Cayman Islands
|
7379 | Not Applicable | ||
(State or other jurisdiction
of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Huanting Timothy Li Sidley Austin LLP Level 39, Two International Finance Centre 8 Finance Street Central, Hong Kong (852) 2509-7888 |
William Y. Chua Sullivan & Cromwell LLP 28th Floor Nine Queens Road Central Hong Kong (852) 2826-8688 |
Leiming Chen Simpson Thacher & Bartlett LLP 35th Floor, ICBC Tower 3 Garden Road Central, Hong Kong (852) 2514-7600 |
Proposed Maximum |
||||||||||||
Title of Each Class of |
Aggregate Offering |
|||||||||||
Securities to be Registered | Amount to be registered(1)(2) | Proposed maximum offering price per share(2) | Price(2) | Amount of Registration Fee | ||||||||
Class A ordinary shares, par value HK$1.00 per
share(1)
|
13,492,896 | US$10.625 | US$143,362,020 | US$10,222 | ||||||||
(1) | Includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date such ordinary shares are first bona fide offered to the public, and also includes Class A ordinary shares that may be offered upon the exercise by the underwriters of their over-allotment option. The Class A ordinary shares are not being registered for the purpose of sales outside the United States. American depositary shares, or ADSs, evidenced by American depositary receipts, or ADRs, issuable upon deposit of the Class A ordinary shares registered hereby, will be registered pursuant to a separate registration statement on Form F-6. Each ADS represents four Class A ordinary shares. |
(2) | Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act. Includes offering price of Class A ordinary shares that may be offered upon the exercise by the underwriters of their over-allotment option. |
The
information in this preliminary prospectus is not complete and
may be changed. No one may sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities and it is not soliciting an offer
to buy these securities in any jurisdiction where the offer or
sale is not permitted. |
Per ADS | Total | |||
Public offering price
|
US$ | US$ | ||
Underwriting discounts and commissions
|
US$ | US$ | ||
Proceeds, before expenses, to SouFun Holdings Limited
|
US$ | US$ | ||
Proceeds, before expenses, to the selling shareholders
|
US$ | US$ |
Deutsche Bank Securities | Goldman Sachs (Asia) L.L.C. |
Page | ||||||||
ii | ||||||||
1 | ||||||||
7 | ||||||||
10 | ||||||||
13 | ||||||||
56 | ||||||||
57 | ||||||||
69 | ||||||||
70 | ||||||||
71 | ||||||||
72 | ||||||||
74 | ||||||||
75 | ||||||||
77 | ||||||||
80 | ||||||||
123 | ||||||||
129 | ||||||||
151 | ||||||||
160 | ||||||||
172 | ||||||||
177 | ||||||||
184 | ||||||||
196 | ||||||||
207 | ||||||||
210 | ||||||||
218 | ||||||||
227 | ||||||||
228 | ||||||||
228 | ||||||||
230 | ||||||||
F-1 | ||||||||
EX-3.1 | ||||||||
EX-3.2 | ||||||||
EX-4.1 | ||||||||
EX-4.4 | ||||||||
EX-4.5 | ||||||||
EX-4.6 | ||||||||
EX-4.7 | ||||||||
EX-4.8 | ||||||||
EX-4.9 | ||||||||
EX-5.1 | ||||||||
EX-8.1 | ||||||||
EX-8.2 | ||||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.3 | ||||||||
EX-10.4 | ||||||||
EX-10.5 | ||||||||
EX-10.6 | ||||||||
EX-10.7 | ||||||||
EX-10.8 | ||||||||
EX-10.9 | ||||||||
EX-10.10 | ||||||||
EX-10.11 | ||||||||
EX-10.12 | ||||||||
EX-10.13 | ||||||||
EX-10.14 | ||||||||
EX-10.15 | ||||||||
EX-10.16 | ||||||||
EX-21.1 | ||||||||
EX-23.1 | ||||||||
EX-23.3 | ||||||||
EX-23.4 | ||||||||
EX-23.5 | ||||||||
EX-23.6 | ||||||||
EX-23.7 | ||||||||
EX-23.8 | ||||||||
EX-23.9 | ||||||||
EX-23.10 | ||||||||
EX-23.11 | ||||||||
EX-23.12 | ||||||||
EX-99.1 | ||||||||
EX-99.2 |
i
| we, us, Company, our or SouFun refers to SouFun Holdings Limited, SouFun.com Limited, the name of our Company prior to July 14,1999, and its PRC subsidiaries as follows: |
| SouFun Media Technology (Beijing) Co., Ltd., or SouFun Media; | |
| Beijing SouFun Network Technology Co., Ltd., or SouFun Network; | |
| Beijing SouFun Information Consultancy Co., Ltd., or Beijing Information; | |
| Beijing Zhong Zhi Shi Zheng Information Technology Co., Ltd., or Beijing Zhong Zhi Shi Zheng; | |
| Shanghai SouFun Information Co., Ltd., or SouFun Shanghai; | |
| SouFun Information (Shenzhen) Co., Ltd., or SouFun Shenzhen; | |
| SouFun Information (Tianjin) Co., Ltd., or SouFun Tianjin; and | |
| SouFun Information (Guangzhou) Co., Ltd., or SouFun Guangzhou; |
| China Index Academy Limited, incorporated in Hong Kong, or China Index Academy; | |
| Bravo Work Investments Limited, incorporated in Hong Kong, or Bravo Work; | |
| Max Impact Investments Limited, incorporated in Hong Kong, or Max Impact; | |
| Selovo Investments Limited, incorporated in the British Virgin Islands, or Selovo Investments; and | |
| Pendiary Investments Limited, incorporated in the British Virgin Islands, or Pendiary Investments; |
| Beijing SouFun Internet Information Service Co., Ltd., or Beijing Internet; | |
| Beijing Jia Tian Xia Advertising Co., Ltd., or Beijing Advertising; | |
| Beijing SouFun Science and Technology Development Co., Ltd., or Beijing Technology; | |
| Beijing China Index Information Co., Ltd., or Beijing China Index; | |
| Shanghai Jia Biao Tang Advertising Co., Ltd., or Shanghai JBT Advertising; | |
| Shanghai SouFun Advertising Co., Ltd., or Shanghai Advertising; | |
| Beijing Century Jia Tian Xia Technology Development Co., Ltd., or Beijing JTX Technology; | |
| Tianjin Jia Tian Xia Advertising Co., Ltd., or Tianjin JTX Advertising; |
ii
| Shanghai China Index Consultancy Co., Ltd., or Shanghai China Index; | |
| Beijing Li Tian Rong Ze Technology Development Co., Ltd., or Beijing Li Tian Rong Ze; and | |
| Tianjin Xin Rui Jia Tian Xia Advertising Co., Ltd., or Tianjin Xin Rui. |
| China or PRC or Chinese refers to the Peoples Republic of China, which, for geographical and statistical purposes, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; | |
| GFA refers to gross floor area and sq.m. refers to square meter(s); | |
| shares or ordinary shares refers to our ordinary shares, which, following this offering, will include both Class A ordinary shares and Class B ordinary shares; and | |
| all references to RMB or Renminbi are to the legal currency of China, all references to Hong Kong dollars or HK$ are to the legal currency of the Hong Kong Special Administrative Region, and all references to U.S. dollars or US$ are to the legal currency of the United States of America. |
iii
| Marketing services: We offer marketing services on our website, mainly through advertisements, to real estate developers in the marketing phase of new property developments, as well as to real estate agencies and other home furnishing and improvement vendors who wish to promote their products and services, including home furnishing and improvement products and services, furniture, electronics and other products. We also intend to integrate paid priority placement of customer links in keyword search results into our current search and search ranking services. The substantial majority of our revenues are derived from marketing services; | |
| Listing services: We offer basic and special listing services. Basic listing services are mainly offered to real estate agents, brokers, property developers, property owners and managers and providers of home furnishing and improvement products and services, and allow them to post information on properties, home furnishing and improvement and other related products and services on our website. Special listings consist of a customized marketing program primarily involving the coordination and promotion of offline themed events; and | |
| Other value-added services and products: We offer subscription-based access to our information database, research reports and total web solution services, which integrate our customers services and products into our website, and also include website design services. |
| over 139,000 listings for new residential property complexes, approximately eight million listings of secondary and rental residential properties, as well as over 140,000 listings of commercial properties for sale and lease; | |
| over 8,000 brands and one million listings from home furnishing and improvement vendors across China; and | |
| content coverage of real estate-related content, search services, marketing and listing coverage of 106 cities in China. |
1
| Leading market position and national brand name with powerful network effects; | |
| Broad geographic coverage with local market expertise and highly scalable business model; | |
| Extensive customer relationships and strategic partnerships in China; | |
| Robust technology platform with focus on user experience; and | |
| Experienced management team with extensive industry knowledge and proven track record. |
| Strengthen relationships with customers through premium, customized services; | |
| Strategically phase in service offerings in our existing network of cities; | |
| Leverage our user base to introduce and monetize additional product offerings; | |
| Continue to enhance our technology platform and user interface to strengthen user experience; and | |
| Selectively pursue strategic alliances and acquisitions. |
2
3
| whether the online marketing industry in China will continue to develop and our ability to obtain listings from our key customer groups, such as property developers, real estate agents, brokers, and property owners and managers; | |
| our ability to compete successfully against our current or future competitors; | |
| our ability to maintain and enhance brand awareness; | |
| the performance of the real estate sector in China, which is heavily regulated, relatively immature and volatile, and subject to stringent government regulations that may change from time to time; | |
| our ability to develop and maintain an effective system of internal controls over financial reporting; | |
| uncertainties associated with the effectiveness of our contractual arrangements in providing operational control over our controlled consolidated entities in China, including effectiveness of voting proxies and our ability to enforce our rights under these contractual arrangements; and | |
| the uncertain legal and regulatory environment in China for foreign-invested companies operating in the Internet and online advertising sectors. |
4
(1) | Affiliates of IDG Technology Venture Investment Inc. include IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P. |
5
(1) | Refers to the following three entities affiliated with Apax Partners LLP: Hunt 7-A Guernsey L.P. Inc, Hunt 7-B Guernsey L.P Inc and Hunt 6-A Guernsey L.P. Inc. | |
(2) | Affiliates of IDG Technology Venture Investment Inc. include IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P. |
6
Price per ADS | We currently estimate the initial public offering price will be between US$40.50 and US$42.50 per ADS. | |
ADSs offered by us | 246,914 ADSs | |
ADSs offered by the selling shareholders | 2,686,324 ADSs (or 3,126,310 ADSs if the underwriters exercise in full their over-allotment option to purchase additional ADSs). | |
ADSs outstanding immediately after this offering | 2,933,238 ADSs (or 3,373,224 ADSs if the underwriters exercise in full their over-allotment option to purchase additional ADSs). | |
Class A ordinary shares outstanding immediately after this offering | 49,007,482 Class A ordinary shares (or 50,767,426 Class A ordinary shares if the underwriters exercise in full their over-allotment option to purchase additional ADSs). | |
Class B ordinary shares outstanding immediately after this offering | 25,298,329 Class B ordinary shares (or 25,298,329 Class B ordinary shares if the underwriters exercise in full their over-allotment option to purchase additional ADSs). | |
Ordinary shares | Our share capital will consist of Class A and Class B ordinary shares upon completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. Each Class A ordinary share will be entitled to one vote on all matters subject to shareholders vote, and each Class B ordinary share will be entitled to 10 votes on all matters subject to shareholders vote. Each Class B ordinary share will be convertible into one Class A ordinary share at any time by its holder. Upon transfer of any Class B ordinary share by its holder to any person or entity that is not an affiliate of such holder (as defined in our amended and restated articles of association), such Class B ordinary share will be automatically and immediately converted into a Class A ordinary share. Class A ordinary shares will not be convertible into Class B ordinary shares under any circumstance. | |
Right to purchase additional ADSs | Telstra International, one of the selling shareholders, has granted to the underwriters the right, exercisable for 30 days after the date of this prospectus, to purchase from it up to an aggregate of 439,986 additional ADSs at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. |
7
The ADSs | Each ADS represents four Class A ordinary shares, par value HK$1.00 per share. The ADSs will be evidenced by ADRs. The depositary will be the holder of the ordinary shares underlying the ADSs and you will have the rights of an ADR holder as provided in the deposit agreement among us, the depositary and owners and beneficial owners of ADSs from time to time. | |
You may surrender your ADSs to the depositary to withdraw the ordinary shares underlying your ADSs. The depositary will charge you a fee for such an exchange. | ||
We may amend or terminate the deposit agreement for any reason without your consent. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs. | ||
To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled Description of American Depositary Shares. We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. | ||
Use of proceeds | We plan to use the net proceeds we receive from this offering for general corporate purposes. See Use of Proceeds for additional information. | |
We will not receive any of the proceeds from the sale of the ADSs by the selling shareholders. | ||
Risk factors | See Risk Factors and other information included in this prospectus for a discussion of the risks and uncertainties you should carefully consider before deciding to invest in our ADSs. | |
Listing | We have received approval to list our ADSs on the New York Stock Exchange. Our ordinary shares will not be listed for trading on any exchange or quoted for trading on any over-the-counter trading system. | |
Proposed New York Stock Exchange symbol | SFUN | |
Depositary | JPMorgan Chase Bank, N.A. | |
Lock-up | We, the selling shareholders, all of our other existing shareholders, General Atlantic Mauritius Limited, or General Atlantic, Hunt 7-A Guernsey L.P. Inc, Hunt 7-B Guernsey L.P. Inc and Hunt 6-A Guernsey L.P. Inc, such three Hunt entities collectively, Apax, our directors and executive officers and a substantial majority of our option holders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. In addition, through a letter agreement, we have agreed to instruct JPMorgan Chase Bank, N.A., as |
8
depositary, not to accept any deposit of any ordinary shares or issue any ADSs for 180 days after the date of this prospectus unless we consent to such deposit or issuance, and not to provide consent without the prior written consent of the representatives of the underwriters. The foregoing does not affect the right of ADS holders to cancel their ADSs and withdraw the underlying ordinary shares. See Shares Eligible for Future Sale and Underwriting. |
9
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(US$ in thousands, except per ordinary share and ADS data) | ||||||||||||||||||||
Consolidated statement of operations data
|
||||||||||||||||||||
Revenues
|
||||||||||||||||||||
Marketing
services(1)
|
46,552 | 86,252 | 102,367 | 29,503 | 45,586 | |||||||||||||||
Listing services
|
9,885 | 16,070 | 17,559 | 5,398 | 14,006 | |||||||||||||||
Other value-added services and products
|
1,439 | 1,802 | 7,123 | 2,056 | 8,593 | |||||||||||||||
Total revenues
|
57,876 | 104,124 | 127,049 | 36,957 | 68,185 | |||||||||||||||
Cost of revenues
|
||||||||||||||||||||
Cost of services
|
(12,630 | ) | (22,162 | ) | (26,484 | ) | (9,506 | ) | (18,164 | ) | ||||||||||
Cost of other value-added services and products
|
| | (4,863 | ) | (1,185 | ) | (6,887 | ) | ||||||||||||
Total cost of revenues
|
(12,630 | ) | (22,162 | ) | (31,347 | ) | (10,691 | ) | (25,051 | ) | ||||||||||
Gross profit
|
45,246 | 81,962 | 95,702 | 26,266 | 43,134 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Selling expenses
|
(13,221 | ) | (18,708 | ) | (25,186 | ) | (9,988 | ) | (16,742 | ) | ||||||||||
General and administrative expenses
|
(12,158 | ) | (19,857 | ) | (22,176 | ) | (9,379 | ) | (14,330 | ) | ||||||||||
Operating income:
|
19,867 | 43,397 | 48,340 | 6,899 | 12,062 | |||||||||||||||
Foreign exchange gain (loss)
|
8 | (2,826 | ) | (59 | ) | (17 | ) | (481 | ) | |||||||||||
Interest
income (2)
|
707 | 1,221 | 1,205 | 613 | 1,162 | |||||||||||||||
Realized gaintrading securities
|
| | 195 | 85 | 164 | |||||||||||||||
Government grant
|
211 | 360 | 730 | 336 | 356 | |||||||||||||||
Income before income tax
|
20,793 | 42,152 | 50,411 | 7,916 | 13,263 | |||||||||||||||
Income tax (expense)/benefit
|
(8,457 | ) | (18,805 | ) | 2,199 | (4,190 | ) | (7,965 | ) | |||||||||||
Net income
|
12,336 | 23,347 | 52,610 | 3,726 | 5,298 | |||||||||||||||
Net income (loss) attributable to non-controlling interest
|
125 | (34 | ) | (42 | ) | (20 | ) | (11 | ) | |||||||||||
Net income attributable to SouFun Holdings Limited shareholders
|
12,211 | 23,381 | 52,652 | 3,746 | 5,309 | |||||||||||||||
10
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(US$ in thousands, except per ordinary share and ADS data) | ||||||||||||||||||||
Income per ordinary share
|
||||||||||||||||||||
Basic
|
0.16 | 0.32 | 0.71 | 0.05 | 0.07 | |||||||||||||||
Diluted(3)
|
0.16 | 0.30 | 0.68 | 0.05 | 0.07 | |||||||||||||||
Dividend declared per ordinary share
|
0.55 | | 0.59 | | | |||||||||||||||
Income per ADS
|
||||||||||||||||||||
Basic
|
0.64 | 1.28 | 2.84 | 0.20 | 0.28 | |||||||||||||||
Diluted
|
0.64 | 1.20 | 2.72 | 0.20 | 0.28 | |||||||||||||||
Dividend declared per ADS
|
2.20 | | 2.36 | | | |||||||||||||||
Weighted average number of ordinary shares outstanding
|
||||||||||||||||||||
Basic
|
74,020,217 | 74,020,217 | 73,986,129 | 74,020,217 | 73,932,217 | |||||||||||||||
Diluted
|
76,997,410 | 77,092,197 | 77,418,960 | 77,386,202 | 77,851,697 | |||||||||||||||
Weighted average number of ADSs outstanding
|
||||||||||||||||||||
Basic
|
18,505,054 | 18,505,054 | 18,496,532 | 18,505,054 | 18,483,054 | |||||||||||||||
Diluted
|
19,249,353 | 19,273,049 | 19,354,740 | 19,346,551 | 19,462,924 | |||||||||||||||
Share-based compensation included in:
|
||||||||||||||||||||
Cost of revenues
|
160 | 268 | 489 | 238 | 251 | |||||||||||||||
Selling expenses
|
142 | 323 | 595 | 295 | 338 | |||||||||||||||
General and administrative expenses
|
1,915 | 2,126 | 3,056 | 1,480 | 1,228 |
(1) | Marketing services include related-party amounts of nil and US$375,000 in the six months ended June 30, 2009 and 2010, respectively, relating to marketing services provided to the Hainan property developer that was the subject of the Dong Fang Xi Mei commitment deposit described in the section entitled Certain Relationships and Related Party TransactionsRelated Party Loans and Other Payments. See note 10 to the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. | |
(2) | Interest income includes related party amounts of nil, nil, US$85,000, nil and US$305,000 in 2007, 2008 and 2009 and the six months ended June 30, 2009 and 2010, respectively. | |
(3) | Income per ordinary share (diluted) and income per ADS (diluted) for each year from 2007 to 2009 and the six months ended June 30, 2009 and 2010 have been computed, after considering the dilutive effect of the shares underlying employees share options and, as applicable, preferred shares. |
11
| on an actual basis; and | |
| on an as adjusted basis to reflect the exercise of 1,125,000 vested stock options by Media Partner to purchase 1,125,000 Class A ordinary shares, the issuance of 20,882 non-voting ordinary shares to Telstra International upon its exercise of 41,250 vested stock options by means of net-share settlement and the issuance and sale of 987,656 Class A ordinary shares in the form of ADSs by us in this offering based on the initial public offering price shown on the front cover of this prospectus, after deducting the estimated offering expenses payable by us. A US$1.00 increase (decrease) in the assumed initial public offering price of US$41.50 per ADS, the mid-point of the estimated range of the initial public offering price, would increase (decrease) the amounts representing total current assets, total assets, total SouFun Holdings Limiteds equity, total shareholders equity and shareholders equity by US$0.9 million. |
As of December 31, | As of June 30, | |||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||
Actual | Actual | Actual | As Adjusted | |||||||||||||
(US$ in thousands) | ||||||||||||||||
Consolidated balance sheet data
|
||||||||||||||||
Total current assets
|
102,861 | 149,224 | 176,745 | 114,414 | ||||||||||||
Total assets
|
107,246 | 154,494 | 185,079 | 194,125 | ||||||||||||
Total current liabilities
|
79,867 | 124,306 | 132,187 | 132,187 | ||||||||||||
Total liabilities
|
93,858 | 129,993 | 141,628 | 141,628 | ||||||||||||
Total SouFun Holdings Limiteds equity
|
13,283 | 24,438 | 43,399 | 52,445 | ||||||||||||
Non-controlling interests
|
105 | 63 | 52 | 52 | ||||||||||||
Total shareholders equity
|
13,388 | 24,501 | 43,451 | 52,497 | ||||||||||||
Total liabilities and shareholders equity
|
107,246 | 154,494 | 185,079 | 194,125 |
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(US$ in thousands) | ||||||||||||||||||||
Consolidated cash flow data
|
||||||||||||||||||||
Net cash generated from operating activities
|
30,493 | 44,568 | 65,966 | 24,005 | 18,198 | |||||||||||||||
Net cash (used in) generated from investing activities
|
(7,596 | ) | (2,598 | ) | (12,034 | ) | 8,927 | (5,600 | ) | |||||||||||
Net cash used in financing activities
|
(2,647 | ) | (16,210 | ) | (24,789 | ) | (24,241 | ) | | |||||||||||
Net increase in cash and cash equivalents
|
21,774 | 28,954 | 29,217 | 8,713 | 13,129 | |||||||||||||||
Cash and cash equivalents at beginning of year/period
|
12,294 | 34,068 | 63,022 | 63,022 | 92,239 | |||||||||||||||
Cash and cash equivalents at end of year/period
|
34,068 | 63,022 | 92,239 | 71,735 | 105,368 |
12
| the amount of user traffic on our website, our ability to achieve user demographic characteristics that are attractive to advertisers, and our ability to demonstrate such user traffic and demographic characteristics through our website traffic tracking tools and reporting systems; | |
| potential downward pressure on online marketing pricing due to increased competition from other online advertisers and traditional online advertising media; and | |
| widespread adoption of technologies that permit Internet users to selectively block unwanted web views, including advertisements on web pages. |
13
14
15
16
| restrictive monetary policies adopted by the PRC government, including any significant increase in interest rates; | |
| adverse developments in the credit markets and/or mortgage financing markets resulting from PRC government policies; | |
| policies regarding land supply; | |
| significant increases in transaction costs as a result of changes in PRC government policies regarding real estate transaction taxes, such as the recent announcement regarding the reinstatement of a sales tax on residential property sales by individuals within five years of purchase; | |
| adverse changes in PRC government policies regarding the acquisition and/or ownership of real estate; | |
| adverse changes in PRC national or local government policies or practices regarding brokerage, referral or franchise business or related fees and commissions; or | |
| other PRC government policies or regulations that burden real estate transactions or ownership. |
17
18
19
20
| any breakdown or system failure resulting in a sustained shutdown of our servers, including failures which may be attributable to sustained power shutdowns, or efforts to gain unauthorized access to our systems causing loss or corruption of data or malfunctions of software or hardware; | |
| any disruption or failure in the national backbone network, which would prevent our customers and users from accessing our website; | |
| any damage from fire, flood, earthquake and other natural disasters; and | |
| computer viruses, hackings and similar events. |
21
| seasonality of the real estate market and real estate consumers purchasing patterns; |
22
| our ability to retain existing customers and attract new customers for our marketing and listing services; | |
| the amount and timing of our operating expenses and capital expenditures; | |
| the adoption of new, or changes to existing, governmental regulations; | |
| a shortfall in our revenues relative to our forecasts and a decline in our operating results; and | |
| economic conditions in general and specific to the real estate industry and to China. |
23
24
25
| risks associated with the assimilation of new operations, services, technologies and personnel; | |
| unforeseen or hidden liabilities; | |
| the diversion of resources from our existing businesses and technologies; | |
