article 3 or Section 3
or 5 of this Article 2, and causes irreparable results; or Party
A notifies Party B in writing that Party B is required to make
certain corrections, and, after receiving written notice, Party B
fails to make all such corrections within the specified time and
according to Party A's requirements.
5. Regardless of the reason for terminating the transmitting and
receiving relations by both parties, in the event of such termination,
each party shall return the relevant equipment provided by the other
party in good and intact conditions.
3. MANAGEMENT OF INFORMATION
1. Party A grants Party B a Nonexclusive License to manage SSE Level-2
Quotations. Party A agrees that Party B shall provide SSE Level-2
Quotations to its End Users in a manner that is within the scope and
purposes specified in Appendix I (License) hereto, and within the
scope of the license (expiration of the license and revocation of the
license by Party A in accordance with this agreement are deemed
outside the scope of the license).
2. Party A will issue the license to Party B after confirming Party B's
payment of the license fee of the first year in accordance with
Section 4 herein.
3. Party B agrees to be bound by the following terms:
(1) covenants to manage SSE Level-2 Quotations in accordance with
this agreement (including the Appendix).
(2) covenants not to provide all or any part of SSE Level-2
Quotations to any entities or individuals not specified in the
license, or use such information in other aspects or purposes,
without written approval of Party A.
(3) covenants not to use all or any part of SSE Level-2 Quotations
for any illegal purpose, or to provide such information to a
third party to be used for any illegal purpose.
(4) covenants to respect the value of SSE Level-2 Quotations, and to
take no unfair competitive measures to manage relevant
information such as low-price dumping, sale under cost, etc.
(5) covenants to provide complete, accurate and timely SSE Level-2
Quotations to its End Users; if omissions, errors, or delays
occur, it shall
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- promptly remedy such problems and report to Party A, orally and in writing. (6) Upon the occurrence of disruption of SSE Level-2 Quotations transmitted by Party A to Party B for any reason, or the disruption of the provision of Level-2 related products or services by Party B to its End Users for any other reasons, Party B warrants to provide and show SSE real-time quotations to its users to minimize the negative effects on the users; meanwhile, Party B shall make an announcement upon Party A's approval through a media outlet named by Party A in accordance with Party A's requirements, within the time specified by Party A, and shall bear and deal with all the subsequent matters. A sample of the announcement is attached as Appendix III hereto. (7) Without written approval from Party A, Party B shall not enter into a sub-license or re-license of the SSE Level-2 License issued by Party A, and shall not sell or purchase such license. |
4. EXPENSES
Party B agrees to pay the expenses to Party A in accordance with Appendix I-A "Expense Payment Agreement", including but not limited to a License Fee, a User Charge, etc.
5. INTELLECTUAL PROPERTY; INFORMATION AND PROTECTION
1. SSE and Party A have the rights of SSE Level-2 Quotations specified
herein and in the license; without written approval of Party A, any
organizations or individuals (including Party B hereto, its directors,
supervisors, managers or staff, etc.) shall not save or permanently
use SSE Level-2 Quotations (including but not limited to copy,
translation, distribution, editing, transfer, approving others to use
or develop derivatives, etc.).
2. Party B shall get written approval from Party A before application of
any methods of transmitting the test content or announced content of
SSE Level-2 Quotations to a third party. If Party B applies a method
without written approval from Party A, Party B shall stop the
application the next day after receiving notice from Party A. If Party
B fails to do so, and continues to use the method the next day after
Party A issued a written warning letter, Party A shall be entitled to
suspend the provision of Level-2 data and to publicize it.
3. Any products used by Party B for displaying all or part of SSE Level-2
Quotations or products developed based on all or part of SSE Level-2
Quotations (hereinafter referred to as "Relevant Products") shall be
announced (including but not limited to providing to a third party) or
updated (including but not limited to a version update that is
considered important by Party A) to the public only after submitting
an announcement or an updating application and other relevant
materials to Party A and getting written approval from Party A. Party
B warrants that the application and materials are true, accurate and
complete. Without written approval of Party A, Party B shall not
announce or
update any Relevant Products to the public.
4. Party B shall accept and cooperate in the regular or irregular
technical inspection of Party B's Relevant Products by Party A or a
third party entrusted by Party A. During the term of the agreement, if
any Relevant Products of Party B have serious problems such as a
security problem, including but not limited to difficulty of user
certification, susceptibility of data being stolen, systems
vulnerability, or nonconformity of products to materials submitted to
Party A, Party B shall make corrections within the specified time,
according to Party A's requirements, after receiving Party A's written
notice.
5. Party B warrants only to use Level-2 data from the one trading day of
September 6, 2006 for demonstration of Relevant Products to clients.
Without written approval of Party A, Party B shall not provide trials
of the Relevant Products to any third party.
6. Party B shall note on the interface of its users' terminals that
receive SSE Level-2 Quotations that the source of SSE Level-2
Quotations is Party A, and the name, number and term of the license
certificate issued.
7. As to advertising or public statements:
(1) for any relevant text with "SSE", "SSE Infonet Ltd.", "SSE
Level-2 Quotations", or any introduction to the content of SSE
Level-2 Quotations, Party B shall complete the Approval Letter
(in accordance with the form attached as Appendix IV hereto) for
relevant advertisements or pamphlets and submit it to Party A for
approval, at least one working day in advance. Such
advertisements and pamphlets shall only be used upon Party A's
written approval. Party B shall not use the name, brand, logo
(including but not limited to text, patterns or marks, etc.) of
SSE or Party A without getting written approval from Party A.
(2) public statements regarding the License obtained by Party B shall
note the number, validity, purposes and scope of the License.
(3) if the License is expired and not extended, or is revoked by
Party A, Party B shall not continue to make public statements
that SSE Level-2 Quotations are sourced from Party A, and shall
not include any information from the former License on the
interface of its terminals.
8. Party B agrees to accept and cooperate with Party A in the supervision
of the relevant operations by Party A:
(1) Party B shall submit the monthly statistics report of SSE Level-2
Quotations' users on a regular basis to Party A, in accordance
with Appendix II "Agreement on Supervision and Management of
Information Operation", and warrant that the data submitted is
true, complete and accurate.
(2) Party B shall keep the original material of its users and charges
for three years, and warrants that the aforesaid materials shall
be complete and accurate.
(3) Party B shall accept and cooperate with Party A or a third Party
entrusted
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- by Party A to make inspections of Party B's income and users of SSE Level-2 Quotations operation, including Party A's entrustment of relevant personnel to audit revenues and expenditures of Relevant Products of Party B based on SSE Level-2 Quotations. If Party A discovers any cover-up, or discounted reports of sales volume of Party B, Party A is entitled to ask Party B to bear all reasonable expenses incurred from the inspection, including auditing fees, travel fees, etc., in addition to the liabilities specified hereunder, and is entitled to ask Party B to make corrections in a limited time period. (4) Prior to providing SSE Level-2 Quotations, Party B shall enter into contracts or agreements with its users which expressly stipulate the obligations and rights of each party, and such contracts or agreements shall expressly contain the following: a. Users receive the SSE Level-2 Quotations as End Users, and shall warrant not to copy in any way or provide to any organization or individual all or part of SSE Level-2 Quotations, not to develop any derivatives based on all or part of SSE Level-2 Quotations, or in any way use all or part of SSE Level-2 Quotations for illegal purposes and split products of Party B. b. The service term provided by Party B to its users of SSE Level-2 Quotations shall not exceed the term of the license issued by Party A to Party B. If the license is expired and not extended, or Party A revokes the license in accordance with this agreement, Party B will cease immediately to provide SSE Level-2 Quotations to its users. The users shall not ask SSE or Party A to bear any liabilities or compensations. c. SSE Level-2 Quotations provided by Party B to its users are considered value-added information, and shall not be a substitute for SSE real-time quotations as trading service information in any event. d. SSE and Party A own all intellectual property of SSE Level-2 Quotations. SSE and Party A bear no liability for the completeness, accuracy and timeliness of SSE Level-2 Quotations. 9. Party B undertakes to do the following: (1) Unless Party A gives special written approval, all users of Party B shall only be End Users. (2) Party B is responsible for supervising its users to ensure that they abide by the warranties of users specified in Item (4), Article 8 herein, and monitoring that all parts of SSE Level-2 Quotations are secure from theft through Relevant Products of Party B. (3) If Party B discovers a violation of the warranties stated in Item (4), Article 8 herein by its users, or that all or part of SSE Level-2 Quotations are stolen through its Relevant Products, or that any other actions infringe the rights and interests of Party A, it shall notify Party A in oral 7 |
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- |
and written form, and shall be obliged to timely provide any
applicable materials it holds, including but not limited to the name,
address, and contact information of the users.
(4) Party B shall assist Party A in dealing with the infringement of
information interests of Party A relevant to its users or products,
including but not limited to: upon receiving written notice from Party
A, Party B shall assist Party A in investigating the relevant
infringement, shall cease to provide SSE Level-2 Quotations to the
relevant suspected infringing terminals; upon Party A's request, shall
issue a detailed written report, and shall assist Party A in claiming
compensation from the responsible party for Party A's economic losses
resulting from such infringement.
6. DISCLAIMERS
1. SSE and Party A shall bear no liability for completeness, timeliness, or
accuracy of the information provided (including but not limited to SSE
Level-2 Quotations).
2. Party B agrees that SSE and Party A bear no liability for abnormal
information results or abnormal information transmission for whatever
reasons.
3. Party B undertakes that it will always avoid and eliminate factors which
may have an adverse effect on SSE and Party A, such as omission, mistakes,
losses, delay and intermissions of information, and that it will protect
SSE and Party A from economic and credit losses, and shall not claim
compensations from SSE or Party A for aforesaid reasons in connection
herewith.
4. SSE and Party A shall bear no liability for any business risks Party B may
take, or resulting from the management of SSE Level-2 Quotations.
5. SSE and Party A shall bear no liability for any risks Party B or its users
may take, or resulting from investments based on SSE Level-2 Quotations.
7. LIABILITY FOR BREACH OF AGREEMENT
1. If Party B breaches the agreement, and fails to remedy such breach within
the specified term stated in the written notice and requiring corrections
requested by Party A, Party A is entitled to cancel the agreement, and
revoke the License. The License Fee for the year (whether the term of the
year is ended or not) charged by Party A will not be refunded. Meanwhile,
Party B shall pay any applicable defaulting fine and compensation to Party
A in accordance with the agreement, in addition to all payable expenses as
stated herein. Party B bears all other liabilities and consequences
incurred from such default.
2. If Party B breaches Item 2, 7, Article 3, Section 3 of this Article 7,
Party B shall transfer to Party A the earnings from such breach, and shall
pay any applicable defaulting fine to Party A which shall be equivalent to
twice the total amount of the annual License Fee stated in Appendix I--A
"Payment Agreement" and earnings from the breach); meanwhile, Party B shall
take prompt and effective measures to terminate such breach.
3. If Party B fails to pay for the relevant expenses in accordance with the
time stated herein, Party B shall pay 0.3% of all past due payments per day
as the defaulting fine (calculated from the due date). If Party B fails to
pay after Party A's call, Party A shall be entitled to cancel this
agreement, revoke the License, and cease to provide SSE Level-2 Quotations
to Party B. Meanwhile, Party B shall pay a defaulting fine to Party A,
equivalent to 50% of total expenses, as stated in Appendix I --A " Payment
Agreement", and compensate Party A for other losses incurred from such
default.
4. If Party B breaches Section 5 herein, Party B shall pay a defaulting fine
to Party A (equivalent to the total amount of the annual License Fee stated
in Appendix I--A "Payment Agreement" and earnings from the breach); if any
losses of Party A are caused by such breach, Party B shall compensate Party
A for all losses of Party A resulting from such breach.
5. Except for liabilities due to breaches of this agreement set forth above in
Article 2, 3, and 4 herein, if Party B fails to perform other terms herein,
Party B shall pay a defaulting fine to Party A (equivalent to the total
amount of the annual License Fee stated in Appendix I--A "Payment
Agreement" and earnings from the breach); if there are any losses of Party
A as a result of such breach, Party B shall compensate Party A for all
losses.
8. EFFECTIVENESS, MODIFICATION AND TERMINATION OF THE AGREEMENT
1. This agreement shall be effective when signed and stamped by a legal
representative or an authorized representative of both parties, and shall
terminate on July 31, 2009.
2. Any provisions herein shall only be modified with written approval from
both parties; any modified provisions confirmed in written form shall be
deemed to be an integral part of the agreement. The License shall be
changed in the event of major modification.
3. Upon the expiration of Appendix I hereto, Appendix I-A shall also be
terminated. Party B may make a written application to Party A for an
extension or change of the license 30 business days prior to the expiration
of the license. Upon the approval of Party A, both parties may extend
Appendix I-A.
Upon the extension of the aforesaid Appendix I-A and Party B's payment
specified in Appendix I-A, Party A will issue a new term License to Party
B, and the agreement will also extend in accordance with the valid term
specified in the new license. Both parties shall perform all rights and
obligations in accordance with this agreement, as modified by additional
content agreed upon by both parties.
4. If :Party B fails to apply for an extension or change of license, or Party
A does not give approval for the license, the agreement shall terminate at
the expiration date of the license. If Party A ceases to provide SSE
Level-2 Quotations to Party B, then Party B shall not continue managing SSE
Level-2 Quotations.
5. Upon the termination of this agreement, Party B shall pay all expenses to
Party A in accordance with this agreement (including but not limited to the
expenses
which are due but Party B has failed to pay, any defaulting fine,
compensations, or payable expenses which are not yet due) within ten
working days prior to the termination of the agreement. If Party B fails to
make a payment in time, Party B shall pay 0.3% of the payable expenses per
day as a defaulting fine to Party A, after the due date.
6. Section 5, 6, 7 herein will not become invalid even if the remaining
sections herein are found to be invalid, or this agreement is terminated.
9. DISPUTE RESOLUTION
Any dispute that arises from the performance of the agreement or in connection herewith, shall be settled though friendly consultation by both parties; if the dispute is not settled through friendly consultation, both parties agree to submit the dispute to People's Court at the place of Party A for settlement. All reasonable expenses of either party, including attorneys' fees, auditing fees, travel fees, etc, shall be borne by the losing party.
10. APPENDIX TO THE AGREEMENT
The appendices included hereto have the same legal force as this agreement.
Appendices include the following documents and other documents signed during the
performance of the agreement:
Appendix I: SSE Level-2 Quotations License Certificate; Appendix I:-A: Expense Payment Agreement; Appendix II: Agreement on Supervision and Management of Information Operation; Appendix III: Sample of Announcement; Appendix IV: Approval Letter for Relevant Advertisements or Pamphlets (Sample) |
11. MISCELLANEOUS
1. This agreement is governed by PRC (excluding Hong Kong, Macau, and Taiwan)
laws and regulations, regulations of China Securities Regulatory Commission
and the rules of SSE. If any change in relevant regulations occurs, the
relevant provisions herein are changed accordingly without conditions.
2. Notices or documents issued by both parties may be delivered by hand, post
or in other ways. The addresses of the addressees are as indicated herein.
3. Notices or documents shall be deemed to have been effectively given as of
the following dates:
(1) if delivered by hand, the served date shall be the signed date on the
receipt.
(2) if delivered by post, the served date shall be the date noted on the
return of service.
4. Contact Information:
(1) Party A:
Office address: Building 12, Nantai, No. 528, Pudong Nan Lu, Shanghai
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- (200120) Tel: 021-68800098 ext: e-mail: infobiz@sse.com.cn Fax: 021-68819726 (2) Party B: Office address: Floor 9, Tower C, Corporate Square No. 35 Financial Street Xicheng District, Beijing, China (100032) Contact: Ma Linghai Tel: 010-58325388 e-mail: mlh@jrj.com Fax: 010-58325300 |
5. Upon the effectiveness of this agreement, this agreement shall supersede
all previous relevant agreements by both parties on SSE Level-2 Quotations
license, including but not limited to any written or oral agreements,
contracts, consultations, representations, plans, and appendices, etc.
6. All the headings herein are for the convenience of reading, and shall not
affect the interpretation and meaning of the agreement.
7. This agreement is executed in quadruplicate. Each party holds two. Each is
equally authentic.
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- Appendix I: SSE LEVEL-2 QUOTATIONS LICENSE CERTIFICATE License No.: Shangzhengxinxu 06Z02 Agreement No,: ZQB06IN002 |
Name of Licensee: Fortune Software (Beijing ) Co. Ltd.
Address: Floor 9, Tower C, Corporate Square, No. 35 Financial Street
Legal Representative: Zhao Zhiwei
Licensed Information: SSE Level-2 Quotations
Purpose: transmitted to End Users through internet or telecom wire, and
End Users use special terminal software to receive such
information.
Scope: China Mainland (excluding Hong Kong, Macau, and Taiwan)
Term: from August 1, 2006 to July 31, 2009
Date of Issue: August 2006
Licensor: SSE Infonet Ltd.
Attachment to the license:
A. Payment Agreement
[***] -- Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Appendix I- A.
EXPENSE PAYMENT AGREEMENT
1. Party B shall pay for the following:
1. Real time quotations license expense: RMB [***] (from May 2006 to
August 2006).
2. Management License Fee: RMB [***]/year, aggregate amount of three
years is RMB [***].
3. User Charge: the charge criteria for each End User per month is in
accordance with Party A's uniform criteria: RMB [***] yuan. If Party A
makes adjustments of the charge criteria, the new criteria will be
abided by. If an End User is given a discounted price by Party A, the
User Charge for such End User will be calculated based on the
discounted criteria fixed by Party A. Party B will pay the User Charge
to Party A according to the following: The User Charge for September
2006 is RMB [***], and for October 2006 is RMB [***] (hereinafter
referred to as a "Minimum Charge"). If the End User's actual expenses
for the month exceed the aforesaid Minimum Charge, the End User shall
pay the actual expenses that are due for the month; otherwise the End
User shall pay the Minimum Charge. From November 2006, the minimum
User Charge will be RMB [***]. If the End User's actual expenses for
the month exceed RMB[***], the End User shall pay the actual expenses
that are due for the month; otherwise the End User shall pay RMB
[***].
The actual User Charge will be calculated based on the numbers of End
Users listed in the Monthly Statistics Report of Users as specified in
Appendix II, which shall be submitted by Party B every month.
2. Payment Agreement:
Party B shall remit the payment hereunder to the bank of deposit and
account named by Party A, in accordance with the following dates and
amounts:
1. Party B shall pay the aforesaid real time quotations License Fees
amounting to RMB [***] within 5 working days after the execution of
this agreement.
2. Party B shall pay for a one-year management License Fee of RMB [***]
for the term from August of that year to July of the next year, within
5 working days prior to the beginning of August of every year.
3. Party B shall pay the monthly User Charge from September 2006, within
the first 5 working days of every month, in accordance with the
calculations of User Charges specified in Item 3, Article 1 hereof.
4. Bank of Deposit and Account No. of Party A:
Bank of Deposit : Shanghai Branch of China Merchants Bank
Account Name: SSE Infonet Ltd.
Account No.:
Party A: SSE Infonet Ltd. Party B: Fortune Software (Beijing ) Co. Ltd. (Signature or Seal): /s/ company seal (Signature or Seal): /s/ company seal Date of Execution: 9/26/2006 Date of Execution: 25/10/2006 |
AGREEMENT ON SUPERVISION AND MANAGEMENT OF INFORMATION
OPERATION
1. Party B shall provide detailed data of End Users as to the real time use, in
accordance with the methods, forms and content specified by Party A.
2. Party B shall submit the Monthly Statistics Report of Users to Party A within
the first 5 working days of each month, stating the detail of the use of SSE
Level-2 Quotations by its End Users.
3. A Monthly Statistics Report of Users shall be submitted in written form with
Party B's signature and seal, in the following forms and content:
Monthly Statistics Report of Users
Date of Filling and Submission:
User Number with Full Rate of the Month:
User Number with Half Rate of the Month:
User Number with Free Charge of the Month:
Total User Charge of the Month:
Person to submit:____________ Date:___________ Company (Seal):
Notes:
Date: the form shall be yyyy/ mm. The month means the month of submission. The
statistics of End Users of all categories shall follow the methods required by
Party A.
User Number with Full Rate of the Month: means the number of users who get
Level-2 related information service, and pay the User Charge in accordance with
the information terminal User Charge criteria;
User Number with Half Rate of the Month: means the number of users who get
Level-2 related information service, and obtain written approval from Party A to
pay the half rate of the User Charge in accordance with the charge criteria of
SSE Level-2 Quotations specified by Party A.
User Number with Free Charge of the Month: means the number of users who get
Level-2 related information service, and obtain written approval from Party A to
not pay the User Charge.
