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) | |
American Depositary Shares,
each representing two common shares, par value US$0.0001 per share |
The NASDAQ Stock Market LLC
(The NASDAQ Global Select Market) |
i
| ADRs are to the American depositary receipts that evidence our ADSs; | ||
| ADSs are to our American depositary shares, each of which represents two common shares; | ||
| China or the PRC are to the Peoples Republic of China, excluding for the purpose of this annual report Hong Kong, Macau and Taiwan; | ||
| Nasdaq are to the Nasdaq Global Select Market; | ||
| RMB are to Renminbi, the legal currency of the PRC; | ||
| shares or common shares are to our common shares, with par value US$0.0001 per share; | ||
| U.S. GAAP are to the generally accepted accounting principles in the United States of America; and | ||
| US$ are to U.S. dollars, the legal currency of the United States of America. |
| 51net are to 51net.com Inc.; | ||
| AdCo are to Shanghai Qianjin Advertising Co., Ltd.; | ||
| AdCo Subsidiaries are to the subsidiaries of AdCo that conduct advertising businesses; | ||
| Qian Cheng are to Beijing Qian Cheng Si Jin Advertising Co., Ltd.; | ||
| RAL are to Shanghai Run An Lian Information Consultancy Co., Ltd.; | ||
| Run An are to Beijing Run An Information Consultancy Co., Ltd.; | ||
| Tech JV are to Qianjin Network Information Technology (Shanghai) Co., Ltd.; | ||
| Wang Cai AdCo are to Shanghai Wang Cai Advertising Co., Ltd.; | ||
| Wang Ju are to Shanghai Wang Ju Human Resource Consulting Co., Ltd.; | ||
| WFOE are to Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd.; and | ||
| Wuhan AdCo are to Wuhan Mei Hao Qian Cheng Advertising Co., Ltd. |
ii
| market acceptance of our services; | ||
| our ability to expand into other recruitment and human resource services such as business process outsourcing; | ||
| our ability to control our operating costs and expenses; | ||
| our potential need for additional capital and the availability of such capital; | ||
| behavioral and operational changes of our customers in meeting their human resource needs as they respond to evolving social, economic and political changes in China as well as stock market volatilities; | ||
| changes in our management team and other key personnel; | ||
| introduction by our competitors of new or enhanced products and services; | ||
| price competition in the market for the various human resource services that we provide in China; | ||
| seasonality of our business; | ||
| fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; | ||
| our ability to develop or introduce new products and services outside of the human resources industry; | ||
| fluctuations in general economic conditions; and | ||
| other risks outlined in our filings with the Securities and Exchange Commission, including this annual report on Form 20-F and any amendments thereto. |
iii
1
2
3
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
66
67
68
69
70
71
72
73
74
75
76
For the year ended December 31,
2003
2004
2005
2006
2007
2007
(in thousands, except per share data)
RMB
RMB
RMB
RMB
RMB
US$
(2)
182,606
300,652
356,285
389,535
430,621
59,033
76,960
111,509
159,495
219,794
282,688
38,753
15,748
24,908
26,307
19,938
16,086
2,205
18,020
42,875
53,507
68,586
114,871
15,747
293,334
479,944
595,594
697,853
844,266
115,738
280,119
456,120
562,026
659,843
799,284
109,572
(151,477
)
(224,607
)
(269,328
)
(294,068
)
(349,022
)
(47,847
)
128,642
231,513
292,698
365,775
450,262
61,725
(39,043
)
(69,029
)
(115,095
)
(136,770
)
(181,230
)
(24,844
)
(55,817
)
(72,096
)
(100,614
)
(114,322
)
(128,347
)
(17,595
)
(94,860
)
(141,125
)
(215,709
)
(251,092
)
(309,577
)
(42,439
)
33,782
90,388
76,989
114,683
140,685
19,286
35,792
95,201
91,367
127,901
148,979
20,422
(3,192
)
(34,058
)
(29,945
)
(28,560
)
(45,402
)
(6,224
)
32,600
61,143
61,422
99,341
103,577
14,198
0.83
1.32
1.10
1.79
1.84
0.25
0.75
1.26
1.07
1.76
1.83
0.25
1.65
2.65
2.21
3.58
3.68
0.50
1.50
2.52
2.15
3.52
3.66
0.50
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As of December 31,
2003
2004
2005
2006
2007
2007
(in thousands)
RMB
RMB
RMB
RMB
RMB
US$
(2)
115,085
848,293
830,634
868,698
1,007,520
138,119
145,573
893,647
892,544
919,576
1,075,288
147,409
39,831
43,735
70,875
208,039
227,878
31,239
185,404
937,382
963,420
1,127,615
1,303,166
178,648
56,096
85,564
109,540
139,075
176,115
24,143
24
122
516
72
56,120
85,564
109,540
139,197
176,631
24,215
129,284
851,818
853,880
988,418
1,126,535
154,433
185,404
937,382
963,420
1,127,615
1,303,166
178,648
(1)
Share-based compensation was included in the consolidated statement of operations data as
follows:
For the year ended December 31,
2003
2004
2005
2006
2007
2007
(in thousands)
RMB
RMB
RMB
RMB
RMB
US$
(2)
(597
)
(1,811
)
(1,480
)
(4,621
)
(4,931
)
(676
)
(423
)
(1,758
)
(1,438
)
(3,972
)
(4,241
)
(581
)
(17,682
)
(16,921
)
(11,635
)
(19,926
)
(20,479
)
(2,807
)
(2)
Translations from Renminbi to U.S. dollars were made at the noon buying rate in The City of
New York for cable transfers of Renminbi as certified for customs purposes by the Federal
Reserve Bank of New York. The translations of Renminbi amounts into U.S. dollar amounts have
been made at the noon buying rate in effect on December 31, 2007, which was RMB7.2946 to
US$1.00.
(3)
Each ADS represents two common shares.
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Noon buying rate of Renminbi per U.S. dollar
Period
Period-end
Average
(1)
Low
High
8.2767
8.2772
8.2800
8.2765
8.2765
8.2768
8.2771
8.2765
8.0702
8.1826
8.2765
8.0702
7.8041
7.9579
8.0702
7.8041
7.2946
7.5806
7.8127
7.2946
7.2946
7.3682
7.4120
7.2946
7.1818
7.2405
7.2946
7.1818
7.1115
7.1644
7.1973
7.1100
7.0120
7.0722
7.1110
7.0105
6.9870
6.9997
7.0185
6.9840
6.9400
6.9725
7.0000
6.9377
6.8630
6.9034
6.9633
6.8630
(1)
Annual averages are calculated from month-end rates. Monthly averages are calculated using
the average of the daily rates during the relevant period.
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our local newspaper contractors will fulfill their obligations under our agreements;
the agreements will be renewed on terms acceptable to us or at all;
our current contractors will not, upon termination of our agreements, seek to compete
directly against us or establish relationships with one or more of our competitors; or
in the event that we wish to do so or it is necessary to do so, we will be able to
locate and enter into an agreement with a suitable alternative local newspaper on a timely
basis or at all.
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implement our business model and strategy and adapt and modify them as needed;
increase awareness of our brands, protect our reputation and develop customer loyalty;
anticipate with any degree of certainty the behavioral and operational changes of our
customers that have a significant impact on our business from time to time as they respond
to evolving social, economic and political changes in China;
manage our expanding operations and service offerings, including the integration of any
future acquisitions;
maintain adequate control of our expenses;
adequately and efficiently operate, maintain, upgrade and develop our website and the
other systems and equipment we utilize in providing our services;
attract, retain and motivate qualified personnel;
maintain our current, and develop new, contractual arrangements with local newspapers
and other important operational relationships; and
anticipate and adapt to changing conditions in the print, online and other markets in
which we operate as well as the impact of any changes in government regulation, mergers
and acquisitions involving our competitors, technological developments and other
significant competitive and market dynamics.
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our ability to identify and acquire businesses on a cost-effective basis;
our ability to integrate acquired personnel, operations, products and technologies into
our organization effectively; and
our ability to retain and motivate key personnel and to retain the clients of acquired
firms.
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Rick Yan, our chief executive officer and a director, who beneficially owned
approximately 26.9% of our outstanding common shares;
Recruit, which beneficially owned approximately 21.8%, and which is affiliated with
Hiroyuki Honda, one of our directors; and
entities affiliated with DCM, which beneficially owned approximately 17.2%, and which
is affiliated with David K. Chao, one of our directors.
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Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or WFOE, a wholly
foreign owned enterprise in China;
Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV;
Shanghai Qianjin Advertising Co., Ltd., or AdCo, and its subsidiaries; and
Shanghai Wang Ju Human Resource Consulting Co., Ltd., or Wang Ju.
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levying fines;
revoking business licenses;
restricting or prohibiting our use of proceeds from our initial public offering and any
future offerings to finance our business and operations in China;
requiring us to restructure the ownership structure or operations of our subsidiaries
or affiliated entities; and/or
requiring us to discontinue all or a portion of our business.
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levying fines;
revoking business licenses;
restricting or prohibiting our use of proceeds from our initial public offering and any
future offerings to finance our business and operations in China;
requiring us to restructure the ownership structure or operations of our subsidiaries
or affiliated entities; and/or
requiring us to discontinue all or a portion of our business.
levying fines;
revoking business licenses;
restricting or prohibiting our use of proceeds from our initial public offering and any
future offerings to finance our business and operations in China;
requiring us to restructure the ownership structure or operations of our subsidiaries
or affiliated entities; and/or
requiring us to discontinue all or a portion our business.
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amount of government involvement;
level of development;
growth rate;
control of foreign exchange; and
allocation of resources.
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actual or anticipated fluctuations in our quarterly operating results;
changes or revisions by us to previously released operating and financial targets;
announcements of new services by us or our competitors;
changes in financial estimates or recommendations by securities analysts;
conditions in our industry, which is the market for recruitment advertising services
and other human resource related services in China;
announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
additions or departures of key personnel;
release of transfer restrictions on our outstanding common shares or ADSs or sales of
additional common shares or ADSs; and
pending or potential litigation or regulatory investigations.
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to recognize or enforce against us judgments of courts of the United States based on
certain civil liability provisions of U.S. securities laws; and
to impose liabilities against us, in original actions brought in the Cayman Islands,
based on certain civil liability provisions of U.S. securities laws that are penal in
nature.
Shanghai Qianjin Advertising Co., Ltd., or AdCo, and AdCos seven branch offices, seven
majority owned subsidiaries and one jointly owned subsidiary with Tech JV, or,
collectively, the AdCo Subsidiaries. AdCo and the AdCo Subsidiaries hold licenses and
permits to conduct advertising businesses;
Shanghai Run An Lian Information Consultancy Co., Ltd., or RAL, which holds human
resource related services and Internet content provision licenses and is wholly owned by
Run An;
Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV, which is
allowed to conduct online advertising and holds a human resource related services license;
Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or WFOE, which is
wholly owned by 51net Beijing and owns certain of our trademarks and registered
copyrights;
Beijing Qian Cheng Si Jin Advertising Co., Ltd., or Qian Cheng, which is our joint
venture partner in Tech JV and is wholly owned by Run An;
Beijing Run An Information Consultancy Co., Ltd., or Run An, which is jointly owned by
David Weimin Jin and Tao Wang, two executive officers of our company;
Shanghai Wang Cai Advertising Co., Ltd., or Wang Cai AdCo, which is an AdCo Subsidiary
jointly owned by AdCo and TechJV and holds licenses to conduct advertising businesses;
Shanghai Wang Ju Human Resource Consulting Co., Ltd., or Wang Ju, which is owned by
51net HR and Run An and holds a license to provide human resource related services; and
Wuhan Mei Hao Qian Cheng Advertising Co., Ltd., or Wuhan AdCo, which holds a minority
interest in Tech JV and our AdCo Subsidiary in the city of Wuhan that conducts advertising
businesses.
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recruitment related services, including print advertising, online recruitment and
executive search services; and
other human resource related services, such as training and business process
outsourcing.
City
Newspaper contractor
(1)
China Trade News
City Evening News
Human Resource News
Hua Xi Metropolitan News
Human Resource News
Dalian Evening News
Straits Talent News
Guangzhou Youth Daily
News Information Daily
Harbin Lifestyle Daily
Hefei Evening News
Jinan Times
Chuncheng Evening News
Modern Express
Modern Golden News
Qingdao Financial Times
China Trade News
Friendly Times
Nan Fang Metropolitan News
Metro Express
News Information Daily
China Merchant News
Youth Herald
(1)
English translations of the Chinese names.
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For the year ended December 31,
2005
2006
2007
11,884
12,609
16,568
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For the year ended December 31,
2005
2006
2007
56,599
74,950
94,125
search and review all current recruitment advertisements;
receive e-mails of advertisements matching the job seekers profile and preferences;
submit resumés directly to prospective employers to apply for a desired position;
organize and track job related information and applications; and
obtain information about upcoming job fairs and career development and other job related information.
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job seekers;
employers with hiring and/or training needs; and
human resource departments with actual or potential outsourcing needs.
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Foreign Investment Industrial Guidance Catalogue (2004); and
Regulations on Administration of Foreign Investment in Advertising Enterprises (2004).
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Administrative Rules for Foreign Investments in Telecommunications Enterprises (2001); and
Foreign Investment Industry Guidance Catalogue (2007).
Advertising Law (1994);
Administration of Advertising Regulations (1987);
Implementation Rules on Administration of Advertising Regulations (2004); and
Measures for the Administration of Advertising Business Licenses (2005).
Telecommunications Regulations (2000);
The Administrative Measures for Telecommunications Business Operating Licenses (2001); and
The Internet Information Services Administrative Measures (2000).
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Wholly Foreign Owned Enterprise Law (1986), as amended;
Wholly Foreign Owned Enterprise Law Implementing Rules (1990), as amended;
Sino-foreign Equity Joint Venture Enterprise Law (1979), as amended;
Sino-foreign Equity Joint Venture Enterprise Law Implementing Rules (1983), as amended; and
PRC Enterprise Income Tax Law and its Implementation Rules (2007).
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(1)
Does not include Wang Jin Information Technology (Shanghai) Co., Ltd. and Shanghai Wang Ju
Advertising Co., Ltd., both of which are wholly owned subsidiaries of 51net established in the
PRC with no current operations.
(2)
Includes the subsidiaries and branches of AdCo that conduct advertising businesses as well as
Shanghai Cheng An Human Resources Co., Ltd., a company providing outsourcing services which is
90% owned by AdCo and 10% owned by Run An. Hefei Wu You Culture Communication Co., Ltd., an
AdCo subsidiary, is 80% owned by AdCo and 20% owned by Qian Cheng.
(3)
Excludes Wuhan AdCo and Wang Cai AdCo, which are set out separately in the chart.
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online recruitment services are provided by Tech JV, which does not act as an Internet
content provider;
print advertising services are provided by AdCo and the AdCo Subsidiaries, which are
all direct and indirect majority owned PRC subsidiaries of Tech JV;
human resource related services are provided by RAL and Shanghai Wang Ju Human Resource
Consulting Co., Ltd., or Wang Ju, which hold licenses to provide human resource related
services; and
Internet content provider services are provided by RAL through a contractual
arrangement with Tech JV; RAL holds a license to act as an Internet content provider and
operates our
www.51job.com
website.
our current ownership structure is in compliance with existing PRC laws and
regulations;
the agreements among our subsidiaries, affiliated entities and their respective
shareholders are valid and binding, and are enforceable under, and will not result in any
violation of, existing PRC laws or regulations, with exception to the effectiveness of the
equity pledge agreements, which are subject to registration with the relevant
administrations of industry and commerce, and the trademark license agreement, which may
not be enforceable against bona fide third parties until registration with the relevant
trademark administration authorities; and
except as otherwise disclosed herein, our current business operations as described in
this annual report are not in violation of existing PRC laws, rules and regulations in all
material aspects.
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For the year ended December 31,
2005
2006
2007
59.8
%
55.8
%
51.0
%
26.8
31.5
33.5
4.4
2.9
1.9
9.0
9.8
13.6
100.0
%
100.0
%
100.0
%
2005
2006
2007
compared to
compared to
compared to
2004
2005
2006
18.5
%
9.3
%
10.5
%
43.0
37.8
28.6
5.6
(24.2
)
(19.3
)
24.8
28.2
67.5
24.1
%
17.2
%
21.0
%
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For the year ended December 31,
2005
2006
2007
(47.9
%)
(44.6
%)
(43.7
%)
(38.4
%)
(38.0
%)
(38.7
%)
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For the year ended December 31,
2005
2006
2007
(20.5
%)
(20.7
%)
(22.7
%)
(17.9
)
(17.3
)
(16.0
)
(38.4
%)
(38.0
%)
(38.7
%)
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For the year ended December 31,
2005
2006
2007
(in thousands, except percentages)
RMB
%
RMB
%
RMB
%
356,285
63.4
389,535
59.0
430,621
53.9
159,495
28.4
219,794
33.3
282,688
35.4
26,307
4.7
19,938
3.0
16,086
2.0
53,507
9.5
68,586
10.4
114,871
14.3
595,594
106.0
697,853
105.8
844,266
105.6
(33,568
)
(6.0
)
(38,010
)
(5.8
)
(44,982
)
(5.6
)
562,026
100.0
659,843
100.0
799,284
100.0
(269,328
)
(47.9
)
(294,068
)
(44.6
)
(349,022
)
(43.7
)
292,698
52.1
365,775
55.4
450,262
56.3
(115,095
)
(20.5
)
(136,770
)
(20.7
)
(181,230
)
(22.7
)
(100,614
)
(17.9
)
(114,322
)
(17.3
)
(128,347
)
(16.0
)
(215,709
)
(38.4
)
(251,092
)
(38.0
)
(309,577
)
(38.7
)
76,989
13.7
114,683
17.4
140,685
17.6
(11,320
)
(2.0
)
(9,440
)
(1.4
)
(18,134
)
(2.3
)
20,385
3.6
20,744
3.1
24,635
3.1
5,313
1.0
1,914
0.3
1,793
0.2
91,367
16.3
127,901
19.4
148,979
18.6
(29,945
)
(5.4
)
(28,560
)
(4.3
)
(45,402
)
(5.7
)
61,422
10.9
99,341
15.1
103,577
12.9
(1,480
)
(0.3
)
(4,621
)
(0.7
)
(4,931
)
(0.6
)
(1,438
)
(0.3
)
(3,972
)
(0.6
)
(4,241
)
(0.5
)
(11,635
)
(2.1
)
(19,926
)
(3.0
)
(20,479
)
(2.6
)
Print Advertising.
Our print advertising revenues increased 10.5% to RMB430.6 million
(US$59.0 million) in 2007 from RMB389.5 million in 2006. This increase was primarily due
to a higher number of recruitment advertisements placed in our editions of
51job Weekly
as
we increased customer penetration in our existing markets. We estimate that the number of
print advertising pages increased 31.4% to 16,568 in 2007 from 12,609 in 2006. The
increase in revenues from greater advertisement volumes was partially offset by a 15.9%
decrease in our overall average revenue per page due to higher growth rates in lower
priced markets. We did not materially change the prices we charge for print advertising in
each local market in 2007.