| the inability to generate sufficient revenues to offset the costs and expenses of acquisitions; and | |
| potential loss of, or harm to, relationships with employees, customers and users as a result of the integration of new businesses. |
26
27
28
29
30
31
| revoking the business and operating licenses of our PRC subsidiaries or consolidated controlled entities, whose business and operating licenses are essential to the operation of our business; | |
| levying fines of the greater of RMB500,000 or an amount up to five times the revenues generated from operating activities violating the relevant regulations; | |
| confiscating our income or the income of our PRC subsidiaries and/or consolidated controlled entities; | |
| shutting down our servers or blocking our website; |
32
| discontinuing or restricting our operations or the operations of our PRC subsidiaries and/or consolidated controlled entities; | |
| imposing conditions or requirements with which we, our PRC subsidiaries and/or consolidated controlled entities may not be able to comply; | |
| requiring us, our PRC subsidiaries and/or consolidated controlled entities to restructure the relevant ownership structure, operations or contractual arrangements; and | |
| taking other regulatory or enforcement actions that could be harmful to our business. |
33
34
| revoking the business and operating licenses of SouFun Media and SouFun Network; | |
| imposing fines or confiscating income of SouFun Media and SouFun Network; and | |
| requiring SouFun Media and SouFun Network to cease operations. |
35
36
37
38
39
40
41
42
43
44
45
46
47
48
| announcements of competitive developments; | |
| regulatory developments in our target markets which affect us, our users, our customers or our competitors; | |
| actual or anticipated fluctuations in our quarterly results of operations; | |
| failure of our quarterly financial and results of operations to meet market expectations or failure to meet our previously announced guidance; | |
| changes in financial estimates by securities research analysts; | |
| changes in the economic performance or market valuations of other Internet or online real estate and home furnishing and improvement services companies; | |
| additions or departures of our executive officers and other key personnel; | |
| announcements regarding intellectual property litigation (or potential litigation) involving us or any of our directors and officers; | |
| fluctuations in the exchange rates between the U.S. dollar and the Renminbi; | |
| release or expiration of the underwriters post-offering lock-up or other transfer restrictions on our outstanding ordinary shares and ADSs; and/or | |
| sales or perceived sales of additional ordinary shares or ADSs. |
49
50
51
52
53
54
| Our new articles of association provide for a dual-class ordinary share structure; and | |
| Our new articles of association permit our board of directors, without further action by our shareholders, to issue preferred shares with special voting rights compared to our ordinary shares. |
55
| any change in the laws, rules and regulations of the central and local governments in China and the rules, regulations and policies of MIIT, and other relevant government authorities relating to all aspects of our business; | |
| general economic, market and business conditions in China; | |
| macroeconomic policies of the PRC government; | |
| changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or prices; | |
| the effects of competition in the Internet industry on the demand for and price of our services; | |
| various business opportunities that we may pursue; and | |
| the risk factors discussed in this prospectus as well as other factors and uncertainties beyond our control. |
56
| Beijing Internet holds an ICP license issued by the Beijing Telecommunications Administration Bureau for www.villachina.com and provides marketing and listing services relating to Chinas real estate and home furnishing and improvement sectors. Beijing Internet also holds licenses for the provision of value-added telecommunications services within the mobile networks of Beijing; | |
| Beijing Technology holds an ICP license issued by the Beijing Telecommunications Administration Bureau for www.soufun.com and has received approval to operate electronic bulletin board services on such website. Beijing Technology also holds a license issued by the Beijing Bureau of Radio and Television for producing and distributing videos, and a license issued by the State Administration of Radio, Film and Television for broadcasting real estate information audio and video programs on www.soufun.com. Beijing Technology provides marketing and listing services relating to Chinas real estate and home furnishing and improvement sectors; | |
| Beijing China Index holds an ICP license issued by the Beijing Telecommunications Administration Bureau for www.landlist.cn and has received approval to operate electronic bulletin board services on that website. Beijing China Index provides other |
57
value-added services such as information database and research services relating to Chinas real estate and home furnishing and improvement sectors; |
| Beijing JTX Technology holds an ICP license for www.jiatx.com issued by the Beijing Telecommunications Administration Bureau and has been approved for operating electronic bulletin board services on that website. Beijing JTX Technology also holds a license for the provision of value-added telecommunications services within Beijing. Beijing JTX Technology provides marketing and listing services relating to Chinas home furnishing and improvement business; and | |
| Each of Beijing Advertising, Shanghai JBT Advertising, Shanghai Advertising, Tianjin JTX Advertising and Tianjin Xin Rui is allowed to provide marketing and listing services, as the case may be, including design, production, agency and publication of advertisements in accordance with the business scope indicated in each of their respective business licenses and provide marketing and listing services relating to Chinas real estate and home furnishing and improvement business. |
58
(1) | Affiliates of IDG Technology Venture Investment Inc. include IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P. |
59
(1) | Refers to the following three entities affiliated with Apax Partners LLP: Hunt 7-A Guernsey L.P. Inc, Hunt 7-B Guernsey L.P Inc and Hunt 6-A Guernsey L.P. Inc. | |
(2) | Affiliates of IDG Technology Venture Investment Inc. include IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P. |
60
| payment of service fees by our consolidated controlled entities to SouFun Network in respect of its provision of exclusive technical and consulting services to our consolidated controlled entities, together with a pledge of the equity interests of our consolidated controlled entities to ensure compliance with the exclusive technical consultancy and services agreements; | |
| consolidation of the control over our consolidated controlled entities at an operational level under the operating and shareholders proxy agreements; | |
| advances to Mr. Mo and Mr. Dai for them to make capital contributions to our consolidated controlled entities; | |
| an exclusive call option granted to us to become the registered holder of the equity interests in our consolidated controlled entities at a cost equivalent to the advances to Mr. Mo and Mr. Dai, as and when permitted by PRC laws, rules and regulations; and |
61
| an obligation on SouFun Media and SouFun Network, as the case may be, as reasonably requested by the consolidated controlled entities, to provide appropriate funds to the consolidated controlled entities for major losses resulting from their business and operations. |
62
| the relevant consolidated controlled entity is unable to pay fees due pursuant to the technical consultancy and services agreement; | |
| the shareholders of the relevant consolidated controlled entity violate any of the warranties or guarantees in the equity pledge agreement; | |
| the shareholders of the relevant consolidated controlled entity violate any of the terms of the equity pledge agreement; | |
| the shareholders of the relevant consolidated controlled entity transfer their assets in the consolidated controlled entity without the written consent of SouFun Network; | |
| the relevant consolidated controlled entity is in violation of loan agreements with third parties requiring it to accelerate payment of its debts or is in such violation that causes SouFun Network to believe the relevant consolidated controlled entitys capability to perform the exclusive technical consultancy and services agreement with SouFun Network has been adversely affected; | |
| the shareholders of the relevant consolidated controlled entity are unable to perform their ordinary debt obligations or payments; | |
| where the relevant equity pledge agreement cannot be performed as a result of any newly issued laws, or the pledgor is not able to perform its obligations under the exclusive technical consultancy and services agreement with SouFun Network; | |
| where all government approvals related to the performance of the relevant equity pledge agreement are amended, terminated or cease to be effective; | |
| where there is an adverse change to the financial condition of the shareholders, and the change causes SouFun Network to believe the shareholders capability to perform the obligations under the exclusive technical consultancy and services agreement has been adversely affected; | |
| where the successor of the relevant consolidated controlled entity is only able to partially perform or refuses to perform its obligations under the exclusive technical consultancy and services agreement; and | |
| where laws and regulations render the shareholders of the relevant consolidated controlled entity unable to enforce their pledge rights under the equity pledge agreement. |
63
64
65
| Amendments and Supplements to the Exclusive Technical Consultancy and Services Agreements. The 2010 Amendments provide that SouFun Network and our consolidated controlled entities may negotiate to adjust the criteria for determining service fees set forth in the exclusive technical consultancy and services agreements, and any adjustment to such service fees must be approved by SouFun Network. The 2010 Amendments further provide that SouFun Network can unilaterally extend the term of the exclusive technical consultancy and services agreements and such request will be unconditionally agreed to by our consolidated controlled entities. |
66
| Amendments and Supplements to the Operating Agreements. The 2010 Amendments provide that the consolidated controlled entities and shareholders of the consolidated controlled entities should abide by the corporate policies and guidelines provided by SouFun Network, including the recruitment and dismissal of relevant employees of the consolidated controlled entities, the daily operations and management of the consolidated controlled entities as well as the financial management system of the consolidated controlled entities. Moreover, the 2010 Amendments provide that the annual budgets of our consolidated controlled entities shall be examined and approved by SouFun Network, including but not limited to profit estimates, operating capital, pricing strategies and payment policies. Additionally, our consolidated controlled entities operating costs may not exceed the annual budget approved by SouFun Network. SouFun Network is also obligated to provide proper capital support or other financial support to our consolidated controlled entities on their reasonable demand and the supporting methods and plans shall be negotiated by SouFun Network and our consolidated controlled entities based upon the specific circumstances of our consolidated controlled entities. | |
| Amendments and Supplements to the Exclusive Call Option Agreements. The 2010 Amendments provide an additional restrictive covenant on the part of our consolidated controlled entities that allows us, upon our unilateral decision, to request our consolidated controlled entities to make donations to SouFun Network, to the extent permitted by applicable laws, rules and regulations, at the time and in the amount and form designated by us. Our consolidated controlled entities covenanted not to reject such a request under any circumstances. The 2010 Amendments also provide an additional restrictive covenant on the part of the shareholders of our consolidated controlled entities that requires them to immediately transfer all the profits distributed from our consolidated controlled entities to us upon our request, which provides us with an alternative method to secure operating revenues and profits from our consolidated controlled subsidiaries that are in excess of their operating expenses or capital needs, should our consolidated controlled subsidiaries fail to pay service fees to us pursuant to the exclusive technical consultancy and service agreements. The 2010 Amendments further provide that SouFun Network can unilaterally extend the term of the exclusive call option agreements and such request will be unconditionally agreed to by our consolidated controlled entities. |
67
| each of our Structure Contracts is legal, valid and binding on the contracting parties under applicable PRC laws, rules and regulations; | |
| the execution, delivery, effectiveness, enforceability and performance of each of our Structure Contracts do not violate any published PRC laws, rules and regulations currently in force and effect; | |
| none of our Structure Contracts contravene any published PRC laws, rules and regulations currently in force and effect; and | |
| no filings, registrations, consents, approvals, permits, authorizations, certificates and licenses of any PRC government authorities are currently required in connection with the execution, delivery, effectiveness, performance and enforceability of each Structure Contract, provided that the pledges of equity interests under the Structure Contracts should be registered with competent PRC government authorities, and provided further that the exercise of the call option in the future must be approved and registered by competent PRC government authorities. |
68
69
70
| on an actual basis; and | |
| on an as adjusted basis to reflect the exercise of 1,125,000 vested stock options by Media Partner to purchase 1,125,000 Class A ordinary shares, the issuance of 20,882 non-voting ordinary shares to Telstra International upon its exercise of 41,250 vested stock options by means of net-share settlement and the issuance and sale of 987,656 Class A ordinary shares in the form of ADSs by us in this offering based on the initial public offering price of US$41.50 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting the estimated offering expenses payable by us. |
As of June 30, 2010 | ||||||||
Actual | As Adjusted | |||||||
(US$ in thousands) | ||||||||
Shareholders equity
|
||||||||
Ordinary shares, par value of HK$1.00 per share,
600,000,000 shares authorized, 73,932,217 shares issued and
outstanding as of December 31, 2009 and June 30, 2010
|
9,489 | 9,760 | ||||||
Additional paid-in
capital(1)
|
22,225 | 31,791 | ||||||
Accumulated other comprehensive income
|
6,376 | 6,376 | ||||||
Retained earnings
|
5,309 | 4,518 | ||||||
Total SouFun Holdings Limiteds
equity(1)
|
43,399 | 52,445 | ||||||
Non-controlling interests
|
52 | 52 | ||||||
Total shareholders
equity(1)
|
43,451 | 52,497 | ||||||
Total
capitalization(1)
|
43,451 | 52,497 |
(1) | Assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated offering expenses payable by us, a US$1.00 increase (decrease) in the assumed initial public offering price of US$10.38 per ordinary share would increase (decrease) each of additional paid-in capital and total SouFun Holdings Limiteds equity, total shareholders equity and total capitalization by US$0.9 million. |
71
Assumed initial public offering price per ordinary share
|
US$ | 10.38 | ||
Net tangible book value per ordinary share as of June 30,
2010
|
US$ | 0.57 | ||
Increase in net tangible book value per ordinary share
attributable to existing shareholders
|
US$ | 0.11 | ||
Net tangible book value per ordinary share after giving effect
to this offering, the exercise of 1,125,000 vested stock options
by Media Partner and the issuance of 20,882 non-voting
ordinary shares to Telstra International upon its exercise of
vested options
|
US$ | 0.68 | ||
Dilution in net tangible book value per ordinary share to new
investors
|
US$ | 9.7 | ||
Percentage dilution in net tangible book value per ordinary
share to new investors
|
93.5 | % | ||
Dilution in net tangible book value per ADS to new investors
|
US$ | 38.78 | ||
Percentage dilution in net tangible book value per ADS to new
investors
|
93.5 | % |
| our pro forma net tangible book value after giving effect to this offering by US$0.9 million, | |
| our pro forma net tangible book value per ordinary share and per ADS after giving effect to this offering by US$0.01 per ordinary share and US$0.04 per ADS, and | |
| the dilution in our pro forma net tangible book value per ordinary share and per ADS to new investors in this offering by US$0.99 per ordinary share and US$3.96 per ADS, |
72
Average |
||||||||||||||||||||||||
Price |
Average |
|||||||||||||||||||||||
Ordinary Shares |
Per Ordinary |
Price |
||||||||||||||||||||||
Purchased | Total Consideration |
Share |
Per ADS |
|||||||||||||||||||||
Number | Percent | Amount | Percent | Equivalent | Equivalent | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Existing shareholders*
|
75,078,099 | 98.7 | % | US$ | 8,808 | 46.2 | % | US$ | 0.12 | US$ | 0.48 | |||||||||||||
New investors
|
987,656 | 1.3 | 10,247 | 53.8 | 10.38 | 41.50 | ||||||||||||||||||
Total
|
76,065,755 | 100 | % | US$ | 19,054 | 100 | % | |||||||||||||||||
* | Including the exercise of 1,125,000 vested stock options by Media Partner for an aggregate purchase price of US$307,500 and the exercise of vested stock option by Telstra International to purchase 20,882 non-voting ordinary shares by Telstra International by means of net-share settlement. |
73
Renminbi Per U.S. Dollar Exchange Rate | ||||||||||||||||
Low | High | Average (1) | Period-End | |||||||||||||
2005
|
8.2765 | 8.0702 | 8.1826 | 8.0702 | ||||||||||||
2006
|
8.0702 | 7.8041 | 7.9579 | 7.8041 | ||||||||||||
2007
|
7.8127 | 7.2946 | 7.5806 | 7.2946 | ||||||||||||
2008
|
7.2946 | 6.7800 | 6.9193 | 6.8225 | ||||||||||||
2009
|
6.8470 | 6.8176 | 6.8295 | 6.8259 | ||||||||||||
2010 (through August 27)
|
||||||||||||||||
February
|
6.8330 | 6.8258 | 6.8285 | 6.8258 | ||||||||||||
March
|
6.8270 | 6.8254 | 6.8262 | 6.8258 | ||||||||||||
April
|
6.8275 | 6.8229 | 6.8256 | 6.8247 | ||||||||||||
May
|
6.8310 | 6.8245 | 6.8275 | 6.8305 | ||||||||||||
June
|
6.8323 | 6.7815 | 6.8184 | 6.7815 | ||||||||||||
July
|
6.7807 | 6.7709 | 6.7762 | 6.7735 | ||||||||||||
August (through August 27)
|
6.8038 | 6.7670 | 6.7855 | 6.7977 |
(1) | Annual averages are calculated using the exchange rates on the last day of each calendar month during that year. Monthly averages are calculated using the average of the daily exchange rates during that month. |
74
75
76
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||
(US$ in thousands, except per ordinary share and ADS data and number of shares and ADSs) | ||||||||||||||||||||||||||||
Consolidated statement of operations data
|
||||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||
Marketing
services(1)
|
12,491 | 30,638 | 46,552 | 86,252 | 102,367 | 29,503 | 45,586 | |||||||||||||||||||||
Listing services
|
4,532 | 4,633 | 9,885 | 16,070 | 17,559 | 5,398 | 14,006 | |||||||||||||||||||||
Other value-added services and products
|
981 | 3,532 | 1,439 | 1,802 | 7,123 | 2,056 | 8,593 | |||||||||||||||||||||
Total Revenues
|
18,004 | 38,803 | 57,876 | 104,124 | 127,049 | 36,957 | 68,185 | |||||||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||||||
Cost of services
|
(5,748 | ) | (8,214 | ) | (12,630 | ) | (22,162 | ) | (26,484 | ) | (9,506 | ) | (18,164 | ) | ||||||||||||||
Cost of other value-added services and products
|
| | | | (4,863 | ) | (1,185 | ) | (6,887 | ) | ||||||||||||||||||
Total cost of revenues
|
(5,748 | ) | (8,214 | ) | (12,630 | ) | (22,162 | ) | (31,347 | ) | (10,691 | ) | (25,051 | ) | ||||||||||||||
Gross profit
|
12,256 | 30,589 | 45,246 | 81,962 | 95,702 | 26,266 | 43,134 | |||||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||||||
Selling expenses
|
(4,308 | ) | (9,404 | ) | (13,221 | ) | (18,708 | ) | (25,186 | ) | (9,988 | ) | (16,742 | ) | ||||||||||||||
General and administrative expenses
|
(5,083 | ) | (14,703 | ) | (12,158 | ) | (19,857 | ) | (22,176 | ) | (9,379 | ) | (14,330 | ) | ||||||||||||||
Operating income
|
2,865 | 6,482 | 19,867 | 43,397 | 48,340 | 6,899 | 12,062 | |||||||||||||||||||||
Foreign exchange gain (loss)
|
61 | (9 | ) | 8 | (2,826 | ) | (59 | ) | (17 | ) | (481 | ) | ||||||||||||||||
Interest
income (2)
|
149 | 278 | 707 | 1,221 | 1,205 | 613 | 1,162 | |||||||||||||||||||||
Realized gaintrading securities
|
| | | | 195 | 85 | 164 |
77
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||
(US$ in thousands, except per ordinary share and ADS data and number of shares and ADSs) | ||||||||||||||||||||||||||||
Government grant
|
| 114 | 211 | 360 | 730 | 336 | 356 | |||||||||||||||||||||
Income before income tax
|
3,075 | 6,865 | 20,793 | 42,152 | 50,411 | 7,916 | 13,263 | |||||||||||||||||||||
Income tax (expense)/benefit
|
(210 | ) | (1,340 | ) | (8,457 | ) | (18,805 | ) | 2,199 | (4,190 | ) | (7,965 | ) | |||||||||||||||
Net income
|
2,865 | 5,525 | 12,336 | 23,347 | 52,610 | 3,726 | 5,298 | |||||||||||||||||||||
Net income (loss) attributable to non-controlling interest
|
| 14 | 125 | (34 | ) | (42 | ) | (20 | ) | (11 | ) | |||||||||||||||||
Net income attributable to SouFun Holdings Limited shareholders
|
2,865 | 5,511 | 12,211 | 23,381 | 52,652 | 3,746 | 5,309 | |||||||||||||||||||||
Income per ordinary share
|
||||||||||||||||||||||||||||
Basic
|
0.04 | 0.08 | 0.16 | 0.32 | 0.71 | 0.05 | 0.07 | |||||||||||||||||||||
Diluted(3)
|
0.04 | 0.07 | 0.16 | 0.30 | 0.68 | 0.05 | 0.07 | |||||||||||||||||||||
Dividend declared per ordinary share
|
| | 0.55 | | 0.59 | | | |||||||||||||||||||||
Income per ADS
|
||||||||||||||||||||||||||||
Basic
|
0.16 | 0.32 | 0.64 | 1.28 | 2.84 | 0.20 | 0.28 | |||||||||||||||||||||
Diluted
|
0.16 | 0.28 | 0.64 | 1.20 | 2.72 | 0.20 | 0.28 | |||||||||||||||||||||
Dividend declared per ADS
|
| | 2.20 | | 2.36 | | | |||||||||||||||||||||
Weighted average number of ordinary shares outstanding
|
||||||||||||||||||||||||||||
Basic
|
67,576,741 | 66,353,603 | 74,020,217 | 74,020,217 | 73,986,129 | 74,020,217 | 73,932,217 | |||||||||||||||||||||
Diluted
|
74,770,880 | 77,239,648 | 76,997,410 | 77,092,197 | 77,418,960 | 77,386,202 | 77,851,697 | |||||||||||||||||||||
Weighted average number of ADSs outstanding
|
||||||||||||||||||||||||||||
Basic
|
16,894,185 | 16,588,401 | 18,505,054 | 18,505,054 | 18,496,532 | 18,505,054 | 18,483,054 | |||||||||||||||||||||
Diluted
|
18,692,720 | 19,309,912 | 19,249,353 | 19,273,049 | 19,354,740 | 19,346,551 | 19,462,924 | |||||||||||||||||||||
Share-based compensation included in:
|
||||||||||||||||||||||||||||
Cost of revenues
|
45 | 555 | 160 | 268 | 489 | 238 | 251 | |||||||||||||||||||||
Selling expenses
|
25 | 231 | 142 | 323 | 595 | 295 | 338 | |||||||||||||||||||||
General and administrative expenses
|
530 | 5,068 | 1,915 | 2,126 | 3,056 | 1,480 | 1,228 |
(1) | Marketing services include related-party amounts of nil and US$375,000 in the six months ended June 30, 2009 and 2010, respectively, relating to marketing services provided to the Hainan property developer that was the subject of the Dong Fang Xi Mei commitment deposit described in the section entitled Certain Relationships and Related Party TransactionsRelated Party Loans and Other Payments. See note 10 to the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. | |
(2) | Interest income includes related party amounts of nil, nil, nil, nil, US$85,000, nil and US$305,000 in 2005, 2006, 2007, 2008, 2009 and the six months ended June 30, 2009 and 2010, respectively. | |
(3) | Income per ordinary share (diluted) and income per ADS (diluted) for each year from 2007 to 2009 and the six months ended June 30, 2009 and 2010 have been computed, after considering the dilutive effect of the shares underlying employees share options and, as applicable, preferred shares. |
78
As of |
||||||||||||||||||||||||
As of December 31, |
June 30, |
|||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||||
(US$ in thousands) | ||||||||||||||||||||||||
Consolidated balance sheet data
|
||||||||||||||||||||||||
Total current assets
|
18,873 | 31,779 | 63,557 | 102,861 | 149,224 | 176,745 | ||||||||||||||||||
Total assets
|
19,917 | 33,057 | 66,757 | 107,246 | 154,494 | 185,079 | ||||||||||||||||||
Total current liabilities
|
10,445 | 22,092 | 75,343 | 79,867 | 124,306 | 132,187 | ||||||||||||||||||
Total liabilities
|
10,445 | 22,652 | 82,047 | 93,858 | 129,993 | 141,628 | ||||||||||||||||||
Total SouFun Holdings Limiteds equity
|
(72,512 | ) | 10,391 | (15,429 | ) | 13,283 | 24,438 | 43,399 | ||||||||||||||||
Non-controlling interests
|
| 14 | 139 | 105 | 63 | 52 | ||||||||||||||||||
Total shareholders equity
|
(72,512 | ) | 10,405 | (15,290 | ) | 13,388 | 24,501 | 43,451 | ||||||||||||||||