Total User Charge of the Month: means the total User Charges payable to Party A
by Party B in
Party A: SSE Infonet Ltd. Party B: Fortune Software (Beijing ) Co. Ltd. (Signature or Seal): /s/ company seal (Signature or Seal): /s/ company seal Date of Execution: Date of Execution: |
No.:ZQB06IN002 License No.:Shangzhengxinxu 06Z02 -------------------------------------------------------------------------------- Appendix III: SAMPLE OF ANNOUNCEMENT |
This is to announce that, SSE Level-2 Quotations provided by Fortune Software (Beijing) Co. Ltd. are suspended as of ___ (time) of_____(DD/MM/ YYYY). The reason is ___________
Fortune Software (Beijing) Co. Ltd.
Date:_______________________
APPROVAL LETTER FOR RELEVANT ADVERTISEMENTS OR PAMPHLETS
(Sample)
1. "Content" shall state the places in the advertisement or pamphlets that contain actual text or implications of "SSE", "SSE Infonet Ltd." , "SSE Level-2 Quotations", or relevant introduction to Level-2 content.
2. A sample of the advertisement or pamphlet is submitted as an attachment.
Applicant (seal):
Date:
.
.
.
Exhibit 4.16
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
[Translated from the original Chinese version]
[***] -- Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
SHENZHEN STOCK EXCHANGE
PROPRIETARY INFORMATION LICENSE
AGREEMENT
Agreement No: SZ07SWJ03-03
License No: Shenzhengxu 07SWJ03-03
PARTY A: SHENZHEN SECURITIES INFORMATION CO., LTD. ADDRESS: F6, BUILDING 10, SHANGBU INDUSTRIAL ZONE, HONGLIXI ROAD, SHENZHEN POSTAL CODE: 518028 |
NAME IN ENGLISH: SHENZHEN SECURITIES INFORMATION CO., LTD.
PARTY B: FORTUNE SOFTWARE (BEIJING) CO., LTD.
ADDRESS: FLOOR 9, TOWER C, CORPORATE SQUARE, NO. 35 FINANCIAL
STREET, XICHENG DISTRICT, BEIJING, CHINA
POSTAL CODE: 100032
NAME IN ENGLISH:
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
Date of execution: March 20, 2007
Whereas:
Party A hereto is the authorized representative of Shenzhen Stock Exchange and has the sole authority to offer and manage the Information of Shenzhen Stock Exchange; to enter into relevant contracts and agreements and charge fees accordingly on behalf of Shenzhen Stock Exchange and is responsible for the management work in connection therewith; and to protect the rights and interests of Shenzhen Stock Exchange from being impaired.
Party B hereto is a legal company or organization willing to pay for the use of the Information of the Shenzhen Stock Exchange.
Both parties wish to enter into this Agreement. The Licensor hereto is Party A, and the Licensee hereto is Party B.
1. DEFINITIONS
1.1 "Agreement" means this agreement, all appendices attached hereto, and supplementary written documents agreed upon by both parties hereto.
1.2 "Allowed Uses" means uses of the Quotations licensed to Party B as specified in Appendix I.
1.3 "Illegal Operation Unit" means those units or individuals that failed to obtain a Shenzhen Stock Exchange Proprietary Information license agreement with Shenzhen Securities Information Co., Ltd, and instead obtained a Shenzhen Stock Exchange Proprietary Information license certificate.
1.4 "Information Fee" means the expenses paid by Party B to Party A in accordance with Article 5.1 herein.
1.5 "Information / Proprietary Information" means transaction information and
other relevant information produced from trading, which has been edited and
gathered by the Shenzhen Stock Exchange. However, in this Agreement, it
means the real-time quotations of the Shenzhen Stock Exchange, hereinafter
referred to as the "Quotations." The contents of the Quotations include:
securities codes, abbreviations of the securities, closing prices on
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
the previous trading day, last traded prices, current day highest traded prices, current day lowest traded prices, current day aggregate trading volumes, current day aggregate traded amounts, five highest declared prices for purchase and the quantity thereof in real-time, and the five lowest declared prices for sale and the quantity thereof in real time, etc.
1.6 "License" means the written license granted by Party A to Party B to manage the Proprietary Information of SSE in accordance with this Agreement.
1.7 "Off-Exchange Trading" means trading outside of SSE and trading of securities not listed on SSE.
1.8 "Scope of Dissemination" means the geographical scope of the Quotations licensed to Party B as specified in Appendix I.
1.9 "SSE" means the "Shenzhen Stock Exchange."
1.10 "Users' Receiving Terminal" means the terminal equipment used by end users of Party B to receive the Quotations from Party B as specified in Appendix I.
1.11 "Ways of Dissemination" means ways of dissemination of the Quotations by Party B to end users as specified in Appendix I.
2. RECEIVING OF INFORMATION
2.1 Party A is entitled to change the method of the transmission of Information as necessary, but shall notify Party B in writing one month prior to doing so.
2.2 Party A shall endeavor to maintain uninterrupted transmission of Information during SSE trading time. If Party B has technical problems with receiving the Information, it shall contact Party A on a timely basis. Party A shall assist in solving the problems to allow Party B to receive continuous Information smoothly.
3. DISSEMINATION OF INFORMATION AND REGULATION
3.1 Party A hereby agrees to permit Party B to disseminate the Quotations to users by the methods specified in Appendix I. Party B is only entitled to the right of disseminating and announcing the Quotations within the scope stated in this Agreement. Such right is not proprietary or exclusive.
3.2 Party B shall warrant the following when disseminating the Information to any users:
(1) it bears the liability and the obligation to warrant the accuracy and completeness of the Information disseminated;
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
(2) in the event written approval is not obtained from Party A, it shall prevent its users from providing the Information of Party A to any third party for re-dissemination in any manner or by any method, and shall have the obligation to assist Party A in monitoring this;
(3) it shall disseminate the Quotations in accordance with the scope, methods, and Users' Receiving Terminal stated herein;
(4) all or any part of the Information shall not be used by any other entity, organization or individual, or in any other place or method except those stated herein; and
(5) neither the Information nor any part thereof shall be used for illegal purposes, or provided to a third party for illegal purposes.
3.3 Without written approval from Party A, Party B shall not use the Information or any part of the Information of Party A to establish, maintain, offer or assist Off-Exchange Trading directly or indirectly.
3.4 Party B shall not provide the Quotations directly or indirectly to organizations or individuals for business operation, and shall not in any way cooperate with others to provide market quotation information (including but not limited to website links, provision of quotation codes, website nesting, software interface, etc.).
3.5 If Party B violates the restrictions on cooperating with clients, or has links to Illegal Operation Units of Party B without permission, Party B must make a public, written announcement of its cessation of Quotation dissemination, and to cooperate with Party A to regulate the dissemination of Quotation Information in the market.
3.6 In accordance with Article 10 of Shenzhen Stock Exchange Information Management Temporary Measures, within the term of this Agreement, Party B is entitled to, within its legal Scope of Dissemination, supervise and report any Illegal Operation Unit that disseminates Party A's Proprietary Information, and maintain orderly dissemination of Party A's Proprietary Information.
3.7 Both parties shall avoid and eliminate those negative results of information such as omission, mistakes, loss, delay, intermission etc, caused by incidental reasons, to protect both parties from economic losses and credit losses.
3.8 When both parties are unable to warrant the accuracy and completeness of the Information due to force majeure, incidental events, or changes of policies and other conditions, neither Party A nor Party B will bear any liability.
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
4. REPRESENTATIONS AND WARRANTIES
4.1 Party A is an independent legal person incorporated and registered in accordance with relevant laws of People's Republic of China, and owns legal rights to conclude the Agreement and perform obligations hereunder. Party A warrants that it owns and will continue to own all the rights to obtain and transfer market Information, and authorizes Party B to disseminate the market Information to its end users.
4.2 Party B is an independent legal person incorporated and registered in accordance with relevant laws of People's Republic of China, and owns and will continue to own all legal rights to be authorized to conclude the Agreement and perform obligations hereunder.
4.3 Each party hereby represents and warrants respectively to the other party that their respective representative chosen to execute the Agreement has been authorized; all necessary procedures have been carried out by both parties as to the approval of execution and exercise of the Agreement and as to any other agreements in accordance with the Agreement.
5. INFORMATION FEE
5.1 Party B shall, within the term of this Agreement, pay to Party A all expenses in accordance with Appendix I hereto and other expenses stated herein.
5.2 If this Agreement is terminated by Party B's, Party B shall not refund the paid expenses stated in Appendix I.
5.3 During the term of this Agreement, if the Proprietary Information system provided by Party A is updated or adjusted, and a corresponding Proprietary Information license fee is adjusted accordingly, Party B shall enter a new agreement in accordance with the new regulations, and pay for the Information Fee accordingly. The Information Fee shall be calculated on a monthly basis according to the different time periods of each version of the Quotations. Periods of less than one month shall be calculated as one month. Any balance of the Information Fee at the expiration of this Agreement shall be, at Party B's discretion, transferred to the next agreement year or returned to Party B within 10 working days after the termination of the Agreement.
6. DISCLAIMERS
6.1 SSE and Party A bear no liability for any losses and impairs resulted from inaccuracy or omission of the Information
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
disseminated; and bear no liability for any Information interruption caused by abnormal circumstances, but are obliged to make timely and active efforts to return the Information dissemination back to normal.
6.2 Party B shall avoid and eliminate those negative factors of Information such as omissions, mistakes, loss, delay, intermission, etc., which may have adverse effects on Party A and SSE, and protect Party A and SSE from economic losses and credit losses. Party B shall not claim compensation against Party A or SSE in connection with this Agreement. Neither Party A nor SSE shall bear any liability for any losses of Party B and its users, caused by the aforesaid conditions.
6.3 When both parties fail to warrant the accuracy and completeness of the Information due to force majeure, neither Party A nor Party B shall bear any liability.
7. RIGHTS AND PROTECTION
7.1 Party B acknowledges it has no rights of literary property (copyright) and other property rights with respect to the quotation Information specified in this Agreement. In accordance with the Securities Laws of People's Republic of China, Measures for the Administration of Stock Exchanges, the Trading Rules of Shenzhen and Shanghai Stock Exchanges and other regulations, all the rights under the quotation Information specified herein (including but not limited to intellectual property rights, other property rights and their supervision rights, etc.) are possessed by SSE, and authorized to Party A to exercise in practice.
Except for the uses and scope as specified herein, without the approval of Party A, Party B shall not transfer (including providing website links), redistribute, copy, sell, lease or loan the Information to any third party, or affect changes, additions, expansions, deletions, destruction or make any other changes to the Information.
As to various uses, without approval of Party A, Party B and its users or distributors shall not make samples of the quotation Information specified herein, create an index or other derivatives, nor transmit such material to any other third party.
If Party B and its clients violate the aforesaid regulations, Party A is entitled to require Party B and its clients to make corrections within a limited term, or require Party B to cease to disseminate quotation Information to such clients. If Party B and its clients fail to make corrections or meet the requirements within the term, Party A is entitled to cancel the Agreement and seek legal redress accordingly.
7.2 Party B is entitled to make public statements regarding obtaining the license certificate for Party A's Information during the term of the Agreement. However:
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
[***] -- Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
(1) The license certificate No. shall be noted in the advertisements or in the public statements, and the content of the advertisements and public statements shall conform to the license certificate;
(2) The names and logos (texts, patterns, or marks, etc.) of SSE and Party A shall not be used in advertisements and public statements.
7.3 If Party B discovers that any actions of its users are infringing upon Party A's interests, it shall inform Party A immediately, and is obliged to provide the basic material of such clients, such as addresses, etc. on a timely basis. Upon receiving written notice from Party A, Party B shall investigate or assist Party A in investigating the infringing actions of such users.
7.4 If Party A discovers users of Party B infringing Party A's interests, Party B shall, upon receiving written notices from Party A, immediately terminate providing Information to such users, and provide a written report as to how it dealt with regulating the violations of such users.
7.5 This Section will survive the termination of remaining parts herein.
8. LIABILITY OF BREACH OF AGREEMENT
8.1 If Party B breaches Article 3 herein, it shall immediately cease the breach
and transfer to Party A the earnings from such breach, and make a payment of RMB
[***] to Party A as a fine. Party A has the right to terminate the Agreement.
8.2 If Party B breaches Article 7.1 herein, it shall immediately cease the breach, pay RMB [***] to Party A as a fine, and make a public apology in the newspaper. Party A has the right to terminate the Agreement.
8.3 If Party B breaches Article 5 herein, and fails to pay the relevant fees to Party A within the time limit, Party B shall, in addition to making up the amount in breach, pay an overdue fine of 0.3% of the amount in breach per day; if Party B fails to make the payment two months after the time limit, Party A has the right to terminate the Agreement, and seek compensation for economic losses of Party A from Party B.
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
9. MODIFICATION, TRANSFER AND TERMINATION
9.1 Any provisions herein shall only be amended and modified with written approval of both parties.
9.2 Without written approval of Party A, Party B shall not transfer all or any part of the rights it enjoys and all or any part of the obligations it bears hereunder.
9.3 Party A is entitled to provide a written notice (and cease to provide Information to Party B shortly after) of termination of the Agreement in the event that:
(1) Party B is bankrupt and fails to pay for the debt;
(2) Party B breaches relevant articles herein and causes irreparable results;
(3) Party B breaches relevant articles herein and fails to make corrections within five working days after receiving a written notice from Party A to require Party B to correct such breaches.
9.4 Both parties are entitled to terminate the Agreement without representing any reasons, providing that it shall make a prior written notice to the other party six months in advance.
9.5 Upon the termination of the Agreement, Party A has the absolute right to terminate the transmission of Information at once, and all the fees due shall be paid to Party A promptly.
9.6 Upon the termination of the Agreement, each party shall return the relevant equipment provided by the other party in good, working condition.
9.7 Upon the termination of the Agreement, the license certificate shall become invalid. Party B shall return the certificate to Party A within ten working days.
10. SETTLEMENT OF DISPUTE
If any dispute arises from the performance of the Agreement, both parties may make a settlement through friendly consultation or submit the dispute to a court. Both parties agree the place for litigation shall be Shenzhen, China.
11. NOTIFICATION
11.1 Any notices or other correspondences needed to be sent by one party to the other party, shall be served to the following addresses:
Party A: Shenzhen Securities Information Co., Ltd
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
Respondent: Sun Wenjie
Address: F6, Building 203, Shangbu Industrial Zone, Honglixi Road, Shenzhen
Tel: 86-755-83276743
Fax: 86-755-83201393
Party B: Fortune Software (Beijing) Co., Ltd.
Receipt: Feng Jian
Address: Floor 9, Tower C, Corporate Square, No.35 Financial Street, Xicheng District, Beijing 100032, China
Tel: 86-10-58325388
Fax: 86-10-58325300
11.2 If either party has to change any of aforesaid contact Information, it shall inform the other party of the new contact Information 7 days before making changes.
11.3 Notices or documents will be deemed to have been served effectively on the following dates:
(1) if delivered by hand, on the first working day after delivery;
(2) if delivered by post, the seventh working day after the notices or documents are given to post office (as indicated by post marks);
(3) if delivered by e-mail, or fax, the first working day after sending or transmission.
12. ENTIRE AGREEMENT
12.1 The effectiveness of the Agreement means that the parties hereto agree to the provisions hereof and shall supersede all previous written or oral agreements, consultations, representations, plans and appendices agreed between both parties.
12.2 If any provision contained in the Agreement is deemed invalid, illegal or unenforceable under any applicable laws, the validity, illegality and enforceability of remaining provisions shall not be affected or impaired, and the invalid, illegal and unenforceable provisions may be deemed as ineffective as to the interpretation of the Agreement.
13. WAIVER
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
Failure or delay of exercising any rights and interests hereunder by either party hereto shall not be construed as a waiver of such rights and interests, unless such party makes a written statement to waive such rights and interests. One time or partial exercise of such rights by one party shall not preclude further exercise of such rights or interests by such party, nor shall preclude exercise of other rights and interests by such party.
14. MISCELLANEOUS
14.1 Matters not covered in this Agreement shall be dealt with in a supplementary agreement executed by both parties. The supplementary agreement shall have the same legal force as this Agreement.
14.2 There is one appendix hereto.
14.3 The term of this Agreement is specified in Appendix I.
14.4 The Agreement is executed in Chinese, and shall be effective on the date when signed and stamped by both parties.
14.5 The Agreement is executed in duplicate. Each party hereto shall hold one copy, and are equally authentic.
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
(Signature page, no text)
Party A: Shenzhen Securities Information Co., Ltd SEAL: /s/company seal Address: F6, Building 10, Shangbu Industrial Zone, Honglixi Road, Futian district, Shenzhen Tel: 86-755-83276743 Representative to sign: Fax: 86-755-83201393 Date: March 20, 2007 |
Bank of deposit and account No.: Shangbu Branch of Merchants Bank 4582712510001
Party B: Fortune Software (Beijing) Co., Ltd. SEAL: /s/company seal Address: Floor 9, Tower C, Corporate Square, No. 35 Financial Street, Xicheng District, Beijing 100032, China Tel: 86-10-58325388 Representative to sign: Fax: 86-10-58325300 Date: March 20, 2007 |
SHENZHEN STOCK EXCHANGE PROPRIETARY INFORMATION LICENSE AGREEMENT NO: SZ07SWJ03-03 ------------------------------------------------------------------------------------------- |
[***] -- Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Appendix I
USE OF INFORMATION AND FEE
Agreement No.:SZ07SWJ03-03
License No.: Shenzhengxu 07SWJ03-03
1. USE OF INFORMATION
2. TERM OF THE AGREEMENT IS FROM MARCH 1, 2007 TO MARCH 1, 2008.
3. PAYMENT OF INFORMATION FEE
1. The license fee for the Proprietary Information shall be RMB [***] per year, and Party B shall pay it off within ten working days after the execution of the Agreement. Party A shall issue an invoice to Party B within ten working days after receiving such payment, and grant Party B the Shenzhen Stock Exchange Proprietary Information License Certificate for the year.
2. Satellite running fee shall be RMB [***] per year, and Party B shall pay it off within ten working days after the execution of the Agreement.
Party A: Shenzhen Securities Information Co., Ltd SEAL: /s/company seal Address: F6, Building 10, Shangbu Industrial Zone, Honglixi road, Futian District, Shenzhen Tel: 86-755-83276743 Representative to sign: Fax: 86-755-83201393 Date: March 20, 2007 Bank of deposit and account No.: Shangbu Branch of Merchants Bank Party B: Fortune Software (Beijing) Co., Ltd. SEAL: /s/company seal Address: Floor 9, Tower C, Corporate Square, No. 35 Financial Street, Xicheng District, Beijing 100032, China Tel: 86-10-58325388 Representative to sign: Fax: 86-10-58325300 Date: March 20, 2007 |
Exhibit 4.17
[Translated from the Chinese original]
DOMAIN NAME TRANSFER
AGREEMENT
BETWEEN
CHINA FINANCE ONLINE CO., LTD.
AND
CHINA FINANCE ONLINE (BEIJING) CO., LTD.
AND
BEIJING FUHUA INNOVATION TECHNOLOGY
DEVELOPMENT CO., LTD.
This Domain Name Transfer Agreement is entered into as of October 30, 2006 by and between the following parties in Beijing, China.
PARTY A (TRANSFEREE): BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO., LTD.
Address: Room 609, 6/F, Ping'an Mansion, Financial Street, Xicheng District, Beijing
Legal Representative: Chen Wu
PARTY B (TRANSFEROR): CHINA FINANCE ONLINE (BEIJING) CO., LTD.
Address: 9/F, Tower C, Corporate Square, No. 35 Financial Street, Xicheng District, Beijing
Legal Representative: Zhao Zhiwei
PARTY C (TRANSFEROR): CHINA FINANCE ONLINE CO. LIMITED
Address: 8/F, Unit C, East Wing Sincere Insurance Building 4-6, Hennessy Road, Hong Kong, SAR
Authorized Representative: Zhao Zhiwei
Each above-mentioned Party is refered to hereunder as " Party", or collectively referred to as "Parties".