Online Recruitment Services.
Our online recruitment services revenues increased 28.6%
to RMB282.7 million (US$38.8 million) in 2007 from RMB219.8 million in 2006. This increase
was mainly attributable to growth in the number of unique employers placing recruitment
and related advertisements on
www.51job.com
as well as greater use of our
eHire
web-based
online resumé and recruitment management platform. We estimate that the number of unique
employers increased 25.6% to 94,125 in 2007 from 74,950 in 2006. The prices we charge for
our online recruitment services were generally unchanged in 2007. However, our average
revenue per unique employer in 2007 increased 2.4% over 2006 as a result of
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the greater number of customers purchasing multiple online recruitment services and the
migration of customers to higher priced products, both factors which increase our average
revenue per unique employer, more than offset the increase in new online customers, who
generally purchase basic, lower priced recruitment advertisements and decrease our average
revenue per unique employer.
Executive Search.
Our executive search revenues decreased 19.3% to RMB16.1 million
(US$2.2 million) in 2007 from RMB19.9 million in 2006, primarily as a result of fewer
candidate assignments.
Other Human Resource Related Revenues
. Our revenues from other human resource related
services increased 67.5% to RMB114.9 million (US$15.7 million) in 2007 from RMB68.6
million in 2006. This increase was primarily attributable to an increase in training
revenues as we conducted a greater number of seminars and added new course content as well
as an increase in business process outsourcing revenues from the growing number of
corporate customers and their employees we served.
Sales and Marketing Expenses.
Our sales and marketing expenses increased 32.5% to
RMB181.2 million (US$24.8 million) in 2007 from RMB136.8 million in 2006. This increase
was due to the expansion of our sales and marketing staff, higher employee salaries and
commissions, and greater spending on advertising and promotional activities. Our
advertising and promotion expenses in 2007 increased 79.6% to RMB34.1 million (US$4.7
million) from RMB19.0 million in 2006 due to a greater number of customer events and
activities as well as increased spending on brand advertising campaigns. Our sales and
marketing expenses in 2007 also included share-based compensation expense of RMB4.2
million (US$0.6 million) compared with RMB4.0 million in 2006.
General and Administrative Expenses.
Our general and administrative expenses increased
12.3% to RMB128.3 million (US$17.6 million) in 2007 from RMB114.3 million in 2006. This
increase was primarily due to a loss provision of RMB9.7 million (US$1.3 million) recorded
in the fourth quarter of 2007 relating to the non-compliance to contract terms by a third
party which provided services to us in connection with our human resource outsourcing
operations in Beijing. We have terminated our relationship with the third party contractor
and have been involved in an ongoing investigation of this contractor with the assistance
of local authorities. Due to the contractors non-compliance, we
have assessed that we face probable liability and have estimated a loss of RMB9.7 million (US$1.3 million)
related to this matter. We are exploring all legal options available to recover funds from
the third party contractor. However, the outcome of the investigation and our ability to
recover funds is unclear.
In addition to the loss provision, our general and administrative expenses increased in
2007 due to higher employee compensation and depreciation and amortization expenses which
were partially offset by lower office rent and professional services fees. Our general and
administrative expenses in 2007 included share-based compensation expense of RMB20.5
million (US$2.8 million) compared with RMB19.9 million in 2006.
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Print Advertising.
Our print advertising revenues increased 9.3% to RMB389.5 million in
2006 from RMB356.3 million in 2005. This growth was primarily due to a greater volume of
print advertisements in our editions of
51job Weekly,
which reflected increased
penetration in existing markets and our sales and marketing efforts, as well as higher
overall average revenue per page. We estimate that the number of print advertising pages
increased 6.1% to 12,609 in 2006 from 11,884 in 2005. Our overall average revenue per page
rose approximately 3.0% over 2005 as a result of modest price increases we made for
certain print advertisement products in some cities in late 2005.
Online Recruitment Services.
Our online recruitment services revenues increased 37.8%
to RMB219.8 million in 2006 from RMB159.5 million in 2005. This increase was primarily the
result of significant growth in the number of unique employers using our online
recruitment services complemented by a modest increase in our average revenue per unique
employer. We estimate that the number of unique employers increased 32.4% to 74,950 in
2006 from 56,599 in 2005, mainly due to our greater sales and marketing efforts and
increased customer acceptance of the Internet as a channel for recruitment advertising.
Although the prices we charge were generally unchanged in 2006, our average revenue per
unique employer in 2006 increased 4.1% from 2005 as the employers who purchased multiple
online services or higher priced products offset the first-time customers who generally
purchase discounted introductory and promotional online recruitment services packages.
Executive Search.
Our executive search revenues decreased 24.2% to RMB19.9 million in
2006 from RMB26.3 million in 2005 due to fewer candidate assignments and case closings.
Other Human Resource Related Revenues
. Our revenues from other human resource related
services increased 28.2% to RMB68.6 million in 2006 from RMB53.5 million in 2005. This
increase was primarily driven by growth in sales of training and outsourcing services.
Training revenues grew as a result of an increase in the number of public and in-house
seminars we conducted in 2006. In addition, we believe the increase in revenues from our
human resource outsourcing business reflected growing customer acceptance and demand for
these services as well as our sales and marketing efforts.
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Sales and Marketing Expenses.
Our sales and marketing expenses increased 18.8% to
RMB136.8 million in 2006 from RMB115.1 million in 2005. This increase was primarily due to
increases in commissions and bonuses paid to sales personnel, the hiring of additional
sales and marketing staff, increases in employee salaries and benefits, increases in
marketing and promotional expenses, and the addition of a new sales office in Tianjin in
2006. We calculate commissions based on a percentage of total revenues generated by a
salesperson. In addition, we pay bonuses to account executives for achieving and exceeding
certain sales targets and goals. Our total advertising and promotion expenses in 2006
decreased 11.1% to RMB19.0 million from RMB21.4 million in 2005 due to lower advertising
expenses which were partially offset by higher promotion expenses from conducting a
greater number of promotional events and other brand awareness activities. Our sales and
marketing expenses in 2006 also included an increase in share-based compensation expense
to RMB4.0 million from RMB1.4 million in 2005 due to the adoption of SFAS No. 123R.
General and Administrative Expenses.
Our general and administrative expenses increased
13.6% to RMB114.3 million in 2006 from RMB100.6 million in 2005. This increase was
primarily due to higher share-based compensation expense, hiring of additional office
staff, higher employee salaries and bonuses, higher professional services fees, and costs
associated with our purchase of office facilities in Shanghai, including greater
depreciation expenses, moving and renovation expenses, and office management fees. Our
general and administrative expenses in 2006 included a 71.3% increase in share-based
compensation expense to RMB19.9 million from RMB11.6 million in 2005 due to the adoption
of SFAS No. 123R.
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For the three months ended,
March 31,
June 30,
September 30,
December 31,
2007
2007
2007
2007
(in thousands)
RMB
RMB
RMB
RMB
113,557
107,569
114,065
95,430
61,585
71,203
73,018
76,882
3,852
4,676
3,592
3,966
21,491
26,497
29,558
37,325
200,485
209,945
220,233
213,603
189,382
199,170
208,456
202,276
(84,850
)
(84,076
)
(90,657
)
(89,439
)
104,532
115,094
117,799
112,837
(33,776
)
(42,232
)
(50,548
)
(54,674
)
(28,915
)
(29,804
)
(31,866
)
(37,762
)
(62,691
)
(72,036
)
(82,414
)
(92,436
)
41,841
43,058
35,385
20,401
44,502
45,126
38,756
20,595
(12,347
)
(14,095
)
(12,078
)
(6,882
)
32,155
31,031
26,678
13,713
(1,184
)
(1,168
)
(1,300
)
(1,279
)
(1,017
)
(1,005
)
(1,119
)
(1,100
)
(5,187
)
(4,648
)
(5,698
)
(4,946
)
For the year ended December 31,
2005
2006
2007
2007
(in thousands)
RMB
RMB
RMB
US$
122,026
185,229
193,315
26,501
(54,391
)
(144,402
)
(41,248
)
(5,655
)
(74,098
)
6,099
4,470
613
(17,659
)
38,064
138,822
19,031
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Capital
Operating Lease Commitments
Commitments
Publication
Office
Office
fees
premises
Others
equipment
Total
(in thousands)
RMB
RMB
RMB
RMB
RMB
51,912
14,775
11,709
929
79,325
31,398
20,426
3,508
55,332
960
5,033
72
6,065
600
24,345
1,521
26,466
84,870
64,579
16,810
929
167,188
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Name
Age
Position / Title
78
Chairman of the board and independent director
45
Director, chief executive officer, president and secretary
41
Independent director
61
Independent director
47
Non-executive director
38
Chief financial officer and senior vice president
38
Senior vice president
45
Vice president
35
Vice president
(1)
Member of audit committee.
(2)
Member of compensation committee.
(3)
Member of nominating and corporate governance committee.
(4)
Pursuant to the share purchase agreement between Recruit Co., Ltd., or Recruit, and the
selling shareholders, each of the selling shareholders has agreed that it will use its
commercially reasonable best efforts in cooperating with Recruit to have a representative of
Recruit nominated to stand for election to our board of directors and that it will vote all of
its shares in favor of the election of such nominee to our board of directors at any annual or
extraordinary general meetings of our members at which such nominee may stand for election for
the duration of the agreement. Mr. Hiroyuki Honda, Recruits nominee, was elected to our board
of directors on July 28, 2006.
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Common shares
underlying options
granted
Exercise price
Date of grant
Date of expiration
US$
160,800
8.695
April 22, 2005
April 21, 2011
40,000
7.00
July 25, 2005
July 24, 2011
81,600
8.695
April 22, 2005
April 21, 2011
40,800
8.695
April 22, 2005
April 21, 2011
21,600
8.695
April 22, 2005
April 21, 2011
31,200
8.695
April 22, 2005
April 21, 2011
343,200
8.695
April 22, 2005
April 21, 2011
30,000
6.25
November 6, 2005
November 10, 2011
749,200
40,032
8.365
April 3, 2006
April 2, 2012
160,800
8.365
April 3, 2006
April 2, 2012
40,032
8.365
April 3, 2006
April 2, 2012
14,976
9.83
July 28, 2006
July 27, 2012
81,600
8.365
April 3, 2006
April 2, 2012
31,200
8.365
April 3, 2006
April 2, 2012
31,200
8.365
April 3, 2006
April 2, 2012
31,200
8.365
April 3, 2006
April 2, 2012
437,952
8.365
April 3, 2006
April 2, 2012
868,992
40,032
8.795
April 16, 2007
April 15, 2013
160,128
8.77
May 25, 2007
May 24, 2013
100,032
8.795
April 16, 2007
April 15, 2013
40,032
8.795
April 16, 2007
April 15, 2013
40,032
9.355
August 8, 2007
August 7, 2013
60,096
9.355
April 16, 2007
April 15, 2013
14,976
8.795
April 16, 2007
April 15, 2013
30,048
8.80
September 24, 2007
September 23, 2013
81,600
8.795
April 16, 2007
April 15, 2013
81,600
8.795
April 16, 2007
April 15, 2013
48,000
8.795
April 16, 2007
April 15, 2013
48,000
8.795
April 16, 2007
April 15, 2013
444,576
8.795
April 16, 2007
April 15, 2013
1,189,152
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the appointment, evaluation, compensation, oversight and termination of the work of our
independent auditor (including resolution of disagreements between management and the
independent auditor regarding financial reporting);
ensuring that it receives from our independent auditor a formal written statement
attesting to the auditors independence and describing all relationships between the
auditor and us;
pre-approving any audit and non-audit services, including tax services, to be provided
by our independent auditor in accordance with Nasdaq rules;
reviewing our annual audited financial statements and quarterly financial statements
with management and our independent auditor;
reviewing with our independent auditor all critical accounting policies and practices
to be used by us in preparing our financial statements, all alternative treatments of
financial information within U.S. GAAP, and other material communications between our
independent auditor and management;
reviewing our policies with respect to risk assessment and risk management;
reviewing, with management and counsel, any legal matters that may have a material
impact on us and any material reports or inquiries from regulatory or governmental
agencies; and
establishing procedures for the receipt, retention and treatment of complaints
regarding accounting, internal accounting controls, auditing matters or potential
violations of law, and the confidential, anonymous submission by our employees of concerns
regarding questionable accounting or auditing matters or potential violations of law.
identifying and recommending to the board nominees for election or re-election to the
board, or for appointment to fill any vacancy;
reviewing annually with the board the current composition of the board in light of the
characteristics of independence, age, skills, experience and availability of service to
us;
reviewing the continued board membership of a director upon a significant change in
such directors principal occupation;
identifying and recommending to the board the names of directors to serve as members of
the audit
committee and the compensation committee, as well as the nominating and corporate
governance committee itself;
advising the board periodically with respect to significant developments in the law and
practice of corporate governance as well as our compliance with applicable laws and
regulations, and making recommendations to the board on all matters of corporate
governance and on any corrective action to be taken;
establishing criteria and processes for, and leading the board and each committee of
the board in, its annual performance self-evaluation;
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reviewing and approving policies and procedures with respect to proposed transactions
between us and our related parties, and approving in advance all such related-party
transactions; and
monitoring compliance with our code of business conduct and ethics, including reviewing
the adequacy and effectiveness of our procedures to ensure proper compliance.
approving and overseeing the total compensation package for our executives;
reviewing and making recommendations to the board with respect to the compensation of our directors;
reviewing and approving corporate goals and objectives relevant to the compensation of
our chief executive officer, evaluating the performance of our chief executive officer in
light of those goals and objectives, and setting the compensation level of our chief
executive officer based on this evaluation;
reviewing the results of, and procedures for, the evaluation of the performance of
other executive officers;
reviewing periodically and making recommendations to the board regarding any long-term
incentive compensation or equity plans, programs or similar arrangements, and
administering these plans;
reviewing and making recommendations to the board regarding all new employment,
consulting, retirement and severance agreements and arrangements proposed for our
executives; and
selecting peer groups of companies to be used for purposes of determining competitive
compensation packages.
convening shareholders annual general meetings and reporting its work to shareholders
at such meetings;
declaring dividends and distributions;
appointing officers and determining the term of office of the officers;
exercising the borrowing powers of our company and mortgaging the property of our company; and
approving the transfer of shares in our company, including the registering of such
shares in our share register.
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1,615
856
497
461
160
352
3,941
*
*
Includes 838 temporary, part-time and contract employees.
by each of our directors and executive officers; and
each person known to us to own beneficially more than 5% of our common shares.
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Common shares beneficially owned
Number
%
15,316,996
26.9
10,229,598
18.0
1,763,958
3.1
90,200
*
81,732
*
72,300
*
57,900
*
18,428
*
27,631,112
48.2
15,316,996
26.9
12,325,199
21.8
9,754,329
17.2
2,861,158
5.1
(1)
Includes 3,201,171 common shares owned by DCM III, L.P., 84,817 common shares owned by DCM
III-A, L.P., 156,406 common shares owned by DCM Affiliates Fund III, L.P., 5,169,293 common
shares owned by Doll Technology Investment Fund II, L.P., 287,020 common shares owned by DCM
Network Fund, L.P., 530,892 common shares owned by DCM Internet Fund, L.P., and 324,730 Common
shares owned by Doll Technology Affiliates Fund II, L.P. The respective general partners of
these entities are DCM Investment Management III, L.L.C. and Doll Technology Investment
Management II, L.L.C. and share voting and investment power with respect to shares held by
each of the limited partnerships. The managing members of DCM Investment Management III,
L.L.C. are David K. Chao, Dixon R. Doll and Peter Moran; the managing members of Doll
Technology Investment Management II, L.L.C. are David K. Chao and Dixon R. Doll. Each managing
member disclaims beneficial ownership of shares held by the limited partnerships, except to
the extent of their respective pecuniary interests therein. Also includes beneficial ownership
of 433,577 common shares by David K. Chao. The address of David K. Chao and the entities
affiliated with DCM is 2420 Sand Hill Road, Suite 200, Menlo Park, CA 94025.
(2)
The address for Hiroyuki Honda and Recruit Co., Ltd. is GranTokyo South Tower, 1-9-2
Marunouchi, Chiyoda-ku, Tokyo 100-6640, Japan.
(3)
Name and number of shares owned by each entity affiliated with DCM are described in Note (1)
above.
(4)
Based on their Schedule 13G filing with the Securities and Exchange Commission on January 28,
2008. The address for Noonday Asset Management, L.P. is 227 West Trade Street, Suite 2140,
Charlotte, NC 28202.
*
Less than 1%.
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Sales price
High
Low
US$
US$
55.55
18.61
53.50
9.71
31.90
12.70
25.44
14.02
19.49
14.40
31.90
15.50
23.79
13.20
18.46
12.70
18.39
14.02
19.44
15.52
20.98
15.55
25.44
17.59
19.66
16.01
20.16
17.71
19.56
16.05
19.25
17.46
19.66
16.01
18.42
16.27
20.50
17.86
19.94
17.79
(1)
Our ADSs commenced trading on September 29, 2004.
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dealers in securities or currencies;
regulated investment companies;
financial institutions;
real estate investment trusts;
insurance companies;
tax-exempt organizations;
persons holding ADSs or common shares as part of a hedging, integrated or conversion
transaction, constructive sale or straddle;
traders in securities that have elected the mark to market method of accounting;
persons liable for the alternative minimum tax;
partnerships or other pass-through entities for U.S. federal income tax purposes;
persons who own or are deemed to own more than 10% of our voting shares; or
persons whose functional currency is not the U.S. dollar.
an individual citizen or resident of the United States;
a corporation or other entity taxable as a corporation created or organized in or under
the laws of the United States, any state thereof, or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation, regardless of
its source; or
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a trust if it is subject to the primary supervision of a court within the United States
and one or more U.S. persons have the authority to control all substantial decisions of
the trust or if the trust has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
a foreign corporation that is eligible for the benefits of a comprehensive income tax
treaty with the United States which the U.S. Treasury determines to be satisfactory for
these purposes and which includes an exchange of information program; and
a foreign corporation if its stock with respect to which a dividend is paid or its ADSs
backed by such stock are readily tradable on an established securities market within the
United States,
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77
78
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2006
2007
2007
RMB
RMB
US$
4,457
5,352
733
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79
80
81
Exhibits
Description
Amended and Restated Memorandum and Articles of Association.
(Incorporated by reference to Exhibit 3.1 from our Registration
Statement on Form F-1 (File No. 333-117194) filed with the
Securities and Exchange Commission on July 7, 2004)
Specimen of Share Certificate. (Incorporated by reference to
Exhibit 4.1 from our Registration Statement on Form F-1 (File No.