Total liabilities, preferred shares and shareholders equity
|
19,917 | 33,057 | 66,757 | 107,246 | 154,494 | 185,079 |
Six months |
||||||||||||||||||||
Year ended December 31, | ended June 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(US$ in thousands) | ||||||||||||||||||||
Consolidated cash flow data
|
||||||||||||||||||||
Net cash generated from operating activities
|
30,493 | 44,568 | 65,966 | 24,005 | 18,198 | |||||||||||||||
Net cash (used in) generated from investing activities
|
(7,596 | ) | (2,598 | ) | (12,034 | ) | 8,927 | (5,600 | ) | |||||||||||
Net cash used in financing activities
|
(2,647 | ) | (16,210 | ) | (24,789 | ) | (24,241 | ) | | |||||||||||
Net increase in cash and cash equivalents
|
21,774 | 28,954 | 29,218 | 8,713 | 13,129 | |||||||||||||||
Cash and cash equivalents at beginning of
year/period
|
12,294 | 34,068 | 63,022 | 63,022 | 92,239 | |||||||||||||||
Cash and cash equivalents at end of
year/period
|
34,068 | 63,022 | 92,240 | 71,735 | 105,368 |
79
| Marketing services: We offer marketing services on our website, mainly through advertisements, to real estate developers in the marketing phase of new property developments, as well as to real estate agencies and other home-related vendors who wish to promote their products and services, including home furnishing and improvement products and services, furniture, electronics and other products. We also intend to integrate paid priority placement of customer links in keyword search results into our current search and search ranking services. The substantial majority of our revenues are derived from marketing services; | |
| Listing services: We offer basic and special listing services. Basic listings services are mainly offered to real estate agents, brokers, property developers, property owners and managers and providers of home furnishing and improvement products and services, and allow them to post information on properties, home furnishing and improvement and other related products and services on our website. Special listings consist of a customized marketing program primarily involving the coordination and promotion of offline themed events; and | |
| Other value-added services and products: We offer subscription-based access to our information database, research reports and total web solution services, which integrate our customers services and products into our websites, and also include website design services. |
80
81
82
83
84
85
86
| a risk-free interest rate of 3.61%, 1.69% and 3.39% in 2007, 2008 and 2009, respectively; | |
| an expected dividend yield of 0%, 1% and 0% in 2007, 2008 and 2009, respectively; | |
| an expected volatility range of 53.20%, 77.67% and 36.03% in 2007, 2008 and 2009, respectively; and | |
| a weighted average expected life of 4.45 years, 3.59 years and 6.32 years in 2007, 2008 and 2009, respectively. |
87
| a risk-free interest rate of 3.24-3.44%, 1.14-3.39% and 1.75-2.52% in 2007, 2008 and 2009 and 1.62%-1.95% and 1.70%-2.65% in the six months ended June 30, 2009 and 2010, respectively; | |
| an expected dividend yield of 0%, 1% and 0% in 2007, 2008 and 2009 and 0% and 0% in the six months ended June 30, 2009 and 2010, respectively; | |
| an expected volatility range of 53.20%, 77.67% and 36.03% in 2007, 2008 and 2009 and 51.91% and 39.82% in the six months ended June 30, 2009 and 2010, respectively; and | |
| a weighted average expected life of 0 year in each of 2007, 2008 and 2009 and 0 year in the six months ended June 30, 2009 and 2010, respectively. |
| No material changes in the existing political, legal, fiscal and economic conditions in China; | |
| No major changes in the tax rates applicable to our subsidiaries and consolidated controlled entities in China; | |
| Our ability to retain competent management, key personnel and technical staff to support our ongoing operations; and | |
| No material deviation in industry trends and market conditions from economic forecasts. |
88
Grant date
|
December 31, 2009 | |
Grantees
|
Employees | |
Number of options granted
|
1,033,654 | |
Exercise price per ordinary share
|
US$10.00 | |
Vesting schedule
|
||
December 31, 2010
|
10.0% | |
December 31, 2011
|
20.0% | |
December 31, 2012
|
40.0% | |
December 31, 2013
|
30.0% | |
Estimated fair value of ordinary share at grant date
|
US$6.73 | |
Estimated fair value of options per ordinary share at grant date
|
US$1.95 | |
Total amount of compensation cost to be recognized during
vesting period
|
US$2,020,497 | |
Total amount recognized as expense in 2009
|
Nil | |
Total amount recognized as expense as of June 30, 2010
|
US$249,819 |
89
Grant date
|
April 20, 2010 | |
Grantee
|
Telstra International | |
Number of options granted
|
37,500 | |
Exercise price per ordinary share
|
US$10.00 | |
Vesting schedule
|
||
April 20, 2011
|
10.0% | |
April 20, 2012
|
20.0% | |
April 20, 2013
|
40.0% | |
April 20, 2014
|
30.0% | |
Estimated fair value of ordinary share at grant date
|
US$6.90 | |
Estimated fair value of options per ordinary share at grant date
|
US$2.22 | |
Total amount of compensation cost to be recognized during
vesting period
|
US$83,611 | |
Total amount recognized as expense as of June 30, 2010
|
US$4,059 |
| the significant increase in our revenues and operating income in the six months ended June 30, 2010 compared to the same period in 2009, which exceeded our forecasts for our business performance and results of operations; |
90
| the continued growth in our financial results despite the tightening measures announced by the PRC government in April 2010 that were targeted at the PRC property market; | |
| the strengthening of our sales and marketing team and our editorial and production team through hiring additional personnel; | |
| the enhancement of our internal control system through (i) the recent hiring of three accountants who are U.S. GAAP-accredited, (ii) the expected appointment of three independent directors to our board of directors, including an independent director who meets the criteria of an audit committee financial expert, (iii) the employment of three internal auditors, and (iv) the creation of a five-member compliance team to be responsible for annual review of our policies and procedures relating to internal control over financial reporting and regularly reviewing and updating internal control documents; | |
| Chinas economy continuing to show robust growth during this period, which was evidenced by a number of indicators, including accelerating annualized quarter-over-quarter GDP growth in the second quarter of 2010; and | |
| the completion of this offering, which will result in the increased liquidity and marketability of our ordinary shares. |
91
| improve the effectiveness of our entity-wide internal control over financial reporting, including strengthening our corporate governance structure by establishing an audit committee, an effective internal audit function, a code of conduct, anti-fraud policies, a whistle-blower system, employee complaint handling procedures for accounting and auditing matters and procedures for the authorization and approval of related-party transactions; | |
| improve our processes and controls, including the strengthening of our procedures on the preparation, review, approval and disclosure of financial reports in preparation for becoming a listed company, the increase in the number of financial staff with relevant accounting knowledge and experience with U.S. GAAP, improvements and regular updating of documentation of our processes and controls, such as accounting manuals and creation of policies on the maintenance and custody of written and electronic control evidence, such as working papers and supporting documents; and | |
| improve our IT controls, including the creation of formal access controls over the opening, cancellation and authorization of an account in our application systems, improved management of important application systems and segregation of our accounting responsibility and financial software system administration. |
92
| will appoint three independent directors to our board of directors and established an audit committee, which will be effective upon closing of this offering. Our audit committee will be composed of the three independent directors; | |
| strengthened our internal audit team by employing three internal auditors in 2010 and ensuring that our internal audit team will directly report to our audit committee; | |
| amended our current code of conduct and code of ethics, in accordance with the requirements of Sarbanes-Oxley, which will set forth our anti-fraud policies and create a whistle-blower system for handling employee complaints. We will distribute such policies to all employees through training and written acknowledgements; | |
| assembled a five-member team from our finance department to be responsible for the preparation of financial statements under U.S. GAAP. We hired three accountants, two of whom are U.S. GAAP-accredited with the knowledge and experience in the preparation of financial statements in accordance with U.S. GAAP, to join our finance department; | |
| set up an integrated financial reporting process, including procedures on the preparation, review, approval and disclosure of financial reports; | |
| intend to organize quarterly training sessions on U.S. GAAP for our finance department in the form of workshops, seminars and newsletters as well as requiring our finance personnel to participate in annual in-house or public U.S. GAAP training courses; | |
| set up a compliance team consisting of five people selected from our finance, internal audit, operations, IT and human resources departments, which will be responsible for reviewing our policies and procedures relating to internal control over financial reporting on an annual basis and regularly reviewing and updating internal control documents; | |
| established a custody policy for the retention of key control documentation, which will be distributed to all employees and be subject to periodic compliance tests by our internal audit department; | |
| strengthened checking procedures between our operating data and the data in our accounting system, which will be implemented on a monthly basis; | |
| established access authority management and IT system account management policies and began to require appropriate internal approvals before the opening of any accounts. |
93
In addition, our system administrator will periodically send a list of users access authority to the relevant departments for review and confirmation and will work with our human resources department to periodically update account access for any movements in employees; |
| adopted an IT emergency management and reporting policy, including reporting procedures and documentation required to be logged upon the occurrence of an IT accident and established two separate systems to achieve (i) close monitoring of important application systems and (ii) timely documentation of the results of system inspection. The system administrator will also periodically inspect such information in the system log files and document the results of such inspection for our records; and | |
| appointed IT personnel to administer our financial software system to segregate the responsibilities relating to business operations and the administration of our IT system. |
94
95
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||||
Percentage |
Percentage |
Percentage |
Percentage |
Percentage |
||||||||||||||||||||||||||||||||||||
Amount | of revenues | Amount | of revenues | Amount | of revenues | Amount | of revenues | Amount | of revenues | |||||||||||||||||||||||||||||||
(US$ in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||||||||||
Marketing
services (1)
|
46,552 | 80.4 | % | 86,252 | 82.8 | % | 102,367 | 80.6 | % | 29,503 | 79.8 | % | 45,586 | 66.9 | % | |||||||||||||||||||||||||
Listing services
|
9,885 | 17.1 | 16,070 | 15.4 | 17,559 | 13.8 | 5,398 | 14.6 | 14,006 | 20.5 | % | |||||||||||||||||||||||||||||
Other value-added services and products
|
1,439 | 2.5 | 1,802 | 1.8 | 7,123 | 5.6 | 2,056 | 5.6 | 8,593 | 12.6 | % | |||||||||||||||||||||||||||||
Total revenues
|
57,876 | 100.0 | % | 104,124 | 100.0 | % | 127,049 | 100.0 | % | 36,957 | 100.0 | % | 68,185 | 100.0 | % | |||||||||||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||||||||||||||||||
Cost of services
|
(12,630 | ) | (21.8 | )% | (22,162 | ) | (21.3 | )% | (26,484 | ) | (20.8 | )% | (9,506 | ) | (25.7 | )% | (18,164 | ) | (26.6 | )% | ||||||||||||||||||||
Cost of other value-added services and products
|
| | | | (4,863 | ) | (3.9 | ) | (1,185 | ) | (3.2 | ) | (6,887 | ) | (10.1 | ) | ||||||||||||||||||||||||
Total cost of revenues
|
(12,630 | ) | (21.8 | )% | (22,162 | ) | (21.3 | )% | (31,347 | ) | (24.7 | )% | (10,691 | ) | (28.9 | )% | (25,051 | ) | (36.7 | )% | ||||||||||||||||||||
Gross profit
|
45,246 | 78.2 | 81,962 | 78.7 | 95,702 | 75.3 | 26,266 | 71.1 | 43,134 | 63.3 | ||||||||||||||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||||||||||||||||||
Selling expenses
|
(13,221 | ) | (22.8 | ) | (18,708 | ) | (18.0 | ) | (25,186 | ) | (19.8 | ) | (9,988 | ) | (27.0 | ) | (16,742 | ) | (24.6 | ) | ||||||||||||||||||||
General and administrative expenses
|
(12,158 | ) | (21.1 | ) | (19,857 | ) | (19.0 | ) | (22,176 | ) | (17.5 | ) | (9,379 | ) | (25.4 | ) | (14,330 | ) | (21.0 | ) | ||||||||||||||||||||
Operating income
|
19,867 | 34.3 | 43,397 | 41.7 | 48,340 | 38.0 | 6,899 | 18.7 | 12,062 | 17.7 | ||||||||||||||||||||||||||||||
Foreign exchange gain (loss)
|
8 | 0.0 | (2,826 | ) | (2.7 | ) | (59 | ) | (0.0 | ) | (17 | ) | nil | (481 | ) | (0.7 | ) | |||||||||||||||||||||||
Interest
income (2)
|
707 | 1.2 | 1,221 | 1.2 | 1,205 | 0.9 | 613 | 1.7 | 1,162 | 1.7 | ||||||||||||||||||||||||||||||
Realized gaintrading securities
|
| 0.0 | | 0.0 | 195 | 0.2 | 85 | 0.2 | 164 | 0.2 | ||||||||||||||||||||||||||||||
Government grant
|
211 | 0.4 | 360 | 0.3 | 730 | 0.6 | 336 | 0.9 | 356 | 0.5 | ||||||||||||||||||||||||||||||
Income before income tax
|
20,793 | 35.9 | 42,152 | 40.5 | 50,411 | 39.7 | 7,916 | 21.4 | 13,263 | 19.5 | ||||||||||||||||||||||||||||||
Income tax (expense)/benefit
|
(8,457 | ) | (14.6 | ) | (18,805 | ) | (18.1 | ) | 2,199 | 1.7 | (4,190 | ) | (11.3 | ) | (7,965 | ) | (11.7 | ) | ||||||||||||||||||||||
Net income
|
12,336 | 21.3 | 23,347 | 22.4 | 52,610 | 41.4 | 3,726 | 10.1 | 5,298 | 7.8 | ||||||||||||||||||||||||||||||
Net income (loss) attributable to non- controlling interest
|
125 | 0.2 | (34 | ) | (0.0 | ) | (42 | ) | (0.0 | ) | (20 | ) | (0.1 | ) | (11 | ) | nil | |||||||||||||||||||||||
Net income attributable to our shareholders
|
12,211 | 21.1 | % | 23,381 | 22.4 | % | 52,652 | 41.4 | % | 3,746 | 10.1 | % | 5,309 | 7.8 | % | |||||||||||||||||||||||||
Share-based compensation included in:
|
||||||||||||||||||||||||||||||||||||||||
Cost of revenues
|
160 | 0.3 | % | 268 | 0.3 | % | 489 | 0.4 | % | 238 | 0.6 | % | 251 | 0.4 | % | |||||||||||||||||||||||||
Selling expenses
|
142 | 0.2 | % | 323 | 0.3 | % | 595 | 0.5 | % | 295 | 0.8 | % | 338 | 0.5 | % | |||||||||||||||||||||||||
General and administrative expenses
|
1,915 | 3.3 | % | 2,126 | 2.0 | % | 3,056 | 2.4 | % | 1,480 | 4.0 | % | 1,228 | 1.8 | % |
(1) | Marketing services include related-party amounts of nil and US$375,000 in the six months ended June 30, 2009 and 2010, respectively, relating to marketing services provided to the Hainan property developer that was the subject of the Dong Fang Xi Mei commitment deposit described in the section entitled Certain Relationships and Related Party TransactionsRelated Party Loans and Other Payments. See note 10 to the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. | |
(2) | Interest income includes related party amounts of nil, nil, US$85,000, and US$305,000 in 2007, 2008 and 2009 and the six months ended June 30, 2009 and 2010, respectively. |
96
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||||
Percentage |
Percentage |
Percentage |
Percentage |
Percentage |
||||||||||||||||||||||||||||||||||||
of marketing |
of marketing |
of marketing |
of marketing |
of marketing |
||||||||||||||||||||||||||||||||||||
service |
service |
service |
service |
service |
||||||||||||||||||||||||||||||||||||
Amount | revenues | Amount | revenues | Amount | revenues | Amount | revenues | Amount | revenues | |||||||||||||||||||||||||||||||
(US$ in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||
New home
|
39,188 | 84.2 | % | 75,535 | 87.6 | % | 87,134 | 85.1 | % | 26,219 | 88.9 | % | 38,721 | 84.9 | % | |||||||||||||||||||||||||
Secondary and rental
|
309 | 0.7 | 554 | 0.6 | 537 | 0.5 | 252 | 0.9 | 344 | 0.8 | ||||||||||||||||||||||||||||||
Home furnishing and improvement
|
7,055 | 15.1 | 10,163 | 11.8 | 14,696 | 14.4 | 3,032 | 10.3 | 6,521 | 14.3 | ||||||||||||||||||||||||||||||
Total marketing service revenues
|
46,552 | 100.0 | % | 86,252 | 100.0 | % | 102,367 | 100.0 | % | 29,503 | 100.0 | % | 45,586 | 100.0 | % | |||||||||||||||||||||||||
97
98
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||||
Percentage of |
Percentage of |
Percentage of |
Percentage of |
Percentage of |
||||||||||||||||||||||||||||||||||||
listing |
listing |
listing |
listing |
listing |
||||||||||||||||||||||||||||||||||||
service |
service |
service |
service |
service |
||||||||||||||||||||||||||||||||||||
Amount | revenues | Amount | revenues | Amount | revenues | Amount | revenues | Amount | revenues | |||||||||||||||||||||||||||||||
(US$ in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||
Basic listing
|
4,924 | 49.8 | % | 8,593 | 53.5 | % | 11,513 | 65.6 | % | 3,230 | 59.8 | % | 10,649 | 76.0 | % | |||||||||||||||||||||||||
Special listing
|
4,961 | 50.2 | 7,477 | 46.5 | 6,046 | 34.4 | 2,168 | 40.2 | 3,359 | 24.0 | ||||||||||||||||||||||||||||||
Total
|
9,885 | 100.0 | % | 16,070 | 100.0 | % | 17,559 | 100.0 | % | 5,398 | 100.0 | % | 14,008 | 100.0 | % | |||||||||||||||||||||||||
99
100
Year ended December 31, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||||
Percentage |
Percentage |
Percentage |
Percentage |
Percentage |
||||||||||||||||||||||||||||||||||||
of total |
of total |
of total |
of total |
of total |
||||||||||||||||||||||||||||||||||||
operating |
operating |
operating |
operating |
operating |
||||||||||||||||||||||||||||||||||||
Amount | expenses | Amount | expenses | Amount | expenses | Amount | expenses | Amount | expenses | |||||||||||||||||||||||||||||||
(US$ in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||
Selling expenses
|
13,221 | 52.1 | % | 18,708 | 48.5 | % | 25,186 | 53.2 | % | 9,988 | 51.6 | % | 16,742 | 53.9 | % | |||||||||||||||||||||||||
General and administrative expenses
|
12,158 | 47.9 | 19,857 | 51.5 | 22,176 | 46.8 | 9,379 | 48.4 | 14,330 | 46.1 | ||||||||||||||||||||||||||||||
Total
|
25,379 | 100.0 | % | 38,565 | 100.0 | % | 47,362 | 100.0 | % | 19,367 | 100.0 | % | 31,072 | 100.0 | % | |||||||||||||||||||||||||
101
102
103
104
105
106
107
108
109
110
111
112
113
Three months ended | ||||||||||||||||||||||||
March 31, |
June 30, |
September 30, |
December 31, |
March 31, |
June 30, |
|||||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2010 | 2010 | |||||||||||||||||||
(US$ in thousands) | ||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Marketing services
|
11,868 | 17,635 | 24,832 | 48,032 | 17,925 | 27,661 | ||||||||||||||||||
Listing services
|
2,266 | 3,132 | 4,629 | 7,532 | 5,706 | 8,300 | ||||||||||||||||||
Other value-added services and products
|
651 | 1,405 | 1,848 | 3,219 | 2,818 | 5,775 | ||||||||||||||||||
Total revenues
|
14,785 | 22,172 | 31,309 | 58,783 | 26,449 | 41,736 | ||||||||||||||||||
Cost of revenues
|
||||||||||||||||||||||||
Cost of services
|
(4,420 | ) | (5,086 | ) | (6,413 | ) | (10,565 | ) | (8,228 | ) | (9,935 | ) | ||||||||||||
Cost of other value-added services and products
|
(268 | ) | (917 | ) | (1,593 | ) | (2,085 | ) | (2,274 | ) | (4,613 | ) | ||||||||||||
Total cost of revenues
|
(4,688 | ) | (6,003 | ) | (8,006 | ) | (12,650 | ) | (10,502 | ) | (14,549 | ) | ||||||||||||
Gross profit
|
10,097 | 16,169 | 23,303 | 46,133 | 15,947 | 27,187 | ||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Selling expenses
|
(5,019 | ) | (4,969 | ) | (6,355 | ) | (8,843 | ) | (6,974 | ) | (9,768 | ) | ||||||||||||
General and administrative expenses
|
(4,334 | ) | (5,045 | ) | (5,598 | ) | (7,199 | ) | (6,019 | ) | (8,311 | ) | ||||||||||||
Operating income
|
744 | 6,155 | 11,350 | 30,091 | 2,954 | 9,108 | ||||||||||||||||||
Foreign exchange gain (loss)
|
8 | (25 | ) | (19 | ) | (23 | ) | (24 | ) | (457 | ) | |||||||||||||
Interest income (Including related party amount of nil, nil,
nil, US$85, US$183 and US$122 for the three months ended
March 31, June 30, September 30, and December 31,
2009 and March 31 and June 30, 2010, respectively)
|
356 | 257 | 265 | 327 | 630 | 532 | ||||||||||||||||||
Realized gaintrading securities
|
85 | | 110 | | 113 | 51 | ||||||||||||||||||
Government grants
|
151 | 185 | 126 | 268 | 191 | 165 | ||||||||||||||||||
Income before income tax
|
1,344 | 6,572 | 11,832 | 30,663 | 3,864 | 9,399 | ||||||||||||||||||
Income tax (expense) benefit
|
(1,028 | ) | (3,162 | ) | 9,325 | (2,936 | ) | (1,496 | ) | (6,469 | ) | |||||||||||||
Net income
|
316 | 3,410 | 21,157 | 27,727 | 2,368 | 2,930 | ||||||||||||||||||
Net loss attributable to non-controlling interests
|
(10 | ) | (10 | ) | (10 | ) | (12 | ) | (6 | ) | (5 | ) | ||||||||||||
Net income attributable to SouFun Holdings Limited shareholders
|
326 | 3,420 | 21,167 | 27,739 | 2,374 | 2,935 | ||||||||||||||||||
114
115
Year ended |
||||||||||||||||||||
December 31, | Six months ended June 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(US$ in thousands) | ||||||||||||||||||||
Net cash generated from operating activities
|
30,493 | 44,568 | 65,966 | 24,005 | 18,198 | |||||||||||||||
Net cash generated from (used in) investing activities
|
(7,596 | ) | (2,598 | ) | (12,034 | ) | 8,927 | (5,600 | ) | |||||||||||
Net cash used in financing activities
|
(2,647 | ) | (16,210 | ) | (24,789 | ) | (24,241 | ) | | |||||||||||
Net increase in cash and cash equivalents
|
21,774 | 28,954 | 29,217 | 8,713 | 13,129 | |||||||||||||||
Cash and cash equivalents at beginning of year/period
|
12,294 | 34,068 | 63,022 | 63,022 | 92,239 | |||||||||||||||
Cash and cash equivalents at end of year/period
|
34,068 | 63,022 | 92,239 | 71,735 | 105,368 |
116
117
As of |
As of |
|||||||
December 31, 2009 | June 30, 2010 | |||||||
(US$ in thousands) | ||||||||
Operating lease commitments:
|
||||||||
Less than 1 year
|
3,333 | 4,942 | ||||||
13 years
|
4,543 | 6,586 | ||||||
35 years
|
| 23 | ||||||
More than 5 years
|
| | ||||||
Total
|
7,876 | 11,551 | ||||||
118
119
120
121
122
Year ended December 31, | ||||||||||||||||||||||||
CAGR |
||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2004 - 2008 | |||||||||||||||||||
China GDP (RMB in billions)
|
15,988 | 18,322 | 21,192 | 25,731 | 30,067 | 17.1 | % | |||||||||||||||||
China GDP per capita (RMB)
|
12,336 | 14,053 | 16,165 | 19,524 | 22,698 | 16.5 | % |
Year ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Urban population (in millions)
|
542.8 | 562.1 | 577.1 | 593.8 | 606.7 | |||||||||||||||
Total population (in millions)
|
1,300.0 | 1,307.6 | 1,314.5 | 1,321.3 | 1,328.0 | |||||||||||||||
Urbanization rate (%)
|
41.8 | 43.0 | 43.9 | 44.9 | 45.7 | |||||||||||||||
Per capita disposable income of urban households (RMB)
|
9,422 | 10,493 | 11,760 | 13,786 | 15,781 |
123
Year ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
Number of Internet users in China (in millions)
|
94 | 111 | 137 | 210 | 298 | 384 | ||||||||||||||||||
Internet penetration rates in China (%)
|
7.3 | 8.5 | 10.5 | 16.0 | 22.6 | 28.9 | ||||||||||||||||||
Internet penetration rates in the United States (%)
|
64.8 | 68.0 | 68.9 | 71.8 | 74.0 | 76.2 | ||||||||||||||||||
Internet penetration rates in Japan (%)
|
62.4 | 66.9 | 68.7 | 74.3 | 75.4 | 76.8 |
Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||
CAGR |
||||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009E | 2010E | 2011E | 2012E | 2004 -2012E | |||||||||||||||||||||||||||||||
(RMB in billions) | ||||||||||||||||||||||||||||||||||||||||
Online advertising revenues in China
|
2.3 | 4.1 | 6.1 | 10.6 | 17.0 | 21.6 | 30.9 | 43.6 | 58.5 | 49.9 | % |
124
Year ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
(RMB in millions) | ||||||||||||||||||||
China online advertising spending by major industries
|
||||||||||||||||||||
Real estate
|
174.2 | 457.5 | 538.2 | 720.2 | 972.9 | |||||||||||||||
Other major
industries (1)
|
1,417.5 | 1,773.2 | 2,484.0 | 3,934.4 | 6,346.5 | |||||||||||||||
Total
|
1,591.7 | 2,230.7 | 3,022.2 | 4,654.6 | 7,319.3 |
(1) | Other major industries include IT products, transportation, network services, communication, consumer electronics, financial services, food and beverage, retail and services and apparel. |
125
Year ended December 31, | ||||||||||||||||||||||||
CAGR |
||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2004 - 2008 | |||||||||||||||||||
Total GFA of residential properties sold (sq.m. in millions)
|
338.2 | 495.9 | 554.2 | 701.4 | 592.8 | 15.1 | % | |||||||||||||||||
Total GFA of properties sold (sq.m. in millions)
|
382.3 | 554.9 | 618.6 | 773.6 | 659.7 | 14.6 | ||||||||||||||||||
Average selling price of residential properties (RMB per sq.m.)