WHEREAS:
1. Party A is a company legally incorporated and validly existing within the territory of People's Republic of China, specializing in providing Internet information services in China (the "Operation"), and operating the website of "Financial World";
2. Party B is a wholly foreign-owned enterprise invested and incorporated by Party C and validly existing within the territory of People's Republic of China. Party C is a limited liability company duly organized and validly existing under the laws of Hong Kong Special Administration Region of the People's Republic of China;
3. The Internet Domain Name: [www.jrj.com.cn] used by the website of "Financial World" operated by Party A, is registered by Party B, and Party B owns the ownership of this Domain Name. Now Party B agrees to fully transfer to Party A, and Party A agrees to be fully transferred this Domain Name owned by Party B;
4. The Internet Domain Name: [www.jrj.com] used by the website of "Financial World" operated by Party A, is registered by Party C, and Party C owns the ownership of this Domain Name. Party B is the authorized manager of this Domain Name. Now Party C agrees to fully transfer to Party A, and Party A agrees to be fully transferred this Domain Name owned by Party C;
NOW THEREFORE, through mutual consultation, as to the full transfer of the aforesaid Domain Names, the parties agrees as follows:
1. SUBJECT MATTER OF THE TRANSFER
The Transferors transfer to the Transferee their legally owned Domain Names of www.jrj.com, and www.jrj.com.cn (the "Domain Names")
2. REGISTRATION OF THE DOMAIN NAMES
The Transferors are obliged to assist Party A in contacting relevant organizations to deal with issues in connection with the Transfer of the Domain Names. The annual registration fees of the Domain Names after the Transfer shall be borne by Party A, and expenses incurring from the transfer registration procedures shall be borne by Party A;
3. WARRANTIES OF PARTY C AND PARTY B
(1) Party C and Party B warrant that they are the registered owners of the aforesaid Domain Names, and warrant the Domain Names transferred herein are valid domain names, and no any third party has the ownership of such Domain Names;
(2) Party C and Party B own all necessary rights, capacities and authorization to enter into this Agreement and perform all obligations and liabilities hereunder;
(3) To enter into this Agreement, the board of Party C has obtained approval of auditing committee or other independent body required by Sarbanes-Oxley Act and NASDAQ rules.
4. CONSIDERATION OF TRANSFER
The Transfer Fee for the Transfer of rights of the Domain Name :
www.jrj.com.cn shall be RMB 1 yuan, which shall be paid in cash by Party A to
Party B within five days after the effectiveness of this Agreement.
The Transfer Fee for the Transfer of the Domain Name: www.jrj.com shall be USD 70,000, which shall be paid by Party A to Party C in the way of transfer payment, within five days after the effectiveness of this Agreement.
5. NO TRANSFER
After the effectiveness of this Agreement, without the consent of Party B and Party C, Party A shall not transfer the aforesaid Domain Names, nor enter into any agreement of the same kind with any third party.
6. BUY BACK
Party B and Party C are entitled to exercise the right to buy back in accordance with applicable laws. To exercise the right of repurchase, Party B and Party C shall issue a written notice to Party A (the "Notice of repurchase"). The content of the Notice of repurchase is as follows:
(a) Party B and Party C decide to exercise the right of repurchase;
(b) The domain name Party B and Party C intended to be repurchased from Party A ("Repurchase Domain Name");
(c) Date of repurchase.
Unless the domain name shall be evaluated as required by applicable laws, the price of the Repurchased Domain Name shall be the lowest price as permitted by China laws.
7. INDEMNIFICATION
If any Party herein fails to conform to the relevant obligations hereunder and causes losses to other Parties herein, such defaulting Party shall provide full and effective indemnification to other Parties; if such default leads to the failure of cooperation, other Parties have the right to terminate this Agreement. The losses suffered by the defaulting Party shall be borne by itself.
8. FORCE MAJEURE AND CIRCUMSTANCES CHANGE
At any time prior to the completion of the Transfer, in the event of any major changes in politics, economics, finance, laws, and other aspects, and such major changes have made or may make material adverse effect on the Transfer, the Parties may decide to hold off or terminate this Agreement. No Party will bear any liability of breaching this Agreement.
9. LIABILITY OF TERMINATION
(1) In the event of following circumstances, each Party is entitled to issue written notice to other parties herein to terminate its obligations hereunder:
a. one Party violates or fails to perform the obligations hereunder in accordance with this Agreement;
b. one party makes false or misleading acknowledgements, warranties and undertakings in this Agreement, leading to the failure to be fulfilled.
(2) If this Agreement is terminated in accordance with Item (1) of this Article 9 or Article 7 herein, the liabilities of relevant Parties hereunder are terminated accordingly. However, such termination will not affect any right or claim which has been formed, nor will affect the liabilities required to be borne in accordance with the acknowledgements, warranties, undertakings and indemnifications made in this Agreement.
10. DISPUTE RESOLUTION
(1) Any dispute, issue or demand arising from this Agreement, or its interpretation, violation, cancellation or effectiveness or in connection herewith, shall be settled first through mutual friendly consultation; such consultation shall began immediately after one Party has delivered to other Parties a written request for such consultation. If the dispute cannot be settled through
consultation within thirty days after such notice is given, any disputing Party may request and notify other Parties to submit the dispute for arbitration.
(2) The dispute shall be submitted to China International Economic and Trade Arbitration Committee to be arbitrated in Beijing in accordance with the arbitration rules then in force.
(3) The arbitral award shall be final, and binding upon the Parties. Unless otherwise specified in the arbitral award, the arbitration fees shall be borne by the losing Party.
11. MODIFICATION
The Parties shall exercise strictly this Agreement upon the effectiveness of this Agreement. Any modification to this Agreement shall become effective only after a written agreement through mutual consultations of the Parties, and after the Parties have obtained necessary authorization and approvals respectively.
12. EFFECTIVENESS OF THIS AGREEMENT
This Agreement will become effective upon the execution by the legal representatives or authorized representative of the Parties, and supersede all prior relevant agreements and documents signed by the Parties. The term of this Agreement shall be five (5) years. Unless Party B and Party C gives a notice thirty days in advance to Party A stating this Agreement will not renew, this Agreement will automatically renew for one year upon the expiry of the valid term, and the same rule applies for terms thereafter.
13. COUNTERPARTS
This Agreement executes in three counterparts; each Party of Party A, Party B and Party C shall hold one counterpart, and each counterpart has same legal force.
(The remainder of this page is intentionally left blank)
(Signature Page, No Body Text)
PARTY A:(TRANSFEREE): BEIJING FUHUA
INNOVATION TECHNOLOGY DEVELOPMENT CO.,
LTD.
/s/ Company seal ---------------------------------------- Authorized Representative: |
PARTY B (TRANSFEROR): CHINA FINANCE
ONLINE (BEIJING) CO., LTD.
/s/ Company seal ---------------------------------------- Authorized Representative: |
PARTY C (TRANSFEROR): CHINA FINANCE
ONLINE CO. LIMITED
/s/ Company seal ---------------------------------------- Authorized Representative: |
Exhibit 4.18
[Translated from the Chinese original]
DOMAIN NAME TRANSFER AGREEMENT
BETWEEN
STOCKSTAR INFORMATION TECHNOLOGY
(SHANGHAI) CO., LTD.
AND
SHANGHAI MEINING COMPUTER SOFTWARE
COMPANY LIMITED
This Domain Name Transfer Agreement is entered into as of October 30, 2006 by and between the following two parties in Shanghai, China.
PARTY A(TRANSFEREE): SHANGHAI MEINING COMPUTER SOFTWARE COMPANY LIMITED
Address: 15/F, No.288 Anfu Road, Shanghai, China
PARTY B(TRANSFEROR): STOCKSTAR INFORMATION TECHNOLOGY (SHANGHAI) CO.,LTD
Address: No. 79, Building B, Pudong Software Park, No. 498, Guoshoujing Road,
Zhangjiang, Shanghai, China
Either above-mentioned Party is refered to hereunder as "Party", or collectively referred to as "Parties".
WHEREAS:
Party A is a company legally incorporated and validly existing within the territory of People's Republic of China, specializing in providing Internet information services and selling computer hardwares in China (the "Operation"); Party B is a wholly-foreign owned company legally incorporated and validly existing within the territory of People's Republic of China; Party B agrees to fully transfer to Party A, and Party A agrees to be fully transferred Party B owned Domain Names of www.stockstar.com, www.stockstar.com.cn, and other Domain Names with access to the website of "Stockstar".
NOW THEREFORE, through mutual consultation, as to the full transfer of the aforesaid Domain Names, the parties agrees as follows:
1. Party B transfers to Party A Domain Names of www.stockstar.com, www.stockstar.com.cn, and other Domain Names with access to the website of "Stockstar", owned by Party B.
2. Party B is obliged to assist Party A in contacting relevant organizations to deal with issues in connection with the Transfer of the Domain Names. The annual registration fees of the Domain Names after the Transfer shall be borne by Party A, and expenses incurred from the transfer registration procedures shall be borne by Party A;
3. Party B warrants that it is the registered owner of the aforesaid Domain Names, and warrants the Domain Names transferred herein are valid domain names, and no any third party has the ownership of such Domain Names.
4. The Transfer Fee for the Transfer of rights of the Domain Names of "Stockstar" shall be RMB 1 yuan, which shall be paid in cash by Party A within five days after the effectiveness of this Agreement.
5. After the effectiveness of this Agreement, without the consent of Party B, Party A shall not transfer the aforesaid Domain Names, nor enter into any agreement of the same kind with any third party.
6. INDEMNIFICATION
If any Party herein fails to conform to the relevant obligations hereunder and causes losses to the other Party herein, such defaulting Party shall provide full and effective indemnifications to the other Party; if such default leads to the failure of cooperation, the other Party has the right to terminate this Agreement. The losses suffered by the defaulting Party shall be borne by itself.
7. FORCE MAJEURE AND CIRCUMSTANCES CHANGE
At any time prior to the completion of the Transfer, in the event of any major changes in politics, economics, finance, laws, and other aspects, and such major changes have made or may make material adverse effect on the Transfer, the Parties may decide to hold off or terminate this Agreement. Neither Party will bear any liability of breaching this Agreement.
8. LIABILITY OF TERMINATION
(1) In the event of following circumstances, either Party is entitled to issue written notice to the other party to terminate its obligations hereunder:
a. one Party violates or fails to perform the obligations hereunder in accordance with this Agreement;
b. one party makes false or misleading acknowledgements, warranties and undertakings in this Agreement, leading to the failure to be fulfilled.
(2) If this Agreement is terminated in accordance with Item (1) of this Article or Article 7 herein, the liabilities of relevant Parties hereunder are terminated accordingly. However, such termination will not affect any right or claim which has been formed, nor will affect the liabilities required to be borne in accordance with the acknowledgements, warranties, undertakings and indemnifications made in this Agreement.
9. DISPUTE RESOLUTION
(1) Any dispute, issue or demand arising from this Agreement, or its interpretation, violation, cancellation or effectiveness or in connection herewith, shall be settled first through mutual friendly consultation; such consultation shall began immediately after one Party has delivered to the other Party a written request for such consultation. If the dispute cannot be settled through consultation within thirty days after such notice is given, any disputing Party may request and notify the other Party to submit the dispute for arbitration.
(2) The dispute shall be submitted to Shanghai Branch of China International Economic and Trade Arbitration Committee to be arbitrated in Shanghai in accordance with the arbitration rules then in force.
(3) The arbitral award shall be final, and binding upon the Parties. Unless otherwise specified in the arbitral award, the arbitration fees shall be borne by the losing Party.
10. MODIFICATION
Party A and Party B shall exercise strictly this Agreement upon the effectiveness of this Agreement. Any modification to this Agreement shall become effective only after a written agreement through mutual consultations of the Parties, and after Party A and Party B have obtained necessary authorization and approval respectively.
11. EFFECTIVENESS OF THIS AGREEMENT
This Agreement will become effective upon the execution by the legal representative or authorized representative of Party A and Party B, and supersede all prior relevant agreements and documents signed by the Parties.
12. COUNTERPARTS
This Agreement executes in duplicate; Party A and Party B shall hold one counterpart, and either counterpart has same legal force.
(The remainder of this page is intentionally left blank)
(Signature Page, No Body Text)
PARTY A(TRANSFEREE): SHANGHAI MEINING
COMPUTER SOFTWARE COMPANY LIMITED
/s/ Company seal ---------------------------------------- Authorized Representative: |
PARTY B(TRANSFEROR): STOCKSTAR
INFORMATION TECHNOLOGY (SHANGHAI) CO.,
LTD
/s/ Company seal ---------------------------------------- Authorized Representative: |
Exhibit 4.22
LEASE CONTRACT FOR HOUSING UNIT OF CORPORATE SQUARE
Numbers: [2006] Guo Zu No. 10
PARTY A (the Lessor): China Galaxy Securities Company Limited
Legal Representative: Zhu Li
Title: Chairman Address: Tower C, Corporate Square, 35 Financial Street, Xicheng District, Beijing Postal code: 100032 Phone: (8610) 66568611 Fax: (8610) 66568743 |
PARTY B (the Lessee): Beijing Fuhua Innovation Technology Development Co., Ltd.
Legal Representative: Zhao Zhiwei
Title: Chief Executive Officer Address: Room 601, Ping'an Mansion, 23 Financial Street, Xicheng District, Beijing Postal code: 100032 Phone: (8610) 66214728 Fax: (8610) 33210423 |
Pursuant to the Contracts Law and related laws and regulations of the People's Republic of China, and for the purpose of defining their rights and obligations, the Parties hereby agree on the contract as follows (the "Contract") after friendly negotiations:
ARTICLE 1 QUALIFICATION, REPRESENTATIONS AND WARRANTIES
1. Party A is a company duly established and existing under the laws of the People's Republic of China and the legal owner of Tower C of Corporate Square located at 35 Financial Street in Xicheng District in Beijing.
2. Party B is a company duly established and existing under the law of the People's Republic of China and has the full qualification and power to sign and perform the Contract hereto.
3. Party A and Party B both represent that they have completely understood and agreed on each provision of the Contract and are clearly aware of the benefits, risks and liabilities under the Contract.
4. Party A and Party B both undertake to perform the Contract in a positive, careful and complete manner, following principles of fairness, justice and good faith and in compliance with requirements of relevant policies, laws and regulations.
ARTICLE 2 SCOPE, AREA, TERM AND PURPOSE OF THE LEASE
1. Per Party B's request, Party A agrees to lease to Party B the housing units of 938 to 941 of the ninth floor of Tower C of Corporate Square as indicated in Appendix 1 (the "Leased Units"), with a total area of 441 square meters (referring to the construction area measured by the Bureau of Land Resources and Housing Management of Beijing Municipality) for a lease term of 60 months (the "Lease Term"), commencing on February 9, 2007 (the "Commencement Date") and ending on February 8, 2012.
ARTICLE 3 DELIVERY OF LEASED UNITS AND CONDITIONS FOR DELIVERY
1. Party A shall deliver to Party B the Leased Units on the Commencement Date. Party A shall guarantee that the equipment for electricity, lighting, air conditioning, elevators and washing have been installed in the public areas of the Leased Units and are operating in good condition.
2. Party A provides Party B with equipment and facilities in the Leased Units including but not limited to air conditioning, temperature controllers, alarms and fire sprinkler system, which shall be examined and confirmed by Party B's signature if no objection.
ARTICLE 4 DECORATION AND PLACEMENT
1. In the case of decoration, placement and other changes to the Leased Units made by Party B, Party B shall give a prior notice to Party A and timely provide Party A or the Property Management Department of Corporate Square with various patterns, design plans, list of decoration materials and other documents with respect to decorating and placing internal equipment and auxiliary objects to facilitate the procedure for related approvals.
2. Party B shall conduct the decoration after receipt of examination and approvals. Party B shall strictly perform in compliance with the approved decoration plan and relevant regulations set forth in Appendix 1 by the Property Management Department of Corporate Square. Party B shall pay the price of decoration and other related expenses.
3. Party B shall undertake that decorations shall not have a negative impact either on the structure and framework of Corporate Square or on the interests of other lessees and users. Otherwise, Party B and not Party A shall exclusively bear all liabilities and losses arisen thereby.
4. Party B shall undertake to be responsible for the equipment and facilities altered and improved in the decoration and to never violate related laws, regulations, rules or connected rules of Corporate Square listed in Appendix 1.
ARTICLE 5 FREE LEASE PERIOD, PREEMPTED RIGHT OF RENEWAL AND SUBLEASE
1. Party B has a right to a free lease period for 90 days from the Commencement Date. The term of free lease period is included in the whole Lease Term. Within the term of the free lease period, Party B shall have free rent, but it shall pay for fees other than the rent specified in accordance with the Contract.
2. Upon the expiration of the Contract, Party B has a right to demand renewal of the lease, provided the conditions of Party B are the same as other parties have. Both parties shall negotiate and sign a new contract with respect to the rent and other fees during the renewal of the lease. Party B shall be deemed to waive the right of renewal in the event that Party B cannot notify Party A of the renewal request at least 3 months prior to the expiration of the Contract or both parties cannot reach a new contract at least 1 month prior to the expiration of the Contract.
ARTICLE 6 RENT, PROPERTY MANAGEMENT FEE, DEPOSIT AND PAYMENT
1. The rent and property management fee are calculated in accordance with construction area measured by the Bureau of Land Resources and Housing Management of Beijing Municipality.
2. The rent and property management fee shall be calculated in RMB and shall be collected monthly. The rent for each square meter per day is RMB4.62 yuan and the property management fee for each square meter per day is RMB0.98 yuan.
3. The property management fee shall be calculated on the basis of the property management fee charged by the Property Management Department in compliance with the rules of Corporate Square. Party A can adjust reasonably the property management fee pursuant to the conditions and procedures of Corporate Square.
4. Within 3 working days after the execution of the Contract, Party B shall pay to Party A rent and property management fees for a 3 month period, in the total amount of RMB252541.31 yuan as the deposit, functioning as the security of Party B to make in time all payment of rent and property management fees to Party A.
5. Within 3 working days after the execution of the Contract, Party B shall pay to Party A the property management fee of the first month in the amount
of
RMB14731.58 yuan. Party B shall pay RMB84180.44 yuan for the rent and property management fee of every month after term of the free lease period. Subsequent payment for the rent and property management fee of each month shall be made by Party B within the first 3 working days of such month. If the Commencement Date is not the initial date of a month, payment for the rent and property management fee of the month shall be calculated upon the actual days for lease.
6. Party B shall remit the money for payment through bank transfer to the account designated by Party A as follows:
Account: RMB Account Bank: China Construction Bank, Beijing Fuxing Branch Account Number: 65100080350760014 |
Foreign exchange shall be remitted to the account below:
1. Payee: China Galaxy Securities Company Limited Bank: China Merchants Bank, Beijing Finance Street Branch Account: 6580115832001 2. Payee: China Galaxy Securities Company Limited Bank (HK$ account): Industrial and Commercial Bank of China, Beijing Branch Account: 0200000309200005493 |
7. The rent of the contract includes land use premiums.
ARTICLE 7 RIGHTS AND OBLIGATIONS OF PARTY A
1. Party A is entitled to the ownership and beneficial right of the Leased Units and any other property rights provided pursuant to the laws and regulations.
2. During the Lease Term, Party A has a right to transfer the ownership of the Leased Units, in whole or part, to third parties regardless of consent from Party B. Party A shall transfer its rights and obligations under the Contract to such third parties. The rights and obligations of Party B under the Contract shall not be affected by the ownership transfer.
3. During the Lease Term, Party A has a right to set up a mortgage, offer to compensate and exchange on the Leased Units, in whole or part, regardless of consent from Party B. The rights and obligations of Party B under the Contract shall not be affected by the Party A's activities as aforesaid.
4. During the Lease Term, Party A shall pay the taxes imposed upon it by relevant laws and regulations.
5. Party A has a right to dispatch its personnel to inspect the equipment and hardware of Corporate Square in the Leased Units, giving a prior notice to
Party
B except in emergency circumstances. Party A shall use its best endeavors to avoid any interruption to the ordinary working environment of Party B.
ARTICLE 8 RIGHTS AND OBLIGATIONS OF PARTY B
1. Party B is entitled to use the Leased Units in accordance with the Contract.
2. Party B shall carry out the business activities in the Leased Units in compliance with laws, regulations and rules of the People's Republic of China and is prohibited to harm Party A's reputation through its activities.
3. Party B shall duly make the payments with respect to the rent, property management fee, electricity usage fee and any other charges it shall be responsible for.
4. Starting from the Commencement Date, Party B shall purchase insurance for the properties in the Leased Units, including property insurance and third party liability insurance. Otherwise, Party B and not Party A shall be solely responsible for all liabilities and losses.
5. Party B shall not alter the purpose of use of the Leased Units without consent in writing from Party A.
6. Party B shall not re-lend, sublease, and exchange the Leased Units, in whole or part, to third parties or allow third parties to use the Leased Units by other means, without consent in writing from Party A.
7. Party B shall not alter the locking and security system on the gate of the Leased Units without consent in writing from Party A or approval from related departments.
8. Party B shall not alter or move the equipment for usage of water and electricity and shall not enlarge the capacities of central air conditioning, without consent in writing from Party A.
9. Party B shall take necessary actions to prevent the Leased Units from fires accident or man-made damage. Party B shall immediately notify to Party A with respect to any damage of the Leased Units. Party B shall restore the damaged parts of the Leased Units to their former condition within one month upon receipt of Party A's notice, provided that the damages resulted from negligence by Party B and its employees.
ARTICLE 9 LIABILITIES FOR BREACH
1. The party in breach shall be responsible for the liabilities resulting from the breach. If both parties are deemed to be in breach of the Contract, liabilities
shall be allocated between the two parties in accordance with corresponding facts and actual results of the breach.
2. The party in breach shall pay liquidated damages to the other party duly performing the Contract. The other party is entitled to claim all of its losses incurred but with a limit to all actual losses.