333-117194) filed with the Securities and Exchange Commission on
July 7, 2004)
Specimen of American Depositary Receipt. (Incorporated by
reference to Exhibit 4.2 from our Registration Statement on Form
F-1 (File No. 333-117194) filed with the Securities and Exchange
Commission on August 2, 2004)
Form of Deposit Agreement among 51job, Inc., JPMorgan Chase Bank,
as Depositary, and Holders and Beneficial Holders from time to
time of American Depositary Shares evidenced by American
Depositary Receipts issued thereunder, including the form of
American Depositary Receipt. (Incorporated by reference to the
Registration Statement on Form F-6 (File No. 333-117254) filed
with the Securities and Exchange Commission with respect to
American Depositary Shares representing common shares on July 9,
2004)
2000 Stock Option Plan. (Incorporated by reference to Exhibit
10.1 from our Registration Statement on Form F-1 (File No.
333-117194) filed with the Securities and Exchange Commission on
July 7, 2004)
Form of Employment, Confidential Information and Invention
Assignment Agreement. (Incorporated by reference to Exhibit 10.2
from our Registration Statement on Form F-1 (File No. 333-117194)
filed with the Securities and Exchange Commission on July 7,
2004)
Form of Indemnification Agreement. (Incorporated by reference to
Exhibit 10.3 from our Registration Statement on Form F-1 (File
No. 333-117194) filed with the Securities and Exchange Commission
on July 7, 2004)
Form of Investor Rights Agreement. (Incorporated by reference to
Exhibit 10.5 from our Registration Statement on Form F-1 (File
No. 333-117194) filed with the Securities and Exchange Commission
on July 7, 2004)
Loan Agreements dated as of September 11, 2007 between Qianjin
Network Information Technology (Shanghai) Co., Ltd. and the
shareholders of Beijing Run An Information Consultancy Co., Ltd.
Technical and Consulting Service Agreement dated as of May 3,
2004, as amended as of July 2, 2004, between Shanghai Run An Lian
Information Consultancy Co., Ltd. and Qian Cheng Wu You Network
Information Technology (Beijing) Co., Ltd. (Incorporated by
reference to Exhibit 10.7 from our Registration Statement on Form
F-1 (File No. 333-117194) filed with the Securities and Exchange
Commission on July 7, 2004)
Technical and Consulting Service Agreement dated as of May 3,
2004, as amended as of July 2, 2004, between Beijing Qian Cheng
Si Jin Advertising Co., Ltd. and Qian Cheng Wu You Network
Information Technology (Beijing) Co., Ltd. (Incorporated by
reference to Exhibit 10.8 from our Registration Statement on Form
F-1 (File No. 333-117194) filed with the Securities and Exchange
Commission on July 7, 2004)
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Exhibits
Description
Technical and Consulting Service Agreement dated as of September 11, 2007
between Beijing Run An Information Consultancy Co. Ltd. and Qian Cheng Wu
You Network Information Technology (Beijing) Co., Ltd.
Equity Pledge Agreement dated as of May 3, 2004 between Qian Cheng Wu You
Network Information Technology (Beijing) Co., Ltd. and the shareholders of
Shanghai Run An Lian Information Consultancy Co., Ltd. (Incorporated by
reference to Exhibit 10.9 from our Registration Statement on Form F-1
(File No. 333-117194) filed with the Securities and Exchange Commission on
July 7, 2004)
Equity Pledge Agreement dated as of May 3, 2004 between Qian Cheng Wu You
Network Information Technology (Beijing) Co., Ltd. and the shareholders of
Beijing Qian Cheng Si Jin Advertising Co., Ltd. (Incorporated by reference
to Exhibit 10.10 from our Registration Statement on Form F-1 (File No.
333-117194) filed with the Securities and Exchange Commission on July 7,
2004)
Equity Pledge Agreement dated as of September 11, 2007 between Qian Cheng
Wu You Network Information Technology (Beijing) Co., Ltd. and the
shareholders of Beijing Run An Information Consultancy Co., Ltd.
Investment Capital Transfer Agreement dated as of September 11, 2007 among
the shareholders of Beijing Run An Information Consultancy Co., Ltd.
Share Transfer Agreement dated as of November 20, 2007 among the
shareholders of Shanghai Run An Lian Information Consultancy Co. Ltd.
Share Transfer Agreement dated as of November 12, 2007 between the
shareholders of Beijing Qian Cheng Si Jin Advertising Co., Ltd.
Cooperation Agreement dated as of May 3, 2004 between Shanghai Run An Lian
Information Consultancy Co., Ltd. and Qianjin Network Information
Technology (Shanghai) Co., Ltd. (Incorporated by reference to Exhibit
10.11 from our Registration Statement on Form F-1 (File No. 333-117194)
filed with the Securities and Exchange Commission on July 7, 2004)
Supplemental Agreement to the Cooperation Agreement effective as of April
1, 2007 between Shanghai Run An Lian Information Consultancy Co., Ltd. and
Qianjin Network Information Technology (Shanghai) Co., Ltd. (Incorporated
by reference to Exhibit 4.10 from our Annual Report on Form 20-F for the
year ended December 31, 2006 filed with the Securities and Exchange
Commission on June 28, 2007)
Domain Name License Agreement dated as of May 3, 2006 between Shanghai Run
An Lian Information Consultancy Co., Ltd. and 51net.com Inc. (Incorporated
by reference to Exhibit 4.10 from our Annual Report on Form 20-F for the
year ended December 31, 2006 filed with the Securities and Exchange
Commission on June 28, 2007)
Call Option Agreement dated as of August 1, 2002, as supplemented and
amended as of May 3, 2004, between Beijing Qian Cheng Si Jin Advertising
Co., Ltd. and 51net.com Inc. (Incorporated by reference to Exhibit 10.13
from our Registration Statement on Form F-1 (File No. 333-117194) filed
with the Securities and Exchange Commission on July 7, 2004)
Share Transfer Agreement dated as of April 5, 2004 among Wuhan Mei Hao
Qian Cheng Advertising Co., Ltd., 51net.com Inc. and Beijing Qian Cheng Si
Jin Advertising Co., Ltd. (Incorporated by reference to Exhibit 10.14 from
our Registration Statement on Form F-1 (File No. 333-117194) filed with
the Securities and Exchange Commission on July 7, 2004)
Business Alliance Agreement dated as of April 5, 2006 between 51job, Inc.
and Recruit Co., Ltd. (Incorporated by reference to Exhibit 4.18 from our
Annual Report on Form 20-F for the year ended December 31, 2005 filed with
the Securities and Exchange Commission on June 29, 2006)
Cooperation Agreement dated as of August 9, 2007, as amended as of March
27, 2008, between 51job, Inc. and Recruit Co., Ltd.
List of subsidiaries of 51job, Inc.
Code of Business Conduct and Ethics. (Incorporated by reference to Exhibit
10.6 from our Registration Statement on Form F-1 (File No. 333-117194)
filed with the Securities and Exchange Commission on July 7, 2004)
CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Exhibits
Description
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
Consent of Maples and Calder
Consent of Jun He Law Offices
Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company
*
Filed with this annual report on Form 20-F.
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F-1
51job, Inc.
By:
/s/ Rick Yan
Name:
Rick Yan
Title:
President and Chief Executive Officer
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-24
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F-2
Shanghai, the Peoples Republic of China
June 27, 2008
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(in thousands, except number of shares and | Note | 2005 | 2006 | 2007 | 2007 | |||||||||||||||
per share data) | RMB | RMB | RMB | US$ (Note 2(c)) | ||||||||||||||||
Revenues:
|
||||||||||||||||||||
Print advertising
|
356,285 | 389,535 | 430,621 | 59,033 | ||||||||||||||||
Online recruitment services
|
159,495 | 219,794 | 282,688 | 38,753 | ||||||||||||||||
Executive search
|
26,307 | 19,938 | 16,086 | 2,205 | ||||||||||||||||
Other human resource related revenues
|
53,507 | 68,586 | 114,871 | 15,747 | ||||||||||||||||
|
||||||||||||||||||||
Total revenues
|
595,594 | 697,853 | 844,266 | 115,738 | ||||||||||||||||
|
||||||||||||||||||||
Less: Business and related taxes
|
(33,568 | ) | (38,010 | ) | (44,982 | ) | (6,166 | ) | ||||||||||||
|
||||||||||||||||||||
Net revenues
|
562,026 | 659,843 | 799,284 | 109,572 | ||||||||||||||||
|
||||||||||||||||||||
Cost of services
(1)
|
(269,328 | ) | (294,068 | ) | (349,022 | ) | (47,847 | ) | ||||||||||||
|
||||||||||||||||||||
Gross profit
|
292,698 | 365,775 | 450,262 | 61,725 | ||||||||||||||||
|
||||||||||||||||||||
Operating expenses
(1)
:
|
||||||||||||||||||||
Sales and marketing
|
(115,095 | ) | (136,770 | ) | (181,230 | ) | (24,844 | ) | ||||||||||||
General and administrative
|
(100,614 | ) | (114,322 | ) | (128,347 | ) | (17,595 | ) | ||||||||||||
|
||||||||||||||||||||
Total operating expenses
|
(215,709 | ) | (251,092 | ) | (309,577 | ) | (42,439 | ) | ||||||||||||
|
||||||||||||||||||||
Income from operations
|
76,989 | 114,683 | 140,685 | 19,286 | ||||||||||||||||
Loss from foreign currency translation
|
(11,320 | ) | (9,440 | ) | (18,134 | ) | (2,486 | ) | ||||||||||||
Interest and investment income
|
20,385 | 20,744 | 24,635 | 3,377 | ||||||||||||||||
Other income
|
5,313 | 1,914 | 1,793 | 245 | ||||||||||||||||
|
||||||||||||||||||||
Income before provision for income tax
|
91,367 | 127,901 | 148,979 | 20,422 | ||||||||||||||||
Income tax expense
|
8 | (29,945 | ) | (28,560 | ) | (45,402 | ) | (6,224 | ) | |||||||||||
|
||||||||||||||||||||
Net income
|
61,422 | 99,341 | 103,577 | 14,198 | ||||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Other comprehensive income:
|
||||||||||||||||||||
Currency translation adjustments
|
388 | 579 | 419 | 57 | ||||||||||||||||
Unrealized loss for investment
|
(204 | ) | | | | |||||||||||||||
|
||||||||||||||||||||
Comprehensive income
|
61,606 | 99,920 | 103,996 | 14,255 | ||||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Earnings per share:
|
12 | |||||||||||||||||||
Basic
|
1.10 | 1.79 | 1.84 | 0.25 | ||||||||||||||||
Diluted
|
1.07 | 1.76 | 1.83 | 0.25 | ||||||||||||||||
Earnings per ADS
(2)
:
|
||||||||||||||||||||
Basic
|
2.21 | 3.58 | 3.68 | 0.50 | ||||||||||||||||
Diluted
|
2.15 | 3.52 | 3.66 | 0.50 | ||||||||||||||||
Weighted average number of shares
outstanding:
|
||||||||||||||||||||
Basic
|
55,607,716 | 55,422,447 | 56,279,193 | 56,279,193 | ||||||||||||||||
Diluted
|
57,254,454 | 56,409,260 | 56,631,598 | 56,631,598 | ||||||||||||||||
(1) Share-based compensation:
|
||||||||||||||||||||
Included in cost of services
|
(1,480 | ) | (4,621 | ) | (4,931 | ) | (676 | ) | ||||||||||||
Included in operating expenses
|
||||||||||||||||||||
Sales and marketing
|
(1,438 | ) | (3,972 | ) | (4,241 | ) | (581 | ) | ||||||||||||
General and administrative
|
(11,635 | ) | (19,926 | ) | (20,479 | ) | (2,807 | ) |
(2) | Each ADS represents two common shares. |
F-3
F-4
Common shares | Deferred | Other | Total | |||||||||||||||||||||||||||||
Number | Additional | share-based | Statutory | Comprehensive | Retained | shareholders | ||||||||||||||||||||||||||
of shares | Par value | paid-in capital | compensation | reserves | (loss) income | earnings | equity | |||||||||||||||||||||||||
(in thousands, except number of shares) | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of January 1, 2005
|
55,616,679 | 46 | 869,126 | (40,154 | ) | 16,756 | (502 | ) | 6,546 | 851,818 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Exercise of share options
|
632,276 | 1 | 1,545 | | | | | 1,546 | ||||||||||||||||||||||||
Share-based compensation
|
| | (2,459 | ) | 17,013 | | | | 14,554 | |||||||||||||||||||||||
Reversal of statutory reserves
|
| | | | (13,075 | ) | | 13,075 | | |||||||||||||||||||||||
Repurchase of common shares
|
(1,372,876 | ) | (2 | ) | (19,789 | ) | | | | (55,853 | ) | (75,644 | ) | |||||||||||||||||||
Adjustment of other comprehensive income
|
| | | | | 184 | | 184 | ||||||||||||||||||||||||
Net income
|
| | | | | | 61,422 | 61,422 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2005
|
54,876,079 | 45 | 848,423 | (23,141 | ) | 3,681 | (318 | ) | 25,190 | 853,880 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Exercise of share options
|
1,243,682 | 1 | 6,098 | | | | | 6,099 | ||||||||||||||||||||||||
Share-based compensation
|
| | 5,378 | 23,141 | | | | 28,519 | ||||||||||||||||||||||||
Appropriation of statutory reserves
|
| | | | 1,168 | | (1,168 | ) | | |||||||||||||||||||||||
Adjustment of other comprehensive income
|
| | | | | 579 | | 579 | ||||||||||||||||||||||||
Net income
|
| | | | | | 99,341 | 99,341 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2006
|
56,119,761 | 46 | 859,899 | | 4,849 | 261 | 123,363 | 988,418 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Exercise of share options
|
399,710 | 1 | 4,469 | | | | | 4,470 | ||||||||||||||||||||||||
Share-based compensation
|
| | 29,651 | | | | | 29,651 | ||||||||||||||||||||||||
Appropriation of statutory reserves
|
| | | | 1,142 | | (1,142 | ) | | |||||||||||||||||||||||
Adjustment of other comprehensive income
|
| | | | | 419 | | 419 | ||||||||||||||||||||||||
Net income
|
| | | | | | 103,577 | 103,577 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2007
|
56,519,471 | 47 | 894,019 | | 5,991 | 680 | 225,798 | 1,126,535 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2007 (US$ Note 2(c))
|
56,519,471 | 6 | 122,559 | | 821 | 93 | 30,954 | 154,433 | ||||||||||||||||||||||||
|
F-5
2005 | 2006 | 2007 | 2007 | |||||||||||||
(in thousands) | RMB | RMB | RMB | US$ (Note 2(c)) | ||||||||||||
Cash flows from operating activities:
|
||||||||||||||||
Net income for the year
|
61,422 | 99,341 | 103,577 | 14,198 | ||||||||||||
Adjustments for:
|
||||||||||||||||
Share-based compensation
|
14,553 | 28,519 | 29,651 | 4,065 | ||||||||||||
Depreciation
|
13,070 | 15,891 | 18,351 | 2,516 | ||||||||||||
Amortization of intangible assets
|
3,235 | 3,132 | 2,654 | 364 | ||||||||||||
Loss due to disposal of fixed assets
|
259 | 251 | 244 | 33 | ||||||||||||
Loss due to impairment of fixed assets
|
| 49 | | | ||||||||||||
Loss from foreign currency translation
|
11,320 | 9,440 | 18,134 | 2,486 | ||||||||||||
Deferred tax provision (benefit)
|
1,353 | 1,516 | (855 | ) | (117 | ) | ||||||||||
(Increase) Decrease in accounts receivable
|
1,030 | (6,208 | ) | (1,275 | ) | (175 | ) | |||||||||
(Increase) Decrease in prepayments and other current
assets
|
(8,589 | ) | 5,202 | (15,068 | ) | (2,065 | ) | |||||||||
Increase (Decrease) in accounts payable
|
(2,462 | ) | 777 | 1,650 | 226 | |||||||||||
Decrease in due to related parties
|
(72 | ) | (1,041 | ) | (464 | ) | (64 | ) | ||||||||
Increase in salary and employee related accrual
|
7,641 | 7,337 | 2,387 | 328 | ||||||||||||
Increase (Decrease) in taxes payable
|
(7,385 | ) | 549 | 9,747 | 1,336 | |||||||||||
Increase in advance from customers
|
22,842 | 17,311 | 17,605 | 2,414 | ||||||||||||