|
2,608 | 2,937 | 3,119 | 3,645 | 3,576 | 8.2 | ||||||||||||||||||
Average selling price of properties sold (RMB per sq.m.)
|
2,778 | 3,168 | 3,367 | 3,864 | 3,800 | 8.1 | ||||||||||||||||||
Total revenues of residential properties sold (RMB in billions)
|
1,036.0 | 1,456.4 | 1,728.8 | 2,556.6 | 2,119.6 | 19.6 | ||||||||||||||||||
Total revenues of properties sold (RMB in billions)
|
1,260.1 | 1,757.6 | 2,082.6 | 2,988.9 | 2,506.8 | 18.8 | % |
126
| more rigorous administration of real estate loans; | |
| measures to regulate and control the real estate development projects; | |
| promulgation of relevant tax measures to discourage speculation in the real estate market; and | |
| additional measures to discourage speculation on luxury residences. |
127
128
| Marketing services: We offer marketing services on our website, mainly through advertisements, to real estate developers in the marketing phase of new property developments as well as to real estate agencies and other home furnishing and improvement vendors who wish to promote their products and services, including home furnishing and improvement products and services, furniture, electronics and other products. We also intend to integrate paid priority placement of customer links in keyword search results into our current search and search ranking services. The substantial majority of our revenues are derived from marketing services; | |
| Listing services: We offer basic and special listing services. Basic listing services are mainly offered to real estate agents, brokers, property developers, property owners and managers and providers of home furnishing and improvement products and services, and allow them to post information on properties, home furnishing and improvement and other related products and services on our website. Special listings consist of a customized marketing program primarily involving the coordination and promotion of offline themed events; and | |
| Other value-added services and products: We offer subscription-based access to our information database, research reports and total web solution services, which integrate our customers services and products into our website, and also include website design services. |
| over 139,000 listings for new residential property complexes, approximately eight million listings of secondary and rental properties, as well as over 140,000 listings of commercial properties for sale and lease; | |
| over 8,000 brands and one million listings from home furnishing and improvement vendors across China; and | |
| content coverage of real estate-related content, search services, marketing and listing coverage of 106 cities in China. |
129
130
131
132
133
| real estate developers; | |
| real estate professionals, such as agents and brokers; | |
| retailers and other suppliers of home furnishing and improvement products and services; | |
| home design, decoration and re-modeling companies; and | |
| banks offering residential mortgage loan products. |
134
135
136
137
| Visitor traffic: According to CR-Nielsen, our website received a weekly average of over 8.2 million and 9.8 million unique visitors in 2008 and 2009, respectively; | |
| Page views: According to DCCI, our website generated over 14.7 billion total page views in 2009; |
138
| Market share: According to CR-Nielsen, our website obtained a 46.3% market share of the online real estate advertising market in China in 2009 in terms of estimated real estate-related online advertising revenues; and | |
| Members: As of June 30, 2010, we had over 17.6 million registered members of our website and had 3.0 million registered members of our SouFun membership card. |
139
140
141
142
143
144
145
146
| Real estate and home furnishing and improvement websites offering listing and marketing services in China including real estate websites sponsored or supported by local governments in China, which may be able to use such government connections to develop relationships with locally-active real estate developers; | |
| traditional advertising media such as general-purpose and real estate-focused newspapers, magazines, television and outdoor advertising that compete for overall advertising spending; | |
| websites focused on real estate research services in China; and | |
| online listing service providers, whether general-purpose Internet portals or regional websites dedicated to online listing. |
147
Editorial and production
|
2,407 | |||
Sales and marketing
|
1,649 | |||
Technical and research
|
303 | |||
Management and general administrative
|
451 | |||
Total
|
4,810 | |||
148
149
150
| formulating and enforcing telecommunications industry policy, standards and regulations; | |
| granting licenses to provide telecommunications and Internet services; | |
| formulating tariff and service charge policies for telecommunications and Internet services; | |
| supervising the operations of telecommunications and Internet service providers; and | |
| maintaining fair and orderly market competition among operators. |
151
| The Foreign Investment Industrial Guidance Catalog; | |
| The Administrative Regulations on Foreign-invested Advertising Enterprises; and | |
| The Circular Regarding Investment in the Advertising Industry by Foreign Investors through Equity Acquisition. |
152
| each of the Structure Contracts is legal, valid and binding on the contracting parties under applicable PRC laws, rules and regulations; | |
| the execution, delivery, effectiveness, enforceability and performance of each of the Structure Contracts do not violate any published PRC laws, rules and regulations currently in force and effect; | |
| none of our Structure Contracts contravenes any published PRC laws, rules and regulations currently in force and effect; and | |
| no filings, registrations, consents, approvals, permits, authorizations, certificates and licenses of any PRC government authorities are currently required in connection with the execution, delivery, effectiveness, performance and enforceability of each Structure Contract, provided that the pledges of equity interests under the Structure Contracts should be registered with competent PRC government authorities, and provided further that the exercise of the call option in the future must be approved and registered by competent PRC government authorities. |
| The Telecommunications Regulations (2000); | |
| The Catalog of Classes of Telecommunications Business; | |
| The Administrative Measures for Telecommunications Business Operating Licenses; and | |
| The Internet Information Services Administrative Measures. |
153
| The Advertising Law; | |
| The Administration of Advertising Regulations; and | |
| The Implementation Rules for the Administration of Advertising Regulations. |
154
| gain improper entry into a computer or system of national strategic importance; | |
| disseminate politically disruptive information; | |
| leak government secrets; | |
| spread false commercial information; or | |
| infringe intellectual property rights. |
155
156
157
158
159
Name | Age | Position | ||||
Tianquan Vincent MO
|
46 | Executive chairman of the board of directors | ||||
Bruce J.
AKHURST(1)
|
50 | Director | ||||
John
STANHOPE(1)
|
59 | Director | ||||
Quan ZHOU
|
52 | Director | ||||
Shan LI(2)
|
47 | Independent director | ||||
Qian
ZHAO(3)
|
41 | Independent director | ||||
Sam Hanhui
Sun(3)
|
38 | Independent director | ||||
Jeff Xuesong
LENG(4)
|
40 | Director | ||||
Thomas Nicholas
HALL(4)
|
42 | Director | ||||
Richard Jiangong
DAI(4)
|
36 | President, chief executive officer and director | ||||
Lanying GUAN
|
42 | Chief financial officer | ||||
Jian LIU
|
34 | Chief operations officer |
(1) | Bruce J. Akhurst and John Stanhope will resign from our board of directors and cease to be our directors immediately prior to the effectiveness of the registration statement on Form F-1, of which this prospectus forms a part. | |
(2) | Shan Li will become an independent director immediately following the effectiveness of the registration statement on Form F-1, of which this prospectus forms a part. | |
(3) | Qian Zhao and Sam Hanhui Sun will become independent directors immediately following the effectiveness of the registration statement on Form F-1, of which this prospectus forms a part. | |
(4) | Jeff Xuesong Leng, Thomas Nicholas Hall and Jiangong Richard Dai will become directors immediately following the effectiveness of the registration statement on Form F-1, of which this prospectus forms a part. |
160
161
162
| convening shareholders meetings and reporting its work to shareholders at such meetings; | |
| implementing shareholders resolutions; | |
| determining our business plans and investment proposals; | |
| formulating our profit distribution plans and loss recovery plans; | |
| determining our debt and finance policies and proposals for the increase or decrease in our registered capital and the issuance of debentures; | |
| formulating our major acquisition and disposition plans, and plans for merger, division or dissolution; |
163
| proposing amendments to our amended and restated memorandum and articles of association; and | |
| exercising any other powers conferred by the shareholders meetings or under our amended and restated memorandum and articles of association. |
| selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; | |
| annually reviewing an independent auditors report describing the auditing firms internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditors and us; | |
| setting clear hiring policies for employees or former employees of the independent auditors; | |
| reviewing with the independent auditors any audit problems or difficulties and managements response; | |
| reviewing and approving all proposed related-party transactions, as defined in Item 404 of Regulation S-K; | |
| discussing the annual audited financial statements with management and the independent auditors; | |
| discussing with management and the independent auditors major issues regarding accounting principles and financial statement presentations; | |
| reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; | |
| discussing earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; | |
| reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures on our financial statements; | |
| discussing policies with respect to risk assessment and risk management; |
164
| reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted to address material issues raised by internal quality control reviews or peer reviews by the independent auditors; | |
| timely reviewing reports from the independent auditors regarding all critical accounting policies and practices to be used by us, all alternative treatments of financial information within U.S. GAAP that have been discussed with management and all other material written communications between the independent auditors and management; | |
| establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; | |
| annually reviewing and reassessing the adequacy of our audit committee charter; | |
| handling such other matters that are specifically delegated to our audit committee by our board of directors from time to time; | |
| meeting separately, periodically, with management, internal auditors and the independent auditors; and | |
| reporting regularly to the full board of directors. |
| reviewing and making recommendations to our board of directors regarding our compensation policies and forms of compensation provided to our directors and officers; | |
| reviewing and determining bonuses for our officers and other employees; | |
| reviewing and determining share-based compensation for our directors, officers, employees and consultants; | |
| administering our equity incentive plans in accordance with their respective terms; and | |
| such other matters that are specifically delegated to the compensation committee by our board of directors from time to time. |
165
166
167
Number of |
Number of |
Number of |
||||||||||||||||||
Class A |
Class B |
non-voting |
||||||||||||||||||
ordinary |
ordinary |
ordinary |
||||||||||||||||||
shares to be |
shares to be |
shares to be |
Exercise price |
|||||||||||||||||
issued upon |
issued upon |
issued upon |
per ordinary |
|||||||||||||||||
exercise of |
exercise of |
exercise of |
share |
Date of |
||||||||||||||||
options | options | options | (US$) | Date of grant | expiration | |||||||||||||||
Mr. Mo(1)
|
| | 225,000 | US$ | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||
| | 225,000 | 5.00 | December 31, 2007 | December 30, 2017 | |||||||||||||||
| | 225,000 | 5.00 | December 31, 2008 | December 30, 2018 | |||||||||||||||
| | 225,000 | 10.00 | December 31, 2009 | December 30, 2019 | |||||||||||||||
Media Partner /
Mr. Mo(1)
|
| 250,000 | (2) | | 0.13 | June 18, 1999 | June 17, 2014 | |||||||||||||
| 250,000 | (2) | | 0.26 | June 30, 2000 | June 29, 2015 | ||||||||||||||
| 250,000 | (2) | | 0.26 | October 1, 2001 | September 30, 2016 | ||||||||||||||
| 250,000 | (2) | | 0.26 | June 30, 2002 | June 29, 2017 | ||||||||||||||
| 125,000 | (2) | | 0.64 | October 1, 2002 | September 30, 2017 | ||||||||||||||
Next Decade /
Mr. Mo(1)
|
| 1,754,500 | | 5.00 | September 30, 2006 | September 29, 2021 | ||||||||||||||
Aceview Investment Limited / Mr. Dai
|
250,000 | | | 0.13 | June 18, 1999 | June 17, 2014 | ||||||||||||||
82,000 | | | 4.06 | September 1, 1999 | August 30, 2014 | |||||||||||||||
100,000 | | | 0.26 | June 30, 2000 | June 29, 2015 | |||||||||||||||
100,000 | | | 0.26 | October 1, 2001 | September 30, 2016 | |||||||||||||||
100,000 | | | 0.26 | June 30, 2002 | June 29, 2017 | |||||||||||||||
50,000 | | | 0.64 | October 1, 2002 | September 30, 2017 | |||||||||||||||
55,000 | | | 1.97 | October 28, 2004 | October 27, 2019 | |||||||||||||||
| | 18,750 | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||||
| | 18,750 | 5.00 | December 31, 2007 | December 30, 2017 | |||||||||||||||
| | 18,750 | 5.00 | December 31, 2008 | December 30, 2018 | |||||||||||||||
| | 18,750 | 10.00 | December 31, 2009 | December 30, 2019 | |||||||||||||||
Shan Li
|
| * | | 4.06 | June 18, 1999 | June 17, 2014 | ||||||||||||||
| * | | 0.13 | September 1, 1999 | August 30, 2014 | |||||||||||||||
| * | | 1.97 | April 28, 2004 | April 27, 2019 | |||||||||||||||
| | * | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||||
| | * | 5.00 | December 31, 2007 | December 30, 2017 | |||||||||||||||
| | * | 5.00 | December 31, 2008 | December 30, 2018 | |||||||||||||||
| | * | 10.00 | December 31, 2009 | December 30, 2019 | |||||||||||||||
Quan Zhou
|
| * | | 1.97 | April 28, 2004 | April 27, 2019 | ||||||||||||||
| | * | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||||
| | * | 5.00 | December 31, 2007 | December 30, 2017 | |||||||||||||||
| | * | 5.00 | December 31, 2008 | December 30, 2018 | |||||||||||||||
| | * | 10.00 | December 31, 2009 | December 30, 2019 | |||||||||||||||
Newtech Ventures Limited / Quan Zhou
|
| * | | US$ | 0.13 | September 1, 1999 | August 30, 2014 | |||||||||||||
Telstra International
|
| | * | (3) | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||
| | * | (3) | 5.00 | December 31, 2007 | December 30, 2017 | ||||||||||||||
| | * | (3) | 5.00 | December 31, 2008 | December 30, 2018 | ||||||||||||||
| | * | (3) | 10.00 | December 31, 2009 | December 30, 2019 | ||||||||||||||
| | * | (3) | 10.00 | April 20, 2010 | April 20, 2020 | ||||||||||||||
Jian Liu
|
* | | | 0.26 | October 1, 2001 | September 30, 2016 | ||||||||||||||
* | | | 0.64 | October 1, 2002 | September 30, 2017 | |||||||||||||||
* | | | 1.97 | October 28, 2004 | October 27, 2019 | |||||||||||||||
| | * | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||||
| | * | 5.00 | December 31, 2007 | December 30, 2017 | |||||||||||||||
| | * | 5.00 | December 31, 2008 | December 30, 2018 | |||||||||||||||
| | * | 10.00 | December 31, 2009 | December 30, 2019 |
168
Number of |
Number of |
Number of |
||||||||||||||||||
Class A |
Class B |
non-voting |
||||||||||||||||||
ordinary |
ordinary |
ordinary |
||||||||||||||||||
shares to be |
shares to be |
shares to be |
Exercise price |
|||||||||||||||||
issued upon |
issued upon |
issued upon |
per ordinary |
|||||||||||||||||
exercise of |
exercise of |
exercise of |
share |
Date of |
||||||||||||||||
options | options | options | (US$) | Date of grant | expiration | |||||||||||||||
Lanying Guan
|
* | | | 1.97 | October 28, 2004 | October 27, 2019 | ||||||||||||||
| | * | 5.00 | December 31, 2006 | December 30, 2016 | |||||||||||||||
| | * | 5.00 | December 31, 2007 | December 30, 2017 | |||||||||||||||
| | * | 5.00 | December 31, 2008 | December 30, 2018 | |||||||||||||||
| | * | US$ | 10.00 | December 31, 2009 | December 30, 2019 | ||||||||||||||
Other individuals as a group
|
3,959,050 | (3) |
* | Upon exercise of all options granted, would beneficially own less than 1.0% of our outstanding ordinary shares. | |
(1) | Represents options granted to Mr. Mo in his capacity as our executive chairman. Pursuant to resolutions passed by our board of directors on August 4, 2010, our board of directors resolved that such options be assigned and allocated to Media Partner and Next Decade. | |
(2) | On August 4, 2010, Media Partner exercised all of its 1,125,000 outstanding and vested stock options to purchase 1,125,000 Class B ordinary shares at an exercise price ranging from US$0.13 per share to US$0.64 per share for an aggregate purchase consideration of US$307,500. | |
(3) | Represents options granted to Bruce J. Akhurst and John Stanhope in their capacity as our directors. Pursuant to resolutions passed by our board of directors on April 20, 2010, our board of directors resolved that such options be assigned and allocated to Telstra International. Mr. Akhurst and Mr. Stanhope disclaim beneficial ownership of the options held by Telstra International. | |
(3) | Includes special share options exercisable into 2,426,550 non-voting ordinary shares which were granted to individuals other than our directors and executive officers. |
| attract and retain the best available personnel; | |
| to provide an additional incentive to our employees, directors and consultants; and | |
| to promote the success of the Companys business. |
| any full-time or part-time employees, executives or officers of us, our parent or any of our subsidiaries; | |
| any directors, including non-executive directors and independent non-executive directors, of us, our parent or any of our subsidiaries; | |
| any advisers, consultants and agents to us or any of our subsidiaries; and | |
| such other persons who, in the sole opinion of our board of directors or its designated committee, has made contributions to the business or other development of us. |
169
170
171
| each person known to us to own beneficially more than 5.0% of our ordinary shares; | |
| our directors and executive officers as a group; and | |
| each selling shareholder participating in this offering. |
Percentage |
||||||||||||||||||||||||||||
of votes |
||||||||||||||||||||||||||||
Ordinary shares |
Ordinary shares |
held |
||||||||||||||||||||||||||
beneficially owned |
Ordinary shares to be |
beneficially owned |
after this |
|||||||||||||||||||||||||
prior to this offering (1) | sold in this offering (1)(2) | after this offering (1)(2) | offering (1) | |||||||||||||||||||||||||
Number (3) | Percent (3) | Number (3) | Percent (3) | Number (3) | Percent (3) | Percent (3) | ||||||||||||||||||||||
Principal and Selling Shareholders:
|
||||||||||||||||||||||||||||
Telstra International Holdings
Limited (4)
|
40,747,044 | 50.5 | % | 7,304,008 | 9.1 | % | | | | |||||||||||||||||||
Media Partner Technology
Limited (5)
|
11,355,645 | 14.1 | % | | | 11,355,645 | 13.9 | % | 34.5 | % | ||||||||||||||||||
Next Decade Investments
Limited (5)(13)
|
11,985,145 | 14.9 | % | | | 14,849,345 | 18.2 | % | 37.3 | % | ||||||||||||||||||
IDG Technology Venture Investment, Inc. and its
affiliates (6)
|
10,184,405 | 12.6 | % | 3,441,288 | 4.3 | 6,743,117 | 8.3 | % | 5.2 | % | ||||||||||||||||||
General Atlantic Mauritius
Limited (7)(13)
|
| | | | 15,347,720 | 18.8 | % | 4.7 | % | |||||||||||||||||||
Apax (8)(13)
|
| | | | 15,347,720 | 18.8 | % | 4.7 | % | |||||||||||||||||||
Directors and Executive
Officers (9):
|
||||||||||||||||||||||||||||
Mr. Mo (10)
|
23,588,290 | 29.3 | | | 26,452,490 | 32.4 | % | 72.5 | % | |||||||||||||||||||
Shan
Li (11)
|
2,770,985 | 3.4 | | | 2,869,749 | 3.5 | % | 8.4 | % | |||||||||||||||||||
Quan
Zhou(12)
|
* | * | | | * | * | * | |||||||||||||||||||||
Bruce J. Akhurst
|
* | * | * | * | | | | |||||||||||||||||||||
John Stanhope
|
* | * | * | * | | | | |||||||||||||||||||||
Jeff Xuesong
Leng(7)
|
| | | | 15,347,720 | 18.8 | % | 4.7 | % | |||||||||||||||||||
Thomas Nicholas
Hall (8)
|
| | | | 15,347,720 | 18.8 | % | 4.7 | % | |||||||||||||||||||
Richard Jiangong Dai
|
* | * | | | * | * | * | |||||||||||||||||||||
Lanying Guan
|
* | * | | | * | * | * | |||||||||||||||||||||
Jian Liu
|
* | * | | | * | * | * | |||||||||||||||||||||
All directors and executive officers as a group
|
27,565,525 | 34.2 | % | * | * | 61,223,929 | 75.0 | % | 90.7 | % |
* | Less than 1.0% of total outstanding shares. | |
(1) | Telstra International has agreed to sell 15,347,720 Class A ordinary shares to General Atlantic, 15,347,720 Class A ordinary shares to Apax, 888,888 Class A ordinary shares to Next Decade, one of our corporate shareholders, which is held in an irrevocable discretionary trust established by Mr. Mo, our founder and executive chairman, and 98,764 Class A ordinary shares to Digital Link, a company wholly owned by Shan Li, a director of our company, in the Telstra Private Placement, subject to certain conditions. In the event the underwriters of this offering fail to exercise their over-allotment option under the underwriting agreement, Telstra International has agreed to sell to General Atlantic and Apax, and General Atlantic and Apax have agreed to buy from Telstra International, 879,972 and 879,972 additional Class A ordinary shares, respectively, at the initial public offering price in a transaction exempt from registration under the Securities Act. See Certain Relationships and Related Party TransactionsTelstra Private Placement. |
172
(2) | Assumes that the underwriters have not exercised their over-allotment option. | |
(3) | The number of ordinary shares outstanding used in calculating the percentage for each listed person includes the ordinary shares subject to options exercisable by such person within 60 days after the date of this prospectus. The calculation of this number also assumes the conversion of the shares of all of our existing shareholders, except IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P., into Class B ordinary shares immediately prior to the closing of this offering. | |
(4) | Telstra International, a Bermuda company, is wholly owned by Telstra Holdings Proprietary Limited, which is in turn wholly owned by Telstra Corporation Limited, a company listed on the Australian Stock Exchange and the New Zealand Stock Exchange. The address of Telstra International is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. | |
(5) | All of the shares of Media Partner, a British Virgin Islands company, and Next Decade, a British Virgin Islands company, are held in irrevocable discretionary family trusts established by Mr. Mo, our founder and executive chairman. The address of Media Partner and Next Decade is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. See note (10) below. | |
(6) | IDG Technology, a Massachusetts corporation, is wholly owned by International Data Group Inc., a Massachusetts corporation, which is controlled by Patrick McGovern, the majority shareholder, founder and chairman of International Data Group Inc. The address of IDG Technology is 5 Speen Street, Framingham MA 01701, U.S.A. On March 26, 2010, IDG Technology transferred 5,344,856 ordinary shares and 246,582 ordinary shares to IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P., respectively. Upon conversion of our ordinary shares into Class A and Class B ordinary shares, IDG Technology will hold 4,592,967 Class B ordinary shares, and IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P., together, will hold 5,591,438 Class A ordinary shares. 15,264 Class A ordinary shares are held indirectly by Quan Zhou, our director, through IDG-Accel China Capital Investors L.P. IDG-Accel China Capital L.P. is a Cayman Islands exempted limited partnership located at Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman, KY1-9002 Cayman Islands and is a fund affiliated with IDG Technology. IDG-Accel China Capital Investors L.P. is a Cayman Islands exempted limited partnership located at Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman, KY1-9002 Cayman Islands and is also a fund affiliated with IDG Technology. | |
(7) | Includes 15,347,720 Class A ordinary shares that General Atlantic has agreed to purchase from Telstra International in the Telstra Private Placement. General Atlantic GenPar (Mauritius) Limited, or GenPar, controls the management of General Atlantic by virtue of its ownership of a majority of General Atlantics voting shares. General Atlantic LLC owns all the shares of GenPar. There are twenty-four managing directors of General Atlantic LLC. Upon consummation of the Telstra Private Placement, Jeff Xuesong Leng, a managing director of General Atlantic LLC, will be appointed to our board of directors. Jeff Xuesong Leng disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. See Certain Relationships and Related Party TransactionsTelstra Private Placement. The mailing address of General Atlantic is 6th Floor, Tower A, 1 CyberCity, Ebene, Mauritius. | |
(8) | Includes 3,846,216 Class A ordinary shares, 7,242,737 Class A ordinary shares and 4,258,767 Class A ordinary shares that each of Hunt 7-A Guernsey L.P. Inc, Hunt 7-B Guernsey Inc and Hunt 6-A Guernsey Inc has agreed to purchase from Telstra International in the Telstra Private Placement. Hunt 7-A GP Limited controls the management of Hunt 7-A Guernsey L.P. Inc by virtue of its limited partnership agreement; Hunt 7-A GP Limited controls the management of Hunt 7-B Guernsey L.P. Inc by virtue of its limited partnership agreement and Hunt 6-A GP Limited controls the management of Hunt 6-A Guernsey L.P. Inc by virtue of its limited partnership agreement. Upon consummation of the Telstra Private Placement, one Apax designee, Thomas Nicholas Hall, will be appointed to our board of directors. Such Apax designee disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. See Certain Relationships and Related Party TransactionsPrivate Placement. The mailing address of each Apax entity is Third Floor, Royal Bank Place, 1 Glategny Esplanade, St Peter Port, Guernsey GY1 2HJ. | |
(9) | The address of our current directors and executive officers is c/o 8th Floor, Tower 3, Xihuan Plaza, No. 1 Xizhimenwai Avenue, Xicheng District, Beijing 100044 China. | |
(10) | Includes 11,985,145 ordinary shares held by Next Decade, 11,355,645 ordinary shares held by Media Partner and 247,500 ordinary shares subject to options exercisable by Mr. Mo within 60 days after the date of this prospectus. The equity interests of Mr. Mo, our founder and executive chairman, in Next Decade and Media Partner are held in two irrevocable discretionary trusts established by Mr. Mo for the benefit of his designated family members. Mr. Mo, as a part of his estate planning, through an irrevocable discretionary family trust arrangement, transferred to this family trust all of his equity ownership in Next Decade, which holds of record an aggregate of 11,985,145 ordinary shares of our share capital. Mr. Mo established this family trust by a deed of settlement, dated June 8, 2006, as amended, as the ultimate holder of the ordinary shares held of record by Next Decade. The family trust has been established for the benefit of Mr. Mos designated family members, |
173