3. If Party A delays in delivering to Party B the Leased Units, it shall pay a late payment charge in the amount of 5/oo of the monthly rent for each day of delay.
4. If Party B delays in making payment of fees, it shall pay a late payment charge in the amount of 5/oo of unpaid fees for each day of delay.
5. If Party B delays in moving out of the Leased Units, it shall pay a late payment charge in amount of 1% of the monthly rent for each day of delay.
6. If Party B in breach cannot duly pay the liquidated damages, late payment charge or indemnity due upon receipt of a notice from Party A asking for payment, Party B agrees that all the properties in the Leased Units can be taken by Party A as a lien and Party A has a right to dispose the properties in accordance with the laws.
ARTICLE 10 EXPIRATION AND TERMINATION OF THE CONTRACT
1. The Contract shall be terminated automatically upon expiration of the Lease Term. Party A shall return the deposit of the rent and property management fee (less the amount ought to be paid by Party B and not including addition of interests or indemnity) to Party B within 30 days after Party B's completion of its performance.
2. Party B shall complete the obligations below upon the expiration of the Lease Term or 7 days before the termination of the Contract:
1) Party B shall deliver to Party A the equipment and facilities in the Leased Units in good operating condition, except normal wear and tear, damages existing before the Lease Term or caused by force majeure events.
2) Party B shall uninstall the decoration and equipment subsequently improved and restore the Leased Units to their former condition when moving out, except if given a written consent from Party A to maintain the decoration and improvement.
3) Party B shall pay off the rent, property management fee and electricity usage fee and other fees required.
3. Party A has a right to unilaterally terminate the contract and keep the rent, provided that Party B has acted as follows. Party B shall be bound to pay the liquidated damages equal to 3 months' rent and other damages to any economic losses of Party A if:
1) Party B conducts illegal business activities.
2) Party B alters the purpose of use of the Leased Units without consent from Party A.
3) The Leased Units are used by third parties other than Party B without consent from Party A.
4) The Leased Units, in whole or part, are subleased, re-lent and exchanged to third parties or used in common by Party B and third parties, without consent from Party A.
5) Party B delays for more than 30 days in making payment for the rent, property management fee and other fees set forth in Article 6 of the Contract.
6) Party B is in a breach of Article 7 of the Contract and cannot efficiently redress within 30 days upon notice from Party A.
4. Party B has a right to terminate the Contract before the expiration of the Lease Term because of the business development, after giving notice to Party A 3 months in advance and obtaining mutual consent.
5. Party B has a right to terminate the contract and claim twice the amount of the deposit, provided that Party A cannot deliver the Leased Units within 30 days from execution of the Contract and the receipt of the deposit from Party B.
6. If Party A terminates the Contract for no reason, it shall pay to Party B twice the amount of the deposit and shall indemnify the direct losses suffered by Party B, such as decoration expenses.
7. Upon the expiration of the Lease Term or 15 days after the termination of the Contract, any properties in the Leased Units that have not been moved out are regarded as being given up by Party B and Party B agrees to authorize Party A to dispose of these properties and charge Party B for any related costs.
ARTICLE 11 FORCE MAJEURE
1. If one party cannot perform the Contract due to earthquake, typhoon, war, turbulence and other unexpected and inevitable factors, the party encountering the force majeure event shall immediately notify the other party and provide detailed information about the force majeure event and a certificate of
non-performance, partial non-performance or delayed-performance. The certificate shall be issued by a local notary public from the place having the force majeure event. The party encountering the force majeure event shall not be held liable for indemnification.
2. If Party B cannot properly use the Leased Units due to the force majeure event, both parties shall negotiate to agree on subtraction of the rent and property management fee. If Party B cannot use the Leased Units at all due to the force majeure event, the payment for the rent and property management fee shall not be made until the Leased Units can be used in good condition. If the Leased Units cannot be used in good condition for 90 days, Party B has a right to notify Party A of termination of the Party B shall reimburse the deposit and the rent paid in advance (less the actual usage fee and normal wear and tear) to Party B within 30 days upon receipt of a notice.
ARTICLE 12 GOVERNING LAW AND DISPUTE SETTLEMENT
1. The Contract shall be governed by and construed in accordance with the laws of the People's Republic of China.
2. Any dispute arising out of or relating to the Contract shall be resolved through friendly consultation between both parties. If the dispute is not resolved through consultation, any party has a right to submit to the China International Economic and Trade Arbitration ("CIETAC") for arbitration in accordance with the Arbitration Rules of CIETAC. The award of the arbitration tribunal shall be final and binding upon the two parties.
ARTICLE 13 MISCELLANEOUS
1. Party B agrees that the Leased Units shall be managed by Party A (or the Property Management Company designated by Party A).
2. The property management services shall include the cleaning of toilets, elevators, public corridors and maintenance of the equipment of Corporate Square, excluding the equipment improved by Party B inside the Leased Units.
3. Party A and Party B both agree that they will conclude a separate contract with respect to the lease of underground parking spaces.
ARTICLE 14 ANNEX
1. Any notice under the Contract shall be sent by means of fax, registered mail, courier or sent by specific individual to the legal addresses of the parties.
2. If any provision of the Contract shall be held invalid, illegal or unenforceable, the validity and legality of the remaining provisions shall not be affected and shall not form a basis for both parties to refuse the performance of the Contract.
3. Any matters not covered by the Contract may be negotiated and included in a supplementary contract entered into by both parties. Any supplementary contract and appendices shall be integrated into the Contract and have the same legal effect as that of the Contract.
4. The Contract is made in three duplicates. Each party shall hold one and the Bureau of Land Resources and Housing Management of Beijing Municipality shall hold one for record. The three duplicates have the same legal effect.
5. The Contract comes into effect upon the signing by legal representatives or authorized representatives with chopped seals and comes to an end upon expiration of the Lease Term.
APPENDIX
1. MAP OF LEASED UNITS
PARTY A: China Galaxy Securities Company Limited
/s/ [COMPANY SEAL] ------------------------------------- By: /s/ Zhu Li ------------------------------------- Legal Representative or authorized representative Date: December 29, 2006 |
PARTY B: Beijing Fuhua Innovation Technology Development Co., Ltd.
By: /s/ [COMPANY SEAL] --------------------------------- /s/ Junling Cai ------------------------------------- Legal Representative or authorized representative Date: December 27, 2006 |
Exhibit 4.23
LEASE CONTRACT FOR HOUSING UNIT OF CORPORATE SQUARE
Numbers: [2006] Guo Zu No. 11
PARTY A (the Lessor): China Galaxy Securities Company Limited
Legal Representative: Zhu Li
Title: Chairman
Address: Tower C, Corporate Square, 35 Financial Street, Xicheng
District, Beijing
Postal code: 100032
Phone: (8610) 66568611
Fax: (8610) 66568743
PARTY B (the Lessee): Fortune Software (Beijing) Co., Ltd.
Legal Representative: Zhao Zhiwei
Title: Chief Executive Officer
Address: Room 601, Ping'an Mansion, 23 Financial Street,
Xicheng District, Beijing
Postal code: 100032
Phone: (8610) 66214728
Fax: (8610) 33210423
Pursuant to the Contracts Law and related laws and regulations of the People's Republic of China, and for the purpose of defining their rights and obligations, the Parties hereby agree on the contract as follows (the "Contract") after friendly negotiations:
ARTICLE 1 QUALIFICATION, REPRESENTATIONS AND WARRANTIES
1. Party A is a company duly established and existing under the laws of the People's Republic of China and the legal owner of Tower C of Corporate Square located at 35 Financial Street in Xicheng District in Beijing.
2. Party B is a company duly established and existing under the law of the People's Republic of China and has the full qualification and power to sign and perform the Contract hereto.
3. Party A and Party B both represent that they have completely understood and agreed on each provision of the Contract and are clearly aware of the benefits, risks and liabilities under the Contract.
4. Party A and Party B both undertake to perform the Contract in a positive, careful and complete manner, following principles of fairness, justice and good faith and in compliance with requirements of relevant policies, laws and regulations.
ARTICLE 2 SCOPE, AREA, TERM AND PURPOSE OF THE LEASE
1. Per Party B's request, Party A agrees to lease to Party B the housing units of 942 to 945 of the ninth floor of Tower C of Corporate Square as indicated in Appendix 1 (the "Leased Units"), with a total area of 441 square meters (referring to the construction area measured by the Bureau of Land Resources and Housing Management of Beijing Municipality) for a lease term of 60 months (the "Lease Term"), commencing on February 9, 2007 (the "Commencement Date") and ending on February 8, 2012.
ARTICLE 3 DELIVERY OF LEASED UNITS AND CONDITIONS FOR DELIVERY
1. Party A shall deliver to Party B the Leased Units on the Commencement Date. Party A shall guarantee that the equipment for electricity, lighting, air conditioning, elevators and washing have been installed in the public areas of the Leased Units and are operating in good condition.
2. Party A provides Party B with equipment and facilities in the Leased Units including but not limited to air conditioning, temperature controllers, alarms and fire sprinkler system, which shall be examined and confirmed by Party B's signature if no objection.
ARTICLE 4 DECORATION AND PLACEMENT
1. In the case of decoration, placement and other changes to the Leased Units made by Party B, Party B shall give a prior notice to Party A and timely provide Party A or the Property Management Department of Corporate Square with various patterns, design plans, list of decoration materials and other documents with respect to decorating and placing internal equipment and auxiliary objects to facilitate the procedure for related approvals.
2. Party B shall conduct the decoration after receipt of examination and approvals. Party B shall strictly perform in compliance with the approved decoration plan and relevant regulations set forth in Appendix 1 by the Property Management Department of Corporate Square. Party B shall pay the price of decoration and other related expenses.
3. Party B shall undertake that decorations shall not have a negative impact either on the structure and framework of Corporate Square or on the interests of other lessees and users. Otherwise, Party B and not Party A shall exclusively bear all liabilities and losses arisen thereby.
4. Party B shall undertake to be responsible for the equipment and facilities altered and improved in the decoration and to never violate related laws, regulations, rules or connected rules of Corporate Square listed in Appendix 1.
ARTICLE 5 FREE LEASE PERIOD, PREEMPTED RIGHT OF RENEWAL AND SUBLEASE
1. Party B has a right to a free lease period for 90 days from the Commencement Date. The term of free lease period is included in the whole Lease Term. Within the term of the free lease period, Party B shall have free rent, but it shall pay for fees other than the rent specified in accordance with the Contract.
2. Upon the expiration of the Contract, Party B has a right to demand renewal of the lease, provided the conditions of Party B are the same as other parties have. Both parties shall negotiate and sign a new contract with respect to the rent and other fees during the renewal of the lease. Party B shall be deemed to waive the right of renewal in the event that Party B cannot notify Party A of the renewal request at least 3 months prior to the expiration of the Contract or both parties cannot reach a new contract at least 1 month prior to the expiration of the Contract.
ARTICLE 6 RENT, PROPERTY MANAGEMENT FEE, DEPOSIT AND PAYMENT
1. The rent and property management fee are calculated in accordance with construction area measured by the Bureau of Land Resources and Housing Management of Beijing Municipality.
2. The rent and property management fee shall be calculated in RMB and shall be collected monthly. The rent for each square meter per day is RMB4.62 yuan and the property management fee for each square meter per day is RMB0.98 yuan.
3. The property management fee shall be calculated on the basis of the property management fee charged by the Property Management Department in compliance with the rules of Corporate Square. Party A can adjust reasonably the property management fee pursuant to the conditions and procedures of Corporate Square.
4. Within 3 working days after the execution of the Contract, Party B shall pay to Party A rent and property management fees for a 3 month period, in the total amount of RMB252541.31 yuan as the deposit, functioning as the security of Party B to make in time all payment of rent and property management fees to Party A.
5. Within 3 working days after the execution of the Contract, Party B shall pay to Party A the property management fee of the first month in the amount
of
RMB14731.58 yuan. Party B shall pay RMB84180.44 yuan for the rent and property management fee of every month after term of the free lease period. Subsequent payment for the rent and property management fee of each month shall be made by Party B within the first 3 working days of such month. If the Commencement Date is not the initial date of a month, payment for the rent and property management fee of the month shall be calculated upon the actual days for lease.
6. Party B shall remit the money for payment through bank transfer to the account designated by Party A as follows:
Account: RMB Account Bank: China Construction Bank, Beijing Fuxing Branch Account Number: 65100080350760014 |
Foreign exchange shall be remitted to the account below:
1. Payee: China Galaxy Securities Company Limited Bank: China Merchants Bank, Beijing Finance Street Branch Account: 6580115832001 2. Payee: China Galaxy Securities Company Limited Bank (HK$ account): Industrial and Commercial Bank of China, Beijing Branch Account: 0200000309200005493 |
7. The rent of the contract includes land use premiums.
ARTICLE 7 RIGHTS AND OBLIGATIONS OF PARTY A
1. Party A is entitled to the ownership and beneficial right of the Leased Units and any other property rights provided pursuant to the laws and regulations.
2. During the Lease Term, Party A has a right to transfer the ownership of the Leased Units, in whole or part, to third parties regardless of consent from Party B. Party A shall transfer its rights and obligations under the Contract to such third parties. The rights and obligations of Party B under the Contract shall not be affected by the ownership transfer.
3. During the Lease Term, Party A has a right to set up a mortgage, offer to compensate and exchange on the Leased Units, in whole or part, regardless of consent from Party B. The rights and obligations of Party B under the Contract shall not be affected by the Party A's activities as aforesaid.
4. During the Lease Term, Party A shall pay the taxes imposed upon it by relevant laws and regulations.
5. Party A has a right to dispatch its personnel to inspect the equipment and hardware of Corporate Square in the Leased Units, giving a prior notice to
Party
B except in emergency circumstances. Party A shall use its best endeavors to avoid any interruption to the ordinary working environment of Party B.
ARTICLE 8 RIGHTS AND OBLIGATIONS OF PARTY B
1. Party B is entitled to use the Leased Units in accordance with the Contract.
2. Party B shall carry out the business activities in the Leased Units in compliance with laws, regulations and rules of the People's Republic of China and is prohibited to harm Party A's reputation through its activities.
3. Party B shall duly make the payments with respect to the rent, property management fee, electricity usage fee and any other charges it shall be responsible for.
4. Starting from the Commencement Date, Party B shall purchase insurance for the properties in the Leased Units, including property insurance and third party liability insurance. Otherwise, Party B and not Party A shall be solely responsible for all liabilities and losses.
5. Party B shall not alter the purpose of use of the Leased Units without consent in writing from Party A.
6. Party B shall not re-lend, sublease, and exchange the Leased Units, in whole or part, to third parties or allow third parties to use the Leased Units by other means, without consent in writing from Party A.
7. Party B shall not alter the locking and security system on the gate of the Leased Units without consent in writing from Party A or approval from related departments.
8. Party B shall not alter or move the equipment for usage of water and electricity and shall not enlarge the capacities of central air conditioning, without consent in writing from Party A.
9. Party B shall take necessary actions to prevent the Leased Units from fires accident or man-made damage. Party B shall immediately notify to Party A with respect to any damage of the Leased Units. Party B shall restore the damaged parts of the Leased Units to their former condition within one month upon receipt of Party A's notice, provided that the damages resulted from negligence by Party B and its employees.
ARTICLE 9 LIABILITIES FOR BREACH
1. The party in breach shall be responsible for the liabilities resulting from the breach. If both parties are deemed to be in breach of the Contract, liabilities
shall be allocated between the two parties in accordance with corresponding facts and actual results of the breach.
2. The party in breach shall pay liquidated damages to the other party duly performing the Contract. The other party is entitled to claim all of its losses incurred but with a limit to all actual losses.
3. If Party A delays in delivering to Party B the Leased Units, it shall pay a late payment charge in the amount of 5/oo of the monthly rent for each day of delay.
4. If Party B delays in making payment of fees, it shall pay a late payment charge in the amount of 5/oo of unpaid fees for each day of delay.
5. If Party B delays in moving out of the Leased Units, it shall pay a late payment charge in amount of 1% of the monthly rent for each day of delay.
6. If Party B in breach cannot duly pay the liquidated damages, late payment charge or indemnity due upon receipt of a notice from Party A asking for payment, Party B agrees that all the properties in the Leased Units can be taken by Party A as a lien and Party A has a right to dispose the properties in accordance with the laws.
ARTICLE 10 EXPIRATION AND TERMINATION OF THE CONTRACT
1. The Contract shall be terminated automatically upon expiration of the Lease Term. Party A shall return the deposit of the rent and property management fee (less the amount ought to be paid by Party B and not including addition of interests or indemnity) to Party B within 30 days after Party B's completion of its performance.
2. Party B shall complete the obligations below upon the expiration of the Lease Term or 7 days before the termination of the Contract:
1) Party B shall deliver to Party A the equipment and facilities in the Leased Units in good operating condition, except normal wear and tear, damages existing before the Lease Term or caused by force majeure events.
2) Party B shall uninstall the decoration and equipment subsequently improved and restore the Leased Units to their former condition when moving out, except if given a written consent from Party A to maintain the decoration and improvement.
3) Party B shall pay off the rent, property management fee and electricity usage fee and other fees required.
3. Party A has a right to unilaterally terminate the contract and keep the rent, provided that Party B has acted as follows. Party B shall be bound to pay the liquidated damages equal to 3 months' rent and other damages to any economic losses of Party A if:
1) Party B conducts illegal business activities.
2) Party B alters the purpose of use of the Leased Units without consent from Party A.
3) The Leased Units are used by third parties other than Party B without consent from Party A.
4) The Leased Units, in whole or part, are subleased, re-lent and exchanged to third parties or used in common by Party B and third parties, without consent from Party A.
5) Party B delays for more than 30 days in making payment for the rent, property management fee and other fees set forth in Article 6 of the Contract.
6) Party B is in a breach of Article 7 of the Contract and cannot efficiently redress within 30 days upon notice from Party A.
4. Party B has a right to terminate the Contract before the expiration of the Lease Term because of the business development, after giving notice to Party A 3 months in advance and obtaining mutual consent.
5. Party B has a right to terminate the contract and claim twice the amount of the deposit, provided that Party A cannot deliver the Leased Units within 30 days from execution of the Contract and the receipt of the deposit from Party B.
6. If Party A terminates the Contract for no reason, it shall pay to Party B twice the amount of the deposit and shall indemnify the direct losses suffered by Party B, such as decoration expenses.
7. Upon the expiration of the Lease Term or 15 days after the termination of the Contract, any properties in the Leased Units that have not been moved out are regarded as being given up by Party B and Party B agrees to authorize Party A to dispose of these properties and charge Party B for any related costs.
ARTICLE 11 FORCE MAJEURE
1. If one party cannot perform the Contract due to earthquake, typhoon, war, turbulence and other unexpected and inevitable factors, the party encountering the force majeure event shall immediately notify the other party and provide detailed information about the force majeure event and a certificate of
non-performance, partial non-performance or delayed-performance. The certificate shall be issued by a local notary public from the place having the force majeure event. The party encountering the force majeure event shall not be held liable for indemnification.
2. If Party B cannot properly use the Leased Units due to the force majeure event, both parties shall negotiate to agree on subtraction of the rent and property management fee. If Party B cannot use the Leased Units at all due to the force majeure event, the payment for the rent and property management fee shall not be made until the Leased Units can be used in good condition. If the Leased Units cannot be used in good condition for 90 days, Party B has a right to notify Party A of termination of the Party B shall reimburse the deposit and the rent paid in advance (less the actual usage fee and normal wear and tear) to Party B within 30 days upon receipt of a notice.
ARTICLE 12 GOVERNING LAW AND DISPUTE SETTLEMENT
1. The Contract shall be governed by and construed in accordance with the laws of the People's Republic of China.
2. Any dispute arising out of or relating to the Contract shall be resolved through friendly consultation between both parties. If the dispute is not resolved through consultation, any party has a right to submit to the China International Economic and Trade Arbitration ("CIETAC") for arbitration in accordance with the Arbitration Rules of CIETAC. The award of the arbitration tribunal shall be final and binding upon the two parties.
ARTICLE 13 MISCELLANEOUS
1. Party B agrees that the Leased Units shall be managed by Party A (or the Property Management Company designated by Party A).
2. The property management services shall include the cleaning of toilets, elevators, public corridors and maintenance of the equipment of Corporate Square, excluding the equipment improved by Party B inside the Leased Units.
3. Party A and Party B both agree that they will conclude a separate contract with respect to the lease of underground parking spaces.
ARTICLE 14 ANNEX
1. Any notice under the Contract shall be sent by means of fax, registered mail, courier or sent by specific individual to the legal addresses of the parties.
2. If any provision of the Contract shall be held invalid, illegal or unenforceable, the validity and legality of the remaining provisions shall not be affected and shall not form a basis for both parties to refuse the performance of the Contract.