Increase in other payables and accruals
|
3,581 | 3,045 | 7,653 | 1,049 | ||||||||||||
(Increase) Decrease in other long-term assets
|
228 | 118 | (676 | ) | (93 | ) | ||||||||||
|
||||||||||||||||
Net cash provided by operating activities
|
122,026 | 185,229 | 193,315 | 26,501 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Cash flows from investing activities:
|
||||||||||||||||
Purchase of property and equipment
|
(45,902 | ) | (153,842 | ) | (32,300 | ) | (4,428 | ) | ||||||||
Purchase of intangible assets
|
(8,489 | ) | (1,115 | ) | (160 | ) | (22 | ) | ||||||||
Purchase of long-term investments
|
| | (8,788 | ) | (1,205 | ) | ||||||||||
Proceeds from the maturity of short-term investments
|
| 10,555 | | | ||||||||||||
|
||||||||||||||||
Net cash used in investing activities
|
(54,391 | ) | (144,402 | ) | (41,248 | ) | (5,655 | ) | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Cash flows from financing activities:
|
||||||||||||||||
Repurchase of common shares
|
(75,644 | ) | | | | |||||||||||
Proceeds from the exercise of options
|
1,546 | 6,099 | 4,470 | 613 | ||||||||||||
|
||||||||||||||||
Net cash provided by (used in) financing activities
|
(74,098 | ) | 6,099 | 4,470 | 613 | |||||||||||
|
||||||||||||||||
Effect of foreign exchange rate changes on cash
|
(11,196 | ) | (8,862 | ) | (17,715 | ) | (2,428 | ) | ||||||||
|
||||||||||||||||
Net increase (decrease) in cash
|
(17,659 | ) | 38,064 | 138,822 | 19,031 | |||||||||||
Cash, beginning of year
|
848,293 | 830,634 | 868,698 | 119,088 | ||||||||||||
|
||||||||||||||||
Cash, end of year
|
830,634 | 868,698 | 1,007,520 | 138,119 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||||||
Cash paid during the years for:
|
||||||||||||||||
Income taxes
|
41,598 | 24,467 | 39,414 | 5,403 | ||||||||||||
Interest expenses
|
| | | | ||||||||||||
|
||||||||||||||||
Supplemental disclosure of non-cash investing activities:
|
||||||||||||||||
Accrual related to purchase of property, equipment and
software
|
| (1,556 | ) | (18 | ) | (2 | ) | |||||||||
Accrual related to initial public offering costs
|
(2,053 | ) | | | |
F-6
F-7
F-8
Estimated useful lives | ||
Land
|
48 to 50 years | |
Building
|
20 years | |
Leasehold improvements
|
Lesser of the lease period or the estimated useful life | |
Computer equipment
|
5 years | |
Furniture and fixtures
|
5 years | |
Motor vehicles
|
5 years | |
Other assets
|
5 years |
F-9
F-10
F-11
2005 | ||||
(in thousands, except per share data) | RMB | |||
Net income as reported
|
61,422 | |||
Add: Share-based compensation expense under APB No. 25
|
14,553 | |||
Less: Share-based compensation expense under SFAS No. 123
|
(21,557 | ) | ||
|
||||
Pro forma net income
|
54,418 | |||
|
||||
Basic earnings per share:
|
||||
As reported
|
1.10 | |||
|
||||
Pro forma
|
0.98 | |||
|
||||
Basic earnings per ADS:
|
||||
As reported
|
2.21 | |||
|
||||
Pro forma
|
1.96 | |||
|
||||
Diluted earnings per share:
|
||||
As reported
|
1.07 | |||
|
||||
Pro forma
|
0.95 | |||
|
||||
Diluted earnings per ADS:
|
||||
As reported
|
2.15 | |||
|
||||
Pro forma
|
1.90 | |||
|
2005 | 2006 | 2007 | ||||
Risk-free interest rate
|
3.87%-4.53% | 4.85%-4.93% | 4.23%-4.81% | |||
Expected life (years)
|
4 | 4 | 4 | |||
Expected dividend yield
|
0% | 0% | 0% | |||
Volatility
|
90%-100% | 80% | 55-75% | |||
Weighted average of fair value per option at grant date
|
RMB44.42 | RMB40.39 | RMB36.86 |
F-12
F-13
F-14
2006 | 2007 | |||||||
RMB | RMB | |||||||
Balance at beginning of the period
|
2,860 | 2,612 | ||||||
Additions
|
| 2,036 | ||||||
Reversals
|
(247 | ) | | |||||
Write-offs
|
(1 | ) | (769 | ) | ||||
|
||||||||
Balance at end of period
|
2,612 | 3,879 | ||||||
|
2006 | 2007 | |||||||
RMB | RMB | |||||||
Rental and other deposits
|
1,771 | 2,106 | ||||||
Prepayments for rental and others
|
5,574 | 4,800 | ||||||
Employee advances
|
1,760 | 1,349 | ||||||
Payments made on behalf of customers
|
371 | 16,517 | ||||||
Prepaid insurance premium
|
2,225 | 1,504 | ||||||
Interest income receivable
|
4,864 | 4,498 | ||||||
Others
|
1,499 | 2,358 | ||||||
|
||||||||
Total
|
18,064 | 33,132 | ||||||
|
F-15
2006 | 2007 | |||||||
RMB | RMB | |||||||
Land and building
|
164,874 | 164,963 | ||||||
Leasehold improvements
|
10,436 | 8,129 | ||||||
Computer equipment
|
40,376 | 67,492 | ||||||
Furniture and fixtures
|
11,940 | 12,342 | ||||||
Motor vehicles
|
3,824 | 3,979 | ||||||
Other assets
|
4,901 | 4,075 | ||||||
Less: impairment
|
(49 | ) | | |||||
Less: accumulated depreciation
|
(41,987 | ) | (54,996 | ) | ||||
|
||||||||
Net book value
|
194,315 | 205,984 | ||||||
|
2006 | 2007 | |||||||
RMB | RMB | |||||||
Computer equipment software
|
16,818 | 16,835 | ||||||
Acquired training licenses
|
6,571 | 6,571 | ||||||
Internally developed software
|
1,569 | 1,569 | ||||||
Less: accumulated amortization
|
(15,595 | ) | (18,106 | ) | ||||
|
||||||||
Net book value
|
9,363 | 6,869 | ||||||
|
2006 | 2007 | |||||||
RMB | RMB | |||||||
Professional service fees
|
4,633 | 4,935 | ||||||
Office expenses
|
1,504 | 4,192 | ||||||
Deposit from customers
|
4,031 | 479 | ||||||
Marketing expenses
|
3,539 | | ||||||
Revenue from newspaper sales collected on behalf of newspaper
contractors
|
4,951 | 6,040 | ||||||
Payables to employees related to proceeds from share option exercises
|
550 | 1,469 | ||||||
Loss provision related to a third party contractor
|
| 9,655 | ||||||
Others
|
1,353 | 1,444 | ||||||
|
||||||||
Total
|
20,561 | 28,214 | ||||||
|
F-16
2005 | 2006 | 2007 | ||||||||||
RMB | RMB | RMB | ||||||||||
Current income tax expense
|
28,592 | 27,044 | 46,257 | |||||||||
Deferred tax expense (benefit)
|
1,353 | 1,516 | (855 | ) | ||||||||
|
||||||||||||
Income tax expense
|
29,945 | 28,560 | 45,402 | |||||||||
|
F-17
2005 | 2006 | 2007 | ||||||||||
EIT statutory rate
|
33 | % | 33 | % | 33 | % | ||||||
Effect of tax holiday for certain subsidiaries
|
(6 | %) | (21 | %) | (7 | %) | ||||||
Difference in EIT rates of certain subsidiaries
|
(3 | %) | (4 | %) | (8 | %) | ||||||
Non-deductibility of expenses incurred outside the PRC
|
6 | % | 8 | % | 9 | % | ||||||
Other permanent differences
|
4 | % | 4 | % | 2 | % | ||||||
Provision of valuation allowance
|
| 3 | % | 1 | % | |||||||
Reversal of valuation allowance
|
(1 | %) | (1 | %) | | |||||||
|
||||||||||||
Effective EIT rate of the Group
|
33 | % | 22 | % | 30 | % | ||||||
|
2006 | 2007 | |||||||
RMB | RMB | |||||||
Deductible temporary differences related to other payables and accruals
|
1,692 | 3,956 | ||||||
Deductible temporary differences related to advertising expenses
|
1,878 | 40 | ||||||
Deductible temporary differences related to provision for doubtful debts
and slow moving merchandise
|
1,626 | 1,165 | ||||||
|
||||||||
Total current deferred tax assets
|
5,196 | 5,161 | ||||||
Less: Valuation allowance
|
(813 | ) | (231 | ) | ||||
|
||||||||
Net current deferred tax assets
|
4,383 | 4,930 | ||||||
|
||||||||
Tax loss carryforwards
|
7,058 | 6,690 | ||||||
Deductible temporary differences related to fixed assets impairment
|
7 | | ||||||
Deductible temporary differences related to residual value reconciliation
|
198 | 518 | ||||||
Deductible temporary differences related to amortization
|
257 | 272 | ||||||
|
||||||||
Total non-current deferred tax assets
|
7,520 | 7,480 | ||||||
Less: Valuation allowance
|
(7,016 | ) | (6,274 | ) | ||||
|
||||||||
Net non-current deferred tax assets
|
504 | 1,206 | ||||||
|
||||||||
Total deferred tax assets
|
4,887 | 6,136 | ||||||
|
||||||||
Taxable temporary differences related to depreciation period
|
(122 | ) | (516 | ) | ||||
|
||||||||
Total non-current deferred tax liabilities
|
(122 | ) | (516 | ) | ||||
|
||||||||
Total deferred tax liabilities
|
(122 | ) | (516 | ) | ||||
|
F-18
2006 | 2007 | |||||||
RMB | RMB | |||||||
Balance at beginning of the period
|
5,794 | 7,829 | ||||||
Additions
|
3,589 | 2,332 | ||||||
Reversals
|
(1,554 | ) | (300 | ) | ||||
Reversals due to change in EIT rates
|
| (1,123 | ) | |||||
Write-offs due to closure of AdCo branches
|
| (2,233 | ) | |||||
|
||||||||
Balance at end of period
|
7,829 | 6,505 | ||||||
|
Weighted | ||||||||||||||||
Weighted | average | |||||||||||||||
average | remaining | Aggregate | ||||||||||||||
Number | exercise | contractual | intrinsic value | |||||||||||||
of shares | price | life (years) | (thousands) | |||||||||||||
Outstanding at January 1, 2005
|
2,520,444 | US$ | 0.43 | |||||||||||||
|
||||||||||||||||
Granted
|
749,200 | US$ | 8.51 | |||||||||||||
Exercised
|
(632,276 | ) | US$ | 0.30 | ||||||||||||
Forfeited
|
(79,394 | ) | US$ | 0.48 | ||||||||||||
|
||||||||||||||||
Outstanding at December 31, 2005
|
2,557,974 | US$ | 2.82 | |||||||||||||
|
||||||||||||||||
Granted
|
868,992 | US$ | 8.39 | |||||||||||||
Exercised
|
(1,243,682 | ) | US$ | 0.62 | ||||||||||||
Forfeited
|
(142,658 | ) | US$ | 5.78 | ||||||||||||
|
||||||||||||||||
Outstanding at December 31, 2006
|
2,040,626 | US$ | 6.34 | |||||||||||||
|
||||||||||||||||
Granted
|
1,189,152 | US$ | 8.84 | |||||||||||||
Exercised
|
(399,710 | ) | US$ | 1.49 | ||||||||||||
Forfeited
|
(176,938 | ) | US$ | 8.31 | ||||||||||||
|
||||||||||||||||
Outstanding at December 31, 2007
|
2,653,130 | US$ | 8.06 | 4.35 | US$ | 2,578 | ||||||||||
|
||||||||||||||||
Vested and expected to vest at December 31, 2007
|
2,472,341 | US$ | 8.02 | 4.33 | US$ | 2,506 | ||||||||||
|
||||||||||||||||
Exercisable at December 31, 2007
|
901,666 | US$ | 6.85 | 3.38 | US$ | 1,953 | ||||||||||
|
F-19
Weighted | ||||||||
average | ||||||||
Number | grant-date | |||||||
of shares | fair value | |||||||
Non-vested at January 1, 2007
|
1,446,544 | US$ | 5.37 | |||||
|
||||||||
Granted
|
1,189,152 | US$ | 5.05 | |||||
Vested
|
(707,294 | ) | US$ | 5.30 | ||||
Forfeited
|
(176,938 | ) | US$ | 5.37 | ||||
|
||||||||
Non-vested at December 31, 2007
|
1,751,464 | US$ | 5.19 | |||||
|
||||||||
Expected to vest at December 31, 2007
|
1,570,675 | US$ | 5.18 | |||||
|
Outstanding | Exercisable | |||||||||||||||
Weighted | Weighted | |||||||||||||||
average remaining | average remaining | |||||||||||||||
Number | contractual life | Number of | contractual life | |||||||||||||
Exercise price | of shares | (years) | shares | (years) | ||||||||||||
US$0.15
|
83,830 | 1.25 | 83,830 | 1.25 | ||||||||||||
US$0.50
|
89,124 | 1.96 | 89,124 | 1.96 | ||||||||||||
US$1.00
|
7,508 | 2.16 | 6,338 | 2.16 | ||||||||||||
US$6.25
|
30,000 | 3.86 | 15,625 | 3.86 | ||||||||||||
US$7.00
|
40,000 | 3.56 | 24,167 | 3.56 | ||||||||||||
US$8.365
|
710,766 | 4.26 | 300,762 | 4.26 | ||||||||||||
US$8.695
|
525,550 | 3.31 | 347,950 | 3.31 | ||||||||||||
US$8.77
|
160,128 | 5.40 | 23,352 | 5.40 | ||||||||||||
US$8.795
|
861,072 | 5.29 | | | ||||||||||||
US$8.80
|
30,048 | 5.73 | 1,878 | 5.73 | ||||||||||||
US$9.355
|
100,128 | 5.61 | 3,336 | 5.61 | ||||||||||||
US$9.83
|
14,976 | 4.58 | 5,304 | 4.58 | ||||||||||||
|
||||||||||||||||
|
2,653,130 | 901,666 | ||||||||||||||
|
F-20
2005 | 2006 | 2007 | ||||||||||
(in thousands, except number of shares and per share data) | RMB | RMB | RMB | |||||||||
Numerator:
|
||||||||||||
Net income
|
61,422 | 99,341 | 103,577 | |||||||||
|
||||||||||||
Denominator:
|
||||||||||||
Denominator for basic earnings per share weighted
average common shares outstanding
|
55,607,716 | 55,422,447 | 56,279,193 | |||||||||
Effect of dilutive share options
|
1,646,738 | 986,813 | 352,405 | |||||||||
|
||||||||||||
Denominator for diluted earnings per share
|
57,254,454 | 56,409,260 | 56,631,598 | |||||||||
|
||||||||||||
Basic earnings per share
|
1.10 | 1.79 | 1.84 | |||||||||
|
||||||||||||
Diluted earnings per share
|
1.07 | 1.76 | 1.83 | |||||||||
|
F-21
Publication fees | Office premises | Others | Total | |||||||||||||
RMB | RMB | RMB | RMB | |||||||||||||
2008
|
51,912 | 14,775 | 11,709 | 78,396 | ||||||||||||
2009
|
29,295 | 11,725 | 2,457 | 43,477 | ||||||||||||
2010
|
2,103 | 8,701 | 1,051 | 11,855 | ||||||||||||
2011
|
480 | 2,943 | 36 | 3,459 | ||||||||||||
2012
|
480 | 2,090 | 36 | 2,606 | ||||||||||||
After 2012
|
600 | 24,345 | 1,521 | 26,466 | ||||||||||||
|
||||||||||||||||
|
84,870 | 64,579 | 16,810 | 166,259 | ||||||||||||
|
F-22
F-23
Note | 2005 | 2006 | 2007 | 2007 | ||||||||||||||||
(in thousands) | RMB | RMB | RMB | US$ (Note 5) | ||||||||||||||||
Net revenues
|
| | | | ||||||||||||||||
|
||||||||||||||||||||
Cost of services
|
| | | | ||||||||||||||||
|
||||||||||||||||||||
Gross profit
|
| | | | ||||||||||||||||
|
||||||||||||||||||||
Total operating expenses
|
(20,818 | ) | (32,918 | ) | (33,222 | ) | (4,555 | ) | ||||||||||||
|
||||||||||||||||||||
Loss from operations
|
(20,818 | ) | (32,918 | ) | (33,222 | ) | (4,555 | ) | ||||||||||||
Equity in profit of subsidiary companies, net
|
1 | 79,223 | 129,688 | 142,143 | 19,486 | |||||||||||||||
Loss from foreign currency translation
|
(10,898 | ) | (9,344 | ) | (17,835 | ) | (2,445 | ) | ||||||||||||
Interest income
|
13,915 | 11,970 | 12,541 | 1,719 | ||||||||||||||||
Other expense
|
| (55 | ) | (50 | ) | (7 | ) | |||||||||||||
|
||||||||||||||||||||
Income before provision for income tax
|
61,422 | 99,341 | 103,577 | 14,198 | ||||||||||||||||
Income tax expense
|
| | | | ||||||||||||||||
|
||||||||||||||||||||
Net income for the year
|
61,422 | 99,341 | 103,577 | 14,198 | ||||||||||||||||
|
F-24
F-25
Note | 2005 | 2006 | 2007 | 2007 | ||||||||||||||||
(in thousands) | RMB | RMB | RMB | US$ (Note 5) | ||||||||||||||||
Net cash provided by (used in) operating activities
|
7,599 | (9,690 | ) | 10,307 | 1,413 | |||||||||||||||
|
||||||||||||||||||||
Net cash provided by (used in) investing activities
|
(322,941 | ) | 22,283 | (8,788 | ) | (1,205 | ) | |||||||||||||
|
||||||||||||||||||||
Net cash provided by (used in) financing activities
|
(74,098 | ) | 6,099 | 4,470 | 613 | |||||||||||||||
|
||||||||||||||||||||
Effect of foreign exchange rate changes on cash
|
(11,196 | ) | (8,861 | ) | (17,715 | ) | (2,428 | ) | ||||||||||||
|
||||||||||||||||||||
Net increase (decrease) in cash
|
(400,636 | ) | 9,831 | (11,726 | ) | (1,607 | ) | |||||||||||||
Cash, beginning of year
|
648,577 | 247,941 | 257,772 | 35,337 | ||||||||||||||||
|
||||||||||||||||||||
Cash, end of year
|
247,941 | 257,772 | 246,046 | 33,730 | ||||||||||||||||
|
F-26
2006 | 2007 | |||||||
RMB | RMB | |||||||
Receivables due from related parties:
|
||||||||
51net HR
|
803 | 785 | ||||||
51net Beijing
|
16 | 41 | ||||||
|
||||||||
|
819 | 826 | ||||||
|
||||||||
Long term receivables due from related parties:
|
||||||||
51net.com Inc.
|
340,167 | 318,403 | ||||||
|
||||||||
|
340,986 | 319,229 | ||||||
|
||||||||
Due to related parties:
|
||||||||
Qianjin Network Information Technology (Shanghai) Co., Ltd.
|
231 | 275 | ||||||
Shanghai Qianjin Advertising Co., Ltd.
|
2,424 | 2,369 | ||||||
51net.com Inc.