including a corporate entity wholly-owned and controlled by one of his family members, as well as other persons and corporations that may be so designated under the deed of settlement, and has a trust period of 100 years unless earlier terminated by the trustee subject to any applicable rule against perpetuities. Mr. Mo continues to act as the protector of the trust. Credit Suisse Trust Limited acts as the trustee of the trust. | ||
In addition, Mr. Mo, as a part of his estate planning, through a similar irrevocable discretionary family trust arrangement, transferred to his family trust all of his equity ownership in Media Partner, which holds of record an aggregate of 11,355,645 ordinary shares of our share capital. Mr. Mo established this family trust by a deed of settlement, dated April 16, 2010, as the ultimate holder of the ordinary shares held of record by Media Partner. The family trust has been established for the benefit of Mr. Mos designated family members, including a corporate entity wholly-owned and controlled by one of his family members, as well as other persons or corporations that may be so designated under the deed of settlement, and has a trust period of 150 years unless earlier terminated by the trustee subject to any applicable rule against perpetuities. Mr. Mo continues to act as the protector of the trust. Deutsche Bank International Trust Co. (Cayman) Limited acts as the trustee of the trust. | ||
Upon the closing of the Telstra Private Placement, which will occur simultaneously with the closing of this offering, Next Media will also acquire 888,888 Class A ordinary shares from Telstra International. | ||
(11) | Includes 2,770,985 ordinary shares held by Digital Link, a British Virgin Islands company, which is wholly owned by Mr. Shan Li, a director of our Company. The address of Digital Link is Apt 3B, Taggart Tower, 109 Repulse Bay Road, Hong Kong. Upon the closing of the Telstra Private Placement, which will occur simultaneously with the closing of this offering, Digital Link will also acquire 98,764 Class A ordinary shares from Telstra International. | |
(12) | Includes ordinary shares held by IDG-Accel China Capital Investors L.P., a Cayman Islands exempted limited partnership, which is partially owned by Mr. Quan Zhou, a director of our Company. The address of IDG-Accel China Capital Investors L.P. is Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman, KY1-9002 Cayman Islands. IDG-Accel China Capital Investors L.P. is a fund affiliated with IDG Technology. | |
(13) | In connection with the Telstra Private Placement, General Atlantic and Apax granted Next Decade an option to purchase 987,656 Class A ordinary shares from each of General Atlantic and Apax, if the Telstra Private Placement is consummated at the initial offering price as disclosed on the cover of this prospectus. The option will expire on the second anniversary of the completion of the Telstra Private Placement and may only be exercised in full and not in part. The exercise price for the option is the initial public offering price of each Class A ordinary share, plus 5.0% per annum on such price, to the date of exercise. The number of shares subject to the options and the exercise price are subject to customary anti-dilution adjustments. If the closing of this offering has not occurred on or before September 30, 2010 (or the date that is three business days after September 30, 2010 if an underwriting agreement has been entered into in the three business days prior to September 30, 2010 and is not terminated), the Telstra Private Placement contemplates an alternative pricing for the private sale as disclosed in the section entitled Certain Relationships and Related Party Transactions Telstra Private Placement Share Purchase Agreement. |
174
175
| three years after the effective date of this offering; or | |
| such time at which all registrable securities held by such holder can be sold in any three-month period without registration in compliance with Rule 144 of the Securities Act. |
176
177
178
179
180
181
182
183
| is a company that conducts its business outside the Cayman Islands; | |
| is exempted from certain requirements of the Cayman Companies Law, including the filing of an annual return of its shareholders with the Registrar of Companies; | |
| does not have to make its register of shareholders open to inspection; and | |
| may obtain an undertaking against the imposition of any future taxation. |
184
185
186
187
| increase our capital by such sum, to be divided into shares of such amounts, as the resolution may prescribe; | |
| consolidate and divide all or any of our share capital into shares of larger amount than our existing shares; |
188
| cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person, and diminish the amount of our share capital by the amount of the shares so cancelled subject to the provisions of the Cayman Companies Law; | |
| sub-divide our shares or any of them into shares of a smaller amount than is fixed by our amended and restated memorandum of association, subject nevertheless to the Cayman Companies Law, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such subdivision, one or more of the shares may have any such preferred or other special rights over or may have such deferred rights or be subject to any such restrictions as compared with the others as we have power to attach to unissued or new shares; and | |
| divide shares into several classes and, without prejudice to any special rights previously conferred on the holders of existing shares, attach to the shares respectively any preferential, deferred, qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination in general meeting may be determined by our directors. |
| the instrument of transfer is lodged with us accompanied by the certificate for the share to which it relates and such other evidence as our directors may reasonably require to show the right of the transferor to make the transfer; | |
| the instrument of transfer is in respect of only one class of share; | |
| the instrument of transfer is properly stamped (in circumstances where stamping is required); | |
| in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; and | |
| a fee of such maximum sum as the New York Stock Exchange may determine to be payable or such lesser sum as our directors may from time to time require is paid to us for such registration. |
189
190
| all checks or warrants in respect of dividends of such shares, not being less than three in number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years prior to the publication of the advertisement and during the three months referred to in third bullet point below; | |
| we have not during that time received any indication of the whereabouts or existence of the shareholder or person entitled to such shares by death, bankruptcy or operation of law; and | |
| we have caused an advertisement to be published in newspapers in the manner stipulated by our amended and restated articles of association, giving notice of our intention to sell these shares, and a period of three months has elapsed since such advertisement and the New York Stock Exchange has been notified of such intention. |
191
192
| the company is not proposing to act illegally or ultra vires and the statutory provisions as to majority vote have been complied with; | |
| the shareholders have been fairly represented at the meeting in question; | |
| the arrangement is such as a businessman would reasonably approve; and | |
| the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman Companies Law or that would amount to a fraud on the minority. |
| a company is acting or proposing to act illegally or beyond the scope of its authority; | |
| the act complained of, although not beyond the scope of its authority, could be effected duly if authorized by more than a simple majority vote which has not been obtained; and | |
| those who control the company are perpetrating a fraud on the minority. |
193
| require a majority of our directors to be independent; or | |
| provide for cumulative voting. While there is nothing under the Companies Law of the Cayman Islands which specifically prohibits or restricts the creation of cumulative voting rights for the election of our directors, unlike the requirement under Delaware law that cumulative voting for the election of directors is permitted only if expressly authorized in the certificate of incorporation, it is not a concept that is accepted as a common practice in the Cayman Islands, and we have made no provision in our amended and restated articles of association to allow cumulative voting for such elections. |
194
| the designation of the series; | |
| the number of shares of the series; | |
| the dividend rights, dividend rates, conversion rights, voting rights; and | |
| the rights and terms of redemption and liquidation preferences. |
195
196
| Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositarys expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution. | |
| Ordinary shares. In the case of a distribution in ordinary shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such ordinary shares. Only whole ADSs will be issued. Any ordinary shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto. | |
| Rights to receive additional ordinary shares. In the case of a distribution of rights to subscribe for additional ordinary shares or other rights, if we provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing such rights. However, if we do not furnish such evidence, the depositary may: |
| sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled thereto; or | |
| if it is not practicable to sell such rights, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing. |
| Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash. |
197
198
| temporary delays caused by closing our transfer books or those of the depositary or the deposit of ordinary shares in connection with voting at a shareholders meeting, or the payment of dividends; | |
| the payment of fees, taxes and similar charges; or | |
| compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities. |
| to receive any distribution on or in respect of ordinary shares, | |
| to give instructions for the exercise of voting rights at a meeting of holders of ordinary shares, | |
| to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR, or | |
| receive any notice or to act in respect of other matters |
199
| a fee of U.S.$1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs; | |
| a fee of up to U.S.$0.05 per ADS for any cash distribution made pursuant to the deposit agreement; | |
| a fee of up to U.S.$0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision); | |
| reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of the depositarys agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in |
200
connection with the servicing of the ordinary shares or other deposited securities, the delivery of deposited securities or otherwise in connection with the depositarys or its custodians compliance with applicable law, rule or regulation (which charge shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions); |
| a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were ordinary shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto; | |
| stock transfer or other taxes and other governmental charges; | |
| cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of ordinary shares; | |
| transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities; and | |
| expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars. |
201
(1) | amend the form of ADR; | |
(2) | distribute additional or amended ADRs; | |
(3) | distribute cash, securities or other property it has received in connection with such actions; | |
(4) | sell any securities or property received and distribute the proceeds as cash; or | |
(5) | none of the above. |
202
| payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of ordinary shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement; | |
| the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and | |
| compliance with such regulations as the depositary may establish consistent with the deposit agreement. |
203
| any present or future law, rule, regulation, fiat, order or decree of the United States, the Cayman Islands, The Peoples Republic of China (including the Hong Kong Special Administrative Region) or any other country, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism or other circumstance beyond our, the depositarys or our respective agents control shall prevent, delay or subject to any civil or criminal penalty any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation, voting); | |
| it exercises or fails to exercise discretion under the deposit agreement or the ADRs; | |
| it performs its obligations under the deposit agreement and ADRs without gross negligence or bad faith; | |
| it takes any action or refrains from taking any action in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information; or | |
| it relies upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. |
204
205
| be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs, and | |
| appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof. |
206
| any ordinary shares or depositary shares representing ordinary shares; | |
| any shares of our subsidiaries or controlled affiliates or depositary shares representing those shares; or | |
| any securities that are substantially similar to the ordinary shares or depositary shares referred to above, including any securities that are convertible into, exchangeable for or otherwise represent the right to receive ordinary shares, other shares or depositary shares referred to above; |
207
| 1.0% of the then outstanding ordinary shares, in the form of ADSs or otherwise, which will equal approximately 760,657 ordinary shares immediately after this offering; or | |
| the average weekly trading volume of our ordinary shares, in the form of ADSs or otherwise, during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC. |
208
209
210
211
| dealers in securities or currencies; | |
| traders in securities that elect to use a mark-to-market method of accounting for securities holdings; | |
| banks or other financial institutions; | |
| insurance companies; | |
| tax-exempt organizations; |
212
| partnerships and other entities treated as partnerships for U.S. federal income tax purposes or persons holding ordinary shares or ADSs through any such entities; | |
| real estate investment trusts; | |
| regulated investment companies; | |
| persons that hold ADSs as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment; | |
| U.S. holders (as defined below) whose functional currency for tax purposes is not the U.S. dollar; | |
| persons liable for alternative minimum tax; or | |
| persons who actually or constructively own 10.0% or more of the total combined voting power of all classes of our shares (including ADSs) entitled to vote. |
| a citizen or resident of the United States for U.S. federal income tax purposes; | |
| a corporation, or other entity taxable as a corporation, that was created or organized in or under the laws of the United States or any political subdivision of the United States; | |
| an estate the income of which is subject to U.S. federal income tax regardless of its source; or | |
| a trust, if (a) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect to be treated as a U.S. person. |
213
214
215
216
217
Number |
||||
Underwriters
|
of ADSs | |||
Deutsche Bank Securities Inc.
|
||||
Goldman Sachs (Asia) L.L.C.
|
||||
Total
|
2,933,238 | |||
218
Total fees | ||||||||||||
Without exercise of |
With full exercise |
|||||||||||
over-allotment |
of over-allotment |
|||||||||||
Fee per ADS | option | option | ||||||||||
Discounts and commissions paid by us
|
US$ | US$ | US$ | |||||||||
Discounts and commissions paid by the selling shareholders
|
US$ | US$ | US$ |
219
220
221
222
223
224
225
226
SEC registration fee
|
US$ | 10,222 | ||
FINRA filing fee
|
10,454 | |||
New York Stock Exchange listing fee
|
125,000 | |||
Legal fees and expenses (other than the selling shareholders)
|
1,248,785 | |||
Accounting fees and expenses
|
851,765 | |||
Printing fees
|
400,000 | |||
Other fees and expenses
|
506,547 | |||
Total
|
US$ | 3,157,714 | * | |
* | Of which US$1.9 million has already been expensed by us in the first two quarters of 2010. |
227
228
229
230
F-2 | ||||
F-3 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
Unaudited Interim Condensed Consolidated Financial Statements
|
||||
F-39 | ||||
F-41 | ||||
F-42 | ||||
F-43 |
F-1
F-2
As at December 31, | ||||||||||
Notes | 2008 | 2009 | ||||||||
US$ | US$ | |||||||||
ASSETS
|
||||||||||
Current assets:
|
||||||||||
Cash and cash equivalents
|
63,022 | 92,239 | ||||||||
Short-term investments
|
4 | 24,873 | 28,558 | |||||||
Accounts receivable (net of allowance of US$3,330 and US$4,432
for 2008 and 2009, respectively)
|
5 | 11,350 | 13,985 | |||||||
Prepayment and other current assets
|
6 | 1,400 | 1,952 | |||||||
Amounts due from related parties
|
15 | 786 | 7,629 | |||||||
Deferred tax assets, current
|
13 | 1,430 | 471 | |||||||
Inventories
|
| 4,390 | ||||||||
Total current assets
|
102,861 | 149,224 | ||||||||
Non-current assets:
|
||||||||||
Property and equipment, net
|
7 | 3,841 | 4,220 | |||||||
Deferred tax assets, non current
|
13 | | 507 | |||||||
Other non-current assets
|
544 | 543 | ||||||||
Total Non-current assets
|
4,385 | 5,270 | ||||||||
Total assets
|
107,246 | 154,494 | ||||||||
F-3
As at December 31, | ||||||||||
Notes | 2008 | 2009 | ||||||||
US$ | US$ | |||||||||
LIABILITIES AND SHAREHOLDERS EQUITY
|
||||||||||
Current liabilities:
|
||||||||||
Deferred revenue
|
8 | 15,953 | 28,795 | |||||||
Accrued expenses and other liabilities
|
9 | 29,399 | 37,342 | |||||||
Dividend payable
|
10 | 24,200 | 43,906 | |||||||
Share based compensation liability
|
14 | 9,887 | 11,129 | |||||||
Income tax payable
|
13 | 428 | 3,134 | |||||||
Total current liabilities
|
79,867 | 124,306 | ||||||||
Deferred tax liability, non-current
|
13 | 13,991 | 5,687 | |||||||
Total liabilities
|
93,858 | 129,993 | ||||||||
Commitments and contingencies
|
17 | |||||||||
Shareholders equity:
|
||||||||||
Ordinary shares (par value of Hong Kong Dollar (HK$) 1 per share
at December 31, 2008 and 2009, respectively;
Authorized600,000,000 shares at December 31,
2008 and 2009 respectively; Issued and
outstanding74,020,217 and 73,932,217 shares at
December 31, 2008 and 2009, respectively)
|
11 | 9,501 | 9,489 | |||||||
Additional paid-in capital
|
35,707 | 9,279 | ||||||||
Accumulated other comprehensive income
|
5,582 | 5,670 | ||||||||
Accumulated deficits
|
(37,507 | ) | | |||||||
Total SouFun Holdings Limiteds equity
|
13,283 | 24,438 | ||||||||
Noncontrolling interests
|
105 | 63 | ||||||||
Total shareholders equity
|
13,388 | 24,501 | ||||||||
Total liabilities and shareholders equity
|
107,246 | 154,494 | ||||||||
F-4
For the Year Ended December 31, | ||||||||||||||
Notes | 2007 | 2008 | 2009 | |||||||||||
US$ | US$ | US$ | ||||||||||||
Revenues
|
||||||||||||||
Marketing services
|
46,552 | 86,252 | 102,367 | |||||||||||
Listing services
|
9,885 | 16,070 | 17,559 | |||||||||||
Other value-added services and products
|
1,439 | 1,802 | 7,123 | |||||||||||
Total revenues
|
57,876 | 104,124 | 127,049 | |||||||||||
Cost of revenues
|
||||||||||||||
Cost of services
|
(12,630 | ) | (22,162 | ) | (26,484 | ) | ||||||||
Cost of other value-added services and products
|
| | (4,863 | ) | ||||||||||
Total cost of revenues
|
(12,630 | ) | (22,162 | ) | (31,347 | ) | ||||||||
Gross profit
|
45,246 | 81,962 | 95,702 | |||||||||||
Operating expenses:
|
||||||||||||||
Selling expenses
|
(13,221 | ) | (18,708 | ) | (25,186 | ) | ||||||||
General and administrative expenses
|
(12,158 | ) | (19,857 | ) | (22,176 | ) | ||||||||
Operating income
|
19,867 | 43,397 | 48,340 | |||||||||||
Foreign exchange gain (loss)
|
8 | (2,826 | ) | (59 | ) | |||||||||
Interest income (Including related party amount of nil, nil and
US$85 for the years ended December 31, 2007, 2008 and 2009,
respectively)
|
15 | 707 | 1,221 | 1,205 | ||||||||||
Realized gaintrading securities
|
4 | | | 195 | ||||||||||
Government grants
|
211 | 360 | 730 | |||||||||||
Income before income tax
|
20,793 | 42,152 | 50,411 | |||||||||||
Income tax (expense) benefit
|
13 | (8,457 | ) | (18,805 | ) | 2,199 | ||||||||
Net income
|
12,336 | 23,347 | 52,610 | |||||||||||
Net income (loss) attributable to noncontrolling interests
|
125 | (34 | ) | (42 | ) | |||||||||
Net income attributable to SouFun Holdings Limited shareholders
|
12,211 | 23,381 | 52,652 | |||||||||||
Earnings per share
|
||||||||||||||
Basic
|
19 | 0.16 | 0.32 | 0.71 | ||||||||||
Diluted
|
19 | 0.16 | 0.30 | 0.68 | ||||||||||
Weighted average number of ordinary shares outstanding:
|
||||||||||||||
Basic
|
19 | 74,020,217 | 74,020,217 | 73,986,129 | ||||||||||
Diluted
|
19 | 76,997,410 | 77,092,197 | 77,418,960 |
F-5
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net income
|
12,336 | 23,347 | 52,610 | |||||||||
Adjustments to reconcile net income to net cash generated from
operating activities:
|
||||||||||||
Share-based compensation
|
2,217 | 2,717 | 4,140 | |||||||||
Depreciation of property and equipment
|
410 | 1,051 | 1,213 | |||||||||
Deferred tax expense (benefit)
|
5,589 | 5,550 | (7,860 | ) | ||||||||
Allowance for doubtful accounts
|
1,152 | 3,220 | 4,430 | |||||||||
Unrealized foreign exchange loss
|
| 2,824 | 41 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Increase in accounts receivable
|
(2,855 | ) | (9,345 | ) | (7,053 | ) | ||||||
Increase in prepayments and other current assets
|
(411 | ) | (243 | ) | (551 | ) | ||||||
Increase in other non-current assets
|
(566 | ) | (15 | ) | (52 | ) | ||||||
Increase in accrued expenses and other liabilities
|
4,598 | 14,864 | 7,912 | |||||||||
Increase in deferred revenue
|
8,151 | 132 | 12,821 | |||||||||
Change in inventories
|
| | (4,390 | ) | ||||||||
(Decrease) increase in income tax payable
|
(128 | ) | 466 | 2,705 | ||||||||
Net cash generated from operating activities
|
30,493 | 44,568 | 65,966 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Payment for short-term investments
|
(23,158 | ) | (24,047 | ) | (35,864 | ) | ||||||
Proceeds received from maturity of short-term investments
|
17,203 | 23,339 | 32,204 | |||||||||
Acquisition of property and equipment
|
(1,651 | ) | (1,967 | ) | (1,642 | ) | ||||||
Proceeds from disposal of property and equipment
|
| | 107 | |||||||||
Change in amount due from related parties
|
10 | 77 | (6,839 | ) | ||||||||
Net cash used in investing activities
|
(7,596 | ) | (2,598 | ) | (12,034 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Repurchase of shares and vested options
|
| | (548 | ) | ||||||||
Payment of dividends
|
(2,647 | ) | (16,210 | ) | (24,241 | ) | ||||||
Net cash used in financing activities
|
(2,647 | ) | (16,210 | ) | (24,789 | ) | ||||||
Exchange rate effect on cash and cash equivalents
|
1,524 | 3,194 | 74 | |||||||||
Net increase in cash and cash equivalents
|
21,774 | 28,954 | 29,217 | |||||||||
Cash and cash equivalents at beginning of year
|
12,294 | 34,068 | 63,022 | |||||||||
Cash and cash equivalents at end of year
|
34,068 | 63,022 | 92,239 | |||||||||
Supplemental schedule of cash flow information:
|
||||||||||||
Income tax paid
|
131 | 307 | 1,657 | |||||||||
Acquisition of property and equipment through utilization of
deposits
|
| 96 | 52 | |||||||||
Non-monetary exchange of services for prepaid cards
|
| | 9,252 |
F-6
Total SouFun Holdings Limiteds Equity | ||||||||||||||||||||||||||||
Accumulated |
||||||||||||||||||||||||||||
Number of |
Additional |
Other |
||||||||||||||||||||||||||
Ordinary |
Ordinary |
Paid-in |
Comprehensive |
Accumulated |
Noncontrolling |
|||||||||||||||||||||||
Shares | Shares | Capital | Income | Deficits | Interests | Total Equity | ||||||||||||||||||||||
Balance as of January 1, 2007
|
74,020,217 | 9,501 | 73,531 | 459 | (73,099 | ) | 14 | 10,406 | ||||||||||||||||||||
Comprehensive income
|
||||||||||||||||||||||||||||
Net income for the year
|
| | | | 12,211 | | 12,211 | |||||||||||||||||||||
Foreign currency translation adjustments
|
| | | 1,764 | | | 1,764 | |||||||||||||||||||||
Total comprehensive income
|
13,975 | |||||||||||||||||||||||||||
Share-based compensation
|
| | 1,274 | | | | 1,274 | |||||||||||||||||||||
Dividend declared
|
| (41,070 | ) | | | | (41,070 | ) | ||||||||||||||||||||
Noncontrolling interests
|
| | | | | 125 | 125 | |||||||||||||||||||||
Balance as of December 31, 2007
|
74,020,217 | 9,501 | 33,735 | 2,223 | (60,888 | ) | 139 | (15,290 | ) | |||||||||||||||||||
Comprehensive income
|
||||||||||||||||||||||||||||
Net income for the year
|
| | | | 23,381 | | 23,381 | |||||||||||||||||||||
Foreign currency translation adjustments
|
| | | 3,359 | | | 3,359 | |||||||||||||||||||||
Total comprehensive income
|
26,740 | |||||||||||||||||||||||||||
Share-based compensation
|
| | 1,972 | | | | 1,972 | |||||||||||||||||||||
Noncontrolling interests
|
| | | | | (34 | ) | (34 | ) | |||||||||||||||||||
Balance as of December 31, 2008
|
74,020,217 | 9,501 | 35,707 | 5,582 | (37,507 | ) | 105 | 13,388 | ||||||||||||||||||||
Comprehensive income
|
||||||||||||||||||||||||||||
Net income for the year
|
| | | | 52,652 | | 52,652 | |||||||||||||||||||||
Foreign currency translation adjustments
|
| | | 88 | | | 88 | |||||||||||||||||||||
Total comprehensive income
|
52,740 | |||||||||||||||||||||||||||
Share-based compensation
|
| | 2,898 | | | | 2,898 | |||||||||||||||||||||
Repurchase of ordinary shares
|
(88,000 | ) | (12 | ) | | | (429 | ) | | (441 | ) | |||||||||||||||||
Repurchase of vested options
|
| | (107 | ) | | | | (107 | ) | |||||||||||||||||||
Dividend declared
|
| | (29,219 | ) | | (14,716 | ) | | (43,935 | ) | ||||||||||||||||||
Noncontrolling interests
|
| | | | | (42 | ) | (42 | ) | |||||||||||||||||||
Balance as of December 31, 2009
|
73,932,217 | 9,489 | 9,279 | 5,670 | | 63 | 24,501 | |||||||||||||||||||||
F-7
1. | ORGANIZATION AND BASIS OF PRESENTATION |
Percentage of |
||||||||||
Date of |
Place of |
Ownership by the |
||||||||
Company
|
Establishment
|
Establishment
|
Company
|
Principal Activities
|
||||||
Selovo Investments Limited (Selovo)
|
August 10, 2007 |
British Virgin Islands (BVI) |
100% | Investment holding | ||||||
Pendiary Investments Limited (Pendiary)
|
August 16, 2007 | BVI | 100% | Investment holding | ||||||
Max Impact Investments Limited (Max Impact)
|
October 26, 2007 | Hong Kong | 100% | Investment holding | ||||||
Bravo Work Investments limited (Bravo Work)
|
October 29, 2007 | Hong Kong | 100% | Investment holding | ||||||
China Index Academy Limited (China Index)
|
August 7, 2000 | Hong Kong | 100% | Investment holding | ||||||
Beijing SouFun Information Consultancy Co., Ltd. (Beijing
Information)
|
August 5, 1999 | PRC | 90% | Provision of technology and information services | ||||||
Shanghai SouFun Information Co., Ltd (SouFun
Shanghai)
|
May 31, 2000 | PRC | 100% | Provision of technology and information consultancy services | ||||||
SouFun Information (Shenzhen) Co., Ltd (SouFun
Shenzhen)
|
June 23, 2000 | PRC | 100% | Provision of technology and information consultancy services | ||||||
SouFun Information (Tianjin) Co Ltd (SouFun Tianjin)
|
March 2, 2001 | PRC | 100% | Provision of technology and information consultancy services |
F-8
Percentage of |
||||||||||
Date of |
Place of |
Ownership by the |
||||||||
Company
|
Establishment
|
Establishment
|
Company
|
Principal Activities
|
||||||
SouFun Media Technology (Beijing) Co., Ltd. (SouFun
Media)
|
November 28, 2002 | PRC | 100% | Provision of technology and information services | ||||||
SouFun.Information (Guangzhou) Co. Ltd, (SouFun
Guangzhou)
|
November 28, 2002 | PRC | 100% | Provision of technology and information consultancy services | ||||||
Beijing SouFun Network Technology Co., Ltd. (SouFun
Network)
|
March 16, 2006 | PRC | 100% | Provision of technology and information services | ||||||
Zhongzhishizheng Data Technology (Beijing) Co., Ltd.