3. Any matters not covered by the Contract may be negotiated and included in a supplementary contract entered into by both parties. Any supplementary contract and appendices shall be integrated into the Contract and have the same legal effect as that of the Contract.
4. The Contract is made in three duplicates. Each party shall hold one and the Bureau of Land Resources and Housing Management of Beijing Municipality shall hold one for record. The three duplicates have the same legal effect.
5. The Contract comes into effect upon the signing by legal representatives or authorized representatives with chopped seals and comes to an end upon expiration of the Lease Term.
APPENDIX
1. MAP OF LEASED UNITS
PARTY A: China Galaxy Securities Company Limited
/s/ [COMPANY SEAL] ------------------------------------- By: /s/ Zhu Li --------------------------------- Legal Representative or authorized representative Date: December 29, 2006 |
PARTY B: Fortune Software (Beijing) Co., Ltd.
By: /s/ Zhiwei Zhao --------------------------------- Legal Representative or authorized representative Date: December 27, 2006 |
Exhibit 4.25
LABOR CONTRACT
PARTY A: CHINA FINANCE ONLINE (BEIJING) CO. LTD.
PARTY B: Wang Jun
DATE: May 24, 2006
[Translated from Chinese original]
This Contract is entered into by the following two parties on May 24, 2006:
PARTY A:
China Finance Online (Beijing) Co. Ltd. ("Party A" hereafter), a company duly
organized and registered and validly existing in the People's Republic of China.
Party A is also referred to as "Company".
PARTY B:
Wang Jun ("CFO" hereafter), citizen of the People's Republic of China (ID
certificate number:[------------], address: [Tower B, No. 3, East Third
Ring North Road, Chaoyang District, Beijing]).
Pursuant to the Labor Law of the People's Republic of China and other applicable laws and regulations and upon consultation in the spirit of equality and free will, Party A and Party B hereby enter into this Contract providing for Party A's employment of Party B as a contract-based executive-level manager.
1. CHAPTER ONE CONTRACT TERM
1.1 Party A and Party B agree that the term of this Contract shall be as follows:
(a) Fixed Term: Two years, from May 25, 2006 to May 23, 2008
1.2 If it is the Parties' intention to continue performance under this Contract, either Party may inform the other of its or his intention to renew the Contract Term by a 30- day notice prior to the expiration of the Term.
2. CHAPTER TWO JOB RESPONSIBILITIES
2.1 The Company hereby employs Mr. Wang Jun to serve as the Company's CFO in consideration of its business needs. The scope and responsibilities of the CFO job include the following:
(a) To formulate and implement relevant policies, procedures and strategies to ensure the realization of the Company's financial strategy;
(b) To establish a strong financial system and strict internal control;
(c) To supervise all financial activities to ensure their compliance with Chinese law and the Company's policy;
(d) To be responsible for timely submitting accurate financial reports;
(e) To establish and direct a mechanism for solving financial problems and to timely solve financial problems;
(f) To establish and direct a mechanism for reducing costs and increasing efficiency;
(g) To be responsible for the Company's financial planning;
(h) To participate in business development and strategic planning;
(i) To propose investment policies, and manage investment and transactions in accordance with approved investment guide and implementation strategy;
(j) To carry out strategic acquisition, capital management, listing etc. pursuant to the requirements of the Board of Directors;
(k) To provide comments to Senior Management of the Company and the Board of Directors on financial issues of the Company;
(l) Other responsibilities stipulated by the Board of Directors.
2.2 The CFO shall perform his duties diligently and competently pursuant to the requirements for the position.
3. CHAPTER THREE COMPENSATIONS AND STOCKS OPTIONS
3.1 The salary of the CFO shall be fifty thousand yuan (RMB50,000) per month (before tax).
3.2 The pay day of the Company will be between the first and the fifth days of each month and, if such days are during a holiday period, then the pay day will be the first working day after the holiday period.
3.3 The Company's employees shall pay personal income taxes pursuant to regulations of the government tax agency, and the Company shall withhold a corresponding amount from the monthly salary of each employee and pay that amount on behalf of the employee to the relevant tax agency.
3.4 In addition to what is provided for under the foregoing Article 3.3, the Company shall have the right to make other deductions from the employees' salaries in accordance with laws and regulations of the State.
3.5 Party B's compensations also include stock options, which will be spelled out in more details by the Compensation Committee of the company.
4. CHAPTER FOUR REWARDS AND PENALTIES
4.1 The CFO shall abide by various rules and regulations stipulated by the Company under the law.
4.2 Without prior written consent of the Company, the CFO shall not accept money, gifts or any other kinds of benefits from any customer, collaborating company or other related company.
4.3 The CFO shall serve the Company faithfully and competently and the Company will not permit the CFO to engage in any other job on part-time basis during the term of employment.
4.4 The Company shall impose penalties on the CFO pursuant to regulations of the Company, if the CFO violates the Company's rules or regulations.
5. CHAPTER FIVE CONFIDENTIALITY AND NON-COMPETITION
5.1 The CFO shall safeguard the intellectual property rights and secrets of the Company, abide by relevant confidentiality agreements to which the Company is a party regarding manufacturing technologies, marketing, and unpatented technologies, and shall not engage in any business or activity that competes against the business of the Company. Specific obligations are set forth in a separate Intellectual Property, Confidentiality and Non-Competition Agreement between the Parties.
6. CHAPTER SIX AMENDMENT, RESCISSION, AND TERMINATION
6.1 If Party B is derelict of his duties or has committed any gross errors on the job, including without limitation violating the Intellectual Property, Confidentiality and Non-Competition Agreement between the Parties or laws or regulations of the State, and impairing shareholders' rights or interests, the Company shall have the right to rescind this Labor Contract immediately and shall only have to pay Party B the salary for the current month without any other compensation. And for the stock options owned by Party B in accordance with Article 3.5 herein, the unfixed options shall be returned to the Company.
6.2 If Party B seeks to rescind this Contract before the end of the Contract Term for personal reasons, Party B shall notify the Company in writing thirty (30) days in advance, and the Company shall pay Party B the salary for the current month without any other compensation. And for the stock options owned by Party B in accordance with Article 3.5 herein, the unfixed options shall be returned to the Company.
6.3 During Party B's term of employment, if the Company deems that the CFO has failed to reach the expected target or achieve the expected results, the Company has the right to rescind this Labor Contract; however, the Company shall notify Party B in writing thirty (30) days in advance and shall pay Party B three months' salary as compensation. And for the stock options owned by Party B in accordance with Article 3.5 herein, the unfixed options shall be returned to the Company.
6.4 If the Company proposes any amendment to certain provisions of this
Contract due to any change in the objective conditions upon which this
Contract is premised, or if the CFO proposes any amendment for personal
reasons, the proposing Party shall notify the other Party in writing thirty
(30) days in advance, and the Contract may be amended accordingly after
both Parties agree to the proposed amendments upon consultation.
6.5 The CFO may not rescind this Contract pursuant to the foregoing Article
6.4 before all his liabilities for breach under this Contract and the Intellectual Property, Confidentiality and Non-Competition Agreement have been cleared.
6.6 The employment relationship between the Company and the CFO shall be terminated upon expiration of the Term of this Labor Contract. When this Contract is rescinded or terminated, Party B shall properly hand over his work to Party A. All office supplies,
equipment, facilities and documents that Party B used or handled while working for Party A shall be delivered in good condition to Party A's takeover person. Otherwise, Party A shall have the right to refuse to proceed with relevant procedures, hold Party B liable for breach pursuant to the terms of the Contract, and may claim liquidated damages from Party B.
6.7 Regardless of the reasons for his leaving the Company, Party B shall not defame or sue the Company, raid the Company for employees, or engage in any business or activity that competes against the Company's business except if the Company has committed tax evasion or has otherwise violated the law in its business operations.
6.8 Upon rescission or termination of this Contract, the Company shall complete the procedures for rescinding or terminating the Labor Contract within the stipulated time period, unless otherwise agreed upon in this Contract.
7. CHAPTER SEVEN LIABILITY FOR BREACH
7.1 Under either of the following circumstances, the Party in question shall be liable for breach of the Contract:
(a) The Company violates the provisions of this Contract and unilaterally rescinds this Contract, unless otherwise provided for in this Contract;
(b) The CFO quits his job without the Company's consent.
7.2 Either Party in breach of this Contract shall pay to the other Party liquidated damages. The standard liquidated damages shall be twice the salary Party B actually received for the month prior to the date of the breach.
7.3 If the liquidated damages provided for under the foregoing Article 7.2 is not enough to cover the losses of the other Party, then the breaching Party shall compensate the other Party for the actual losses caused by the breach.
7.4 The CFO warrants (1) that all the relevant information he provides to the company, including without limitation information about his identification, address, education, work experiences and professional skills, are true; (2) that, in working for the Company and entering into this Labor Contract with the Company, the CFO has not violated any agreement on confidentiality or non-competition he entered into with his previous employers or any other company or individual. If the CFO breaches this warranty, the Company has the right to rescind this Contract and demand that the CFO compensate the Company for any losses resulting from the breach.
8. CHAPTER MISCELLANEOUS
8.1 The Employee Handbook and other rules and regulations of the Company are part of this Labor Contract.
8.2 This Contract has two counterparts, one for the Company, one for the employee. This Contract shall become effective upon execution by both Parties. Both counterparts shall have equal legal effect.
8.3 If any of the provisions of this Contract conflicts with laws and regulations of the State, the laws and regulations of the State shall prevail.
IN WITNESS WHEREOF, the Parties have executed this Labor Contract.
Party A: China Finance Online (Beijing) Co., Ltd.
(Seal)
/s/ [COMPANY SEAL] ----------------------------- Signature of Authorized representative Date: May 24, 2006 |
Party B: Wang Jun
/s/ Wang Jun ----------------------------- Date: May 24, 2006 |
Exhibit 4.30
[Translated from the Chinese original]
SHARE TRANSFER AGREEMENT
OF
SHANGHAI MEINING COMPUTER SOFTWARE COMPANY LIMITED
[SHANGHAI KEMEI TAIDI TELECOMMUNICATION EQUIPMENT CO. LTD.]
[FENG TAO]
[XUE FENG]
As the Transferors
AND
[BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO., LTD.]
As the Transferee
TABLE OF CONTENTS
1. DEFINITION AND INTERPRETATION 2 2. SHARE TRANSFER 3 3. PURCHASE PRICE AND EARNEST MONEY 3 4. DUE DILIGENCE 4 5. PREREQUISITES TO COMPLETION 5 6. COMPLETION 8 7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS 9 8. FAILURE OF COMPLETION 10 9. EFFECTIVENESS 10 10. BREACH OF THIS SHARE TRANSFER AGREEMENT 11 11. CONFIDENTIALITY 11 12. DISPUTE RESOLUTION 12 13. NOTICE AND SERVICE 12 14. MISCELLANEOUS PROVISIONS 14 APPENDIX 1-1: REPRESENTATIONS AND WARRANTIES OF THE TRANSFERORS 15 |
The following parties enter into this share transfer agreement, (the "Share Transfer Agreement") effective as of August 15, 2006:
PARTY A: SHANGHAI KEMEI TAIDI TELECOMMUNICATION EQUIPMENT CO. LTD.
Registered Address: Room 255, No.11 Wuhua Road, Shanghai
Legal Representative: Ju Chengli
PARTY B: FENG TAO
I.D. NO.:
PARTY C: XUE FENG
I.D. NO.:
(Party A, Party B, and Party C are hereinafter referred to collectively as the "Transferors");
PARTY D: [BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO., LTD.]
Registered Address: Room 615, Ping'an Mansion, No. 23 Financial Street, Xicheng
District, Beijing
Legal Representative: Chen Wu
(Party D hereinafter is also referred to as the "Transferee");
SECURITY PARTY: CHINA FINANCE ONLINE (BEIJING) CO., LTD.
Registered Address: Room 610B, Ping'an Mansion, No. 23 Financial Street, Xicheng
District, Beijing
Legal Representative: Zhao Zhiwei
Either party of the Transferors and the Transferee is referred to hereunder as the "Party", or collectively referred to as the "Parties."
WHEREAS
A. Shanghai Meining Computer Software Company Limited (hereinafter referred to as the "Company") is a limited liability company duly organized and validly existing under the laws of People's Republic of China, with legal address at: [Building 15, No.288, Anfu Road, Shanghai, China]. The Registered Capital of the Company is [RMB 11,646,300].
B. The Transferors are shareholders who hold 100% of the shares of the
Company. Party A holds [70.64]% shares of the Company; Party B holds
[24.36]% shares of the Company; and Party C holds [5]% shares of the
Company. They have contributed their due investments in full.
C. The Transferors are intended to transfer, and the Transferee is intended to receive 100% of the shares of the Company.
D. Therefore, the Parties hereby agree to transfer the shares to the Transferee in accordance with the terms and conditions specified in this Share Transfer Agreement.
1. DEFINITION AND INTERPRETATION
The following terms shall have the meanings set forth below:
"ARTICLES OF ASSOCIATION" means the revised articles of association of the Company. The Articles of Association reflect the provisions of this Share Transfer Agreement which the Transferors and the Transferee will enter into.
"COMPANY" means Shanghai Meining Computer Software Company Limited.
"COMPLETION DAY" means the completion day specified in Article 6.1 hereof.
"COMPLETION TERM" means the completion term specified in Article 6.1 hereof.
"CREDITOR'S RIGHTS OF SHANGHAI TELECOM" means the debt of RMB 850,381.95 to be paid to Shanghai Telecom or Shanghai Telecom Company of China Telecom (hereinafter referred to as "Shanghai Telecom"), as disclosed by the balance sheet of Zhengxing Information Technology Co., Ltd, dated December 31, 2005, and audited by Shanghai Jiangnan Accountant firm.
"DEBT OWED BY HUANING TO MEINING" means the Creditor's Right to receive RMB 332,523, under the due received amount ended at the date of May 31, 2006, to the benefit of the Company against its former shareholder Shanghai Huaning Information Technology Co., Ltd., in accordance with the balance sheet and its attachments in Appendix 2.
"EFFECTIVE DATE" means August 15, 2006.
"LOANS FROM MINGHONG" means the shareholder loan provided by Shanghai Minghong Information Technology Co., Ltd., to the Company, as the former shareholder of the Company. The balance of the loan is RMB 1,110,600 as disclosed by the Company's balance sheet dated May 31, 2006.
"PURCHASE PRICE" means the purchase price paid by the Transferee to the Transferors in accordance with Article 3.1 hereof.
"REGISTERED CAPITAL" means the registered capital of the Company, equivalent to [RMB 11,646,300 yuan]
"SECURITY PARTY" means China Finance Online (Beijing) Co., Ltd. The security party has joint liability under the payment obligation hereunder towards the Transferors, and the warrantor shall not have a defense against this.
"SHAREHOLDER LOANS OF PARTY A" means the shareholder loans of RMB 3,400,000 provided to the Company by Party A, as the shareholder of the Company, including:
1. A promissory note totaling RMB 2 million issued to the Company by the Shanghai Branch of China Construction Bank (the "Bank") from Party A, and transferred to the Company's account on November 1, 2005. The promissory note and Bank pay-in slip are attached as Appendix 3.
2. The actual loan provided by Party A to the Company totaling RMB 1.4 million, in accordance with the loan agreement entered into with the Company on February 21, 2006. The loan agreement and Bank pay-in slip are attached as Appendix 3.
1.1 Interpretation
The headings are for the purpose of convenience and reference only, and shall not affect the interpretation and understanding of this Share Transfer Agreement.
2. SHARE TRANSFER
2.1 The Transferors hereby sell and transfer to the Transferee, and the Transferee hereby purchases and accepts from the Transferors 100% of the shares of the Company.
2.2 Upon the Completion Date when the shares are transferred, the Transferee shall become the sole shareholder of the Company, with all the rights and obligations of a shareholder in accordance with the Articles of Association.
3. PURCHASE PRICE AND EARNEST MONEY
3.1 The Parties agree the Purchase Price is RMB [12 million], in which the Transferee shall pay RMB 8,476,800 to Party A, RMB 2,923,200 to Party B, and RMB 600,000 to Party C.
3.2 The Transferee shall pay the earnest money for purchase of RMB [847,680] to Party A, RMB [292,320] to Party B, and RMB [60,000] to Party C within three days of the execution of this Share Transfer Agreement.
3.3 Unless the Completion of this Share Transfer Agreement fails, the Purchase Price shall be paid by the Transferee to the bank accounts designated by the Transferors in writing at the Completion Day. The Purchase Price may be set off by the paid earnest money as specified in Article 3.2. If the Transferee has made the aforesaid payment to the Transferors, in accordance with this article, the payment obligation of the Transferee under Article 3.1 hereof is deemed to have been performed.
3.4 Party A, Party B, Party C, Party D and the Company shall respectively pay for their taxes and expenses incurred from the transfer in accordance with laws and regulations.
4. DUE DILIGENCE
4.1 To ensure the Transferee understands of the Company's state of affairs for the purchase of shares, the Transferee is entitled to carry out due diligence on the Company upon the execution of this Share Transfer Agreement. The information which must be investigated and checked includes but is not limited to:
(1) the Company's subject capacity, status of operation and
registration at industrial and commerce authorities;
(2) the Company's status of assets;
(3) the Company's financial status;
(4) employees of the Company;
(5) the Company's labor and personnel system and management;
(6) the Company's taxation and law compliance;
(7) the effective contracts concluded by the Company and performance;
(8) economic disputes, client disputes, litigation and arbitration of
the Company;
(9) securities or material obligations borne by the Company for the
outside entities; and
(10) other corporate information of the Company the Transferee
considers necessary to know.
4.2 The Transferors will actively assist and cooperate with the Transferee to carry out the aforesaid due diligence, offer and disclose all detailed information to the Transferee, and allow a specially designated person (corporate key management staff whose title is higher than deputy general manager) to coordinate the investigation work, ensuring the Transferee may carry out the due diligence as soon as possible.
4.3 The fact that the Transferee is carrying out the due diligence in accordance with this Share Transfer Agreement shall not absolve the Transferors of all the obligations and liabilities under the representations and warranties made by the Transferors herein.
5. PREREQUISITES TO COMPLETION
The Transferee's performance of the Completion obligations hereunder shall be subject to the satisfaction of the following prerequisites prior to or on the Completion Day:
5.1 From the execution date of the agreement to the relevant Completion Day, the representations, warranties and undertakings made by the Transferors herein are true, adequate and accurate. The Transferors make no misleading or false representations of fact herein. No risk exists that may cause the Transferee or the Company to be subject to legal proceedings or disputes due to the transfer hereunder, nor is there any material adverse effect on the Transferee or the Company.
5.2 For the purpose of such shares transfer and change of shareholders of the Company, the Transferors shall, within [45] business days after the execution of the agreement, provide all necessary support, execute all relevant legal documents, perform all necessary procedures, and obtain all necessary approvals, in accordance with relevant laws and Articles of Association, including but not limited to, registering such shares transfer with industrial and commerce administration authorities, unless the failure to complete the registration of such transfer with the industrial and commerce administration authorities within the aforesaid term is caused by reasons of the Transferee or other objective reasons of Parties other than the Transferors.
5.3 No event, circumstance, change or material adverse turn which has had or could reasonably be expected to have a material adverse change on the performance of this Share Transfer Agreement or the benefit of the Transferee has occurred prior to the execution of this Share Transfer Agreement.
5.4 Material information, obligations, and liabilities borne by the Company in connection with the transfer hereunder have been disclosed adequately to the Transferee, and the disclosure is accurate, adequate and true.
5.5 The Loan from Minghong is repaid prior to the Completion Day.
5.6 Meining has signed waiver of Creditor's Rights for the Debt Owed by Huaning to Meining.
5.7 The Company has concluded the Strategic Consultation Service Agreement
("Appendix 4-1") and Technology Support Service Agreement ("Appendix 4-2")
with
Zhengxing Information Technology Co., Ltd. (hereinafter referred to "Shanghai Zhengxing"). Such agreements are continual and effective, and the Company is obliged to pay the consultation service fees to Shanghai Zhengxing in accordance with such agreements.
5.8 For the purpose of the payment of the aforesaid consultation service fees, the Transferors have executed the Share Pledge Agreement ("Appendix 5-1") and Purchase Option Agreement ("Appendix 5-2") with Shanghai Zhengxing. Such agreements are continual and effective.
5.9 The Transferors and their affiliated companies, including but not limited to Shanghai Lianchuang Venture Capital Co., Ltd., Shanghai Minghong Information Technology Co., Ltd, Shanghai Stateline Telecom, Shanghai Stateline Network Co., Ltd, Stateline SCM Co. Ltd. Shanghai, have issued an irrevocable written statement waiving all of their Creditor's Rights to the Company except for, or including, the shareholder loans of Party A ("Appendix 6 (1-5)").
5.10 The IDC custodian fee owed by the affiliated companies of the Transferors, Shanghai Minghong Information Technology Co., Ltd and Stateline SCM Co. Ltd. Shanghai has been paid to Meining Company.