|
5 | 73 | ||||||
Advances for share options exercised
|
464 | | ||||||
|
||||||||
|
3,124 | 2,717 | ||||||
|
F-27
F-28
Party A: | Qianjin Network Information Technology (Shanghai) Company Limited ; and |
Party B: |
JIN Weimin
Nationality: China ID No.: Address: No. 2-25, Tuan Jie Building, Shang Jian Road, Xian |
1. | Party A is an enterprise incorporated in the Peoples Republic of China (the PRC ); and | |
2. | Party A agrees to provide a loan to Party B with the funds invested as capital contribution into Beijing Run An Information Consultancy Company Limited (the Run An ). |
1.1 | Party A agrees to provide a loan to Party B with an aggregate principal amount of RMB3,000,000. | |
1.2 | Party B agrees that the total amount of the loan is invested as capital contribution into Run An. Unless Party As prior written consent is obtained, Party B shall not use the aforementioned loan for any other purpose. | |
1.3 | Both Parties hereby agree and confirm that, except as otherwise provided for herein, the loan under this Agreement is interest-free. However, if, at the time the loan is due and Party B needs to transfer his equity interests in Run An to Party A or its designated persons, the actual transfer price is higher than the loan principal due to legal requirements or other reasons, the amount in excess of the loan principal, to the extent permitted by law, shall be deemed as interests or capital utilization cost, which shall be repaid to Party A together with the loan principal. | |
1.4 | Both parties hereby agree and confirm that Party B may repay the loan only in the following manner: if permitted by PRC laws, Party B or its successor or assign shall transfer the equity interests in the Company to Party A or its designated persons and use the proceeds from such transfer to repay the loan, when the loan is due and Party A gives a written notice. | |
1.5 | Both parties hereby agree and confirm that Party B shall be deemed to have fully performed his obligations under this Agreement only if the following requirements are met: |
1.5.1 | Party B has transferred all his equity interests in the Company to Party A and/or its designated persons; and, | ||
1.5.2 | Party B has paid the total proceeds from such transfer or the maximum amount (including principal and the highest loan interest permitted under then applicable law) allowed by applicable law as repayment of the loan to Party A. |
1
2.1 | The term of the loan starts from the date when Party B has received the loan until ten (10) years after the execution of this Agreement and may be extended upon written agreement of the Parties hereto. | |
2.2 | During the term of the loan or any extension thereof, Party A may notify Party B in writing that the loan under this Agreement is due and payable immediately and request Party B to repay the loan in the manner specified herein, if any of the following events occurs: |
2.2.1 | Party B resigns from or is dismissed by Party A or its affiliates; | ||
2.2.2 | Party B dies or becomes a person without capacity or with limited capacity for civil acts; | ||
2.2.3 | Party B commits a crime or is involved in a crime; or | ||
2.2.4 | Any other third party claims more than RMB500,000 against Party B. |
3.1 | Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement: |
3.1.1 | Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of PRC; | ||
3.1.2 | Party A has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party A comply with its business scope, articles of association and other organizational documents. Party A has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement; | ||
3.1.3 | The principal of the loan to Party B is legally owned by Party A; | ||
3.1.4 | The execution and performance of this Agreement by Party A do not violate any laws, regulations, approvals, authorizations, notices, other governmental documents to which Party A is subject, any agreement signed by it with any third party or any undertaking made by it to any third party; and | ||
3.1.5 | When executed by the Parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party A. |
3.2 | Party B hereby represents and warrants to Party A that, from the execution date of this Agreement until this Agreement terminates: |
3.1.1 | Run An is a company incorporated and validly existing under the laws of PRC; | ||
3.1.2 | Party B has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party B comply with its business scope, articles of association and other organizational documents. Party B has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement; | ||
3.1.3 | The execution and the performance of this Agreement by Party B do not violate any laws, regulations, approvals, authorizations, notices, other governmental documents to which Party B is subject, any agreement signed by Party B with any third party or any undertaking made by Party B to any third party; | ||
3.1.4 | When executed by the parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party B; | ||
3.1.5 | Party B has paid contribution in full for its equity interests in Run An in accordance with applicable laws and regulations; |
2
3.1.6 | There are no pending or threatened disputes, litigation, arbitration or other administrative proceedings or other legal proceedings in connection with the equity interests of the Company held by Party B; and | ||
3.1.7 | Run An has completed all necessary governmental approval, license, registration and filing. |
4.1 | Both parties shall strive to settle any dispute, conflict, or claim arising from the interpretation or performance (including any issue relating to the existence, validity and termination of this Agreement) in connection with this Agreement through friendly consultation. In case no settlement can be reached within thirty (30) day after one party requests for the settlement, each party may submit such dispute to China International Economic and Trade Arbitration Commission (the CIETAC) for arbitration in accordance with its rules. The arbitration award shall be final and binding upon the parties. | |
4.2 | The seat of the arbitration shall be Shanghai. | |
4.3 | The language for the arbitration proceedings shall be Chinese. |
3
4
Party A: | Qianjin Network Information Technology (Shanghai) Company Limited ; and |
Party B: |
WANG Tao
Nationality: China ID No.: Address: No. 6, Deng Lai Hutong, Xuanwu District, Beijing |
3. | Party A is an enterprise incorporated in the Peoples Republic of China (the PRC ); and | |
4. | Party A agrees to provide a loan to Party B with the funds invested as capital contribution into Beijing Run An Information Consultancy Company Limited (the Run An ). |
1.1 | Party A agrees to provide a loan to Party B with an aggregate principal amount of RMB3,000,000. | |
1.2 | Party B agrees that the total amount of the loan is invested as capital contribution into Run An. Unless Party As prior written consent is obtained, Party B shall not use the aforementioned loan for any other purpose. | |
1.3 | Both Parties hereby agree and confirm that, except as otherwise provided for herein, the loan under this Agreement is interest-free. However, if, at the time the loan is due and Party B needs to transfer his equity interests in Run An to Party A or its designated persons, the actual transfer price is higher than the loan principal due to legal requirements or other reasons, the amount in excess of the loan principal, to the extent permitted by law, shall be deemed as interests or capital utilization cost, which shall be repaid to Party A together with the loan principal. | |
1.4 | Both parties hereby agree and confirm that Party B may repay the loan only in the following manner: if permitted by PRC laws, Party B or its successor or assign shall transfer the equity interests in the Company to Party A or its designated persons and use the proceeds from such transfer to repay the loan, when the loan is due and Party A gives a written notice. | |
1.5 | Both parties hereby agree and confirm that Party B shall be deemed to have fully performed his obligations under this Agreement only if the following requirements are met: |
1.5.1 | Party B has transferred all his equity interests in the Company to Party A and/or its designated persons; and, | ||
1.5.2 | Party B has paid the total proceeds from such transfer or the maximum amount (including principal and the highest loan interest permitted under then applicable law) allowed by applicable law as repayment of the loan to Party A. |
1
2.1 | The term of the loan starts from the date when Party B has received the loan until ten (10) years after the execution of this Agreement and may be extended upon written agreement of the Parties hereto. | |
2.2 | During the term of the loan or any extension thereof, Party A may notify Party B in writing that the loan under this Agreement is due and payable immediately and request Party B to repay the loan in the manner specified herein, if any of the following events occurs: |
2.2.1 | Party B resigns from or is dismissed by Party A or its affiliates; | ||
2.2.2 | Party B dies or becomes a person without capacity or with limited capacity for civil acts; | ||
2.2.3 | Party B commits a crime or is involved in a crime; or | ||
2.2.4 | Any other third party claims more than RMB500,000 against Party B. |
3.1 | Party A hereby represents and warrants to Party B that, as of the execution date of this Agreement: |
3.1.1 | Party A is a wholly foreign-owned enterprise incorporated and validly existing under the laws of PRC; | ||
3.1.2 | Party A has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party A comply with its business scope, articles of association and other organizational documents. Party A has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement; | ||
3.1.3 | The principal of the loan to Party B is legally owned by Party A; | ||
3.1.4 | The execution and performance of this Agreement by Party A do not violate any laws, regulations, approvals, authorizations, notices, other governmental documents to which Party A is subject, any agreement signed by it with any third party or any undertaking made by it to any third party; and | ||
3.1.5 | When executed by the Parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party A. |
3.2 | Party B hereby represents and warrants to Party A that, from the execution date of this Agreement until this Agreement terminates: |
3.1.1 | Run An is a company incorporated and validly existing under the laws of PRC; | ||
3.1.2 | Party B has the right to execute and perform this Agreement. The execution and performance of this Agreement by Party B comply with its business scope, articles of association and other organizational documents. Party B has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement; | ||
3.1.3 | The execution and the performance of this Agreement by Party B do not violate any laws, regulations, approvals, authorizations, notices, other governmental documents to which Party B is subject, any agreement signed by Party B with any third party or any undertaking made by Party B to any third party; | ||
3.1.4 | When executed by the parties hereto, this Agreement shall constitute the legal, valid and binding obligations of Party B; | ||
3.1.5 | Party B has paid contribution in full for its equity interests in Run An in accordance with applicable laws and regulations; |
2
3.1.6 | There are no pending or threatened disputes, litigation, arbitration or other administrative proceedings or other legal proceedings in connection with the equity interests of the Company held by Party B; and | ||
3.1.7 | Run An has completed all necessary governmental approval, license, registration and filing. |
4.1 | Both parties shall strive to settle any dispute, conflict, or claim arising from the interpretation or performance (including any issue relating to the existence, validity and termination of this Agreement) in connection with this Agreement through friendly consultation. In case no settlement can be reached within thirty (30) day after one party requests for the settlement, each party may submit such dispute to China International Economic and Trade Arbitration Commission (the CIETAC) for arbitration in accordance with its rules. The arbitration award shall be final and binding upon the parties. | |
4.2 | The seat of the arbitration shall be Shanghai. | |
4.3 | The language for the arbitration proceedings shall be Chinese. |
5.1 | This agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assignees. Without prior written approval of Party A, Party B can not assign, pledge or otherwise transfer any right, benefit or obligation under this agreement. | |
5.2 | Party B agrees that Party A can assign its rights and duties under this Agreement to a third party when it thinks necessary, in which case Party A only needs to give a written notice to Party B and no further consent of Party B is required. | |
5.3 | The execution, validity, interpretation, performance, amendment, termination and resolution of disputes in connection with this Agreement shall be governed by the laws of the PRC. | |
5.4 | This Agreement shall be formed on the date of execution. And both parties hereto agree that the terms and conditions of this Agreement shall be effective as of the date on which Party B has obtained the loan and shall expire when both parties have fully performed their obligations under this Agreement. | |
5.5 | Party B cannot terminate or revoke this Agreement unless (a) Party A commits a gross negligence, fraud or other material illegal acts; or (b) Party A goes bankrupt. | |
5.6 | This Agreement may not be amended or modified except with a written agreement reached by both parties. In case of anything not covered herein, both parties may sign a written supplementary agreement. Any amendment, modification, supplement or annex to this Agreement shall form an integral part of this Agreement. | |
5.7 | This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matters hereof and supersedes all prior verbal discussions or written agreements between the parties with respect to subject matters hereof. | |
5.8 | This Agreement is severable. If any clause of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall have no effect on the validity or enforceability of the remainder of this Agreement. | |
5.9 | Each party should protect the confidentiality of the information concerning the other partys business, operation, financial situation or other confidential information obtained under this Agreement or during the performance of this Agreement. |
5.10 | This Agreement shall be executed in two originals, with each party holding one original. All originals shall have the same legal effect. |
3
4
ARTICLE 1
|
COOPERATION | 3 | ||||
|
||||||
ARTICLE 2
|
TECHNICAL AND CONSULTING SERVICES OF PARTY B | 4 | ||||
|
||||||
ARTICLE 3
|
SERVICE FEES | 4 | ||||
|
||||||
ARTICLE 4
|
COPYRIGHT OWNERSHIP | 4 | ||||
|
||||||
ARTICLE 5
|
TERM AND TERMINATION | 5 | ||||
|
||||||
ARTICLE 6
|
LIABILITY FOR BREACH OF CONTRACT | 5 | ||||
|
||||||
ARTICLE 7
|
WAIVER | 5 | ||||
|
||||||
ARTICLE 8
|
NOTICE | 6 | ||||
|
||||||
ARTICLE 9
|
GOVERNING LAW AND DISPUTES RESOLUTION | 6 | ||||
|
||||||
ARTICLE 10
|
MISCELLANEOUS | 7 |
2
1. | Party A is a company engaged in the provision of human resources services, which is qualified and licensed in Beijing human resource market to collect and publish information on demand and availability of human resource, and provide human resource consulting services, including Internet human resource services. |
2. | Party B is a company engaged in the development and provision of services in connection with Internet technology with technical expertise and practical experiences related to Internet, having extended experiences and personnel with respect to information technology software for Chinese website, technology of sorting in Chinese and platform design; |
3. | Party A and Party B intend to explore the respective advantages of both Parties to cooperate with each other to develop Internet human resource services and the relevant professional technical services within the respective business scope of Parties. |
1.1 | Party A shall provide human resource services to the customers relying on its human resource qualification. Party A hereby agrees to engage Party B and Party B agrees to be engaged by Party A as the exclusive technology provider for Party A in light of Party Bs technical expertise and experiences related to the Internet. |
1.2 | Party A agrees that, during the term of this Agreement, Party A shall not engage any third party as Party As technology provider without the consent of Party B, excluding Party Bs affiliates. |
1.3 | Party A agrees that Party B shall have the right to provide the same or similar technical services under this Agreement to other world wide web operators and it shall also have the right to delegate |
3
other company or individual to perform Party Bs obligations to provide technical services under this Agreement. |
2.1 | Party B shall be responsible for the development, design, and production of database software to be used to store human resource information, software for the end-user platform, and other relevant technologies, and license the right to use the same to Party B. |
2.2 | Party B shall provide Party A with the technical consulting services and technical services for the development of Internet technology of Party A, including without limitation, system design, and installation and calibration of the system, as well as system trial operation. |
2.3 | Party B shall provide the consulting services to Party A for procurement of relevant equipments, software and hardware system required for the operation of Internet services by Party A, including but not limited to provision of consulting advice on the selection of various software tools, software application, and technical platform, installation and calibration of system and the selection and purchase, model and performance of various associated hardware facilities. |
2.4 | Party B shall provide appropriate training and technical support and assistance to the staff of Party A, including but not limited to providing the appropriate training to Party A and its staff (including trainings related to, among other things, customer services, technology); introducing to Party A and its staff knowledge and experience in the installation and operation of the systems and equipment and assisting Party A in solving any problems which may arise at any time in the course of installation and operation of the equipment; and providing Party A with consultations and advice on on-line editing of platforms and application of software and assisting Party A in editing and collecting various information. |
2.5 | Other technical and consulting services necessary for Party As businesses and operations. |
4
5.1 | This Agreement shall become effective from the date of execution hereof by the respective authorized representatives of Parties with the company seals of the Parties affixed hereto, and shall remain effective for ten (10) years. |
5.2 | During the term of this Agreement, in the event of a breach of this Agreement by Party A, Party B may send a written notice of such breach to Party A. Notwithstanding any contrary provision of applicable laws, this Agreement may be, and may only be, terminated by Party B by written notice if Party A fails to cure such breach within fourteen (14) days of its receipt of Party Bs notice of such breach. |
5.3 | This Agreement may be extended to any term agreed by the Parties in writing. |
6.1 | In the event of default by any Party hereto on its obligations provided in this Agreement, the defaulting party shall, upon the receipt of a written notice from the non-defaulting party requesting the correction, immediately refrain from the default, and shall compensate the non-defaulting Party for all losses and damages thus caused to the non-defaulting party within fourteen (14) days of the notice. |
6.2 | In the event that the Parties hereto are both at fault, then they shall bear the respective liabilities for the breach in accordance with the actual faults committed by parties. |
7.1 | Except for the obligation of compensation provided herein, no Party shall be liable for any contingent, consequential, special or punitive damages or other damages of the other Party arising from or in connection with this Agreement, whether or not alleged to be the result of contracts or infringement (including negligence or strict liability), or other circumstances, and whether or not the other Party has been informed of the possibilities of such damages to such other Party. |
7.2 | The rights and obligations under this Agreement shall apply to the respective successors, permitted assigns, executor, and manager of both Parties to the extent possible. Any Party may transfer the services which it shall provide under this Agreement to any of its affiliates or successors, regardless whether such succession is resulted from merger, acquisition, asset purchase or otherwise. |
5
7.3 | The invalidity, nullity and unenforceability of any provision hereof shall not affect or prejudice the validity, effectiveness and enforceability of other provisions hereof. However, the Parties hereto shall cease the performance of such invalid, null and unenforceable provision and shall amend such provision only to the extent that it will be valid, effective and enforceable with respect to such specific facts and situations in a manner that most closely reflect the original intention of such provision. |
7.4 | Any allowance, grace period and deferred exercise of the rights entitled under this Agreement granted by one Party in connection with the other Partys default or delay shall not be deemed as a waiver by such Party of its rights and shall not prejudice, affect or restrict any of the rights which such Party shall be entitled to under this Agreement and relevant PRC laws and regulations. |
Party A : | Beijing Run An Information Consultancy Company Limited | |
Address: | Room 704, Building B, Global Trade Center, No. 36 North Third Circle Road (E), Dong Cheng District, Beijing, China | |
Party B: | Qian Cheng Wu You Network Information Technology (Beijing) Company Limited | |
Address: | Room 705, Building B, Global Trade Center, No. 36 North Third Circle Road (E), Dong Cheng District, Beijing, China |
9.1 | The execution, effectiveness, performance and interpretation of this Agreement shall be governed by the laws of the Peoples Republic of China. |
9.2 | Any disputes arising from or in connection with the execution, performance, interpretation and dispute settlement of this Agreement shall be settled by both Parties through friendly consultations. If the Parties fail to settle the disputes through friendly consultations, either Party may submit the dispute to China International Economy and Trade Arbitration Commission (hereinafter referred to as CIETAC) for arbitration in Beijing in accordance with the then applicable arbitration rules of CIETAC. |
9.3 | During the arbitration, the Parties shall continue to perform their obligations under this Agreement not subject to the arbitration. | |
9.4 | The arbitral award shall be final and binding upon the Parties. |
6
10.1 | This Agreement may not be revised, modified, supplemented or dissolved unless by written agreements between the Parties signed by the authorized representatives. |
10.2 | Appendixes attached to this Agreement shall be an integral part of this Agreement. The Parties may, from time to time, revise, add to and adjust the Appendixes hereto during the term of this Agreement. |
10.3 | This Agreement is written in Chinese in two counterparts, with each Party holding one counterpart. |
7
1
ARTICLE 1
|