(Beijing Zhongzhi)
|
June 5, 2007 | PRC | 100% | Provision of technology and information services | ||||||
Beijing Jia Tian Xia Advertising Co., Ltd. (Beijing
Advertising)
|
September 1, 2000 | PRC | Nil | Provision of marketing services and listing services | ||||||
Beijing SouFun Internet Information Service Co., Ltd.
(Beijing Internet)
|
December 17, 2003 | PRC | Nil | Provision of marketing services and listing services | ||||||
Beijing China Index Information Co., Ltd. (Beijing China
Index)
|
November 8, 2004 | PRC | Nil | Provision of other value-added services and products | ||||||
Shanghai Jia Biao Tang Advertising Co., Ltd. (Shanghai JBT
Advertising)
|
July 7, 2005 | PRC | Nil | Provision of marketing services and listing services | ||||||
Beijing SouFun Science and Technology Development Co., Ltd.
(Beijing Technology)
|
March 14, 2006 | PRC | Nil | Provision of marketing services and listing services |
F-9
Percentage of |
||||||||||
Date of |
Place of |
Ownership by the |
||||||||
Company
|
Establishment
|
Establishment
|
Company
|
Principal Activities
|
||||||
Shanghai China Index Consultancy Co., Ltd. (Shanghai China
Index)
|
December 12, 2006 | PRC | Nil | Provision of other value-added services and products | ||||||
Shanghai SouFun Advertising Co., Ltd. (Shanghai
Advertising)
|
December 12, 2006 | PRC | Nil | Provision of marketing services and listing services | ||||||
Beijing Century Jia Tian Xia Technology Development Co., Ltd.
(Beijing JTX Technology)
|
December 21, 2006 | PRC | Nil | Provision of marketing services and listing services | ||||||
Tianjin Jia Tian Xia Advertising Co., Ltd. (Tianjin JTX
Advertising)
|
November 22, 2007 | PRC | Nil | Provision of marketing services and listing services | ||||||
Tianjin Xin Rui Jia Tian Xia Advertising Co., Ltd.
(Tianjin Xin Rui)
|
September 1, 2009 | PRC | Nil | Provision of marketing services and listing services | ||||||
Beijing Li Tian Rong Ze Science &Technology
Development Co. Ltd. (Beijing Li Tian Rong Ze)
|
September 10, 2009 | PRC | Nil | Provision of marketing services and listing services |
F-10
F-11
| the WOFEs have unilateral discretion in setting the technical service fees charged to the PRC Domestic Entities; | |
| the WOFEs are obligated to provide financial support to the PRC Domestic Entities in the event the PRC Domestic Entities incur losses; | |
| the annual budget of the PRC Domestic Entities should be assessed and approved by the WOFEs; | |
| the legal shareholders agree to remit any dividends, received from the PRC Domestic Entities, to the WOFEs; and | |
| the PRC Domestic Entities are obligated to transfer their entire retained earnings after deduction of PRC income tax to the WOFEs upon the WOFEs request. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-12
F-13
Category
|
Estimated Useful Life | Estimated Residual Value | ||||
Office equipment
|
5 years | 5-10 | % | |||
Motor vehicles
|
5 years | 5 | % | |||
Leasehold improvement
|
shorter of lease term or 5 years | |
F-14
F-15
F-16
F-17
F-18
F-19
3. | CONCENTRATION OF RISKS |
F-20
December 31, | ||||||||||
2008 | 2009 | |||||||||
US$ | US$ | |||||||||
Held-to-maturity securities
|
||||||||||
Fixed rate time deposits
|
8,779 | 21,235 | ||||||||
Adjustable rate investments
|
1) | 8,779 | | |||||||
Trading securities
|
||||||||||
Adjustable rate investments
|
2) | 7,315 | 7,323 | |||||||
24,873 | 28,558 | |||||||||
1) | As of December 31, 2008, the Group owned US$8,779 of held-to-maturity securities which mature in February 27, 2009. This investment will pay variable interest ranging from 3% to 3.1% based on a formula linked to an interest rate index (i.e., SHIBOR). As of December 31, 2008 and 2009, the fair value of held-to-maturity securities approximate to their carrying value. |
F-21
2) | As of December 31, 2009, the Group owned US$7,323 (2008US$7,315) of trading securities which mature in March 15, 2010 (2008January 29, 2009). This investment will pay variable interest ranging from 1.98% to 6% (20083.15% to 6%) based on a formula linked to a trading range between the Euro and US$ (2008trading range between Australian dollar and US$). | |
As of December 31, 2008 and 2009, the fair value of trading securities approximated their carrying value. |
Gross |
Gross |
|||||||||||||||
Unrealized |
Unrealized |
|||||||||||||||
Carrying Value | Gains | Losses | Fair Value | |||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
Trading securities
|
||||||||||||||||
Adjustable rate investments
|
7,323 | | | 7,323 | ||||||||||||
5. | ACCOUNTS RECEIVABLE |
December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
Accounts receivable
|
14,680 | 18,417 | ||||||
Allowance for doubtful accounts
|
(3,330 | ) | (4,432 | ) | ||||
Accounts receivable, net
|
11,350 | 13,985 | ||||||
For the |
||||||||
Years Ended |
||||||||
December 31, | ||||||||
2008 | 2009 | |||||||
Movement in allowance for doubtful accounts:
|
||||||||
Balance at beginning of the year
|
1,192 | 3,330 | ||||||
Additional provision charged to expenses
|
3,220 | 4,430 | ||||||
Write-offs
|
(1,231 | ) | (3,332 | ) | ||||
Foreign currency adjustment
|
149 | 4 | ||||||
Balance at end of the year
|
3,330 | 4,432 | ||||||
F-22
6. | PREPAYMENTS AND OTHER CURRENT ASSETS |
December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
Prepaid expenses
|
365 | 514 | ||||||
Advance to employees
|
540 | 355 | ||||||
Rental and other deposits
|
264 | 625 | ||||||
Interest receivables
|
222 | 334 | ||||||
Others
|
9 | 124 | ||||||
1,400 | 1,952 | |||||||
December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
Office equipment
|
4,623 | 6,015 | ||||||
Motor vehicles
|
651 | 526 | ||||||
Leasehold improvement
|
957 | 1,185 | ||||||
Total
|
6,231 | 7,726 | ||||||
Less: Accumulated depreciation
|
(2,390 | ) | (3,506 | ) | ||||
3,841 | 4,220 | |||||||
8. | DEFERRED REVENUE |
9. | ACCRUED EXPENSES AND OTHER LIABILITIES |
December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
Payroll and welfare benefit
|
3,951 | 5,487 | ||||||
Other taxes and surcharges payable
|
7,066 | 11,921 | ||||||
Accrued unrecognized tax benefits and related interests and
penalties (note 13)
|
17,391 | 18,705 | ||||||
Others
|
991 | 1,229 | ||||||
29,399 | 37,342 | |||||||
F-23
10. | DIVIDEND PAYABLE |
11. | SHAREHOLDERS EQUITY |
12. | RESTRICTED NET ASSETS |
F-24
F-25
F-26
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Non-PRC
|
(180 | ) | (3,194 | ) | (174 | ) | ||||||
PRC
|
20,973 | 45,346 | 50,585 | |||||||||
20,793 | 42,152 | 50,411 | ||||||||||
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Current tax expense
|
2,868 | 13,255 | 5,661 | |||||||||
Deferred tax expense (benefit)
|
5,589 | 5,550 | (7,860 | ) | ||||||||
8,457 | 18,805 | (2,199 | ) | |||||||||
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Income before income taxes
|
20,793 | 42,152 | 50,411 | |||||||||
Income tax computed at applicable tax rates (2007: 33% 2008 and
2009: 25%)
|
6,862 | 10,538 | 12,603 | |||||||||
Effect of different tax rates in different jurisdictions
|
61 | 734 | 20 | |||||||||
Non-deductible expenses
|
2,765 | 1,799 | 2,245 | |||||||||
Effect of preferential tax rate
|
(8,391 | ) | (2,931 | ) | (10,691 | ) | ||||||
Effect of tax rate changes
|
1,451 | | (9,525 | ) | ||||||||
Investment basis difference in PRC Domestic Entities
|
4,551 | 6,599 | 1,488 | |||||||||
Changes in valuation allowance
|
130 | 203 | 364 | |||||||||
Decrease in unrecognized tax benefits
|
| (24 | ) | (165 | ) | |||||||
Changes in interest and penalty on unrecognized tax benefits
|
1,028 | 1,887 | 1,462 | |||||||||
8,457 | 18,805 | (2,199 | ) | |||||||||
F-27
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Balancebeginning
|
767 | 2,667 | 13,810 | |||||||||
Additions related to tax positions in current year
|
1,900 | 10,985 | | |||||||||
Reductions related to tax positions in prior years
|
| (24 | ) | (165 | ) | |||||||
Foreign currency adjustment
|
| 182 | 12 | |||||||||
Balanceend
|
2,667 | 13,810 | 13,657 | |||||||||
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
(amounts in thousands except for the per share data) | ||||||||||||
The aggregate amount
|
(8,391 | ) | (2,931 | ) | (10,691 | ) | ||||||
The aggregate effect on basic and diluted earnings per share:
|
||||||||||||
Basic
|
0.11 | 0.04 | 0.14 | |||||||||
Diluted
|
0.11 | 0.04 | 0.14 | |||||||||
F-28
December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
Deferred tax assets, current portion
|
||||||||
Accrued expenses
|
715 | 471 | ||||||
Net operating losses
|
715 | | ||||||
Inventories
|
| 123 | ||||||
Total deferred tax assets, current portion
|
1,430 | 594 | ||||||
Deferred tax assets, non-current portion
|
||||||||
Net operating losses
|
688 | 1,335 | ||||||
Less: valuation allowance
|
(688 | ) | (828 | ) | ||||
Total deferred tax assets, non-current portion
|
| 507 | ||||||
Deferred tax liabilities, current portion
|
||||||||
Deferred revenue
|
| (123 | ) | |||||
Deferred tax liabilities, non-current portion
|
||||||||
Investment basis in PRC Domestic Entities
|
(13,991 | ) | (5,687 | ) | ||||
Deferred tax assets, current portion, net
|
1,430 | 471 | ||||||
Deferred tax assets, non-current portion, net
|
| 507 | ||||||
Deferred tax liabilities, non-current portion, net
|
(13,991 | ) | (5,687 | ) | ||||
F-29
14. | SHARE-BASED PAYMENTS |
F-30
Weighted- |
Weighted- |
Weighted |
||||||||||||||||||
Average |
Average |
Average |
||||||||||||||||||
per Share |
Grant-date |
Remaining |
Aggregated |
|||||||||||||||||
Number of |
Exercise |
Fair Value |
Contractual |
Intrinsic |
||||||||||||||||
Options Granted to Employees
|
Shares* | Price | per Share | Term (Years) | Value | |||||||||||||||
Outstanding, January 1, 2007
|
4,865,838 | |||||||||||||||||||
Granted
|
992,554 | US$ | 2.81 | |||||||||||||||||
Outstanding, December 31, 2007
|
5,858,392 | |||||||||||||||||||
Granted
|
986,554 | US$ | 3.75 | |||||||||||||||||
Outstanding, December 31, 2008
|
6,844,946 | US$ | 3.81 | US$ | 1.69 | |||||||||||||||
Granted
|
1,033,654 | US$ | 10.00 | US$ | 1.95 | |||||||||||||||
Repurchased
|
(35,000 | ) | US$ | 1.97 | US$ | 0.59 | ||||||||||||||
Outstanding, December 31, 2009
|
7,843,600 | US$ | 4.53 | US$ | 1.73 | 8.86 | US$ | 20,658 | ||||||||||||
Vested and expected to vest at December 31, 2009
|
7,843,600 | US$ | 4.53 | US$ | 1.73 | 8.86 | US$ | 20,658 | ||||||||||||
Exercisable at December 31, 2009
|
4,498,783 | US$ | 3.04 | US$ | 1.10 | 8.49 | US$ | 16,743 | ||||||||||||
* | Including both voting and non voting shares. |
F-31
2007 | 2008 | 2009 | ||||||||||
Risk-free interest rate
|
3.61 | % | 1.69 | % | 3.39 | % | ||||||
Dividend yield
|
| 1 | % | | ||||||||
Expected volatility range
|
53.20 | % | 77.67 | % | 36.03 | % | ||||||
Weighted average expected life
|
4.45 years | 3.59 years | 6.32 years |
2007 | 2008 | 2009 | ||||||||||
Risk-free interest rate
|
3.24%- 3.44% | 1.14%-3.39% | 1.75%-2.52% | |||||||||
Dividend yield
|
| 1% | | |||||||||
Expected volatility range
|
53.20% | 77.67% | 36.03% | |||||||||
Weighted average expected life
|
| | |
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Cost of revenues
|
160 | 268 | 489 | |||||||||
Selling expenses
|
142 | 323 | 595 | |||||||||
General and administrative expenses
|
1,915 | 2,126 | 3,056 | |||||||||
2,217 | 2,717 | 4,140 | ||||||||||
15. | RELATED PARTY TRANSACTIONS |
Name of Related Parties
|
Relationship with the Group
|
|
Tianquan Vincent Mo
|
Executive chairman of the board of directors | |
Jiangong Dai
|
Chief executive officer of the Company | |
CNED Hengshui Zhong Cheng Wanyuan Home Co., Ltd.