5.11 If some of the debts owed to Meining, as specified in Article 5.10, are not paid in full prior to the Completion Day, the Transferors shall issue a written confirmation letter to the Transferee consenting to the deduction of the amount equivalent to the unpaid debt from the purchase price.
5.12 The payment for the debt specified in Appendix 2 "Balance Sheet" by the relevant payees upon the execution of this Share Transfer Agreement, shall be reserved in the bank account of the Company, except for those amounts approved by the Transferee in writing.
5.13 The Company has executed the relevant agreement to transfer the www.stockstar.com and www.stockstar.com.cn websites (set forth in Appendix 7-1) and the brand of "Stockstar" ("Appendix 7-2") to Shanghai Zhengxing at the price of RMB 1 yuan respectively.
5.14 Party A has made securities as to the Creditor's Rights of Shanghai Telecom ("Appendix 8").
5.15 The creditors Lu Yinghua, Gao Limin and Shanghai Minghong Information Technology Co., Ltd., and Shanghai Minghong Information Technology Co., Ltd., as defined by the Company's account books, of the promissory note in the amount of
RMB 3.18 million, whose issuer is not known, but was received by the Company on May 14, 2002, have issued a letter to acknowledge their non-possession of or waiver of any creditor's right ("Appendix 9-1"). Party A shall issue a letter of security ("Appendix 9-2") to the Transferee, to warrant that the creditors Lu Yinghua, Gao Limin and Shanghai Minghong Information Technology Co., Ltd., are the true creditors of the debt of the Company in connection with the aforesaid promissory note. If it is discovered in the future that Lu Yinghua, Gao Limin and Shanghai Minghong Information Technology Co., Ltd. are not the true creditors for the aforesaid debt, such debt shall be borne by Party A, and Party A shall compensate any and all losses suffered by the Company or the Transferee from such circumstance.
5.16 As to the promissory note (RMB 2.351 million, issuer of which is unknown) received by the Company on November 22, 2001, the creditors as shown by the account books of the Company is Dongyang Building Materials Co. Ltd. in Zhejiang Province. Party A shall issue a letter of security ("Appendix 10") to the Transferee and the Company, to warrant the creditors, Dongyang Building Materials Co. Ltd. is the true creditor of the debt of the Company in connection with the aforesaid promissory note. If it is discovered in future Dongyang Building Materials Co. Ltd. is not the true creditor for the aforesaid debt, Party A shall compensate any and all losses suffered by the Company or the Transferee from such circumstance.
5.17 The Website Alliance Market Promotion Cooperation Agreement ("Promotion Agreement") concluded between Shanghai Daodun Network Technology Co., Ltd. ("Daodun Company") and the Company dated January 9, 2006, has been terminated on July 3, 2006. Party A shall issue a letter of security to the Transferee, to warrant the aforesaid agreement has been legally terminated, and the Creditor's Rights and debts of both parties under the promotion agreement have been cleared. No legal disputes, claims, lawsuits or threatened lawsuits are incurred from such promotion agreement. Party A shall be liable for any legal dispute, claim, lawsuit or threatened lawsuit incurred from such agreement, and compensate all losses suffered by the Company and the Transferee from this. The promotion agreement and the letter of security as to the termination of such agreement are attached hereto as Appendix 11.
5.18 From the execution of the agreement to the completion day, the Transferors shall guarantee the normal operation of the Company in aspects of products and services, and team work, and shall provide to the Transferee the following documents:
(A) staff list of department managers and those with titles higher than department managers; and (B) Labor Contracts signed by department managers and those with titles higher than department managers ("Appendix 12").
5.19 The Transferors controlled companies have obtained written consent from the Transferee prior to taking the following actions:
(A) Any fund transfer with aggregated amount exceeding RMB
50,000 with a Company or natural person and its affiliated
party; execution of any agreement;
(B) appointment and disposal of department managers and those
with titles higher than department managers;
(C) dividends distribution;
(D) change of employee reward (including bonus) plans;
(E) issues of operation cooperation; and
(F) development and launching plan of new products.
5.20 Party A have made securities as to Share Transfer Agreement of Zhengxing Information Technology (Shanghai) Co., Ltd. concluded between Stockstar.com INC and China Finance Online (Beijing) Co., Ltd. dated August 15, 2006 (attached as "Appendix 13").
5.21 The Transferors have performed all other obligations in connection with the transaction specified herein at the date of completion day.
6. COMPLETION
6.1 Completion
"Completion" in the agreement means the parties complete the transfer hereunder in accordance with Article 6 herein. The parties agree and affirm that the "completion day" is the day at which all registration procedures of the shares transfer hereunder are completed at the industrial and commerce administration authorities. "Completion" shall take place at the office of the Company or other places agreed by the parties.
6.2 Obligations of the Transferors
The Transferors shall deliver the following documents to the Transferee at the Completion:
(1) Board resolution (if applicable) of the Transferors, to authorize the Transferors to execute, deliver and perform the agreement;
(2) All originals of Business License of Enterprise Legal Person renewed by industrial and commerce administration based on the shares transfer;
(3) All prerequisites to completion specified in Article 5 herein required by the Transferee are satisfied by the Transferors.
(4) Official Seal, financial seal and all other seals of the Company.
6.3 Obligations of the Transferee
The Transferee shall deliver the following documents to the Transferors at the completion:
(1) Board resolution of the Transferee, to authorize the Transferee to execute, deliver and perform the agreement; and
(2) the purchase price specified in Article 3.
The Transferee agrees to be transferred the shareholder loan of Party A to the Company equivalent to RMB 3.40 million with a consideration of RMB 3.40 million at the completion day. For this purpose, the Transferors Party A shall conclude a Creditor's Right Transfer Agreement with the Transferee ("Appendix 14").
7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
7.1 The Transferors make irrevocable representations and warranties to the Transferee as specified in Appendix 1 (1-2).
7.2 The representations made by the Transferors herein are true, accurate and adequate and contain no concealed or misleading content. Any debt, obligation or liability discovered after completion, which failed to be disclosed to the Transferee by the Transferors, or failed to get approval from the Transferee, shall be borne jointly by the Transferors.
7.3 If any of the representations or warranties of the article are not true, accurate or adequate, the Transferors shall have joint compensation liability to the Transferee for any loss, damage, expense or adverse condition (which will not occur if the relevant representation or warranty is true or accurate) in any kind suffered by the Transferee.
7.4 The Transferee undertakes that it will make timely and full payment to the Transferors for the purchase price of the shares in accordance with payment schedule specified in the agreement.
7.5 The Transferee undertakes the execution and performance of the agreement make no violation of other contracts, agreement and legal documents to which the Transferee is one party.
7.6 The Transferee complies with the conditions stipulated by laws to be transferred the subject of the agreement prior to making registration of the share transfer at industry and commerce administration, and will not affect the normal legal procedures of the share transfer due to the restrictions of the Transferee itself.
7.7 The Transferee warrants that it will actively go through all the procedures necessary for the share transfer, and perform all required obligations as the Transferee of the shares.
8. FAILURE OF COMPLETION
8.1 If the shares hereunder for any reason fail to complete the registration of transfer at industrial and commerce administration in accordance with this Share Transfer Agreement, except as otherwise provided by the Parties, this Share Transfer Agreement will be cancelled accordingly.
8.2 If the shares hereunder fail to complete the transfer in accordance with this Share Transfer Agreement for none of the reasons of the Transferors and the Transferee (including but not limited to failure to get approval from government in accordance with relevant laws and regulations), the Transferors shall refund all the payment the Transferee made to the Transferors in accordance with this Share Transfer Agreement (including the Earnest Money for purchase), to the Transferee within 7 days after the day of receiving the written Notice from the Transferee. The Transferee shall return all the documents provided by the Transferors to the Transferee in accordance with this Share Transfer Agreement, to the Transferors within 7 days after receiving the written Notice from the Transferors.
8.3 If the failure to complete the share transfer in accordance with this Share Transfer Agreement is due to the Transferors' account, the Transferors shall refund in double the charged earnest money to the Transferee in accordance with this Share Transfer Agreement.
8.4 If the aforesaid failure of Completion is due to the Transferee's account, the Transferors are entitled to forfeit the earnest money paid by the Transferee in accordance with this Share Transfer Agreement.
8.5 If the Completion is failed after the registration of the transfer at industrial and commerce administration, both parties are obliged to return the shares hereunder to the former holding status before the execution of this Share Transfer Agreement.
9. EFFECTIVENESS
9.1 The agreement shall be effective from the date of execution by the parties ("Effective Date").
10. BREACH OF THE AGREEMENT
10.1 Failure of performance, partial or delayed performance of any obligations borne by any party hereof shall constitute a breach of the Share Transfer Agreement, and such party shall bear the liability for breach of the Share Transfer Agreement, and is liable for compensating all economic losses suffered by other parties from such breach. Unless otherwise provided in the Share Transfer Agreement, if any party breaches the Share Transfer Agreement or if the representations, undertakings or warranties made hereunder by any party are false, and such party fails to make effective remedies within ten (10) days (or longer time as approved by the non-breaching party in writing) after receiving the written Notice from the non-breaching party, the non-breaching party is entitled to terminate the agreement immediately and unilaterally, and the breaching party shall compensate the non-breaching party for all losses suffered by the non-breaching party from such breach.
10.2 For the purpose of the Share Transfer Agreement, the parties agree and affirm that, for any breach hereunder by any party of the Transferors, all parties of the Transferors shall have joint liability for any applicable compensation due in the event of a breach. The Transferee is entitled to make claims against any party of the Transferors at its own discretion, and is free from restrictions of any conditions or prerequisite procedures. Any party of the Transferors shall not have a defense against this.
10.3 If the Transferee fails to pay for the Earnest Money to the Transferors in accordance with Article 3 herein, or fails to pay for the purchase price to the Transferors in accordance with the Share Transfer Agreement, or fails to pay to Party A for the transferred Creditor's Rights as specified in Item 3, Article 6.3 herein, the Transferee shall pay to the Transferors a fine amounting to 0.1% of the overdue amount per day from the tenth day of such breach. If such breach exceeds [20] days, the Transferors have the right to terminate the agreement, in addition the Transferee shall pay to the Transferors a fine amounting to 5.0% of the total price of the agreement.
11. CONFIDENTIALITY
11.1 Whether or not the Share Transfer Agreement is terminated, the parties hereof shall make strict confidentiality of the trade secret and proprietary information of the other party or the Company (hereinafter collectively referred to as "Confidential Information") received during the performance of the Share Transfer Agreement. Except those having to be disclosed to a third party upon prior written consent from the other party or in accordance with relevant laws and regulations, the party receiving the Confidential Information shall not disclose to any other third party the Confidential Information or any part of it; except for the purpose of the performance
of the Share Transfer Agreement, the receiving party shall not use or indirectly use the Confidential Information or any part of it.
11.2 The following information is not regarded as Confidential Information: (a) any information which the receiving party has written evidence to prove it has obtained such information prior to receiving it in connection with the Share Transfer Agreement; (b) any information which has been publicized not resulted from faults of the receiving party, or information which are known to the public for other reasons; or (c) information the receiving party legally obtained from other channels thereafter.
11.3 The information receiving party may disclose the Confidential Information to its relevant employees, agencies, or professionals invited, but such party shall ensure the aforesaid persons are also bound by this Share Transfer Agreement, and keep the Confidential Information as confidential, and use the Confidential Information for the sole purpose of the performance of this Share Transfer Agreement.
12. DISPUTE RESOLUTION
12.1 Any dispute arising from the interpretation or exercise of this Share Transfer Agreement, shall be settled though friendly consultation by the parties first.
12.2 If a dispute is not settled by the aforesaid way within sixty (60) days after the beginning of consultation, any party may submit the dispute to China International Economic and Trade Arbitration Committee in Beijing for final arbitration in accordance with the arbitration procedures and rules currently in force.
12.3 The arbitration shall be made by three (3) arbitrators. The Transferors and the Transferee shall appoint one (1) arbitrator each. The third arbitrator shall be designated by the arbitration committee, and serve as chairman of the arbitration court.
12.4 The arbitration award shall be final and binding the parties. The liability for the payment of arbitration fee shall be judged by the arbitration court.
13. NOTICE AND SERVICE
Any Notices or other correspondences among the parties in connection with the Share Transfer Agreement (hereinafter referred to as "Notice") shall be in written form (including delivered by hand, by post, by fax or by telegraph), and delivered to the addressee at the following addresses or numbers, and the names of the following contact persons shall be noted. Only all the aforesaid conditions are satisfied, a Notice shall be deemed as an effective Notice.
Party A: Shanghai Kemei Taidi Telecommunication Equipment Co. Ltd. Contact Person: Ju Chengli
Address: Building 16, No. 288, Anfu Road, Shanghai
Postal Code: 200031
Tel: 021-54658111
Fax: 021-54047200
EMAIL: wxm@uni.com.cn
Party B: Feng Tao
Address: Shanghai Lianchuang Venture Capital Co., Ltd, Xingguo Hotel, No. 78,
Xingguo Road, Shanghai
Postal Code: 200052
Tel: 021-64485757
Fax: 021-53831000
EMAIL: fisher@ceyuanvc.com
Party C: Xue Feng
Address:
Postal Code:
Tel: 13564026279
Fax:
EMAIL: Feng.Xue@dlapiper.com
Party D: BEIJING FUHUA INNOVATION TECHNOLOGY DEVELOPMENT CO., LTD.
Contact Person: Wang Jun
Address: Floor 9, Tower C, Corporate Square, No. 35 Financial Street, Xicheng
District, Beijing, China
Postal Code: 100032
Tel: 010-58325388
Fax: 010-58325300
EMAIL: jwang@jrj.com
The Notices hereunder shall be deemed to have been effectively given on
following: (1) any Notices delivered by hand shall be deemed to have been
effectively served on the date of the confirmation of the addressee. Notices
without confirmation of the addressee shall not be deemed as effectively served;
(2) any Notices delivered by post shall use registered express or courier
service, and shall be deemed to have been effectively served to the addressee on
the 48 hours after they were sent out (deferred accordingly if there are public
holidays); (3) Notices delivered by fax shall be deemed to have been effectively
given on the date of transmission and upon confirmation. However, if the Notice
is sent out on a public holiday, the Notice shall be deemed to have been
effectively served on the first day after the ending of the public holiday; (4)
any Notices sent though telegraph shall be deemed to have been effectively
served on 24 hours after they were sent out (deferred accordingly if there are
pubic holidays).
If any changes are made as to the correspondence address, number or contact person by any party, such party shall notify other parties within 7 days after the change; otherwise the Notices addressed to the former correspondence shall be deemed as effective Notice.
14. MISCELLANEOUS PROVISIONS
14.1 The Share Transfer Agreement and rights of the parties hereunder shall be interpreted and defined in accordance with China laws. If no such relevant China laws exist, the international commercial convention shall be applicable.
14.2 Failure to exercise, partially exercise or delayed exercise of any rights hereunder by any party shall not be construed as a waiver of such rights or any other rights hereunder by such party, except those expressly stated in the agreement or waived in written form.
14.3 The Share Transfer Agreement and its appendices constitute the entire agreement among the parties, and supersede all previous correspondences, statement, agreement or any other documents executed by the parties prior to the Share Transfer Agreement.
14.4 If any provisions herein become invalid as contradicted to the laws and regulations applicable, such provisions shall be cancelled from the Share Transfer Agreement. However, the invalidity of such provisions shall not affect the validity of remaining provisions and entire validity of the agreement. The parities shall make consultations to set up new provisions or deal with the consequences resulted from the invalidity of such provisions.
14.5 If the Share Transfer Agreement of Zhengxing Information Technology (Shanghai) Co., Ltd. concluded between Stockstar.com INC and China Finance Online (Beijing) Co., Ltd. dated August 15, 2006, fails to make registrations of share transfer at industry and commerce administration, the agreement shall be cancelled voluntarily.
14.6 The Share Transfer Agreement is executed in [eight] copies. Each party shall hold one copy. Others shall be used for the relevant registration procedures. Each copy is equally authentic.
APPENDIX 1-1: REPRESENTATIONS AND WARRANTIES OF THE TRANSFERORS
Except for those expressly disclosed in the disclosure sheet attached as Appendix 2, the Transferors warrant and represent to the Transferee (and the Transferors acknowledge the Transferee completes the transfer hereunder based on such representations and warranties):
(a) Company
The Company is incorporated, organized and validly existing under the laws of People's Republic of China, has a well-placed position and all necessary corporate power and capacity to own its property and assets and carry out its current business. The Company has completed all registrations and records procedures, obtained the qualification to carry out business in the form of Company in each jurisdiction and has a well-placed position, which is essential to the characters of business or the property the Company owns or leases within the jurisdiction.
(b) Subsidiary
The Company does not possess, directly or indirectly, and has given no consent to purchase (i) any outstanding shares or securities which can be converted to shares of any other companies, or (ii) any shares participated in dividends in any partnership enterprise, joint venture enterprise or other commercial enterprise.
(c) Binding Agreement and Effectiveness of Transfer
The agreement constitutes legal, effective and binding obligations to the Transferors. By executing and delivering the agreement, completing the transfer stated hereunder, and performing the provisions, conditions, and stipulations herein, the Transferors will not:
(i) contradict, violate or lead to violation of any obligation of the Transferors, the Company or any subsidiary or accelerate the performance of such obligation stipulated or agreed in the following:
A. Any laws applicable to the Transferors, the Company or any subsidiary;
B. Any judgment, order, writ, injunction or award currently applicable to the Transferors, the Company or any subsidiary,
issued by court or government officials, administrations or departments;
C. Articles of association or any resolution of the Transferors, the Company and any subsidiary, and the revisions or reiteration of such articles of association or resolution; or
D. Provisions in any agreements, arrangements, or understandings to which the Transferors, the Company or any subsidiary is one party, or binding the Transferors, the Company or any subsidiary.
(d) License, Approval and Authorization
The Company carries out its business in accordance with all applicable statutes, laws, order, rules and regulations stipulated by any and all authorities which have jurisdictions over any part of the Company's business, and possesses all license, approval and authorization essential to the legal operation of its business. Such license, approval and authorization are continual and effective and will be effective, well-placed and under no violations until the completion day of the agreement.
(e) Capital
The Company is a legal person established in accordance with China
laws, with limited liability, and the registered capital is RMB
[11,646,300].
(f) Shares Purchased and Ownership of Shares of Subsidiaries
The Transferors are the sole owner of all shares of the Company. The shares of the Company is free and clear of any liens, pledge, encumbrance, or encumbrance of other parties (except for the rights of the Transferee hereunder and the agreement attached as Appendix 5). Except for those stipulated herein or in the agreement attached as Appendix 5, there are no agreements, options or rights of others, which is binding or will bind in any time the Transferors or the Company's actions of sale, transfer, distribution, securing, pledge, charge of the purchased shares or in any other ways to dispose or place such purchased shares.
(g) Financial Statement
The annual financial statements of the Company provided by the Transferors:
(i) have been prepared based on acknowledged accounting principles and in correspondence with the last accounting period;
(ii) have been prepared according to financial records, and no adjusting entries, and are adequate and accurate in all material aspects; and
(iii) have fairly reflected the assets, debts (whether are accrued, absolute, contingent or others), financial status or operational outcome.
(h) No Undisclosed Debt
Except for those disclosures reflected in or prepared for the balance sheet, or taken place after the date of the balance sheet and reflected in disclosure sheet in Appendix 2, the Company has no unpaid debt or any liability or obligation (whether is accrued, absolute, contingent or others), and no unperformed undertaking or obligation in any kind (whether such undertaking or obligation is deemed at present as debt of the Company or any subsidiary, in accordance with the acknowledged accounting principles), except for those payable accounts in the normal business operation.
(i) Taxation
(i) The Company have prepared adequate amount of money in the balance sheet to pay for the due and unpaid tax at the date of the balance sheet, or any due tax installments repayment of the Company at current taxation year. Except for those reflected in or prepared for the balance sheet, the Company has no liability for any taxation. To the knowledge of the Transferors upon proper investigation, the Company has no pending or possible action, lawsuit, audit, investigation, claim, or other proceedings in connection with taxation, and to the knowledge of the Transferors, there are no facts or circumstances, actions, negligence, events, transactions, or series of transactions (including execution and/or Completion of the Share Transfer Agreement) which will or may possibly result in an action, lawsuit, audit, investigation, claim, or other proceedings. No agreement, waiver, or other arrangements will lead to the delay of submitting the tax returns or paying for any taxes by the Company.