CREATION OF PLEDGE ON THE PLEDGED EQUITIES | 3 | ||||
ARTICLE 2
|
COVERAGE OF SECURITY | 3 | ||||
ARTICLE 3
|
PLEDGED EQUITIES | 3 | ||||
ARTICLE 4
|
REPRESENTATIONS AND WARRANTIES BY PARTY B | 4 | ||||
ARTICLE 5
|
SPECIAL AGREEMENTS | 5 | ||||
ARTICLE 6
|
DISPOSAL OF THE PLEDGED EQUITIES | 7 | ||||
ARTICLE 7
|
REGISTRATIONS | 8 | ||||
ARTICLE 8
|
TERM AND TERMINATION OF PLEDGE | 8 | ||||
ARTICLE 9
|
TAXES AND FEES | 8 | ||||
ARTICLE 10
|
LIABILITIES FOR BREACH OF CONTRACT | 8 | ||||
ARTICLE 11
|
FORCE MAJEURE | 8 | ||||
ARTICLE 12
|
NOTICE | 9 | ||||
ARTICLE 13
|
DISPUTES RESOLUTIONS | 9 | ||||
ARTICLE 14
|
MODIFICATIONS AND AMENDMENTS | 9 | ||||
ARTICLE 15
|
SEVERABILITY | 9 | ||||
ARTICLE 16
|
JOINT AND SEVERABLE LIABILITY | 10 | ||||
ARTICLE 17
|
APPENDIX | 10 | ||||
ARTICLE 18
|
MISCELLANEOUS | 10 | ||||
|
||||||
APPENDIX I
|
PARTICULARS | 11 | ||||
|
||||||
APPENDIX II
|
SHAREHOLDERS MEETING RESOLUTION | 12 | ||||
|
||||||
APPENDIX III
|
SHAREHOLDERS LIST FOR BEIJING RUN AN INFORMATION
CONSULTANCY COMPANY LIMITED |
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Pledgee: | Qian Cheng Wu You Network Information Technology (Beijing) Company Limited ( Party A ); and |
Pledgor: | Mr. JIN Weimin and Mr. WANG Tao (JIN Weimin and WANG Tao hereinafter referred to as Party B collectively) |
1. | Party B are shareholders of Beijing Run An Information Consultancy Company Limited ( Run An ), in where JIN Weimin holds 50% equity interest and WANG Tao holds 50% equity interest; | |
2. | According to the Technical and Consulting Service Agreement entered into by and between Party A and Run An on September 11, 2007 (hereinafter referred to as the Master Agreement ), Run An shall engage Party A as its exclusive technology provider, and shall pay the relevant service fee to Party A. The term for the Master Agreement is ten (10) years; | |
3. | In order to secure the performance of the obligations of Run An under the Master Agreement, Party B will pledge to Party A all the equity interest it holds in Run An, and Party A agrees to accept such pledge. |
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4.1 | Party A represents and warrants that: |
4.1.1 | Party A is a company incorporated and registered and duly existing under the PRC laws; | ||
4.1.2 | Party A has the power and authorization to execute and perform this Agreement. The execution and performance by Party A of this Agreement are in compliance with the business scope, and the articles of association or other incorporation documents of Party A. Party A has obtained all necessary and appropriate approvals and authorizations to execute and perform this Agreement; | ||
4.1.3 | The execution and performance by Party A of this Agreement are not against any law or regulation, or any government approval, authorization, notice or other government document, which is binding upon or affects Party A, nor are such execution and performance against any agreement concluded by Party A and any third party, or any covenant made by Party A to any third party; and | ||
4.1.4 | Upon the execution of this Agreement, this Agreement shall constitute valid obligations of Party A which are enforceable against Party A. |
4.2 | Party B represents and warrants that: |
4.2.1 | Run An is a limited liability company organized and registered and duly existing under the PRC laws, and has the authorization to provide human resources service and Internet content consulting service; | ||
4.2.2 | Party B has the power and authorization to execute and perform this Agreement, and Party B has obtained all necessary and appropriate approvals and authorizations to execute and perform this Agreement; | ||
4.2.3 | Party B has obtained a resolution required for the execution of this Agreement from the shareholders meeting of Run An, which resolution is attached hereto as Appendix II; | ||
4.2.4 | The execution and performance by Party B of this Agreement are not against any law or regulation, or any government approval, authorization, notice or other government document, which is binding upon or affects Party B, nor are such execution and performance against any agreement concluded by Party B and any third party, or any covenant made by Party B to any third party; | ||
4.2.5 | Upon the execution of this Agreement, this Agreement shall constitute valid obligations of Party B enforceable against Party B; | ||
4.2.6 | Party B has fully paid up all required capital contributions according to the law in connection with the Pledged Equities and has obtained the capital verification report issued by a qualified accounting firm regarding the capital contributions; |
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4.2.7 | As of the execution date of this Agreement, no currently valid mortgage, pledge or any other security arrangements has been created on the Pledged Equities; | ||
4.2.8 | As of the execution date of this Agreement, there is no offer made by Party B to any third party to transfer the Pledged Equities hereunder, nor is there any covenant made by Party B with respect to any offer made by any third party to purchase the Pledged Equities hereunder; | ||
4.2.9 | As of the execution date of this Agreement, there is no agreement entered into by and between Party B and any third party to transfer the Pledged Equities hereunder. | ||
4.2.10 | As of the execution date of this Agreement, there is no dispute, litigation, arbitration, administrative procedures or any other legal procedures in connection with Party B, Run An and/or the Pledged Equities, nor is there any potential dispute, litigation, arbitration, administrative procedures or any other legal procedures in connection with Party B, Run An and/or the Pledged Equities. |
5.1 | From the date of this Agreement to the date when Run An fully performs its obligations under the Master Agreement (hereinafter referred to as Pledge Termination Date ), Party B shall not conduct any of the following without the prior written consent of Party A: |
5.1.1 | create any mortgage, pledge or other security arrangement on the Pledged Equities; | ||
5.1.2 | take any actions which may hamper Party As rights against the Pledged Equities or any of Party As rights under this Agreement; | ||
5.1.3 | Party B shall not transfer the Pledged Equities or otherwise dispose of any rights in the Pledged Equities without the written consent of Party A; or | ||
5.1.4 | Party B undertakes that, without the prior written consent of Party A, Party B shall not take any actions or omissions that may materially affect the assets, business or liabilities of Run An. |
5.2 | To avoid any depreciation of the Pledged Equities due to the operation of Run An, before Party B decides on any of the following matters, a prior written consent shall be obtained from Party A: |
5.2.1 | profit distributions; | ||
5.2.2 | increase or decrease of the registered capital; | ||
5.2.3 | issuance of bonds; | ||
5.2.4 | merge, split up or any change in the form of the entity; |
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5.2.5 | dissolution and liquidation; | ||
5.2.6 | any change of the business scope; | ||
5.2.7 | amendment of the articles of association; | ||
5.2.8 | borrowing from any third party or assumption of any indebtedness to any third party in the name of Run An; and | ||
5.2.9 | appointment of the member of the board of Run An. |
5.3 | Party B hereby irrevocably grants Party A and/or the company or individual designated by Party A the option to purchase Party Bs equity interest in Run An ( Option ) as follows: |
5.3.1 | To the extend permitted under PRC laws, Party A and/or the company or individual designated by Party A shall exercise the Option, in whole or in part, at any time during the term of this Agreement to acquire from Party B and hold the equity interest of Run An. Upon the full exercise of the Option, Party A and/or the company or individual designated by Party A will acquire from Party B and hold 100% of the equity . In the event that the then applicable PRC laws prohibit Party A and/or the company or individual designated by Party A from fully exercising the Option, Party A and/or the company or individual designated by Party A shall exercise the Option to the fullest extent permitted by the applicable law. The Option price shall be the lowest price permitted under the applicable laws. | ||
5.3.2 | Upon the exercise of the Option by Party A and/or the company or individual designated by Party A, Party B is obligated to transfer the relevant equity to Party A and/or the company or individual designated by Party A. | ||
5.3.3 | Party B hereof agrees that, without the written consent of Party A, it will not grant a third party the same or similar option. | ||
5.3.4 | Party A and/or the company or individual designated by Party A shall exercise the Option in a manner permitted by law at any time after the date of this Agreement. To the extent permitted under PRC laws, Party A and/or the company or individual designated by Party A may exercise the Option, in whole or in part, and at one time or otherwise purchase the equity that it has the right to purchase under this Agreement. | ||
5.3.5 | When Party A and/or the company or individual designated by Party A exercises the Option, it shall issue Party B an Option Notice with respect to the exercise of such |
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Option. Once the Option Notice is issued, Party B shall promptly perform its obligation to transfer such equity to Party A and/or the company or individual designated by Party A. | ||
5.3.6 | Party B shall, within 60 days following the issuance of the Option Notice by Party A and/or the company or individual designated by Party A to Party B, complete all procedures and formalities necessary for Party A and/or the company or individual designated by Party A to acquire the relevant equity and become the legal holder of such equity. |
6.1 | In case of occurrence of any one or several of the following events during the term of the pledge hereunder, Party A shall have the right to dispose of the Pledged Equities under this Agreement in accordance with the law and this Agreement: |
6.1.1 | Run An is in default under the Master Agreement; | ||
6.1.2 | Run An breaches any provisions contained herein, | ||
6.1.3 | Pledgor breaches any representation, warranty or covenant it makes under Article 4 and Article 5 hereof; | ||
6.1.4 | Run An suspends its operations or is dissolved, or is ordered to suspend its operations or to dissolve, or is declared insolvent; | ||
6.1.5 | Run An is involved in any dispute, litigation, arbitration, administrative procedures or any other legal procedures which, in the opinion of Party A, are capable of affecting the performance of the Master Agreement and/or this Agreement; or | ||
6.1.6 | other occurrences stipulated by relevant laws and regulations. |
6.2 | Upon the occurrence of any one or several of the above events, and subject to the relevant laws and regulations, Party A shall have the right to dispose of the Pledged Equities in any one or several of the following manners: |
6.2.1 | convert the Pledged Equities into value; | ||
6.2.2 | auction or sale of the Pledged Equities; | ||
6.2.3 | in other manners permitted by the relevant laws and regulations. |
6.3 | The proceeds received by Party A by disposing of the Pledged Equities hereunder according to the foregoing provisions shall be used in the following priority: |
6.3.1 | to pay for all necessary taxes and fees incurred due to the disposal of the Pledged Equities; | ||
6.3.2 | to pay for amounts payable by Run An to Party A under the Master Agreement |
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6.4 | At the time of the disposal of the Pledged Equities by Party A and upon request of Party A, Party B shall provide all relevant documents requested by Party A and Party As agents, complete and assist Party A in completing the procedures for all approvals of and registration with the government authority in connection with the disposal of the Pledged Equities. |
8.1 | The Pledge Term shall commence on the effective date of this Agreement, ending on the day when Run An completes the performance of all of its obligations under the Master Agreement. | |
8.2 | The pledge of the Pledged Equities shall be automatically terminated upon the expiration of the aforesaid Pledge Term. The termination of the pledge shall be recorded on the shareholders list of Run An. |
10.1 | In the event of any loss suffered by one Party hereto due to any breach of this Agreement by the other Party, such defaulting Party shall be liable pursuant to the law for all losses thus caused to the non-defaulting Party. | |
10.2 | Any allowance, grace period and deferred exercise of the rights entitled under this Agreement granted by one Party in connection with the other Partys default or delay shall not be deemed as a waiver by such Party of any of its rights. |
11.1 | For the purpose of this Agreement, a force majeure event shall refer to government act, fire, explosion, typhoon, flood, earthquake, tide, lightning, war, or any event which is unforeseeable by and beyond the control of any Party (hereinafter referred to as a Force Majeure Event ). If any Force Majeure Event occurs to any Party hereto, such Party shall notify the other Party in a timely manner. |
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11.2 | In the event of any Force Majeure Event, no Party shall be held liable for any damage, loss or increased cost caused by its failure of or delay in the performance of this Agreement due to such Force Majeure Event, and such failure of or delay in the performance of this Agreement due to any Force Majeure Event shall not be deemed as a breach of this Agreement. The Party affected by a Force Majeure Event shall take appropriate measures to set off or minimize the effects of such Force Majeure Event, and shall exert its best efforts to perform any of its obligation the performance of which has been prevented or delayed due to such Force Majeure Event. The Parties hereto agree that, upon termination of such Force Majeure Event, they shall exert their best efforts to perform this Agreement. |
13.1 | If any dispute arises from the interpretation and performance of this Agreement, the Parties hereto shall first settle such dispute through friendly consultations. Should such dispute fail to be settled through the consultations, either Party may submit such dispute to China International Economic and Trade Arbitration Commission ( CIETAC ) for arbitration. The arbitration shall be conducted in Beijing according to the then applicable arbitration rules of CIETAC. The arbitration award shall be final and binding upon both Parties. | |
13.2 | In the event of any dispute arising out of the interpretation and performance hereof or if any such dispute is under arbitration, each Party hereto shall continue to exercise its other rights and perform its other obligations under this Agreement not subject to the disputes. |
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/s/ JIN Weimin |
/s/ WANG Tao |
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Pledgor:
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JIN Weimin | |
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Nationality:
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China | |
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Address:
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No. 2-25, Tuan Jie Building, Shang Jian Road, Xian | |
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Telephone:
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Pledgor:
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WANG Tao | |
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Nationality:
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China | |
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Address:
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No. 6, Deng Lai Hutong, Xuanwu District, Beijing | |
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Telephone:
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Run An:
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Enterprise Name:
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Beijing Run An Information Consultancy Company Limited | |
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Establishment Date:
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January 29, 1997 |
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/s/ JIN Weimin | ||||
/s/ WANG Tao |
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Proportionate | ||||||||
Shareholder | Contribution | Particulars of Shareholder | Shareholder Pledge Registration | |||||
JIN Weimin
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50 | % |
Nationality: China
Address: No. 2-25, Tuan Jie Building, Shang Jian Road, Xian Telephone: |
In accordance with the Equity Pledge Agreement entered into by and between JIN Weimin and WANG Tao and Qian Cheng Wu You Network Information Technology (Beijing) Company Limited. Dated September 11, 2007, JIN Weimin has pledged all of his equity in Run An to Qian Cheng Wu You Network Information Technology (Beijing) Company Limited. The registration date for the Equity Pledge shall be the execution date of such Equity Pledge Agreement. | ||||
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WANG Tao
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50 | % |
Nationality: China
Address: No. 6, Deng Lai Hutong, Xuanwu District, Beijing Telephone: |
In accordance with the Equity Pledge Agreement entered into by and between JIN Weimin and WANG Tao and Qian Cheng Wu You Network Information Technology (Beijing) Company Limited. dated as of September 11, 2007, WANG Tao has pledged all of his equity in Run An to Qian Cheng Wu You Network Information Technology (Beijing) Company Limited. The registration date for the Equity Pledge Agreement shall be the execution date of such Equity Pledge Agreement. |
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1. | According to the Corporation Law and the companys articles of incorporation, the shareholders of Beijing Run An Information Consultancy Company Limited agree that Party A and Party B transfer the investment capital. (see attached shareholders resolution) |
2. | Party A agrees to transfer RMB800,000 of the investment capital and Party B agrees to transfer RMB2,200,000 of the investment capital of Beijing Run An Information Consultancy Company Limited to Party C. Party C agrees to accept the RMB3,000,000 transfer from Party A and Party B. |
3. | The change in ownership of the investment capital by the three Parties has no impact on the registered capital of Beijing Run An Information Consultancy Co., Ltd. |
4. | The three Parties are responsible for assisting the company with the procedures for changing the shareholder names in the shareholder register, including, in accordance with the Corporation Law, to request the shareholders to revise the articles of incorporation (to change the shareholder names) and to assist the company with the procedures to file the change in the shareholder register (within 30 days of the shareholding change). |
5. | This Agreement shall be written in four (4) counterparties, with each Party holding one counterpart and one counterpart shall be filed with the relevant administration of industry and commerce. |
Transferor (Party A):
/s/ FENG Lei
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Transferor (Party B): /s/ WANG Tao | |
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Transferee (Party C):
/s/ JIN Weimin
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1. | Share ownership transfer and price |
1.1 | Party A agrees to transfer 80% of the Target Companys equity interest at a price of RMB800,000 to Party C. | ||
1.2 | Party B agrees to transfer 20% of the Target Companys equity interest at a price of RMB200,000 to Party C. | ||
1.3 | The authorities included and affiliated with the equity interest shall be transferred with the equity interest. | ||
1.3 | Party C shall pay the full amount of the share ownership transfer price to Party A and Party B within sixty (60) days of the execution of this Agreement. |
2. | Other |
2.1 | This Agreement shall be effective upon the receipt of the consent from the shareholder meeting of the Target Company and signed by all Parties. | ||
2.2 | This Agreement shall be written in six (6) counterparties, with each Party holding one counterpart and the Target Company holding three counterparts for use in handling procedures related to this matter. |
/s/ FENG Lei
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/s/ WANG Tao | |
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Party A Signature
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Party B Signature |
Party A (signature):
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Party B (signature): | |
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/s/ FENG Lei
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[Company Seal of Beijing Run An Information Consultancy Co., Ltd.] |
(A) | Recruit is a recognized leader in the business of printing and distributing free coupon magazines in Japan. | |
(B) | 51 Job is engaged in the business of providing recruitment, training, and HR outsourcing services, and has an established presence in China. | |
(C) | The Parties have agreed to contribute their expertise and resources to form a holding company ( HoldCo ) under the laws of Japan. HoldCo will act as a holding company for the launching of a company ( OpCo ) to be incorporated under the laws of the Peoples Republic of China ( China ), as well as such other companies as the Parties may agree upon in writing ( OpCo , together with such other companies, the Operating Companies ). OpCo will operate as an advertising agent for selected coupon magazines in China. | |
(D) | The Parties now wish to enter into this Agreement to embody their mutual agreements and covenants concerning the organization and management of HoldCo and the Operating Companies, including, without limitation, their respective rights and obligations as investors therein. |
(a) | words importing the singular number shall include the plural and vice versa, and words importing the masculine shall include the feminine and neuter gender and vice versa; | |
(b) | any reference to Articles or Exhibits is a reference to the articles of and exhibits to this Agreement; | |
(c) | any reference to any document, instrument or agreement shall (i) include all exhibits, schedules and other attachments thereto, (ii) include all documents, instruments or agreements issued or executed in replacement thereof, and (iii) mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time in accordance with the terms thereof and in effect at any given time; | |
(d) | the headings to the Articles and paragraphs of this Agreement are inserted for ease of reference only and shall not affect the interpretation thereof or of this Agreement; | |
(e) | any reference to writing or cognate expressions includes a reference to telex, cable, facsimile transmission, electronic mail or comparable means of communication; | |
(f) | any reference to a person or entity includes its permitted successors and assigns; | |
(g) | the words include, includes and including are not limiting and shall be deemed to be followed by the words without limitation, whether or not so followed; |
(h) | the words hereof, herein and hereunder and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document; | |
(i) | any reference to days shall mean calendar days, unless the term Business Days is used; and | |