(Hengshui)
|
A company under the control of Mr. Tianquan Vincent Mo |
F-32
b) | The Group had the following related party transactions for the years ended December 31, 2007 2008 and 2009: |
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Short-term interest-free loans to:
|
||||||||||||
Tianquan Vincent Mo
|
| 279 | 326 | |||||||||
Jiangong Dai
|
| 272 | 264 | |||||||||
Repayment of interest-free loans by:
|
||||||||||||
Tianquan Vincent Mo
|
179 | 292 | 198 | |||||||||
Jiangong Dai
|
| 317 | 235 | |||||||||
Short-term Loan to:
|
||||||||||||
Hengshui
|
| | 7,323 | |||||||||
Repayment of short-term loan by:
|
||||||||||||
Hengshui
|
| | 637 | |||||||||
Interest on loan to:
|
||||||||||||
Hengshui
|
| | 85 |
c) | The Group had the following related party balances at the end of the period: |
As at December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
Amount due from related parties:
|
||||||||
Tianquan Vincent Mo *
|
493 | 621 | ||||||
Jiangong Dai *
|
293 | 322 | ||||||
Hengshui **
|
| 6,686 | ||||||
786 | 7,629 | |||||||
* | The balances as of December 31, 2008 and 2009 were unsecured, interest-free and repayable on demand. | |
** | The loan bears a stated interest rate of 10% per annum with a fixed repayment term of 6 months. |
16. | EMPLOYEE DEFINED CONTRIBUTION PLAN |
F-33
17. | COMMITMENTS AND CONTINGENCIES |
US$ | ||||
2010
|
3,333 | |||
2011
|
2,480 | |||
2012
|
2,063 | |||
7,876 | ||||
18. | SEGMENT REPORTING |
F-34
19. | EARNINGS PER SHARE |
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
(amounts in thousands except for the number of shares and per share data) | ||||||||||||
Numerator:
|
||||||||||||
Net income attributable to ordinary shareholders used in
calculating income per ordinary sharebasic and diluted
|
12,211 | 23,381 | 52,652 | |||||||||
Denominator:
|
||||||||||||
Weighted average number of ordinary shares outstanding used in
calculating basic earnings per share
|
74,020,217 | 74,020,217 | 73,986,129 | |||||||||
Employee stock options
|
2,977,193 | 3,071,980 | 3,432,831 | |||||||||
Weighted average number of ordinary shares outstanding used in
calculating diluted earnings per share
|
76,997,410 | 77,092,197 | 77,418,960 | |||||||||
Basic earnings per share
|
0.16 | 0.32 | 0.71 | |||||||||
Diluted earnings per share
|
0.16 | 0.30 | 0.68 | |||||||||
20. | FAIR VALUE MEASUREMENT |
F-35
Fair Value Measurement at December 31, 2009 | ||||||||||||||||
Quoted Prices in |
||||||||||||||||
Active Markets for |
Significant Other |
Unobservable |
Fair Value at |
|||||||||||||
Identical Assets |
Observable Inputs |
Inputs |
December 31, |
|||||||||||||
(Level 1) | (Level 2) | (Level 3) | 2009 | |||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
Trading securities:
|
||||||||||||||||
Adjustable rate structured notes
|
| 7,323 | | 7,323 | ||||||||||||
Fair Value Measurement at December 31, 2008 | ||||||||||||||||
Quoted Prices in |
||||||||||||||||
Active Markets for |
Significant Other |
Unobservable |
Fair Value at |
|||||||||||||
Identical Assets |
Observable Inputs |
Inputs |
December 31, |
|||||||||||||
(Level 1) | (Level 2) | (Level 3) | 2008 | |||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
Trading securities:
|
||||||||||||||||
Adjustable rate structured notes
|
| 7,315 | | 7,315 | ||||||||||||
21. | SUBSEQUENT EVENTS |
F-36
22. | PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (See Note 12) |
As at December 31, | ||||||||
2008 | 2009 | |||||||
US$ | US$ | |||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
83 | 112 | ||||||
Amount due from related party
|
245 | 245 | ||||||
Total current assets
|
328 | 357 | ||||||
Non-current assets:
|
||||||||
Investment in subsidiaries and PRC Domestic Entities
|
53,024 | 108,703 | ||||||
Total assets
|
53,352 | 109,060 | ||||||
LIABILITIES AND SHAREHOLDERS EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accrued expenses and other liabilities
|
3 | 3 | ||||||
Dividend Payable
|
24,200 | 43,906 | ||||||
Amount due to subsidiaries
|
15,866 | 40,713 | ||||||
Total liabilities
|
40,069 | 84,622 | ||||||
Commitments and contingencies
|
||||||||
Shareholders equity:
|
||||||||
Ordinary shares (par value of HK$1 per share at
December 31, 2008 and 2009, respectively;
Authorized600,000,000 shares at December 31,
2008 and 2009 respectively; Issued and
outstanding74,020,217 and 73,932,217 shares at
December 31, 2008 and 2009, respectively)
|
9,501 | 9,489 | ||||||
Additional paid-in capital
|
35,707 | 9,279 | ||||||
Accumulated other comprehensive income
|
5,582 | 5,670 | ||||||
Accumulated deficits
|
(37,507 | ) | | |||||
Total shareholders equity
|
13,283 | 24,438 | ||||||
Total liabilities, and shareholders equity
|
53,352 | 109,060 | ||||||
F-37
For the Year Ended |
For the Year Ended |
For the Year Ended |
||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
General and administrative expenses
|
(62 | ) | | | ||||||||
Operating loss
|
(62 | ) | | | ||||||||
Equity in profits of subsidiaries and PRC Domestic Entities
|
12,269 | 20,557 | 52,611 | |||||||||
Foreign exchange loss
|
| 2,824 | 41 | |||||||||
Interest income
|
4 | | | |||||||||
Net income
|
12,211 | 23,381 | 52,652 | |||||||||
2007 | 2008 | 2009 | ||||||||||
US$ | US$ | US$ | ||||||||||
Net cash used in operating activities
|
(58 | ) | (3 | ) | | |||||||
Net cash (used in) provided by investing activities
|
(127 | ) | 16 | 29 | ||||||||
Net (decrease) increase in cash
|
(185 | ) | 13 | 29 | ||||||||
Cash at beginning of the year
|
255 | 70 | 83 | |||||||||
Cash at end of the year
|
70 | 83 | 112 | |||||||||
Supplemental schedule of cash flow information:
|
||||||||||||
Dividend paid by subsidiaries of the Company:
|
2,647 | 16,210 | 24,241 |
F-38
As at | ||||||||||
December 31, |
June 30, |
|||||||||
Notes | 2009* | 2010 | ||||||||
US$ |
US$ |
|||||||||
(Unaudited) | ||||||||||
ASSETS
|
||||||||||
Current assets:
|
||||||||||
Cash and cash equivalents
|
92,239 | 105,368 | ||||||||
Short-term investments
|
2 | 28,558 | 37,550 | |||||||
Accounts receivable (net of allowance of US$4,432 and US$4,045
as of December 31, 2009 and June 30, 2010,
respectively)
|
3 | 13,985 | 11,948 | |||||||
Prepayment and other current assets
|
4 | 1,952 | 2,655 | |||||||
Amounts due from related parties
|
10 | 7,629 | 10,529 | |||||||
Deferred tax assets, current
|
471 | 473 | ||||||||
Inventories
|
4,390 | 8,222 | ||||||||
Total current assets
|
149,224 | 176,745 | ||||||||
Non-current assets:
|
||||||||||
Property and equipment, net
|
5 | 4,220 | 6,778 | |||||||
Deferred tax assets, non current
|
507 | 527 | ||||||||
Other non-current assets
|
543 | 1,029 | ||||||||
Total Non-current assets
|
5,270 | 8,334 | ||||||||
Total assets
|
154,494 | 185,079 | ||||||||
* | Amounts for the year ended December 31, 2009 were derived from the December 31, 2009 audited consolidated financial statements. |
F-39
As at | ||||||||||
December 31, |
June 30, |
|||||||||
Notes | 2009* | 2010 | ||||||||
US$ |
US$ |
|||||||||
(Unaudited) | ||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY
|
||||||||||
Current liabilities:
|
||||||||||
Deferred revenue (including related party amount of nil and
US$183 as at December 31, 2009 and June 30, 2010,
respectively)
|
28,795 | 54,346 | ||||||||
Accrued expenses and other liabilities
|
6 | 37,342 | 31,061 | |||||||
Dividend payable
|
43,906 | 44,147 | ||||||||
Share based compensation liability
|
9 | 11,129 | | |||||||
Income tax payable
|
3,134 | 2,633 | ||||||||
Total current liabilities
|
124,306 | 132,187 | ||||||||
Deferred tax liability, non-current
|
8 | 5,687 | 9,441 | |||||||
Total liabilities
|
129,993 | 141,628 | ||||||||
Commitments and contingencies
|
12 | |||||||||
Shareholders equity:
|
||||||||||
Ordinary shares (par value of Hong Kong Dollar (HK$) 1 per
share;
Authorized600,000,000 shares; Issued and outstanding73,932,217 shares and 73,932,217 shares as at December 31, 2009 and June 30, 2010, respectively) |
9,489 | 9,489 | ||||||||
Additional paid-in capital
|
9,279 | 22,225 | ||||||||
Accumulated other comprehensive income
|
15 | 5,670 | 6,376 | |||||||
Retained earnings
|
| 5,309 | ||||||||
Total SouFun Holdings Limiteds equity
|
24,438 | 43,399 | ||||||||
Noncontrolling interests
|
63 | 52 | ||||||||
Total shareholders equity
|
24,501 | 43,451 | ||||||||
Total liabilities and shareholders equity
|
154,494 | 185,079 | ||||||||
* | Amounts for the year ended December 31, 2009 were derived from the December 31, 2009 audited consolidated financial statements. |
F-40
For the Six Months Ended |
||||||||||
June 30, | ||||||||||
Notes | 2009 | 2010 | ||||||||
US$ |
US$ |
|||||||||
(Unaudited) | (Unaudited) | |||||||||
Revenues
|
||||||||||
Marketing services(including related party amount of nil and
US$375 for the six months ended June 30, 2009 and 2010,
respectively)
|
10 | 29,503 | 45,586 | |||||||
Listing services
|
5,398 | 14,006 | ||||||||
Other value-added services and products
|
2,056 | 8,593 | ||||||||
Total revenues
|
36,957 | 68,185 | ||||||||
Cost of revenues
|
||||||||||
Cost of services
|
(9,506 | ) | (18,164 | ) | ||||||
Cost of value-added services and products
|
(1,185 | ) | (6,887 | ) | ||||||
Total cost of revenues
|
(10,691 | ) | (25,051 | ) | ||||||
Gross profit
|
26,266 | 43,134 | ||||||||
Operating expenses:
|
||||||||||
Selling expenses
|
(9,988 | ) | (16,742 | ) | ||||||
General and administrative expenses
|
(9,379 | ) | (14,330 | ) | ||||||
Operating income
|
6,899 | 12,062 | ||||||||
Foreign exchange loss
|
(17 | ) | (481 | ) | ||||||
Interest income (including related party amount of nil and
US$305 for the six months ended June 30, 2009 and 2010,
respectively)
|
613 | 1,162 | ||||||||
Realized gaintrading securities
|
85 | 164 | ||||||||
Government grants
|
336 | 356 | ||||||||
Income before income tax
|
7,916 | 13,263 | ||||||||
Income tax expense
|
8 | (4,190 | ) | (7,965 | ) | |||||
Net income
|
3,726 | 5,298 | ||||||||
Net loss attributable to noncontrolling interests
|
(20 | ) | (11 | ) | ||||||
Net income attributable to SouFun Holdings Limited shareholders
|
3,746 | 5,309 | ||||||||
Earnings per share
|
13 | |||||||||
Basic
|
0.05 | 0.07 | ||||||||
Diluted
|
0.05 | 0.07 | ||||||||
Weighted average number of ordinary shares outstanding:
|
13 | |||||||||
Basic
|
74,020,217 | 73,932,217 | ||||||||
Diluted
|
77,386,202 | 77,851,697 |
F-41
For the Six Months Ended |
||||||||
June 30, | ||||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | (Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
3,726 | 5,298 | ||||||
Adjustments to reconcile net income to net cash generated from
operating activities:
|
||||||||
Share-based compensation
|
2,013 | 1,817 | ||||||
Depreciation of property and equipment
|
601 | 982 | ||||||
Deferred tax expense
|
353 | 3,706 | ||||||
Allowance for doubtful accounts
|
1,484 | 1,609 | ||||||
Unrealized foreign exchange loss
|
17 | 483 | ||||||
Changes in operating assets and liabilities:
|
||||||||
(Decrease) increase in accounts receivable
|
(1,113 | ) | 488 | |||||
Increase in prepayments and other current assets
|
(147 | ) | (689 | ) | ||||
Increase in other non-current assets
|
| (481 | ) | |||||
Increase (decrease) in accrued expenses and other liabilities
|
1,764 | (6,463 | ) | |||||
Increase in deferred revenue (including related party amounts of
nil and US$183 for the six months ended June 30, 2009 and
2010, respectively)
|
14,262 | 25,297 | ||||||
Change in inventories
|
(1,792 | ) | (3,791 | ) | ||||
Increase (decrease) in income tax payable
|
2,837 | (519 | ) | |||||
Deposit paid to related parties for services
|
| (9,539 | ) | |||||
Net cash generated from operating activities
|
24,005 | 18,198 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Payment for short-term investments
|
(13,174 | ) | (32,244 | ) | ||||
Proceeds received from maturity of short-term investments
|
21,957 | 23,456 | ||||||
Acquisition of property and equipment
|
(67 | ) | (3,558 | ) | ||||
Proceeds from disposal of property and equipment
|
91 | 53 | ||||||
Change in amount due from related parties
|
120 | | ||||||
Repayment of loan from a related party
|
| 6,693 | ||||||
Net cash generated from (used in) investing activities
|
8,927 | (5,600 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Payment of dividends
|
(24,241 | ) | | |||||
Net cash used in financing activities
|
(24,241 | ) | | |||||
Exchange rate effect on cash and cash equivalents
|
22 | 531 | ||||||
Net increase in cash and cash equivalents
|
8,713 | 13,129 | ||||||
Cash and cash equivalents at beginning of period
|
63,022 | 92,239 | ||||||
Cash and cash equivalents at end of period
|
71,735 | 105,368 | ||||||
Supplemental schedule of cash flow information:
|
||||||||
Income tax paid
|
570 | 2,246 | ||||||
Non-monetary exchange of services for prepaid cards
|
4,371 | 11,891 |
F-42
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-43
F-44
| the WOFEs have unilateral discretion in setting the technical service fees charged to the PRC Domestic Entities; | |
| the WOFEs are obligated to provide financial support to the PRC Domestic Entities in the event the PRC Domestic Entities incur losses; | |
| the annual budget of the PRC Domestic Entities should be assessed and approved by the WOFEs; | |
| the legal shareholders agree to remit any dividends, received from the PRC Domestic Entities, to the WOFEs; and | |
| the PRC Domestic Entities are obligated to transfer their entire retained earnings after deduction of PRC income tax to the WOFEs upon the WOFEs request. |
F-45
2. | SHORT TERM INVESTMENTS |
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ | US$ | |||||||
(Unaudited) | ||||||||
Held-to-maturity securities
|
||||||||
Fixed rate time deposits
|
21,235 | 30,187 | ||||||
Trading securities
|
||||||||
Adjustable rate investments (1)
|
7,323 | 7,363 | ||||||
28,558 | 37,550 | |||||||
(1) | As of June 30, 2010, the Group owned US$7,363 (December 31, 2009US$7,323) of trading securities which mature in September 29, 2010 (December 31, 2009March 15, 2010). This investment will pay variable interest ranging from 1.5% to 6% (December 31, 20091.98% to 6%) based on a formula linked to a trading range between the Euro and US$. |
Gross |
Gross |
|||||||||||||||
Carrying |
Unrealized |
Unrealized |
Fair |
|||||||||||||
Value | Gains | Losses | Value | |||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
Trading securities
|
||||||||||||||||
Adjustable rate investments
|
7,363 | | | 7,363 | ||||||||||||
F-46
3. | ACCOUNTS RECEIVABLE |
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | ||||||||
Accounts receivable
|
18,417 | 15,993 | ||||||
Allowance for doubtful accounts
|
(4,432 | ) | (4,045 | ) | ||||
Accounts receivable, net
|
13,985 | 11,948 | ||||||
For the Six Months Ended |
||||||||
June 30, | ||||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | (Unaudited) | |||||||
Movement in allowance for doubtful accounts:
|
||||||||
Balance at beginning of the period
|
3,330 | 4,432 | ||||||
Additional provision charged to expense
|
1,484 | 1,609 | ||||||
Write-offs
|
(2,223 | ) | (2,021 | ) | ||||
Foreign currency adjustment
|
| 25 | ||||||
Balance at end of the period
|
2,591 | 4,045 | ||||||
4. | PREPAYMENTS AND OTHER CURRENT ASSETS |
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | ||||||||
Prepaid expenses
|
514 | 684 | ||||||
Advance to employees
|
355 | 799 | ||||||
Rental and other deposits
|
625 | 551 | ||||||
Interest receivables
|
334 | 598 | ||||||
Others
|
124 | 23 | ||||||
1,952 | 2,655 | |||||||
F-47
5. | PROPERTY AND EQUIPMENT, NET |
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | ||||||||
Office equipment
|
6,015 | 8,519 | ||||||
Motor vehicles
|
526 | 755 | ||||||
Leasehold improvement
|
1,185 | 1,965 | ||||||
Total
|
7,726 | 11,239 | ||||||
Less: Accumulated depreciation
|
(3,506 | ) | (4,461 | ) | ||||
4,220 | 6,778 | |||||||
6. | ACCRUED EXPENSES AND OTHER LIABILITIES |
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | ||||||||
Payroll and welfare benefit
|
5,487 | 7,842 | ||||||
Other taxes and surcharges payable
|
11,921 | 10,753 | ||||||
Accrued unrecognized tax benefits and related interests and
penalties
|
18,705 | 10,644 | ||||||
Others
|
1,229 | 1,822 | ||||||
37,342 | 31,061 | |||||||
7. | RESTRICTED NET ASSETS |
F-48
8. | TAXATION |
F-49
9. | SHARE-BASED PAYMENTS |
Weighted- |
Weighted- |
Weighted |
||||||||||||||||||
Average |
Average |
Average |
||||||||||||||||||
per Share |
Grant-date |
Remaining |
Aggregated |
|||||||||||||||||
Number of |
Exercise |
Fair Value |
Contractual |
Intrinsic |
||||||||||||||||
Options Granted to Employees
|
Shares* | Price | per Share | Term (Years) | Value | |||||||||||||||
Outstanding, December 31, 2009
|
7,843,600 | US$ | 4.53 | US$ | 1.73 | |||||||||||||||
Granted
|
37,500 | US$ | 10.00 | US$ | 2.23 | |||||||||||||||
Forfeited
|
28,168 | US$ | 6.99 | US$ | 2.64 | |||||||||||||||
Expired
|
28,382 | US$ | 3.94 | US$ | 1.12 | |||||||||||||||
Reclassified from liability awards
|
1,739,500 | US$ | 0.15 | US$ | 0.02 | |||||||||||||||
Outstanding, June 30, 2010
|
9,564,050 | US$ | 3.78 | US$ | 1.42 | 8.07 | 34,879 | |||||||||||||
Vested and expected to vest at June 30, 2010
|
9,564,050 | US$ | 3.78 | US$ | 1.42 | 8.07 | 34,879 | |||||||||||||
Exercisable at June 30, 2010
|
6,258,150 | US$ | 2.29 | US$ | 0.79 | 7.65 | 30,148 | |||||||||||||
* | Including both voting and nonvoting shares. |
F-50
For Six Months Ended |
For Six Months Ended |
|||||||
June 30, |
June 30 |
|||||||
2009 | 2010 | |||||||
US$ | US$ | |||||||
Risk-free interest rate
|
1.62%-1.95 | % | 1.70%-2.65 | % | ||||
Dividend yield
|
| | ||||||
Expected volatility range
|
51.91 | % | 39.82 | % | ||||
Weighted average expected life
|
| | ||||||
Suboptimal exercise factor
|
1.5 | 1.5 |
For Six Months Ended |
||||
June 30, |
||||
2010* | ||||
US$ | ||||
Risk-free interest rate
|
2.47%-4.27 | % | ||
Dividend yield
|
| |||
Expected volatility range
|
39.72 | % | ||
Weighted average expected life
|
to 7.80 years | |||
Suboptimal exercise factor
|
1.5 |
* | No equity awards granted in the six months ended June 30, 2009 |
For the Six Months Ended |
||||||||
June 30, | ||||||||
2009 | 2010 | |||||||
US$ | US$ | |||||||
(Unaudited) | (Unaudited) | |||||||
Cost of revenues
|
238 | 251 | ||||||
Selling expenses
|
295 | 338 | ||||||
General and administrative expenses
|
1,480 | 1,228 | ||||||
2,013 | 1,817 | |||||||
F-51
10. | RELATED PARTY TRANSACTIONS |
a) | Related Parties |
Name of Related Parties
|
Relationship with the Group
|
|
Tianquan Vincent Mo
|
Executive chairman of the board of directors | |
Jiangong Dai
|
Chief executive officer of the Company | |
CNED Hengshui Zhong Cheng Wanyuan Home CO., Ltd.
(Hengshui)
|
A company under the control of Mr. Tianquan Vincent Mo | |
Beijing Dong Fang Xi Mei Investment Consulting Co., Ltd.
(Dong Fang Xi Mei)
|
A company under the control of Mr. Tianquan Vincent Mo |
b) | The Group had the following related party transactions for each of the periods stated below: |
For the Six Months Ended |
||||||||
June 30, | ||||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | (Unaudited) | |||||||
Short-term interest-free loans to:
|
||||||||
Tianquan Vincent Mo
|
116 | 12 | ||||||
Repayment of interest-free loans by:
|
||||||||
Jiangong Dai
|
235 | | ||||||
Repayment of loan by:
|
||||||||
Hengshui
|
| 6,693 | ||||||
Interest on loan to:
|
||||||||
Hengshui
|
| 305 | ||||||
Commitment deposit paid to:
|
||||||||
Hengshui
|
| 7,342 | ||||||
Commitment deposit paid to:
|
||||||||
Dong Fang Xi Mei
|
| 2,197 | ||||||
Marketing services provided to:
|
||||||||
Dong Fang Xi Mei
|
| 375 | ||||||
Advance received from:
|
||||||||
Hengshui
|
| 183 |
F-52
c) | The Group had the following related party balances at the end of the period: |
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ | US$ | |||||||
Amount due from related parties:
|
||||||||
Tianquan Vincent Mo*
|
621 | 633 | ||||||
Jiangong Dai*
|
322 | 324 | ||||||
Hengshui**
|
6,686 | 7,363 | ||||||
Dong Fang Xi Mei***
|
| 2,209 | ||||||
7,629 | 10,529 | |||||||
Advance from related party:
|
||||||||
Hengshui**
|
| 183 | ||||||
* | The balances as of December 31, 2009 and June 30, 2010 were unsecured, interest-free and repayable on demand. | |
** | The amount as of December 31, 2009 represents a loan to Hengshui. The loan bears a stated interest rate of 10% per annum with a fixed repayment term of 6 months. The amount has been repaid on May 5, 2010. | |
On May 4, 2010, the Company paid a commitment deposit of US$7,342 to Hengshui in exchange for being appointed as its exclusive online marketing or listing service provider. The deposit is interest free. Hengshui has pledged as collateral an unperfected security interest over some of its properties. The deposit will be repaid within six months after the date of receipt of the deposit by Hengshui. | ||
*** | The amount represents a commitment deposit of US$2,197 paid by the Company to Dong Fang Xi Mei in exchange for being appointed the exclusive online marketing or listing service provider for a property development in Hainan, China. The deposit is interest-free and is not secured by any collateral or security interest. The deposit was to be repaid within six months after the date of receipt of the deposit by Dong Fang Xi Mei. However, pursuant to a termination agreement dated July 5, 2010, Dong Fang Xi Mei returned to the Company the commitment deposit in full on July 16, 2010 and the online marketing services contract was terminated. |
11. | EMPLOYEE DEFINED CONTRIBUTION PLAN |
F-53
12. | COMMITMENTS AND CONTINGENCIES |
US$ | ||||
Six months ended December 31,
|
||||
2010
|
2,666 | |||
Years ended December 31,
|
||||
2011
|
4,609 | |||
2012
|
3,849 | |||
2013
|
427 | |||
11,551 | ||||
F-54
13. | EARNINGS PER SHARE |
For the Six Months Ended |
||||||||
June 30, | ||||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(Unaudited) | (Unaudited) | |||||||
(amounts in thousands except for the number of shares and per share data) | ||||||||
Numerator:
|
||||||||
Net income attributable to ordinary shareholders used in
calculating earnings per ordinary sharebasic and diluted
|
3,746 | 5,309 | ||||||
Denominator:
|
||||||||
Weighted average number of ordinary shares outstanding used in
calculating basic earnings per share
|
74,020,217 | 73,932,217 | ||||||
Employee stock options*
|
3,365,985 | 3,919,480 | ||||||
Weighted average number of ordinary shares outstanding used in
calculating diluted income per share
|
77,386,202 | 77,851,697 | ||||||
Basic earnings per share
|
0.05 | 0.07 | ||||||
Diluted earnings per share
|
0.05 | 0.07 | ||||||
* | Options to purchase 1,979,108 ordinary shares (exercise price of US$5 per share) and 2,039,258 ordinary shares (exercise price range from US$5 to US$10 per share) were outstanding during the six months ended June 30, 2009 and 2010 but were not included in the computation of diluted earnings per share because the options exercise price was greater than the average fair value of the ordinary shares and, therefore, the effect would be antidilutive. |
14. | FAIR VALUE MEASUREMENT |
F-55
Fair Value Measurement at June 30, 2010 | ||||||||||||||||
Quoted Prices in |
||||||||||||||||
Active |
||||||||||||||||
Markets for |
Significant Other |
Unobservable |
Fair Value at |
|||||||||||||
Identical Assets |
Observable Inputs |
Inputs |
June 30, |
|||||||||||||
(Level 1) | (Level 2) | (Level 3) | 2010 | |||||||||||||
US$ | US$ | US$ | US$ | |||||||||||||
Trading securities:
|
||||||||||||||||
Adjustable rate structured notes
|
| 7,363 | | 7,363 | ||||||||||||
15. | COMPREHENSIVE INCOME |
For the Six Months Ended |
||||||||
June 30, | ||||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(unaudited) | (unaudited) | |||||||
Net income
|
3,726 | 5,298 | ||||||
Change in cumulative translation adjustment
|
24 | 741 | ||||||
Comprehensive income
|
3,750 | 6,039 | ||||||
December 31, |
June 30, |
|||||||
2009 | 2010 | |||||||
US$ |
US$ |
|||||||
(audited) | (unaudited) | |||||||
Cumulative translation adjustment
|
5,670 | 6,376 | ||||||
16. | SUBSEQUENT EVENTS |
F-56
F-57
Deutsche Bank Securities | Goldman Sachs (Asia) L.L.C. |
Item 6. | Indemnification of Directors and Officers |
Item 7. | Recent Sales of Unregistered Securities |
Underwriting |
||||||||||||||||
Number of |
Consideration |
discount and |
||||||||||||||
Purchaser
|
Date of sale or issuance | securities | (US$/share) | commission | ||||||||||||
Certain directors, officers and employees as a group
|
December 31, 2007 |
options to purchase a total of 992,554 non-voting ordinary shares |
US$ | 5.00 | Not applicable | |||||||||||
Certain directors, officers and employees as a group
|
December 31, 2008 |
options to purchase a total of 986,554 non-voting ordinary shares |
US$ | 5.00 | Not applicable | |||||||||||
Certain directors, officers and employees as a group
|
December 31, 2009 |
options to purchase a total of 1,033,654 non-voting ordinary shares |
US$ | 10.00 | Not applicable |
II-1
Item 8. | Exhibits and Financial Statement Schedules |
Exhibit No.
|
Description of Exhibit
|
|||
1 | .1* | Form of Underwriting Agreement | ||
3 | .1 | Third Amended and Restated Memorandum and Articles of Association of the Registrant | ||
3 | .2 | Fourth Amended and Restated Memorandum and Articles of Association of the Registrant | ||
4 | .1 | Specimen ordinary share certificate | ||
4 | .2 | Specimen American depositary receipt, incorporated by reference to Registration Statement on Form F-6 (Registration No. 333- ) filed with the SEC | ||
4 | .3 | Form of Deposit Agreement, incorporated by reference to Registration Statement on Form F-6 (Registration No. 333- ) filed with the SEC | ||
4 | .4 | Shareholders Agreement, dated August 31, 2006 | ||
4 | .5 | Stock Related Award Incentive Plan of 1999 | ||
4 | .6 | 2010 Stock Incentive Plan | ||
4 | .7 | Investors Rights Agreement among the Registrant, General Atlantic, Apax, Next Decade, Media Partner and Digital Link, dated August 13, 2010 | ||
4 | .8 | Registration Rights Agreement among the Registrant, General Atlantic and Apax, dated August 13, 2010 | ||
4 | .9 | Options Exercise Agreement among Telstra International, the Registrant and Mr. Mo, dated August 12, 2010 | ||
5 | .1 | Opinion of Conyers, Dill & Pearman, Cayman Islands special counsel to the Registrant, regarding the validity of the ordinary shares being registered | ||
8 | .1 | Opinion of Conyers, Dill & Pearman, special Cayman Islands tax counsel to the Registrant, regarding tax matters | ||
8 | .2 | Opinion of Sidley Austin LLP regarding certain U.S. tax matters | ||
10 | .1 | Form of Employment Agreement | ||
10 | .2 | Form of Indemnification Agreement | ||
10 | .3 | Form of Loan Agreement between and among SouFun Network or SouFun Media and Mr. Mo and Mr. Dai as shareholders of a consolidated controlled entity | ||
10 | .4 | Form of Equity Pledge Agreement among SouFun Network or SouFun Media, Mr. Mo and/or Mr. Dai and/or other shareholders of a consolidated controlled entity pledging the shares of the consolidated controlled entity | ||
10 | .5 | Form of Shareholders Proxy Agreement among SouFun Network or SouFun Media, a consolidated controlled entity, Mr. Mo and/or Mr. Dai and/or other shareholders of the consolidated controlled entity | ||
10 | .6 | Form of Operating Agreement among SouFun Network or SouFun Media, a consolidated controlled entity, Mr. Mo and/or Mr. Dai and/or other shareholders of the consolidated controlled entity | ||
10 | .7 | Form of Exclusive Technical Consultancy and Services Agreement between SouFun Network or SouFun Media and a consolidated controlled entity | ||
10 | .8 | Form of Exclusive Call Option Agreement among SouFun Holdings Limited, Mr. Mo and/or Mr. Dai and/or other shareholders of a consolidated controlled entity, the consolidated controlled entity and SouFun Network and/or SouFun Media | ||
10 | .9 | Form of Amendment Agreement Relating to Exclusive Technical Consultancy and Services Agreement, Exclusive Call Option Agreement, Operating Agreement and Other Agreements among SouFun Network and/or SouFun Media, a consolidated controlled entity, Mr. Mo, Mr. Dai and/or other shareholders of the consolidated controlled entity and SouFun Holdings Limited | ||
10 | .10 | Form of Intra-group Memorandum of Understanding between SouFun Network or SouFun Media and a consolidated controlled entity |
II-2
Exhibit No.