(ii) The Company and the subsidiaries have timely submitted all tax returns, financial statements and other documents required by any taxation laws. Such documents submitted contain no major false representations, nor any omissions of representations of major facts which shall be included. The Company has not submitted nor is it required to submit any tax returns,
financial statements or any other documents in any other jurisdictions outside People's Republic of China;
(iii) The Company has timely withheld and remitted to the relevant authorities (or has provided guarantees as regulated by the relevant laws) the taxes in full which are required to be withheld and remitted in the form required by applicable taxation laws (including any retirement pension plan contribution and social insurance (including but not limited to medical insurance, unemployment insurance, on-job injury insurance) and any other deductions);
(iv) Except for the unpaid debt or liabilities disclosed in the financial statements of the Company, the Company has no unpaid debts or liabilities owing to the Company's directors, former directors, management staff, shareholders, or employees, or to individuals or companies that have no fair transactions with the aforesaid individuals (except for the normal travel expenses borrowed in advance according to procedures of the Company);
(v) The Company has not transferred property to any other person or purchased property from any other person, directly or indirectly through unfair transactions failed to be based on the fair value of the property at sale or purchase.
(j) No Alteration (Prior to the Execution of the Agreement)
(i) There is no major adverse alteration as to any assets, business, financial status, operational outcome or prospects of the Company.
(ii) There is no damage, destruction or loss, labour-management dispute of any kind, or any event, development or condition of any kind which may produce major adverse effect (whether or not an insurance guarantee has been obtained).
(k) Ownership of the Property
Except for those disclosed in the balance sheet or in the Appendix 2, the Company owns full and merchantable ownership of its property and interests in its property, personal property and real property, including the property disclosed in the balance sheet or purchased after the date of the balance sheet (except the property transferred, sold or disposed of in any way during general and normal business operations after such date), and such property is free and clear of any kinds of mortgages, pledge, security interests, liens or agreement on ownership reservation.
(l) Lease of Personal Property
Except those listed in Appendix 2, the Company has no leased or borrowed equipment, other personal property or fixtures.
(m) Lease of Real Property
(i) Except the Lease and Sublease Agreement stated in Appendix 2 hereto, the Company is not a party to any lease, sublease, license or other legal documents in connection with the real property, and is not bound by such legal documents, and the Company has not executed any other legal documents in connection with the real property. Any rights and interests of the Company under the Lease and Sublease Agreement are free and clear of any kinds of liens, pledge and encumbrances.
(ii) All the leases and subleases executed by the Company (listed in Appendix 2) are in normal operation and fully effective. Except otherwise specified in Appendix 2, no amendments have been made to such leases and subleases. The Company has the right to benefit from all leases and subleases to which the Company is one party.
(iii) Except otherwise specified in Appendix 2, all rents and other current owed expenses have been paid, in accordance with all lease or sublease agreements to which the Company is a party.
(iv) The Company has carried out all obligations under all lease or sublease agreements to which the Company is a party; the Company has not breached the obligations under any lease or sublease agreement, and has not received notice of any breach under any lease or subleases agreement.
(n) Real Property
Except as specified in Appendix 2, the Company does not own real property nor does it have rights or interests in real property. The Company has full and merchantable ownership of the permanent property rights towards all real property, and such real property is free and clear of any mortgage, pledge or encumbrances.
(o) Asset Status
All major tangible asset or any portion thereof used in the operation or in connection with the operation of the Company and its subsidiaries, is in good
condition; the maintenance is normal (if applicable), except for reasonable loss.
(p) Lawsuit
Except as disclosed in Appendix 2, there is no existence of any pending lawsuit, action, dispute, civil or criminal lawsuit, claim, arbitration, or legal, administrative or other proceedings, or governmental investigation, including appeal and application filed for the purpose of review (referred to collectively herein as "claims"); and to the knowledge of the Transferors, there is no existence of the aforesaid claims threatened the Company or affected any of its asset, property, or operation. To the knowledge of the Transferors, there are no facts or circumstances that may give rise to such claims. Except as disclosed in Appendix 2, there is no pending judgment, writ of execution, writ, injunction, rules and orders against the Company issued by any court, authorities, administrations or arbitration authority.
(q) Intellectual Property
Appendix 2 lists all inventions, patents, brands, brands intended to use, trade names, copyright, industrial designs, Company names, logos, appearance, corporate style and other Intellectual Property (whether registered or not), domestically or in foreign countries, of which the Company has the ownership or license right, and all relevant applications (referred to herein collectively as "Intellectual Property"), including any detailed material in connection with registration, any detailed registration material, and the earliest used time of any unregistered Intellectual Property. The Company has the ownership of all Intellectual Property. The Intellectual Property is free of any claims or encumbrances. The use and execution (or failure of use and execution) of the Intellectual Property by the Company in any way does not lead to the restriction of its effectiveness or invalidity. Except as disclosed in Appendix 2, the Company has not made any infringement or violation on any Intellectual Property of any person.
(r) Laws Compliance
The Company has obtained all necessary licenses, permits, certificates, authorizations or approvals ("license and permit") which entitle the Company to use the Company name and to engage and carry out its operation and management though the assets and property owned, leased, operated and used by the Company.
(s) Agreement on Operation Restriction
The Company is not a party to any agreement or arrangement which restricts the Company from conducting certain business.
(t) No Security
Except those specified herein or in any appendix hereto, the Company has not provided or agreed to provide any securities to any debts, compensation, bonds, security liability, or any other liabilities, nor is the Company a party to such security or is bound by such security.
(u) Record of the Company
The Company shall provide without reservation the accurate and complete record of meetings and resolutions convened by its directors or shareholders since the establishment of the Company.
(v) Approval
Prior to the completion of the transfer hereunder, there is no necessity for the Company or the Transferors to make to any authorities or obtain from such authorities, any approval, consent, authorization, or statement, record (except the administrative records made at taxation authority, Company registration, or other administrations of same kind) or registration, or make the obtaining of the aforesaid as a condition to complete the transfer hereunder.
(w) Full Disclosure
The above acknowledgement and facts representations contain no false representation of any major facts, and no omission of any major facts. There is no existence of any fact of the Transferors failed to be disclosed to the Transferee, which is foreseeable by the Transferors to make major adverse effect on the capacity of the Transferors to perform the obligations hereunder.
(Signature Page)
The parties hereby sign the Share Transfer Agreement at the date first above written:
PARTY A (SEAL):
AUTHORIZED REPRESENTATIVE:
/s/ CHENGLI JU |
PARTY B (SEAL):
AUTHORIZED REPRESENTATIVE:
/s/TAO FENG |
PARTY C (SEAL):
AUTHORIZED REPRESENTATIVE:
/s/ YING MA |
PARTY D (SEAL):
AUTHORIZED REPRESENTATIVE:
/s/ COMPANY SEAL /s/ZHIWEI ZHAO |
WARRANTOR (SEAL):
AUTHORIZED REPRESENTATIVE:
/s/ COMPANY SEAL /s/ZHIWEI ZHAO |
Exhibit 4.31
[Translated from the Chinese original]
STOCKSTAR INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
SHARE TRANSFER AGREEMENT
[STOCKSTAR.COM INC.]
AND
CHINA FINANCE ONLINE CO., LTD.
AUGUST 15, 2006
TABLE OF CONTENTS
1. DEFINITION AND INTERPRETATION 1 2. SHARE TRANSFER 2 3. PURCHASE PRICE AND EARNEST MONEY 3 4. DUE DILIGENCE 3 5. PREREQUISITES TO COMPLETION 4 6. COMPLETION 5 7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS 6 8. FAILURE OF COMPLETION 7 9. EFFECTIVENESS 8 10. BREACH OF THIS SHARE TRANSFER AGREEMENT 8 11. CONFIDENTIALITY 9 12. DISPUTE RESOLUTION 10 13. NOTICE AND SERVICE 10 14. MISCELLANEOUS PROVISIONS 11 APPENDIX 1: REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR 12 (SIGNATURE PAGE) 19 |
The following Parties voluntarily enter into this share transfer agreement as the date of August 15, 2006 (the "Share Transfer Agreement"):
[Stockstar.com Inc.] is a legal person duly organized and validly existing under the laws of Cayman Islands, with main office at: 4th Floor, Itarbour Centre, Box 613, Grand Cayman, Cayman Islands, British West Indies (hereinafter referred to as the "Transferor");
and
China Finance Online Co., Ltd. is a legal person duly organized and validly existing under the laws of Hong Kong, with a legal address at: Room C, Floor 8, East Wing, Sincere Insurance Building, 4-6 Hennessy Road, Hong Kong. (hereinafter referred to as the "Transferee");
Either Party of the Transferor and the Transferee is referred to hereunder as the "Party", or collectively referred to as the "Parties."
WHEREAS
A. Stockstar Information Technology (Shanghai) Co., Ltd. (hereinafter referred to as the "Company") is a wholly foreign-owned enterprise duly organized and validly existing under the laws of People's Republic of China, with legal address at: [NO.79, Building B, Pudong Software Park, No.498, Guoshoujing Road, Zhangjiang, Shanghai, China]. The Registered Capital of the Company is USD 4 million.
B. The Transferor is the shareholder of 100% shares of the Company, and has contributed due investments in full.
C. The Transferor intends to transfer and the Transferee intends to receive 100% of the shares of the Company.
D. Therefore, the Parties hereby agree to transfer the shares to the Transferee in accordance with the terms and conditions specified in this Share Transfer Agreement.
1. DEFINITION AND INTERPRETATION
1.1 Definition
The following terms shall have the meanings set forth below:
"ARTICLES OF ASSOCIATION" means the revised articles of association of the Company. The Articles of Association reflect the provisions of this Share Transfer Agreement which the Transferor and the Transferee will enter into.
"COMPANY" means Stockstar Information Technology (Shanghai) Co., Ltd.
"COMPLETION DAY" means the completion day specified in Article 6.1 hereof.
"COMPLETION TERM" means the completion term specified in Article 6.1 hereof.
"EARNEST MONEY FOR PURCHASE" means the earnest money for purchase, equivalent to USD 650,000, paid by the Transferee to the Transferor in accordance with Article 3.2.
"EFFECTIVE DATE" means the date at which this Share Transfer Agreement becomes effective in accordance with Article 9.1 hereof.
"ESCROW AGENT" means the escrow agent for the partial Purchase Price, appointed by the Transferor and the Transferee jointly in accordance with Article 3.3 herein.
"EXAMINATION AND APPROVAL AUTHORITY" means [Commercial Authority of Shanghai], which is the examination and approval authority of this Share Transfer Agreement.
"PURCHASE PRICE" means the purchase price paid by the Transferee to the Transferor in accordance with Article 3.1 hereof.
"REGISTERED CAPITAL" means the registered capital of the Company, equivalent to USD 4 million.
1.2 Interpretation
The headings are for the purpose of convenience and reference only, and shall not affect the interpretation and understanding of this Share Transfer Agreement.
2. SHARE TRANSFER
2.1 The Transferor hereby sells and transfers to the Transferee and the Transferee hereby purchases and accepts from the Transferor 100% of the shares of the Company.
2.2 Upon the Completion Date when the shares are transferred, the Transferee shall become the sole shareholder of the Company, with all the rights and obligations of a shareholder in accordance with the Articles of Association.
3. PURCHASE PRICE AND EARNEST MONEY
3.1 The Parties agree the Purchase Price is USD 6.50 million.
3.2 The Transferee shall pay the Earnest Money For Purchase of USD 650,000 to the Transferor within three days after the execution of this Share Transfer Agreement.
3.3 The Transferee shall pay a total amount of USD 5.85 million to the escrow account agreed by the Parties jointly within 15 days after the execution of this Share Transfer Agreement (but the Transferee bears no liability for overdue payment if the escrow account fails to open for the reasons of the Transferor). The Escrow Agent will be recommended by the Transferee, and formally appointed upon the written approval of the Transferor. The Transferor and the Transferee will enter into an escrow agreement with the Escrow Agent concerning the escrow of the fund hereunder, and shall ensure the Escrow Agent manages and releases the escrow fund in the escrow account in accordance with this Share Transfer Agreement and the escrow agreement.
3.4 Unless the Completion of this Share Transfer Agreement fails, the Purchase Price shall be paid by the Transferee to the bank account designated by the Transferor in writing at the Completion Day, among which USD 650,000 may be set off by the Earnest Money for Purchase specified in Article 3.2. The remaining amount will be paid directly from the escrow account under Article 3.3 to the Transferor by the Escrow Agent upon receiving the written release Notice issued by the Transferor and the Transferee jointly or by the Transferor or the Transferee respectively. Upon the aforesaid, payment is released to the Transferor by the Escrow Agent in accordance with this Article, and the Transferee's payment obligation under Article 3.1 herein will be deemed to have been carried out. The Transferor shall issue an official receipt of such payment to the Transferee.
3.5 The Transferor, Transferee and Company shall respectively pay for their taxes and expenses incurred from the transfer in accordance with laws and regulations.
4. DUE DILIGENCE
4.1 For the purpose of ensuring the Transferee understands the Company's state of affairs for the purchase of shares, the Transferee is entitled to carry out due diligence on the Company upon the execution of this Share Transfer Agreement. The information required to be investigated and checked including but not limited to:
(1) the Company's subject capacity, status of operation and registration
at industrial and commerce authorities;
(2) the Company's status of assets;
(3) the Company's financial status;
(4) employees of the Company;
(5) the Company's labor and personnel system and management;
(6) the Company's taxation and law compliance;
(7) the effective contracts concluded by the Company and performance;
(8) economic disputes, client disputes, litigation and arbitration of the
Company;
(9) securities or material obligations borne by the Company for the
outside entities; and
(10) other corporate information of the Company considered by the
Transferee as necessary to know.
4.2 The Transferor will actively assist and cooperate with the Transferee to carry out the aforesaid due diligence, offer and disclose all detailed information to the Transferee, and allow a specially designated person (corporate key management staff whose title is higher than deputy general manager) to coordinate the investigation work, ensuring the Transferee may carry out the due diligence as soon as possible.
4.3 The fact that the Transferee is carrying out the due diligence in accordance with this Share Transfer Agreement shall not absolve the Transferor of all the obligations and liabilities under the representations and warranties made by the Transferor herein.
5. PREREQUISITES TO COMPLETION
Performance of the Completion obligation hereunder by the Transferee shall be subjected to the satisfaction of the following prerequisites prior to or on the Completion Day:
5.1 From the execution date of the Share Transfer Agreement to the relevant Completion Day, the representations, warranties and undertakings made by the transferor herein are true, adequate and accurate. The Transferor makes no misleading or false representations or facts herein. No risk exists that may cause the Transferee or the Company to be subject to legal proceedings or disputes due to the transfer hereunder, nor is there any material adverse effect on the Transferee or the company.
5.2 For the purpose of such shares transfer and change of shareholders of the Company, the Transferor shall, within [45] working days after the execution of this Share Transfer Agreement, provide all necessary support, execute all relevant legal documents, perform all necessary procedures, obtain all necessary approvals, and go through all necessary procedures, in accordance with relevant laws and Articles of Association, including but not limited to, preparing all documents possibly needed by the approval authorities, submitting such documents to approval authorities for examination and approval, and making registrations of such shares transfer at industrial and commerce administration authorities upon getting the approval from approval authorities, unless the failure to complete the registration of such transfer at industrial and commerce administration authorities within the aforesaid term is caused
by reasons of the Transferee or other objective reasons of Parties other than the Transferor.
5.3 No event, circumstance, change or material adverse turn which has had or could reasonably be expected to have a material adverse change on the performance of this Share Transfer Agreement or the benefit of the Transferee, prior to the execution of this Share Transfer Agreement.
5.4 Material, information and obligations and liabilities borne by the Company in connection with the transfer hereunder have been disclosed adequately to the Transferee, and the disclosure is accurate, adequate and true.
5.5 From the execution of this Share Transfer Agreement to the Completion Day, the Transferor shall guarantee the normal operation of the Company in aspects of products and services, and team work, and shall provide to the Transferee the following documents (if applicable):
(A) staff list of department managers and those with titles higher than department managers; and (B) labor contracts signed by department managers and those with titles higher than department managers.
5.6 The Transferor controlled companies have obtained written consent from the Transferee prior to taking the following actions:
(A) Any fund transfer with aggregated amount exceeding RMB 50,000
with a Company or natural person and its affiliated Party;
(B) execution of any agreement;
(C) appointment and disposal of department managers and those with
titles higher than department managers;
(D) dividends distribution;
(E) change of employee reward (including bonus) plans;
(F) issues of operation cooperation; and
(G) development and launching plans of new products.
5.7 The Transferor and Shanghai Lianchuang Venture Capital Co., Ltd. shall issue irrevocable written statement of no any creditor's liability for the Company. ("Appendix 3(1-2)")
5.8 The Transferor has performed all other obligations in connection with the transfer specified herein at the date of Completion Day.
6. COMPLETION
6.1 Completion
"Completion" in this Share Transfer Agreement means the Parties complete the transfer hereunder in accordance with this Share Transfer Agreement. The Parties agree and affirm that the "Completion Day" is the day at which all registration procedures of the shares transfer hereunder are completed at the industrial and commerce administration authorities. "Completion" shall take place at the office of the Company or other places agreed by the Parties.
6.2 Obligations of the Transferor
The Transferor shall deliver the following documents to the Transferee at the Completion:
(1) Board resolution of the Transferor to authorize the Transferor to execute, deliver and perform this Share Transfer Agreement;
(2) Approval documents for the shares transfer hereunder issued by the approval authorities and all originals of the renewed Approval Certificate of Foreign-Invested Enterprises; such approval documents and the renewed Approval Certificate of Foreign-Invested Enterprises shall indicate the Transferee is the sole shareholder of the Company;
(3) All originals of Business License of Enterprise Legal Person renewed by industrial and commerce administration based on approval documents issued by the approval authorities;
(4) All prerequisites to Completion specified in Article 5 herein required by the Transferee are satisfied by the Transferor.
(5) Official Seal, financial seal and all other seals of the Company.
6.3 Obligations of the Transferee
The Transferee shall deliver the following documents to the Transferor at the Completion:
(1) Board resolution of the Transferee to authorize the Transferee to execute, deliver and perform this Share Transfer Agreement; and
(2) the Purchase Price specified in Article 3.
7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
7.1 The Transferor hereby makes irrevocable representations and warranties to the Transferee as specified in Appendix 1.
7.2 The representations made by the Transferor herein are true, accurate and adequate and contain no concealed or misleading content. Any debt, obligation or liability discovered after Completion, which failed to be disclosed to the Transferee by the Transferor, or failed to get approval from the Transferee, shall be borne by the Transferor;
7.3 If any of the representations or warranties of the article is not true , accurate or adequate, the Transferor shall bear compensation liability to the Transferee for any loss, damage, expense or adverse condition (which will not occur if the relevant representation or warranty is true or accurate) in any kind suffered by the Transferee.
7.4 The Transferee undertakes that it will make timely and full payment to the Transferor for the Purchase Price of the shares in accordance with payment schedule specified in this Share Transfer Agreement.
7.5 The Transferee undertakes the execution and performance of this Share Transfer Agreement make no violation of other contracts, agreement and legal documents to which the Transferee is a party.
7.6 The Transferee complies with the conditions stipulated by law to be transferred the subject of this Share Transfer Agreement prior to making registration of the share transfer at industry and commerce administration, and will not affect the normal legal procedures of the share transfer due to the restrictions of the Transferee itself.
7.7 The Transferee warrants that it will actively go through all the procedures necessary for the share transfer, and perform all required obligations as the Transferee of the shares.
8. FAILURE OF COMPLETION
8.1 If the shares hereunder for any reason fail to complete the registration of transfer at industrial and commerce administration in accordance with the time specified in this Share Transfer Agreement, except as otherwise provided by the Parties, this Share Transfer Agreement will be cancelled accordingly.
8.2 If the shares hereunder fail to complete the transfer in accordance with this Share Transfer Agreement for none of the reasons of the Transferor and the Transferee (including but not limited to failure to get approval from government in accordance with relevant laws and regulations), the Transferor shall refund all the payment the Transferee made to the Transferor in accordance with this Share Transfer Agreement (including the Earnest Money for Purchase), to the Transferee within 7 days after the day of receiving the written Notice from the Transferee. The Transferee shall return all the documents provided by the Transferor to the Transferee in accordance with this Share Transfer Agreement, to the Transferor within 7 days after receiving the
written Notice from the Transferor. The Parties bear no liabilities for breach of this Share Transfer Agreement.
8.3 If the failure to complete the share transfer in accordance with this Share Transfer Agreement is due to the Transferor's reason, the Transferor shall refund in double the earnest money to the Transferee in accordance with this Share Transfer Agreement.
8.4 If the aforesaid failure of Completion is due to the Transferee's reason, the Transferor is entitled to forfeit the earnest money paid by the Transferee in accordance with this Share Transfer Agreement, except as otherwise provided herein.
8.5 If the Completion is failed after the registration of the transfer at industrial and commerce administration, both Parties are obliged to return the shares hereunder to the former holding status before the execution of this Share Transfer Agreement.