(j) | this Agreement is the result of negotiations between, and has been reviewed by, Recruit, 51 Job and their respective advisors. Accordingly, this Agreement shall be deemed the product of both Parties, and no ambiguity shall be construed in favor of or against either Party. |
(a) | HoldCo shall be organized as a holding company organized under the laws of Japan. The primary purpose of HoldCo is to cause the formation of and to invest in the shares of OpCo and such other Operating Companies as the Parties may agree on. | |
(b) | OpCo shall be organized as a company under the laws of the Peoples Republic of China, with the primary purpose of engaging in the business of printing and distributing free coupon magazines in China, as well as the solicitation of advertisements in such magazines. | |
(c) | HoldCo and OpCo shall also engage in such other related businesses as the Parties may agree upon from time to time. |
(a) | Recruit shall cause HoldCo to be organized with 5600 authorized shares of capital stock. Recruit hereby confirms that (i) it will have subscribed and fully paid for 600 Shares with an aggregate capital value of JPY, which shall be 60% of CNY22Million at an exchange rate on 7 August 2007, by 31 August 2007 or such other date as the Parties may agree upon in writing (the Effective Date ), and (ii) no later than 31 August 2008 or such other date as the Parties may otherwise agree in writing, Recruit shall subscribe and fully pay for additional Shares with an aggregate stated value of JPY equivalent to 60% of CNY 20 Million, (iii) no later than 31 August 2009 or such other date as the Parties may otherwise agree in writing, Recruit shall subscribe and fully pay for additional Shares with an aggregate stated value of JPY equivalent to 60% of CNY 20Million, (iv) no later than 31 August 2010 or such other date as the Parties may otherwise agree in writing, Recruit shall subscribe and fully pay for additional Shares with an aggregate stated value of JPY equivalent to 60% of CNY 20Million. | |
(b) | 51 Job hereby agrees that: (i) on the Effective Date, 51 Job shall subscribe and fully pay for Bonds with an aggregate stated value of US$, which shall be 40% of CNY22Million at an exchange rate on 7 August 2007, (ii) no later than 31 August 2008 or such other date as the Parties may otherwise agree in writing, 51 Job shall subscribe and fully pay for additional Bonds with an aggregate stated value of US$ equivalent to 40% of CNY 20 Million, (iii) no later than 31 August 2009 or such other date as the Parties may otherwise agree in writing, 51 Job shall subscribe and fully pay for additional Bonds with an aggregate stated value of US$ equivalent to 40% of CNY 20Million, (iv) no later than 31 August2010 or such other date as the Parties may otherwise agree in writing, 51 Job shall subscribe and fully pay for additional Bonds with an aggregate stated value of US$ equivalent to 40% of CNY 20Million. |
(c) | The Parties agree that if, notwithstanding their respective subscriptions for Shares and Bonds as set forth in Articles 2.2(a) and 2.2(b) above, the total funding made available to OpCo shall be less than the amount of CNY 82,000,000, the Parties shall cause HoldCo to make available to OpCo such financial assistance or security or other credit support to ensure that the total funding made available to OpCo shall be equivalent to CNY 82,000,000. | |
(d) | Any issuance of HoldCo Securities that will result in the aggregate value of all HoldCo Securities outstanding after such issuance to exceed the amount of CNY 82,000,000 (or its equivalent) shall require the prior written approval of both Parties. | |
(e) | Except as the Parties may otherwise agree upon in writing, HoldCo may not, following the Parties respective subscriptions to Shares and Bonds as provided for in Article 2.2(a) and (b) above, issue additional HoldCo Securities in the form of either Shares or Bonds without at the same time issuing pro rata ( i.e., in proportion to the total par or stated value of all HoldCo Securities then outstanding) HoldCo Securities of the other class. In the event of any such issuance of additional HoldCo Securities, (i) the additional HoldCo Securities to be issued to 51 Job shall consist of additional Bonds, and (ii) the additional HoldCo Securities to be issued to Recruit shall consist of Shares. | |
(f) | Except as the Parties may otherwise agree upon in writing, any and all funds received by HoldCo from the Parties shall be used primarily to invest in shares in subscribing for the registered capital of the OpCo or providing shareholder loans to OpCo. |
(a) | HoldCo, OpCo and any other Operating Company shall to the extent possible independently obtain all credit facilities from third Persons necessary to meet their respective working capital requirements and debt obligations. | |
(b) | If any Operating Company requires funding in excess of that originally contemplated by the Parties (including, in the case of OpCo, the funding requirements set out in Article 2.2), and HoldCo and such Operating Company are unable to obtain such additional funding on an independent basis, the Parties shall exert their best efforts to make available to such Operating Company appropriate financial assistance or security or other credit support to enable the Operating Companies to obtain such credit facilities. Any additional funding or credit support to be provided by the Parties shall be borne by them in proportion to their respective Percentage Interests; provided, however, that HoldCo has a sole discretion to determine the method to obtain the funding or credit support, which may include additional subscriptions to shares in the capital stock of the relevant Operating Company or loans or other credit facilities obtained by such Operating Company from banks or other financial institutions. | |
(c) | For the avoidance of doubt, nothing in this Article 3.2 shall be interpreted as requiring any Party to extend debt financing to, make contributions to the equity of, or issue any guarantee, security or other credit support for the financing requirements of, any Operating Company. |
(a) | Unless otherwise agreed by the Shareholders in accordance with this Agreement and the Japanese Company Law, the Board shall be comprised of five members. For so long as Recruit and 51 Job hold their respective Percentage Interests of all outstanding HoldCo Securities, three Directors shall be nominees of Recruit (each a Recruit Director ) and two Directors shall be nominees of 51 Job (each a 51 Job Director ). | |
(b) | In the event of any Transfer of HoldCo Securities by an Party or any other occurrence that dilutes the percentage of outstanding HoldCo Securities held by that Party (such that the percentage of outstanding HoldCo Securities held by such Party is less than its Percentage Interest), the number of directors that such Party may nominate shall be reduced to such number as corresponds to such Partys proportionate interest in the total outstanding HoldCo Securities after the Transfer, and such Party shall cause the corresponding number of its nominees to the board of directors to resign as directors. In the event of any Transfer of HoldCo Securities to a Party or any other occurrence that increases the percentage of outstanding HoldCo Securities held by such Party (such that the percentage of outstanding HoldCo Securities held by it exceeds its Percentage Interest), the number of Directors that such other Party may nominate shall be increased by such number as will result in such Partys being able to nominate a number of Directors that corresponds to such Partys proportionate interest in the total outstanding HoldCo Securities after the Transfer. | |
(c) | Any Director may be removed for cause and by the procedures in accordance with the Japanese Company Law; provided, however, that (i) without prior written consent from 51 Job, any 51 Job Director may not be removed and (ii) without prior written consent from Recruit, any Recruit Director may not be removed. In addition, each Party shall have the right, in its sole discretion, to remove its own nominee Directors at any time, and the other Party agrees to take such other steps as are within its power in order promptly to remove such Director. | |
(d) | In the case of a vacancy in the Board for any reason (including removal pursuant to the preceding paragraph), the vacancy shall be filled by the Party having the right to nominate the Director previously occupying the position left vacant, and the other Party agrees to take such steps to cause the election of the individual so nominated, unless such individual is disqualified by law from acting as a Director. |
(a) | Board Meetings shall be convened by a Director designated in the Directors Regulations. | |
(b) | Regular Board Meetings shall be held in person at least once three (3) months. Special Board Meetings may be convened and held in person upon request by a Director designated in the Directors Regulations. All Board Meetings shall be held at the registered office of HoldCo or at Shanghai, China, unless the Representative Director otherwise directs. Any Board Meeting may be held by telephone or video conferencing whereby all persons participating in the meeting can communicate with each other if approved by all Directors. Participation in such a telephone or video conference shall constitute attendance in person at a Board Meeting. | |
(c) | At least three (3) days prior written notice of any Board Meeting shall be given to each Director. Notwithstanding the preceding sentence, a shorter period of notice may be given if so provided in the Articles of Incorporation. |
(a) | Each Director shall have one vote at Board Meetings. | |
(b) | A majority of the number of Directors shall constitute a quorum for a meeting of the Board, unless otherwise provided in the Articles of Incorporation. | |
(c) | Resolutions shall be adopted in a duly convened and constituted Board meeting by an affirmative vote of a majority of the Directors appear on the meeting, or as otherwise provided in the Articles of Incorporation, except for any matter listed in Exhibit A (a Reserved Matter), the resolutions involving which require an unanimous affirmative vote of all Directors of the Board. |
(a) | The overall management and control of the business and affairs of the Operating Companies shall be vested in a single representative director to be appointed for each Operating Company (each a Operating Company Director ), unless otherwise vested in the shareholders meetings of such Operating Company pursuant to this Agreement, the articles of incorporation of such Operating Company or Chinese law. Each Operating Company Director shall be appointed by the board of directors. | |
(b) | The act of any Operating Company Director shall be valid as a corporate act binding upon the relevant Operating Company. |
(c) | The provisions of Articles 4.2(b), 4.2(c), 4.3, 4.4 and 4.5 above shall apply mutatis mutandis to the operation and management of each Operating Company; provided , that all references therein to Tokyo, Japan and to laws of Japan shall be construed as references to the laws of the jurisdiction under whose laws the Operating Company in question was incorporated. |
5.1. | Books and Records . |
(a) | As soon as practicable after the end of each quarterly period of each fiscal year, but in any event no later than 30 days after the end of such quarterly period, the Parties (through their nominee Directors) shall cause the respective boards of directors of HoldCo and OpCo to cause the preparation and delivery to each Party of the following financial reports: (i) a profit and loss statement for the preceding quarterly period, (ii) a balance sheet as of the end of the preceding quarterly period and (iii) a statement comparing the financial results for the preceding quarterly period with the budgeted or forecast results for such period. Any and all costs and expenses incurred in connection with the preparation and delivery of such financial reports shall be for the account of and paid by the company being reported on. |
(a) | it is duly incorporated and in good standing (to the extent that this concept applies) in the jurisdiction of its incorporation; |
(b) | it has full corporate power to own property and to carry on its business as presently conducted; it has been and is conducting its business in compliance with all applicable laws and regulations; | |
(c) | the entry into and performance of this Agreement does not constitute a breach of any obligation (including any statutory, contractual or fiduciary obligation), or default under any agreement or undertaking, by which it is bound; nor the entry into or performance of this Agreement requires any approval or consent from any third party, or such approval or consent has been obtained from or effectively waived by such third party; | |
(d) | it is solvent and no winding-up, bankruptcy or insolvency proceedings have been commenced against it and no order of any court or supervisory authority having jurisdiction for the appointment of a receiver or trustee or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings shall be in force; | |
(e) | there are no actions, suits or proceedings pending or, to its knowledge, threatened, against it before any Governmental Authority, which shall have any adverse effect to the execution and performance by it of this Agreement. |
(a) | Each Party hereby acknowledges and agrees that it will have access to, or become acquainted with, the Confidential Information of the other Party and that the Confidential Information of the other Party constitutes valuable trade secrets of such Party. Each Party shall: |
(i) | use Confidential Information only for purposes of performing this Agreement; | ||
(ii) | absent prior express written consent of the other Party, disclose on a need-to-know basis Confidential Information only to (x) its officers, employees, in-house and outside legal counsels and (y) consultants engaged in assisting in performing the Agreement; without any prejudice to the generality of the foregoing and subject to the requirements under this Article 8, either Party may disclose Confidential Information to its affiliate company, and its officers, employees, in-house and outside legal counsels and other professionals for the purpose of negotiating and performing this Agreement; and | ||
(iii) | not reproduce, or permit to be reproduced, any document in human-readable or any other form containing Confidential Information, except as necessary for performing the Agreement. |
(b) | Each person to whom a Party discloses Confidential Information of the other Party shall be advised of its confidential status and shall agree to maintain the confidentiality of such Confidential Information. | |
(c) | Notwithstanding the foregoing, either Party may disclose Confidential Information to the extent required by law, regulation or court order or applicable rules of any securities exchange or over-the-counter market (collectively, Disclosure Law ). In such event, (i) the disclosure shall extend only to information whose disclosure is required by Disclosure Law, (ii) the Party making such disclosure shall (to the extent permitted by Disclosure Law) promptly and before disclosure notify the other Party of the proposed disclosure, and (iii) the Party making such disclosure shall use reasonable efforts to seek from the disclosee confidential treatment of the information to be disclosed. No information shall be divested of its status as Confidential Information by virtue of disclosure per se as required by Disclosure Law. |
(d) | Nothing in this Agreement shall interfere with a Partys development, disclosure or use of its own Confidential Information. |
(a) | The Parties shall not, and shall procure that their respective directors, officers, and Affiliates shall not, directly or indirectly: |
(i) | from the date of this Agreement and for a term of three years from the termination or expiration thereof, engage in or make any investment in any business in competition with OpCo or its Affiliates within the Peoples Republic of China; and | ||
(ii) | from the date of this Agreement and for a term of three years from the termination or expiration thereof, whether on its own behalf or jointly with or on behalf of any other person in connection with any business substantially similar to, the same as or in direct competition with the business of OpCo or its Affiliates: (x) canvas, solicit or attempt to entice away any person who has at any time during the period of twelve months prior to the termination or expiration of this Agreement been a client of OpCo or its Affiliates, or (y) do anything which may or is calculated to harm the goodwill of OpCo or its Affiliates. |
(b) | The provisions of Articles 9(a)(i), 9(a)(ii)(x) and 9(a)(ii)(y) are separate and severable and shall be enforceable accordingly. |
(a) | This Agreement may be terminated by either Party (the Non-Defaulting Party ) for any of the following reasons: |
(i) | if the other Party (the Defaulting Party ) is the subject of a Bankruptcy Event; | ||
(ii) | if the Defaulting Party consolidates with, or merges into, or transfers all or substantially all its assets to, another Person and, at the time of such consolidation, merger or transfer, the resulting, surviving or transferee Person fails to assume all the obligations of Defaulting Party under this Agreement; | ||
(iii) | if the Defaulting Party defaults in the due performance or observance by it of any material term, covenant or agreement contained in this Agreement, or is otherwise guilty of any breach in any material respect of any material representation or warranty made by it hereunder, and such default or breach continues unremedied for a period of 30 days after receipt of notice thereof from the Non-Defaulting Party; or | ||
(iv) | if the Defaulting Party or any of its shareholders seeks or becomes subject to proceedings to cause the forfeiture, revocation or suspension of a license, registration or other Regulatory Approval held by such Person, and such event, in the reasonable judgment of the Non-Defaulting Party, would have a material adverse effect on the |
business, operations or prospects of HoldCo or the ability of HoldCo to perform its obligations under this Agreement. |
(b) | This Agreement may also be terminated by either Party: |
(i) | if any event occurs or situation arises with respect to the business of HoldCo or OpCo as to which the members of the Board or the Shareholders are divided, such division prevents such Persons or body from taking any action with respect to the business of HoldCo (any such division herein referred to as a Deadlock ) and such Persons or body are unable to resolve such Deadlock within 90 days after such Persons or body have become aware of the occurrence of such Deadlock; or | ||
(ii) | upon the occurrence or threat of a Bankruptcy Event in respect of HoldCo or OpCo (as determined by the terminating Party in its reasonable discretion). |
(c) | Early termination of this Agreement as a result of one or more events set forth under Articles 10.2(a) or 10.2(b) shall be effected as follows: (1) a Party having the right to terminate this Agreement shall give the other Party written notice of its intention to terminate this Agreement, which notice shall specify the event or events giving rise to such right to terminate (a Termination Notice ) and (2) during the 30-day period following such Termination Notice (the Negotiation Period ) the Parties shall in good faith conduct negotiations and endeavor to resolve the cause for such Termination Notice. If the Parties do not agree to a solution by the end of the Negotiation Period, the Parties will proceed the following procedures: (1) in case both Parties hold the Shares, the Parties will proceed to the Call or Put Procedure set forth in Article 10.2(e), and except as otherwise provided herein, this Agreement shall remain in full force and effect until, and shall terminate only upon, the completion of such Call or Put Procedure, and (2) in case either Party holds the Shares but the other Party holds the HoldCo Securities other than Shares, this Agreement shall be terminated at the 10 th day after the end of the Negotiation Period, unless otherwise the Party having the HoldCo Securities other than Shares, may acquire the Shares through its exercise of right to convert or exchange into, or purchase or subscribe for the Shares during that period (in such case, the procedures stipulated in (1) above shall apply). | |
(d) | If this Agreement shall be terminated as a result of one or more events set forth under Article 10.2(a), the Party having the right to terminate this Agreement (the Indemnified Party ) shall be indemnified, protected, saved and held harmless by the other Party, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including, without limitation, reasonable fees and disbursements of counsel incurred in connection therewith) incurred by the Indemnified Party arising out of or in connection with such events, except to the extent that the Indemnified Partys own bad faith, willful misconduct or gross negligence contributes to such loss, liability, damage claim or expense. | |
(e) | In case of early termination of this Agreement pursuant to Article 10.2(a) and (c), a procedure shall be initiated pursuant to which the Non-Defaulting Party may, by delivering written notice to the Defaulting Party no later than 10 Business Days from the end of the Negotiation Period, require the Defaulting Party to sell all, but not less than all, of the Shares owned by the Defaulting Party to the Non-Defaulting Party at the eighty percent (80%) of the then-current fair market value of Shares (such notice, the Call Notice and such procedure, the Call Procedure ). | |
In case of early termination of this Agreement pursuant to Article 10.2(b) and (c) (except for the case (2) of second paragraph of Article 10.2(c)), a procedure shall be initiated pursuant to which the Party that is terminating this Agreement may, by delivering written notice to the other Party no later than 10 Business Days from the end of the Negotiation Period, require the non-terminating Party to buy all, but not less than all, of the Shares owned by the terminating |
Party to the non-terminating Party at the then-current fair market value of Shares (such notice, the Put Notice and such procedure, the Put Procedure ); provided , that in either case, the fair market value of Shares shall be determined by the Appraiser based on the then-current net asset value of HoldCo. | ||
In case both Parties serve its own Put Notice to the other Party in accordance with the provisions hereof, the Party who has the minority equity interest in the HoldCo shall prevail. | ||
(f) | The purchase and sale of Shares pursuant to Article 10.2(e) shall occur on the later of (i) the 90 th day after the date of the Call or Put Notice (or in the event such day is not a Business Day, on the next succeeding Business Day) and (ii) the 10 th Business Day after all Regulatory Approvals required in connection therewith shall have been obtained, and payment for such Shares purchased shall be made by wire transfer to the bank account specified by the seller of such Shares at a closing to be held at such place as shall be designated by the purchaser of such Shares upon seven Business Days prior written notice, which notice may only be given contemporaneously with or subsequent to the date on which such election has been made or has been deemed to have been made. | |
(g) | Upon the consummation of a Call or Put Procedure pursuant to Article 10.2(f), each Party shall, at the request of any other Party, at any time and from time to time promptly execute and deliver, or cause to be executed and delivered, to such requesting Party all such further instruments and take all such further action as may be reasonably necessary or appropriate to consummate the Call or Put Procedure, including but not limited to obtaining all necessary Regulatory Approvals and submitting all necessary applications and reports in connection therewith. |
(a) | Each Party will bear its own costs and expenses of all attorneys, brokers, investment bankers and agents engaged by it incurred in the preparation and execution of this Agreement. | |
(b) | All expenses related to the incorporation of HoldCo (including, but not limited to, legal and documentation costs and expenses) incurred prior to such incorporation and paid by any Party shall be reimbursed in full by HoldCo to that Party no later than sixty (60)days from the Effective Date. |
If to Recruit, to:
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4-17, Ginza 8-chome Chuo-ku, Tokyo 104-8001, Japan
Attention: Mr. Tomomasa Matsumoto Email address: tomomasa_matsumoto@r.recruit.co.jp Fax No.: 81-3-3575-7086 Telephone No.: 81-3-3575-5886 |
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If to 51 Job, to:
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Building 3, No. 1387, Zhang Dong Road, Shanghai 201203, P.R. China
Attention: Mr. Rick Yan Email address: rick@51job.com Fax No.: 86-21-6879-6233 Telephone No.: 86-21-6160-1888 |
Recruit:
[Recruit]
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By: | /s/ Hitoshi Kashiwaki | |||
Name: | ||||
Title: | ||||
51 Job
:
[51 Job]
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By: | /s/ Rick Yan | |||
Name: | Rick Yan | |||
Title: | President & CEO | |||
I. | Managerial matters | |
1. | Amendment of HoldCos Articles of Incorporation; | |
2. | Transfer or any other disposal of all or a material portion of HoldCo or OpCos business or assets including any intellectual property rights or governmental license, permit or approval; | |
3. | Any contract the value amount of which is in excess of CNY 10,000,000; | |
4. | Any debt arrangement of HoldCo; | |
5. | Any transaction of HoldCo or OpCo with an Affiliate of any Party, the value amount of which is in excess of CNY 10,000,000; | |
6. | Amendment of business plan which makes the total cost required by the OpCo exceeds cumulative financing requirement of CNY82,000,000; | |
7. | Absorption-type merger in which the HoldCo merges into another corporation and ceases to exist (kyusyu gappei), an incorporation-type merger (shinsetsugappei), absorption-type demerger (kyusyu bunkatsu), an incorporation-type demerger (shinsetsu bunkatsu), a share exchange (kabushiki koukan) or a share transfer (kabushiki iten); and | |
8. | Establishment of any new subsidiary of HoldCo, the sale or acquisition of a majority equity interest in any direct or indirect subsidiary of HoldCo or OpCo. | |
II. | Financial matters | |
1. | Issuance, delivery or allotment of HoldCos new shares, stock acquisition rights, convertible bonds or securities capable of being converted into, exchanged with or used to acquire the foregoing; and | |
2. | Decrease HoldCos capital, or decrease HoldCos legal reserve. |
1. | Article 1.1. of the Cooperation Agreement is hereby amended by: |
(a) | Replacing the definition of HoldCo with the following: | ||
HoldCo means Kabushiki Kaisha Arealink, a corporation duly organized and validly existing under and by virtue of the laws of Japan, with its principal place of business at 8-4-17 Ginza, Chuo-ku, Tokyo, 104-0061, Japan. | |||
(b) | Adding the following new definition in the proper alphabetical order: | ||
Loan means any or all of the loans to be extended in US$ by 51 Job to HoldCo in four tranches up to the total amount equivalent to 40% of CNY 82,000,000, in accordance with Article 2.2(b) hereof. For the avoidance of doubt, a Loan is not a bond or any other type of securities under Japanese Law. | |||
(c) | Adding the following new definition in the proper alphabetical order: | ||
Loan/Share Issuance Agreement means the Agreement regarding Loan and Issuance, Etc. of Shares ( Loan oyobi kabushiki no hakkou-tou ni kansuru keiyaku-sho ) dated 27 March, 2008 entered into by 51 Job and HoldCo. | |||
(d) | Replacing the entire definition of HoldCo Securities with the following: | ||
HoldCo Securities means any or all Shares or any other securities capable of conversion or exchange into or carrying a right to purchase or subscribe for any Shares or equity securities of HoldCo. For the avoidance of doubt, the term HoldCo Securities does not include any Claim or Loan. | |||
(e) | Adding the following new definition in the proper alphabetical order: | ||
Claim means any or all of (i) the right of 51 Job entitling it to require HoldCo to newly issue or dispose of a certain number of Shares to 51 Job and entitling 51 Job to subscribe for such Shares in accordance with Section 8, Chapter 2, Book 2 of the Japanese Company Law, as provided under Section (1) of the Terms and Conditions of the Issuance ( hakkou youkou ) attached to the Loan/Share Issuance Agreement, and (ii) other rights of 51 Job entitling it to require HoldCo to newly issue or dispose of additional Shares to 51 Job and entitling 51 Job to subscribe for such Shares in accordance with Section 8, Chapter 2, Book 2 of the Japanese Company Law, as granted to 51 Job hereunder, including under Article 2.2(b)(ii), (iii) and (iv) and Article 2.2(e) hereof. For the avoidance of doubt, a Claim is not a stock acquisition right ( shinkabu-yoyaku-ken ) defined under the Japanese Company Law or any other type of securities under Japanese law. | |||
(f) | Deleting the definition of Percentage Interest and replacing it with the following new definition in the proper alphabetical order: | ||
Funding Percentage means (i) with respect to Recruit, sixty percent (60%) and (ii) with respect to 51 Job, forty percent (40%). | |||
(g) | Replacing the definition of Transfer with the following: | ||
Transfer means (i) the direct or indirect sale, assignment, transfer, creation of encumbrance or other disposition of, or grant of an option or other right to purchase or acquire, any Shares, Loans or Claims, or any interest therein, as the case may be, whether voluntary or involuntary, or (ii) entering into any agreement in respect of any of the foregoing. The term Transfer used as a verb has the correlative meaning. | |||
(h) | Adding the following new definition in the proper alphabetical order: | ||
Fully Diluted Basis means on a fully diluted basis regarding the Shares, on the assumption that (i) all of the issued and outstanding HoldCo Securities (other than the Shares) have been exercised, exchanged or converted into Shares by the holder thereof and that (ii) the Claim(s) held by 51 Job have all been exercised by 51 Job |
and the Shares to be issued or disposed of by HoldCo to 51 Job by virtue thereof have all been subscribed for by 51 Job, in accordance with the applicable terms and conditions. |
2. | The first paragraph of Article 2.2 of the Cooperation Agreement shall be amended by deleting the phrase Percentage Interests and replacing it with Funding Percentages. |
3. | Article 2.2(b) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(b) | 51 Job and HoldCo hereby agree as follows: |
(i) | On 27 March, 2008, (A) 51 Job shall (X) sell and assign to HoldCo, in the amount of US$1,163,898, all the Bonds issued by HoldCo to 51 Job on 31 August, 2007, pursuant to Section 1(9)(ii) of the Terms and Conditions of the Issuance of the First Series US$ Unsecured Convertible-Bond-Type Bonds with Stock Acquisition Rights ( dai ikkai beikadate mutanpo tenkanshasai-gata shinkabuyoyakuken-tsuki-shasai hakkou-youkou ) attached to the Subscription Agreement ( hikiuke keiyaku-sho ) entered into by 51 Job and HoldCo on 9 August, 2007, and (Y) extend the first tranche of the Loan to HoldCo, in the amount of US$1,163,898 (which shall be equal to forty percent (40%) of CNY 22,000,000 converted at the applicable currency exchange rate), in accordance with the terms and conditions of the Loan/Share Issuance Agreement; and (B) 51 Job shall have a Claim entitling 51 Job to require HoldCo to newly issue or dispose of certain number of Shares (the First Tranche Shares ) to 51 Job and entitling 51 Job to subscribe for such Shares, in accordance with the terms and conditions of the Loan/Share Issuance Agreement. (a) The sum of the number of First Tranche Shares and the number of Shares which 51 Job may acquire by exercising other Claim(s) held by it (in accordance with the applicable terms and conditions) shall be equal to forty percent (40%) of (b) the total number of all the then issued and outstanding Shares on a Fully Diluted Basis (including the First Tranche Shares), and for such purpose, the number of Shares to be issued to and subscribed for by Recruit hereunder shall be adjusted as necessary and appropriate. | ||
(ii) | No later than 31 August 2008, or such other date as the Parties may otherwise agree in writing, (A) 51 Job shall extend the second tranche of the Loan in US$ equivalent to forty percent (40%) of CNY 20,000,000calculated at the foreign exchange rate at 12 PM between China P/R. and US$ provided by Federal Reserve Bank of New York three(3) Japanese business days before the loan launches , in accordance with the terms and conditions that are substantially the same as those provided under the Loan/Share Issuance Agreement and, simultaneously with the provision of such Loan, (B) 51 Job shall have a Claim entitling 51 Job to require HoldCo to newly issue or dispose of certain additional Shares (the Second Tranche Shares ) to 51 Job and entitling 51 Job to subscribe for such Shares, in accordance with the terms and conditions that are substantially the same as those provided under the Loan/Share Issuance Agreement. (a) The sum of the number of Second Tranche Shares and the number of Shares which 51 Job may acquire by exercising other Claim(s) held by it (in accordance with the applicable terms and conditions) shall be equal to forty percent (40%) of (b) the total number of all the then issued and outstanding Shares on a Fully Diluted Basis (including the number of the Second Tranche Shares), and for such purpose, the number of Shares to be issued to and subscribed for by Recruit hereunder shall be adjusted as necessary and appropriate. | ||
(iii) | No later than 31 August 2009 or such other date as the Parties may otherwise agree in writing, (A) 51 Job shall extend the third tranche of the Loan in US$ equivalent to forty percent (40%) of CNY 20,000,000 calculated at the foreign exchange rate at 12 PM between China P/R. and US$ provided by Federal |
Reserve Bank of New York three(3) Japanese business days before the loan launches , in accordance with the terms and conditions that are substantially the same as those provided under the Loan/Share Issuance Agreement and, simultaneously with the provision of such Loan, (B) 51 Job shall have a Claim entitling 51 Job to require HoldCo to newly issue or dispose of certain additional Shares (the Third Tranche Shares ) to 51 Job and entitling 51 Job to subscribe for such Shares, in accordance with the terms and conditions that are substantially the same as those provided under the Loan/Share Issuance Agreement. (a) The sum of the number of Third Tranche Shares and the number of Shares which 51 Job may acquire by exercising other Claim(s) held by it (in accordance with the applicable terms and conditions) shall be equal to forty percent (40%) of (b) the total number of all the then issued and outstanding Shares on a Fully Diluted Basis (including the number of the Third Tranche Shares), and for such purpose, the number of Shares to be issued to and subscribed for by Recruit hereunder shall be adjusted as necessary and appropriate. |
(iv) | No later than 31 August 2010 or such other date as the Parties may otherwise agree in writing, (A) 51 Job shall extend the fourth tranche of the Loan in US$ equivalent to forty percent (40%) of CNY 20,000,000calculated at the foreign exchange rate at 12 PM between China P/R. and US$ provided by Federal Reserve Bank of New York three(3) Japanese business days before the loan launches , in accordance with the terms and conditions that are substantially the same as those provided under the Loan/Share Issuance Agreement and, simultaneously with the provision of such Loan, (B) 51 Job shall have a Claim entitling 51 Job to require HoldCo to newly issue or dispose of certain additional Shares (the Fourth Tranche Shares ) to 51 Job and entitling 51 Job to subscribe for such Shares, in accordance with the terms and conditions that are substantially the same as those provided under the Loan/Share Issuance Agreement. (a) The sum of the number of Fourth Tranche Shares and the number of Shares which 51 Job may acquire by exercising other Claim(s) held by it (in accordance with the applicable terms and conditions) shall be equal to forty percent (40%) of (b) the total number of all the then issued and outstanding Shares on a Fully Diluted Basis (including the number of the Fourth Tranche Shares), and for such purpose, the number of Shares to be issued to and subscribed for by Recruit hereunder shall be adjusted as necessary and appropriate. |
4. | Article 2.2(c) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(c) | The Parties agree that if, notwithstanding their respective subscriptions for Shares and making of Loans as set forth in Articles 2.2(a) and 2.2(b) above, the total funding made available to OpCo shall be less than the amount equivalent to CNY 82,000,000, the Parties shall cause HoldCo to make available to OpCo such financial assistance or security or other credit support to ensure that the total funding made available to OpCo shall be equivalent to CNY 82,000,000. |
5. | Article 2.2(d) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(d) | Any issuance of Shares by HoldCo or financing extended by 51 Job to HoldCo that will result in the sum of the amount of contribution made for such issuance and the amount of such financing to exceed the amount of CNY 82,000,000 (or its equivalent) shall require the prior written approval of both Parties. |
6. | Article 2.2(e) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(e)(i) | Except as the Parties may otherwise agree upon in writing, HoldCo may not, following Recruits subscriptions for Shares and 51 Jobs making of Loans, as provided for in Articles 2.2(a) and (b) above, issue, dispose of or grant any additional |
Shares or any other securities or rights which would entitle the holder thereof to acquire any Shares or other equity interests of HoldCo, except for HoldCo issuing additional Shares and granting an additional Claim to the Parties (the Additional Issuance/Grant ), in which case HoldCo shall issue to Recruit the following additional number of Shares (the Additional Shares ) and grant to 51 Job the following additional Claim (the Additional Claim ): |
(1) | To Recruit: Such number of Additional Shares which would be Pro Rata (defined below) to the sum of the number of Additional Shares and the number of Shares which would be issued or disposed of by HoldCo to 51 Job upon 51 Job exercising the Additional Claim. | ||
(2) | To 51 Job: The Additional Claim that would entitle 51 Job to require HoldCo to newly issue or dispose of Shares to 51 Job and entitle 51 Job to subscribe for such Shares. The number of such Shares shall be Pro Rata to the sum of the number of such Shares and the number of Additional Shares. |
(ii) | Recruit shall not be obligated to subscribe for the Additional Shares, and 51 Job shall not be obligated to acquire the Additional Claim or extend any additional loan or financing to HoldCo in connection therewith. | ||
(iii) | In the event 51 Job elects to acquire the Additional Claim, 51 Job shall extend to HoldCo a loan or another form of financing (the Additional Financing ) in the amount that would be Pro Rata to the sum of the amount of Additional Financing and the amount of contribution to be made by Recruit to subscribe for the Additional Shares. | ||
(iv) | For the purpose of this Article 2.2(e), Pro Rata means: (A) with respect to Recruit, the proportion of (1) the total number of Shares held by Recruit on a Fully Diluted Basis immediately before the Additional Issuance/Grant to (2) the total number of all the issued and outstanding Shares on a Fully Diluted Basis immediately before the Additional Issuance/Grant, and (B) with respect to 51 Job, the proportion of (1) the number of Shares held by 51 Job on a Fully Diluted Basis (which shall include the number of Shares that 51 Job may acquire by exercising, in accordance with the applicable terms and conditions, the outstanding Claim(s) held by 51 Job) immediately before the Additional Issuance/Grant to (2) the total number of all the issued and outstanding Shares on a Fully Diluted Basis immediately before the Additional Issuance/Grant. |
7. | Article 3.1 of the Cooperation Agreement is hereby replaced in its entirety by the following: | |
Subject to the terms and conditions of Article 2.2(e), HoldCo may issue Shares to Recruit and grant a Claim to 51 Job, in order to comply with the requirements of any Governmental Authority or applicable laws, or as may be approved from time to time by the Parties, the Shareholders and the Board in accordance with this Agreement in order to satisfy the funding requirements of OpCo. | ||
8. | Article 3.2(b) of the Cooperation Agreement shall be amended by deleting the phrase Percentage Interests and replacing it with Funding Percentages. | |
9. | Article 4.2(a) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(a) | Unless otherwise agreed by the Shareholders in accordance with the procedures provided in this Agreement and the Japanese Company Law and agreed by the Parties, the Board shall be comprised of five (5) members. For so long as Recruit holds sixty percent (60%) of the total number of all the issued and outstanding Shares on a Fully Diluted Basis, Recruit shall be entitled to nominate three (3) Directors (each a Recruit Director ), and for so long as the number of Shares held by 51 Job on a Fully Diluted Basis (which shall include the number of Shares that 51 Job may acquire by exercising, in accordance with the applicable terms and conditions, the outstanding Claim(s) held by 51 Job) is equal to forty percent (40%) of the total number of all the issued and outstanding Shares on a Fully Diluted Basis, 51 Job shall |
be entitled to nominate two (2) Directors (each a 51 Job Director ). |
10. | Article 4.2(b) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(b) | In the event of any occurrence that results in Recruit holding less than sixty percent (60%) of the total number of all the issued and outstanding Shares on a Fully Diluted Basis, or in the event that results in the number of Shares held by 51 Job on a Fully Diluted Basis (which shall include the number of Shares that 51 Job may acquire by exercising, in accordance with the applicable terms and conditions, the outstanding Claim(s) held by 51 Job) being less than forty percent (40%) of the total number of all the issued and outstanding Shares on a Fully Diluted Basis, the number of Directors that Recruit or 51 Job, as the case may be, may nominate shall be reduced to the number that corresponds to such Partys proportionate interest in the total number of all the issued and outstanding Shares on a Fully Diluted Basis after such event, and such Party shall cause the corresponding number of its nominees to the Board to resign as Director(s). In the event of any occurrence that results in Recruit holding more than sixty percent (60%) of the total number of all the issued and outstanding Shares on a Fully Diluted Basis, or in the event that results in the number of Shares held by 51 Job on a Fully Diluted Basis (which shall include the number of Shares that 51 Job may acquire by exercising, in accordance with the applicable terms and conditions, the outstanding Claim(s) held by 51 Job) being more than forty percent (40%) of the total number of all the issued and outstanding Shares on a Fully Diluted Basis, the number of Directors that Recruit or 51 Job, as the case may be, may nominate shall be increased to the number that corresponds to such Partys proportionate interest in the total number of all the issued and outstanding Shares on a Fully Diluted Basis after such event. |
11. | Article 6 of the Cooperation Agreement is hereby replaced in its entirety by the following: | |
Neither Party may Transfer or suffer to exist any lien, pledge or other encumbrance on any of the Shares (or other HoldCo Securities, if any) held by it, or any interest therein, except as otherwise agreed to in writing by the other Party. 51 Job may not Transfer any outstanding Loan or Claim to any third party. |
12. | The second sentence of Article 10.2(c) of the Cooperation Agreement is hereby replaced in its entirety by the following: |
(c) | If the Parties do not agree to a solution by the end of the Negotiation Period, the Parties will proceed with the following procedures: (1) in the case both Parties hold the Shares, the Parties will proceed with the Call or Put Procedure set forth in Article 10.2(e), and except as otherwise provided herein, this Agreement shall remain in full force and effect until, and shall terminate only upon, the completion of such Call or Put Procedure, and (2) in the case either Party holds the Shares but the other Party holds HoldCo Securities other than the Shares (or, if the other Party is 51 Job, Claim(s)) this Agreement shall be terminated on the tenth (10 th ) day after the end of the Negotiation Period, unless the Party holding such HoldCo Securities (or, if the other Party is 51 Job, Claim(s)) may acquire the Shares through its exercise of right to convert or exchange into, or purchase or subscribe for the Shares during that period (in such case, the procedures stipulated in (1) above shall apply). |
13. | The third sentence of Article 10.2(e) of the Cooperation Agreement is hereby replaced in its entirety by the following: | |
In the case both Parties serve their own Put Notice to the other Party in accordance with the provisions hereof, the Party who has the minority equity interest in the HoldCo on a Fully Diluted Basis shall prevail. |
14. | Article 10.4 of the Cooperation Agreement is hereby replaced in its entirety by the following: | |
This Agreement shall automatically terminate, with respect to any Party, immediately on the date on which that Party ceases to hold any of the issued and outstanding HoldCo Securities or Claim. |
15. | Item II.1 of Exhibit A (Reserved Matters) of the Cooperation Agreement is hereby replaced in its entirety by the following: | |
Issuance, disposition, delivery or allotment of Shares (including treasury stocks), stock acquisition rights ( shinkabu yoyaku ken ), convertible bonds, securities capable of being converted into, exchanged with or used to acquire the foregoing, Claim or any other right to subscribe or acquire any Shares; and |
Recruit: |
[Recruit]
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By: | /s/ Hitoshi Kashiwaki | |||
Name: | ||||
Title: | ||||
51 Job : |
[51 Job]
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By: | /s/ Rick Yan | |||
Name: | ||||
Title: | ||||
By: | /s/ Rick Yan | |||
Name: | Rick Yan | |||
Title: | Chief Executive Officer |
By: | /s/ Kathleen Chien | |||
Name: | Kathleen Chien | |||
Title: | Chief Financial Officer |
By: | /s/ Rick Yan | |||
Name: | Rick Yan | |||
Title: | Chief Executive Officer |
By: | /s/ Kathleen Chien | |||
Name: | Kathleen Chien | |||
Title: | Chief Financial Officer | |||