9. EFFECTIVENESS
9.1 The Share Transfer Agreement shall be effective from the date of getting written approval from the Examination and Approval Authority ("Effective Date"):
9.2 The Transferor and the Transferee shall make the best efforts to timely obtain all essential approvals which will make this Share Transfer Agreement effective and enforceable.
9.3 Prior to obtaining the approval from the examination and approval authorities, the Parties hereby agree and affirm Article 10, Article 3.2 Earnest Money, Article 3.3 Escrow of Fund, Article 4 Due Diligence, Article 8 Failure of Completion, Article 11 Confidentiality and Article 12 Dispute Resolution binding the Parties.
10. BREACH OF THIS SHARE TRANSFER AGREEMENT
10.1 Failure of performance or partial or delayed performance of any obligations borne by any Party hereof shall constitute a breach of this Share Transfer Agreement, and such Party shall bear the liability for breach of this Share Transfer Agreement, and is liable for compensating all economic losses suffered by other Parties from such breach. Unless otherwise provided in this Share Transfer Agreement, if any Party breaches this Share Transfer Agreement or the representations, undertakings or warranties made hereunder by any Party are false, and such Party fails to make effective remedies within ten (10) days (or longer time as approved by the non-breaching Party in writing) after receiving the written Notice from the non-breaching Party, the non-breaching Party is entitled to terminate this Share Transfer Agreement immediately
and unilaterally, and the breaching Party shall compensate all losses suffered by the non-breaching Party from such breach.
10.2 If the Transferee fails to pay the earnest money to the Transferor in accordance with Article 3 herein, fails to deposit money to the escrow account according to this Share Transfer Agreement, or fails to pay for the Purchase Price to the Transferor in accordance with this Share Transfer Agreement, the Transferee shall pay to the Transferor a fine amounting to 0.1% of the overdue amount per day from the tenth day of such breach. If such breach exceeds [20] days, the Transferor has the right to terminate this Share Transfer Agreement, in addition the Transferee shall pay to the Transferor a fine amounting to 5% of the total price of this Share Transfer Agreement.
11. CONFIDENTIALITY
11.1 Whether or not this Share Transfer Agreement is terminated, the Parties hereof shall make strict confidentiality of the trade secret and proprietary information of the other Party (hereinafter collectively referred to as "Confidential Information") received during the performance of this Share Transfer Agreement. Except those having to be disclosed to a third Party upon prior written consent from the other Party or in accordance with relevant laws and regulations, the Party receiving the Confidential Information shall not disclose to any other third Party the Confidential Information or any part of it; except for the purpose of the performance of this Share Transfer Agreement, the receiving Party shall not use or indirectly use the Confidential Information or any part of it.
11.2 The following information is not regarded as Confidential Information: (a) any information which the receiving Party has written evidence to prove it has obtained such information prior to receiving it in connection with this Share Transfer Agreement; (b) any information which has been publicized not resulted from faults of the receiving Party, or information which are known to the public for other reasons; or (c) information the receiving Party legally obtained from other channels thereafter.
11.3 The information receiving Party may disclose the Confidential Information to its relevant employees, agencies, or professionals invited, but such Party shall ensure the aforesaid persons are also bound by this Share Transfer Agreement, and keep the Confidential Information as confidential, and use the Confidential Information for the sole purpose of the performance of this Share Transfer Agreement.
12. DISPUTE RESOLUTION
12.1 Any dispute arising from the interpretation or exercise of this Share Transfer Agreement, shall be settled though friendly consultation by the Parties first.
12.2 If a dispute is not settled by the aforesaid way within sixty (60) days after the beginning of consultation, either Party may submit the dispute to China International Economic and Trade Arbitration Committee in Beijing for final arbitration in accordance with the arbitration procedures and rules currently in force.
12.3 The arbitration shall be made by three (3) arbitrators. The Transferor and the Transferee shall each appoint one (1) arbitrator. The third arbitrator shall be designated by the arbitration committee, and serve as chairman of the arbitration court.
12.4 The arbitration award shall be final and binding the Parties. The liability for the payment of arbitration fee shall be judged by the arbitration court.
13. NOTICE AND SERVICE
Any notices or other correspondences between the Parties in connection with this Share Transfer Agreement (hereinafter referred to as "Notice") shall be in written form (including delivered by hand, by post, by fax or by telegraph), and delivered to the addressee at the following addresses or numbers, and the names of the following contact persons shall be noted. Only all the aforesaid conditions are satisfied, a Notice shall be deemed as an effective Notice.
THE TRANSFEREE: China Financial Online Co., Ltd.
Contact: Zhao Zhiwei
Address: Floor 9, Tower C, Corporate Square, No. 35 Financial Street,
Xicheng District, Beijing
Postal code: 100032
Tel: 010-58325388
Fax: 010-58325300
EMAIL: zwzhao@jrj.com
THE TRANSFEROR: Stockstar.com Inc
Contract: Xu Hanjiang
Address: Building 15, No.288, Anfu Road, Shanghai
Postal code: 200031
Tel: 021-54038686
Fax: 021-54049870
EMAIL: hyz@uni.com.cn
The Notices hereunder shall be deemed to have been effectively given upon the following: (1) any Notices delivered by hand shall be deemed to have been effectively served on the date of the confirmation of the addressee. Notices without confirmation of the addressee shall not be
deemed as effectively served; (2) any Notices delivered by post shall use registered express or courier service, and shall be deemed to have been effectively served to the addressee on the 48 hours after they were sent out (deferred accordingly if there are public holidays); (3) Notices delivered by fax shall be deemed to have been effectively given on the date of transmission and confirmation. However, if the Notice is sent on a public holiday, the Notice shall be deemed to have been effectively served on the first day after the ending of the public holiday; (4) any Notices sent though telegraph shall be deemed to have been effectively served 24 hours after they were sent out (deferred accordingly if there are pubic holidays).
If any changes are made as to the correspondence address, number or contact person by any Party, such Party shall notify other Parties within 7 days after the change; otherwise Notices addressed to the former correspondence address shall be deemed as effective Notice.
14. MISCELLANEOUS PROVISIONS
14.1 This Share Transfer Agreement and rights of the Parties hereunder shall be interpreted and defined in accordance with China laws. If no such relevant China laws exist, the international commercial convention shall be applicable.
14.2 Failure to exercise, partial exercise or delayed exercise of any rights hereunder by any Party shall not be construed as a waiver of such rights or any other rights hereunder by such Party, except those expressly stated in this Share Transfer Agreement or waived in written form.
14.3 This Share Transfer Agreement and its appendices constitute the entire Share Transfer Agreement among the Parties, and shall supersede all previous correspondence, statements, agreements or any other documents executed by the Parties prior to this Share Transfer Agreement.
14.4 If any provisions herein become invalid as contradicted to the laws and regulations applicable, such provisions shall be cancelled from this Share Transfer Agreement. However, the invalidity of such provisions shall not affect the validity of remaining provisions and entire validity of this Share Transfer Agreement. The parities shall make consultations to set up new provisions or deal with the consequences resulted from the invalidity of such provisions.
14.5 The Share Transfer Agreement is executed in [eight] copies. Each Party shall hold one copy. Others shall be used for the relevant examination, approval and registration procedures. Each copy is equally authentic.
APPENDIX 1: REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
Except for those expressly disclosed in the disclosure sheet attached as Appendix 2, the Transferor warrants and represents to the Transferee (and the Transferor acknowledges the Transferee completes the transfer hereunder based on such representations and warranties):
(a) Company
The Company is incorporated, organized and validly existing under the laws of People's Republic of China, has a well-placed position and all necessary corporate power and capacity to own its property and assets and carry out its current business. The Company has completed all registrations and records procedures, obtained the qualification to carry out business in the form of Company in each jurisdiction and has a well-placed position, which is essential to the characters of business or the property the Company owns or leases within the jurisdiction.
(b) Subsidiary
The Company does not possess, directly or indirectly, and has given no consent to purchase (i) any outstanding shares or securities which can be converted to shares of any other companies, or (ii) any shares participated in dividends in any partnership enterprise, joint venture enterprise or other commercial enterprise.
(c) Binding Agreement and Effectiveness of Transfer
The Transferor has provided legal documents to certify the legal shareholder of Shanghai Meining Computer Software Co., Ltd is Beijing Fuhua Innovation Technology Development Co., Ltd., and the Transferee is confirmed of this after checking.
The Share Transfer Agreement constitutes legal, effective and binding obligations of the Transferor. By executing and delivering this Share Transfer Agreement, completing the transfer stated hereunder, and performing the provisions, conditions, and stipulations herein, the Transferor will not:
(i) contradict, violate or attempt to violate any obligation of the Transferor, the Company or any subsidiary, or accelerate the performance of such obligation stipulated or agreed in the following:
A. Any laws applicable to the Transferor, the Company or any subsidiary;
B. Any judgment, order, writ, injunction or award currently applicable to the Transferor, the Company or any subsidiary, issued by court or government officials, administrations or departments;
C. Articles of association or any resolution of the Transferor, the Company and any subsidiary, and the revisions or reiteration of such articles of association or resolution; or
D. Provisions in any agreements, arrangements, or understandings to which the Transferor, the Company or any subsidiary is one Party, or binding the Transferor, the Company or any subsidiary.
(d) License, Approval and Authorization
The Company carries out its business in accordance with all applicable statutes, laws, order, rules and regulations stipulated by any and all authorities who have jurisdiction over any part of the Company's business, and possesses all license, approval and authorization essential to the legal operation of its business. Such license, approval and authorization are continual and effective and will be effective, well-placed and under no violations until the Completion Day of this Share Transfer Agreement.
(e) Capital
The Company is a legal person established in accordance with China laws, with limited liability, and the Registered Capital is USD 4 million.
(f) Shares Purchased and Ownership of Shares of Subsidiaries
The Transferor is the sole owner of all shares of the Company. The shares of the Company are free and clear of any liens, pledge, encumbrance, or encumbrance of other Parties (except for the rights of the Transferee hereunder). Except for those stipulated herein, there are no agreements, options or rights of others, which are binding or will bind in any time the Transferor or the Company's actions of sale, transfer, distribution, securing, pledge, charge of the purchased shares or in any other ways to dispose or place such purchased shares.
(g) Financial Statement
The annual financial statements of the Company provided by the Transferor:
(i) have been prepared based on acknowledged accounting principles and in correspondence with the last accounting period;
(ii) have been prepared according to financial records, and no adjusting entries, and are adequate and accurate in all material aspects; and
(iii) have fairly reflected the assets, debts (whether are accrued, absolute, contingent or others), financial status or operational outcome.
(h) No Undisclosed Debt
Except for those disclosed in the balance sheet and disclosure sheet attached in Appendix 2, to the knowledge of the Transferor, the Company has no unpaid debt, liability or obligation (whether accrued, absolute, contingent or others), and no unperformed undertaking or obligation of any kind (whether such undertaking or obligation is deemed at present as debt of the Company or any subsidiary, in accordance with the acknowledged accounting principles), except for those payable accounts in the normal business operation.
(i) Taxation
(i) The Company has included an adequate amount of money in the audited balance sheet to account for any due and unpaid taxes at the date of the balance sheet, or any due tax installment repayment of the Company at current taxation year. Except for those reflected in or prepared for the audited balance sheet, the Company has no liability for any taxation. To the knowledge of the Transferor upon proper investigation, the Company has no pending or possible action, lawsuit, auditing, investigation, claim, or other proceedings in connection with taxation, and to the knowledge of the Transferor, there are no facts or circumstances, actions, negligence, events, transactions ,or series of transactions (including execution and/or Completion of this Share Transfer Agreement) which will or may possibly result in an action, lawsuit, audit, investigation, claim, or other proceedings; nor any agreement, waiver, or other arrangement that will lead to the delay of submitting the tax returns or paying for any taxes by the Company.
(ii) The Company and the subsidiaries have timely submitted all tax returns, financial statements and other documents required by any taxation laws. Such documents submitted contain no material false representations, nor any omissions of representations of material facts which shall be included. The Company has not submitted nor is it required to submit any tax returns, financial statements or any other documents in any jurisdiction outside People's Republic of China;
(iii) The Company has timely withheld and remitted to the relevant authorities (or has provided guarantees as regulated by the relevant laws) the taxes in full which are required to be withheld and remitted in the form required by applicable taxation laws (including any retirement pension plan contribution and social insurance (including but not limited to medical insurance, unemployment insurance, on-job injury insurance) and any other deductions);
(iv) Except for the unpaid debt or liabilities disclosed in the financial statements of the Company, the Company has no unpaid loans or liabilities owing to the Company's directors, former directors, management staff, shareholders, or employees, or to individuals or companies that have no fair transactions with the aforesaid individuals (except for the normal travel expenses borrowed in advance according to procedures of the Company);
(v) The Company has not transferred property to any other person or purchased property from any other person, directly or indirectly through unfair transactions failed to be based on the fair value of the property at sale or purchase.
(j) No Alteration (Prior to the Execution of this Share Transfer Agreement)
(i) There is no material adverse alteration as to any assets, business, financial status, operational outcome or prospects of the Company.
(ii) There is no destruction or loss damage, labour-management dispute in any kind, or any event, development or condition of any kind which may produce a material adverse effect (whether or not an insurance guarantee has been obtained).
(k) Ownership of the Property
The Company owns full and merchantable property and interests in its property, personal property and real property, including the property disclosed in the audited balance sheet or purchased after the date of the audited balance sheet (except the property transferred, sold or disposed of in any way during general and normal business operations after such date), and such property is free and clear of any kinds of mortgages, pledge, security interests, liens or agreement on ownership reservation.
(l) Lease of Personal Property
Except those listed in Appendix 2, the Company has no leased or borrowed equipment, other personal property or fixtures.
(m) Lease of Real Property
(i) Except the Lease and Sublease Agreement stated in Appendix 2 hereto, the Company is not a Party to any lease, sublease, license or other legal documents in connection with the real property, and is not bound by such legal documents, and the Company has not executed any other legal documents in connection with the real property. Any rights and interests of the Company under the Lease and Sublease Agreement are free and clear of any kinds of liens, pledge and encumbrances.
(ii) All the leases and subleases executed by the Company (listed in Appendix 2) are in normal operation and fully effective. Except otherwise specified in Appendix 2, no amendments have been made to such leases and subleases. The Company has the right to benefit from all leases and subleases to which the Company is one Party.
(iii) Except otherwise specified in Appendix 2, all rents and other current owed expenses have been paid in accordance with all lease or sublease agreements to which the Company is a Party.
(iv) The Company has carried out all obligations under all lease or sublease agreements to which the Company is a Party; the Company has not breached the obligations under any lease or sublease agreement, and has not received notice of any breach under any lease or sublease agreement.
(n) Real Property
Except as specified in Appendix 2, the Company does not own real property or rights and interests of real property. The Company has full and merchantable ownership of the permanent property rights towards all real property, and such real property is free and clear of any mortgage, pledge or encumbrances.
(o) Asset Status
All material tangible assets or any portion thereof used in the operation or in connection with the operation of the Company and its subsidiaries, is in good condition; the maintenance is normal (if applicable), except for reasonable loss.
(p) Lawsuit
Except as disclosed in Appendix 2, there is no existence of any pending lawsuit, action, dispute, civil or criminal lawsuit, claim, arbitration, or legal, administrative or other proceedings, or governmental investigation, including appeal and application filed for the purpose of review (referred to collectively herein as "claims"); and to the knowledge of the Transferor, there is no existence of the aforesaid claims threatened the Company or affected any of its asset, property, or operation. To the knowledge of the Transferor, there are no facts or circumstances that may give rise to such claims. Except as disclosed in Appendix 2, there is no pending judgment, writ of execution, writ, injunction, rules and orders against the Company issued by any court, authorities, administrations or arbitration authority.
(q) Intellectual Property
Appendix 2 lists all inventions, patents, brands, brands intended to use, trade names, copyright, industrial designs, Company names, logos, appearance, corporate style and other Intellectual Property (whether registered or not), domestically or in foreign countries, of which the Company has the ownership or license right, and all relevant applications (referred to herein collectively as "Intellectual Property"), including any detailed material in connection with registration, any detailed registration material, and the earliest used time of any unregistered Intellectual Property. The Company owns all of its Intellectual Property. The Intellectual Property is free of any claims or encumbrances. The use and execution (or failure of use and execution) of the Intellectual Property by the Company in any way does not restrict its effectiveness or validity. Except as disclosed in Appendix 2, the Company has
not made any infringement or violation on any Intellectual Property of any person.
(r) Laws Compliance
The Company has obtained all necessary licenses, permits, certificates, authorizations or approvals which entitle the Company to use the Company name and to engage and carry out its operation and management though the assets and property owned, leased, operated and used by the Company.
(s) Agreement on Operation Restriction
The Company is not a Party to any agreement or arrangement which restricts the Company from conducting certain business.
(t) No Security
Except those specified herein or in any appendix hereto, the Company has not provided or agreed to provide any securities to any debts, compensation, bonds, warranty liability, or any other liabilities, nor is the Company a Party to such security or bound by such security.
(u) Record of the Company
The Company shall provide without reservation the accurate and complete record of meetings and resolutions convened by its directors or shareholders since the establishment of the Company.
(v) Approval
Except that the shares transfer of the Company has to be approved by the examination and approval authorities, as the Company is a foreign invested enterprise in China, prior to the Completion of the transfer hereunder, there is no necessity for the Company or the Transferor to make to any authorities or obtain from such authorities, any approval, consent, authorization, or statement, record (except the administrative records made at taxation authority, Company registration, or other administrations of same kind) or registration, or make the obtaining of the aforesaid as a condition to complete the transfer hereunder.
(w) Full Disclosure
The above acknowledgement and facts representations contain no false representation of any material facts, and no omission of any material facts. There is no existence of any fact of the Transferor failed to be disclosed to the Transferee, which is foreseeable by the Transferor to make material adverse effect on the capacity of the Transferor to perform the obligations hereunder.
(SIGNATURE PAGE)
Therefore, the Parties hereby sign this Share Transfer Agreement at the date first above written:
THE TRANSFEREE:
/S/COMPANY SEAL /S/ZHIWEI ZHAO |
THE TRANSFEROR:
/S/COMPANY SEAL /S/HANJIANG XU |
.
.
.
EXHIBIT 8.1
PERCENTAGE COUNTRY OF OWNERSHIP NAME INCORPORATION INTEREST -------------------------------------------------------------------- -------------- ---------- Fortune Software (Beijing) Co., Ltd China 100 China Finance Online (Beijing) Co., Ltd. China 100 Beijing Fuhua Innovation Technology Development Co., Ltd.* China 100 Stockstar Information Technology (Shanghai) Co., Ltd China 100 Shanghai Meining Computer Software Co., Ltd. China 100 Zhengning Information & Technology (Shanghai) Co., Ltd. China 100 Shenzhen Genius Information Technology Co., Ltd. China 100 Jujin Software (Shenzhen) Co., Ltd. China 100 |
Exhibit 10.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-139192 and 333-123802 on Form S-8 of our report dated May 28, 2007, relating to the consolidated financial statements and financial statement schedule of China Finance Online Co. Limited appearing in this Annual Report on Form 20-F of China Finance Online Co. Limited for the year ended December 31, 2006.
/s/ Deloitte Touche Tohmatsu CPA Ltd. Deloitte Touche Tohmatsu CPA Ltd. Beijing, China May 29, 2007 |
EXHIBIT 12.1
CERTIFICATION
I, Zhao Zhiwei, certify that:
1. I have reviewed this annual report on Form 20-F of China Finance Online Co. Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
Date: May 29, 2007 /s/ Zhao Zhiwei ------------------------------- Name: Zhao Zhiwei Title: Chief Executive Officer |
EXHIBIT 12.2
CERTIFICATION
I, Jeff Wang, certify that:
1. I have reviewed this annual report on Form 20-F of China Finance Online Co. Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
Date: May 29, 2007 /s/ Jeff Wang ------------------------------- Name: Jeff Wang Title: Chief Financial Officer |
EXHIBIT 13.1
CHINA FINANCE ONLINE CO. LIMITED
Certification
Pursuant to 18 U.S.C. Section 1350, the undersigned, Zhao Zhiwei, Chief Executive Officer of China Finance Online Co. Limited (the "Company"), hereby certifies, to his knowledge, that the Company's annual report on Form 20-F for the year ended December 31, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 29, 2007 /s/ Zhao Zhiwei ------------------------------- Name: Zhao Zhiwei Title: Chief Executive Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.
EXHIBIT 13.2
CHINA FINANCE ONLINE CO. LIMITED
Certification
Pursuant to 18 U.S.C. Section 1350, the undersigned, Jeff Wang, Chief Financial
Officer of China Finance Online Co. Limited (the "Company"), hereby certifies,
to his knowledge, that the Company's annual report on Form 20-F for the year
ended December 31, 2006 (the "Report") fully complies with the requirements of
Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934,
and that the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Date: May 29, 2007 /s/ Jeff Wang ------------------------------- Name: Jeff Wang Title: Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.