|
Description of Exhibit
|
|||
10 | .11 | Web Promotion Technical Service Contract, dated April 23, 2010, between CNED Hengshui Zhongcheng Wanyuan Home Co., Ltd. and SouFun Media | ||
10 | .12 | Individual Entrustment Loan Agreement, dated November 5, 2009, between CNED Hengshui Zhongcheng Wanyuan Home Co., Ltd., as borrower, and Bank of Communications, as lender, with SouFun Media, as principal | ||
10 | .13 | Web Promotion Technical Service Contract, dated February 5, 2010, between Beijing Dong Fang Xi Mei Investment Consulting Co., Ltd. and Beijing Technology | ||
10 | .14 | Termination Agreement With Respect to Web Promotion and Technical Service Contract, dated July 5, 2010, between Beijing Dong Fang Xi Mei Investment Consulting Co., Ltd. and Beijing SouFun Technical Development Co. Ltd. | ||
10 | .15 | Web Promotion Technical Service Contract, dated July 16, 2010, between Beijing Wei Ye Hang Real Estate Agency Co., Ltd. and Beijing SouFun Technical Development Co. Ltd. | ||
10 | .16 | Indemnity Agreement among Mr. Mo, CNED Hengshui Zhengcheng Wanyuan Home Co., Ltd. and the Registrant | ||
21 | .1 | List of subsidiaries of the Registrant | ||
23 | .1 | Consent of Ernst & Young Hua Ming | ||
23 | .2 | Consent of Conyers Dill & Pearman (included in Exhibit 5.1) | ||
23 | .3 | Consent of King & Wood | ||
23 | .4 | Consent of Jones Lang LaSalle Sallmanns Limited | ||
23 | .5 | Consent of CR-Nielsen | ||
23 | .6 | Consent of Data Center of China Internet | ||
23 | .7 | Consent of Shenzhen Union Strength Business Consulting Co., Ltd. | ||
23 | .8 | Consent of CCPIT Patent & Trademark Law Office | ||
23 | .9 | Consent of Qian Zhao, an independent director appointee | ||
23 | .10 | Consent of Sam Hanhui Sun, an independent director appointee | ||
23 | .11 | Consent of Jeff Xuesong Leng, an independent director appointee | ||
23 | .12 | Consent of Thomas Nicholas Hall, an independent director appointee | ||
24 | .1 | Power of Attorney (included on page II-5 of this Registration Statement) | ||
99 | .1 | Code of Business Conduct and Ethics of the Registrant | ||
99 | .2 | Anti-Fraud and Whistle-Blower Policy of the Registrant |
* | To be filed by amendment |
Item 9. | Undertakings |
II-3
II-4
By: |
/s/ Tianquan
Vincent Mo
|
Signature
|
Capacity
|
|||
/s/ Tianquan
Vincent Mo Tianquan Vincent Mo |
Executive Chairman | |||
/s/ Quan
Zhou Quan Zhou |
Director | |||
/s/ Shan
Li Shan Li |
Director |
II-5
Signature
|
Capacity
|
|||
/s/ Richard
Jiangong Dai Richard Jiangong Dai |
President and Chief Executive Officer (principal executive officer) |
|||
/s/ Lan
Ying Guan Lan Ying Guan |
Chief Financial Officer (principal financial officer) |
|||
/s/ Ji
Wenting Ji Wenting |
Principal Accounting Officer |
II-6
By: |
/s/ Kate
Ledyard
|
Title: |
Manager Law Debenture Corporate Services Inc. |
II-7
Exhibit No.
|
Description of Exhibit
|
|||
1 | .1* | Form of Underwriting Agreement | ||
3 | .1 | Third Amended and Restated Memorandum and Articles of Association of the Registrant | ||
3 | .2 | Fourth Amended and Restated Memorandum and Articles of Association of the Registrant | ||
4 | .1 | Specimen ordinary share certificate | ||
4 | .2 | Specimen American depositary receipt, incorporated by reference to Registration Statement on Form F-6 (Registration No. 333- ) filed with the SEC | ||
4 | .3 | Form of Deposit Agreement, incorporated by reference to Registration Statement on Form F-6 (Registration No. 333- ) filed with the SEC | ||
4 | .4 | Shareholders Agreement, dated August 31, 2006 | ||
4 | .5 | Stock Related Award Incentive Plan of 1999 | ||
4 | .6 | 2010 Stock Incentive Plan | ||
4 | .7 | Investors Rights Agreement among the Registrant, General Atlantic, Apax, Next Decade, Media Partner and Digital Link, dated August 13, 2010 | ||
4 | .8 | Registration Rights Agreement among the Registrant, General Atlantic and Apax, dated August 13, 2010 | ||
4 | .9 | Options Exercise Agreement among Telstra International, the Registrant and Mr. Mo, dated August 12, 2010 | ||
5 | .1 | Opinion of Conyers, Dill & Pearman, Cayman Islands special counsel to the Registrant, regarding the validity of the ordinary shares being registered | ||
8 | .1 | Opinion of Conyers, Dill & Pearman, special Cayman Islands tax counsel to the Registrant, regarding tax matters | ||
8 | .2 | Opinion of Sidley Austin LLP regarding certain U.S. tax matters | ||
10 | .1 | Form of Employment Agreement | ||
10 | .2 | Form of Indemnification Agreement | ||
10 | .3 | Form of Loan Agreement between and among SouFun Network or SouFun Media and Mr. Mo and Mr. Dai as shareholders of a consolidated controlled entity | ||
10 | .4 | Form of Equity Pledge Agreement among SouFun Network or SouFun Media, Mr. Mo and/or Mr. Dai and/or other shareholders of a consolidated controlled entity pledging the shares of the consolidated controlled entity | ||
10 | .5 | Form of Shareholders Proxy Agreement among SouFun Network or SouFun Media, a consolidated controlled entity, Mr. Mo and/or Mr. Dai and/or other shareholders of the consolidated controlled entity | ||
10 | .6 | Form of Operating Agreement among SouFun Network or SouFun Media, a consolidated controlled entity, Mr. Mo and/or Mr. Dai and/or other shareholders of the consolidated controlled entity | ||
10 | .7 | Form of Exclusive Technical Consultancy and Services Agreement between SouFun Network or SouFun Media and a consolidated controlled entity | ||
10 | .8 | Form of Exclusive Call Option Agreement among SouFun Holdings Limited, Mr. Mo and/or Mr. Dai and/or other shareholders of a consolidated controlled entity, the consolidated controlled entity and SouFun Network and/or SouFun Media | ||
10 | .9 | Form of Amendment Agreement Relating to Exclusive Technical Consultancy and Services Agreement, Exclusive Call Option Agreement, Operating Agreement and Other Agreements among SouFun Network and/or SouFun Media, a consolidated controlled entity, Mr. Mo, Mr. Dai and/or other shareholders of the consolidated controlled entity and SouFun Holdings Limited | ||
10 | .10 | Form of Intra-group Memorandum of Understanding between SouFun Network or SouFun Media and a consolidated controlled entity |
Exhibit No.
|
Description of Exhibit
|
|||
10 | .11 | Web Promotion Technical Service Contract, dated April 23, 2010, between CNED Hengshui Zhongcheng Wanyuan Home Co., Ltd. and SouFun Media | ||
10 | .12 | Individual Entrustment Loan Agreement, dated November 5, 2009, between CNED Hengshui Zhongcheng Wanyuan Home Co., Ltd., as borrower, and Bank of Communications, as lender, with SouFun Media, as principal | ||
10 | .13 | Web Promotion Technical Service Contract, dated February 5, 2010, between Beijing Dong Fang Xi Mei Investment Consulting Co., Ltd. and Beijing Technology | ||
10 | .14 | Termination Agreement With Respect to Web Promotion and Technical Service Contract, dated July 5, 2010, between Beijing Dong Fang Xi Mei Investment Consulting Co., Ltd. and Beijing SouFun Technical Development Co., Ltd. | ||
10 | .15 | Web Promotion Technical Service Contract, dated July 16, 2010, between Beijing Wei Ye Hang Real Estate Agency Co., Ltd. and Beijing SouFun Technical Development Co. Ltd. | ||
10 | .16 | Indemnity Agreement among Mr. Mo, CNED Hengshui Zhengcheng Wanyuan Home Co., Ltd. and the Registrant | ||
21 | .1 | List of subsidiaries of the Registrant | ||
23 | .1 | Consent of Ernst & Young Hua Ming | ||
23 | .2 | Consent of Conyers Dill & Pearman (included in Exhibit 5.1) | ||
23 | .3 | Consent of King & Wood | ||
23 | .4 | Consent of Jones Lang LaSalle Sallmanns Limited | ||
23 | .5 | Consent of CR-Nielsen | ||
23 | .6 | Consent of Data Center of China Internet | ||
23 | .7 | Consent of Shenzhen Union Strength Business Consulting Co., Ltd. | ||
23 | .8 | Consent of CCPIT Patent & Trademark Law Office | ||
23 | .9 | Consent of Qian Zhao, an independent director appointee | ||
23 | .10 | Consent of Sam Hanhui Sun, an independent director appointee | ||
23 | .11 | Consent of Jeff Xuesong Leng, an independent director appointee | ||
23 | .12 | Consent of Thomas Nicholas Hall, an independent director appointee | ||
24 | .1 | Power of Attorney (included on page II-5 of this Registration Statement) | ||
99 | .1 | Code of Business Conduct and Ethics of the Registrant | ||
99 | .2 | Anti-Fraud and Whistle-Blower Policy of the Registrant |
* | To be filed by amendment |
1. | The name of the Company is SouFun Holdings Limited. |
2. | The Registered Office of the Company shall be at the offices of Codan Trust Company (Cayman) Limited, Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies. |
3. | Subject to the following provisions of this Memorandum, the objects for which the Company is established are unrestricted and shall include, but without limitation: |
(a) to act and to perform all the functions of a holding company in all its branches and to co-ordinate the policy and administration of any subsidiary company or companies wherever incorporated or carrying on business or of any group of companies of which the Company or any subsidiary company is a member or which are in any manner controlled directly or indirectly by the Company; | ||
(b) to act as an investment company and for that purpose to acquire and hold upon any terms and, either in the name of the Company or that of any nominee, shares, stock, debentures, debenture stock, annuities, notes, mortgages, bonds, obligations and securities, foreign exchange, foreign currency deposits and commodities, issued or guaranteed by any company wherever incorporated or carrying on business, or by any government, sovereign, ruler, commissioners, public body or authority, supreme, municipal, local or otherwise, by original subscription, tender, purchase, exchange, underwriting, participation in syndicates or in any other manner and whether or not fully paid up, and to make payments thereon as called up or in advance of calls or otherwise and to subscribe for the same, whether conditionally or absolutely, and to hold the same with a view to investment, but with the power to vary any investments, and to exercise and enforce all rights and powers conferred by or incident to the ownership thereof, and to invest and deal with the moneys of the Company not immediately |
required upon such securities and in such manner as may be from time to time determined. |
4. | Subject to the following provisions of this Memorandum, the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by Section 27(2) of The Companies Law (Revised). | |
5. | Nothing in this Memorandum shall permit the Company to carry on a business for which a licence is required under the laws of the Cayman Islands unless duly licensed. | |
6. | If the Company is exempted, it shall not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this clause shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. |
7. | The liability of each member is limited to the amount from time to time unpaid on such members shares. |
8. | The authorized share capital of the Company is HK$600,000,000 divided into 600,000,000 ordinary shares with a par value of HK$1.00 each, with power for the Company insofar as is permitted by law to purchase any of its shares and to increase or reduce the said capital, in each case subject to the provisions of the Companies Law (Revised), this Memorandum, and the Articles of Association annexed hereto and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether stated to be preference or otherwise shall be subject to the powers hereinbefore contained. |
SUBJECT | Article No. | |
Table A |
1 | |
Interpretation |
2 | |
Share Capital |
3 | |
Alteration Of Capital |
4-7 | |
Share Rights |
8-9 | |
Variation Of Rights |
10-11 | |
Shares |
12-15 | |
Share Certificates |
16-21 | |
Lien |
22-24 | |
Calls On Shares |
25-33 | |
Forfeiture Of Shares |
34-42 | |
Register Of Members |
43-44 | |
Record Dates |
45 | |
Transfer Of Shares |
46-51 | |
Transmission Of Shares |
52-54 | |
Untraceable Members |
55 | |
General Meetings |
56-58 | |
Notice Of General Meetings |
59-60 | |
Proceedings At General Meetings |
61-65 | |
Voting |
66-77 | |
Proxies |
78-83 | |
Corporations Acting By Representatives |
84 | |
Written Resolutions Of Members |
85 | |
Board Of Directors |
86 | |
Disqualification Of Directors |
87 | |
Executive Directors |
88-89 | |
Directors Fees And Expenses |
90-91 | |
Directors Interests |
92-95 | |
General Powers Of The Directors |
96-101 | |
Borrowing Powers |
102-105 | |
Proceedings Of The Directors |
106-115 | |
Managers |
116-118 | |
Officers |
119-122 | |
Register of Directors and Officers |
123 | |
Minutes |
124 | |
Seal |
125 | |
Authentication Of Documents |
126 | |
Destruction Of Documents |
127 | |
Dividends And Other Payments |
128-137 | |
Reserves |
138 | |
Capitalisation |
139-140 | |
Subscription Rights Reserve |
141 | |
Accounting Records |
142-146 |
SUBJECT | Article No. | |
Audit |
147-150 | |
Notices |
151-153 | |
Signatures |
154 | |
Winding Up |
155-156 | |
Indemnity |
157 | |
Amendment To Memorandum and Articles of Association
And Name of Company |
158 | |
Information |
159 |
WORD | MEANING | |
Audit Committee
|
the audit committee of the Company formed by the Board pursuant to Article 112(1) hereof, or any successor audit committee. | |
Auditor
|
the auditor of the Company for the time being and may include any individual or partnership. | |
Articles
|
these Articles in their present form or as supplemented or amended or substituted from time to time. | |
Board or Directors
|
the board of directors of the Company or the directors present at a meeting of directors of the Company at which a quorum is present. | |
capital
|
the share capital from time to time of the Company. | |
clear days
|
in relation to the period of a notice, that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect. | |
clearing house
|
a clearing house recognised by the laws of the jurisdiction in which the shares of the Company (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction. | |
Company
|
Soufun Holdings Limited | |
competent regulatory
|
a competent regulatory authority in the territory where |
1
WORD | MEANING | |
authority
|
the shares of the Company (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such territory. | |
Corporate Governance
Policies
|
mean the corporate governance policies or initiatives adopted by the Board and as may be in effect from time to time in accordance with Article 86(3) hereof. | |
debenture and
debenture holder
|
include debenture stock and debenture stockholder respectively. | |
dollars and HK$
|
dollars, the legal currency of the Hong Kong Special Administrative Region. | |
head office
|
such office of the Company as the Directors may from time to time determine to be the principal office of the Company. | |
Law
|
The Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. | |
Member
|
a duly registered holder from time to time of the shares in the capital of the Company. | |
Memorandum
|
the memorandum of association of the Company. | |
month
|
a calendar month. | |
Notice
|
written notice unless otherwise specifically stated and as further defined in these Articles. | |
Office
|
the registered office of the Company for the time being. | |
ordinary resolution
|
a resolution shall be an ordinary resolution when it has been passed by a simple majority of votes cast by such Members as, being entitled so to do, vote in person or, in the case of any Member being a corporation, by its duly authorised representative or, where proxies are allowed, by proxy at a general meeting of which not less than ten (10) clear days Notice has been duly given; | |
paid up
|
paid up or credited as paid up. |
2
WORD | MEANING | |
Register
|
the register of Members of the Company to be maintained at such place within or outside the Cayman Islands as the Board shall determine from time to time. | |
Seal
|
common seal or any one or more duplicate seals of the Company (including a securities seal) for use in the Cayman Islands or in any place outside the Cayman Islands. | |
Secretary
|
any person, firm or corporation appointed by the Board to perform any of the duties of secretary of the Company and includes any assistant, deputy, temporary or acting secretary. | |
Shareholders Agreement
|
that certain Shareholders Agreement entered into between the Company and other parties thereto dated 31 August 2006 (a copy of which is appended to these Articles), as amended from time to time. | |
Shares
|
the ordinary shares of the Company. | |
special resolution
|
a resolution shall be a special resolution when it has been passed by a majority of not less than two-thirds of votes cast by such Members as, being entitled so to do, vote in person or, in the case of such Members as are corporations, by their respective duly authorised representative or, where proxies are allowed, by proxy at a general meeting of which not less than ten (10) clear days Notice, specifying (without prejudice to the power contained in these Articles to amend the same) the intention to propose the resolution as a special resolution, has been duly given. Provided that a resolution may be proposed and passed as a special resolution at a meeting of which no less than ten (10) clear days Notice has been given if it is so agreed by the Members (or their proxies) holding a majority of the aggregate voting power of all of the shares of the Company having the right to vote at such meeting. | |
A special resolution shall be effective for any purpose for which an ordinary resolution is expressed to be required under any provision of these Articles or the Statutes. |
3
WORD | MEANING | |
Statutes
|
the Law and every other law of the Legislature of the Cayman Islands for the time being in force applying to or affecting the Company, its Memorandum of Association and/or these Articles. | |
year
|
a calendar year. |
(a) | words importing the singular include the plural and vice versa; | ||
(b) | words importing a gender include both gender and the neuter; | ||
(c) | words importing persons include companies, associations and bodies of persons whether corporate or not; | ||
(d) | the words: |
(i) | may shall be construed as permissive; | ||
(ii) | shall or will shall be construed as imperative; |
(e) | expressions referring to writing shall, unless the contrary intention appears, be construed as including printing, lithography, photography and other modes of representing words or figures in a visible form, and including where the representation takes the form of electronic display, provided that both the mode of service of the relevant document or notice and the Members election comply with all applicable Statutes, rules and regulations; | ||
(f) | references to any law, ordinance, statute or statutory provision shall be interpreted as relating to any statutory modification or re-enactment thereof for the time being in force; | ||
(g) | save as aforesaid words and expressions defined in the Statutes shall bear the same meanings in these Articles if not inconsistent with the subject in the context; | ||
(h) | references to a document being executed include references to it being executed under hand or under seal or by electronic signature or by any other method and references to a notice or document include a notice or document recorded or stored in any digital, electronic, electrical, magnetic or other retrievable form or medium and information in visible form whether having physical substance or not. |
4
(a) | increase its capital by such sum, to be divided into shares of such amounts, as the resolution shall prescribe; | ||
(b) | consolidate and divide all or any of its capital into shares of larger amount than its existing shares; | ||
(c) | sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the Law), and may by such resolution determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred, deferred or other rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unissued or new shares; | ||
(d) | cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled or, in the case of shares, without par value, diminish the number of shares into which its capital is divided. |
5
(a) | Dividend Provision. The holders of the Ordinary Shares shall, subject to the Law the Memorandum and these Articles, be entitled to receive, when, as and if declared by the Directors, out of any assets of the Company legally available therefor, such dividends as may be declared from time to time by the Directors. | ||
(b) | Liquidation. Upon the winding up of the Company, the assets, if any, of the Company shall be distributed, subject to the Law, the Memorandum and these Articles, ratably to the holders of the Ordinary Shares. | ||
(c) | Redemption. Subject to applicable laws, the Ordinary Shares may be redeemed in accordance with the Shareholders Agreement. |
6
(a) | the necessary quorum (whether at a separate general meeting or at its adjourned meeting) shall be a person or persons (or in the case of a Member being a corporation, its duly authorized representative) together holding or representing by proxy not less than three-quarters in nominal value of the issued shares of that class; | ||
(b) | every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him; and | ||
(c) | any holder of shares of the class present in person or by proxy or authorised representative may demand a poll. |
7
8
9
10
11
(a) | requiring payment of the amount unpaid together with any interest which may have accrued and which may still accrue up to the date of actual payment; and | ||
(b) | stating that if the Notice is not complied with the shares on which the call was made will be liable to be forfeited. |
12
(a) | the name and address of each Member, the number and class of shares held by him and the amount paid or agreed to be considered as paid on such shares; | ||
(b) | the date on which each person was entered in the Register; and | ||
(c) | the date on which any person ceased to be a Member. |
13
(a) | determining the Members entitled to receive any dividend, distribution, allotment or issue and such record date may be on, or at any time not more than sixty (60) days before or after, any date on which such dividend, distribution, allotment or issue is declared, paid or made; | ||
(b) | determining the Members entitled to receive notice of and to vote at any general meeting of the Company. |
14
(a) | a fee of such sum as the Board may from time to time require is paid to the Company in respect thereof (but in any event not to exceed HK$50); | ||
(b) | the instrument of transfer is in respect of only one class of share; | ||
(c) | the instrument of transfer is lodged at the Office or such other place at which the Register is kept in accordance with the Law (as the case may be) accompanied by the relevant share certificate(s) and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); and | ||
(d) | if applicable, the instrument of transfer is duly and properly stamped. |
15
(a) | all cheques or warrants in respect of dividends of the shares in question, being not less than three in total number, for any sum payable in cash to the holder of such shares in respect of them sent during the relevant period in the manner authorised by the Articles of the Company have remained uncashed; | ||
(b) | so far as it is aware at the end of the relevant period, the Company has not at any time during the relevant period received any indication of the existence of the Member who is the holder of such shares or of a person entitled to such shares by death, bankruptcy or operation of law; and |
16
(a) | the declaration and sanctioning of dividends; |
17
(b) | consideration and adoption of the accounts and balance sheet and the reports of the Directors and the Auditor and other documents required to be annexed to the balance sheet; | ||
(c) | the election of Directors; | ||
(d) | appointment of Auditors (where special notice of the intention for such appointment is not required by the Law) and other officers; | ||
(e) | the fixing of the remuneration of the Auditor, and the voting of remuneration or extra remuneration to the Directors; | ||
(f) | subject to the Shareholders Agreement, the granting of any mandate or authority to the Directors to repurchase securities of the Company. |
18
(a) | by the chairman of such meeting; or | ||
(b) | by at least three Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or | ||
(c) | by a Member or Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Members having the right to vote at the meeting; or | ||
(d) | by a Member or Members present in person or in the case of a Member being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right. |
19
20
(a) | any objection shall be raised to the qualification of any voter; or | ||
(b) | any votes have been counted which ought not to have been counted or which might have been rejected; or | ||
(c) | any votes are not counted which ought to have been counted; |
21
22
23
24
(a) | hold any other office or place of profit with the Company (except that of Auditor) in conjunction with his office of Director for such period and upon such terms as the Board may determine. Any remuneration (whether |
25
by way of salary, commission, participation in profits or otherwise) paid to any Director in respect of any such other office or place of profit shall be in addition to any remuneration provided for by or pursuant to any other Article; | |||
(b) | act by himself or his firm in a professional capacity for the Company (otherwise than as Auditor) and he or his firm may be remunerated for professional services as if he were not a Director; | ||
(c) | continue to be or become a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of any other company promoted by the Company or in which the Company may be interested as a vendor, shareholder or otherwise and (unless otherwise agreed) no such Director shall be accountable for any remuneration, profits or other benefits received by him as a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of or from his interests in any such other company. Subject as otherwise provided by these Articles the Directors may exercise or cause to be exercised the voting powers conferred by the shares in any other company held or owned by the Company, or exercisable by them as Directors of such other company in such manner in all respects as they think fit (including the exercise thereof in favour of any resolution appointing themselves or any of them directors, managing directors, joint managing directors, deputy managing directors, executive directors, managers or other officers of such company) or voting or providing for the payment of remuneration to the director, managing director, joint managing director, deputy managing director, executive director, manager or other officers of such other company and any Director may vote in favour of the exercise of such voting rights in manner aforesaid notwithstanding that he may be, or about to be, appointed a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer of such a company, and that as such he is or may become interested in the exercise of such voting rights in manner aforesaid. |
26
(a) | he is a member or officer of a specified company or firm and is to be regarded as interested in any contract or arrangement which may after the date of the Notice be made with that company or firm; or | ||
(b) | he is to be regarded as interested in any contract or arrangement which may after the date of the Notice be made with a specified person who is connected with him; |
27
(a) | To give to any person the right or option of requiring at a future date that an allotment shall be made to him of any share at par or at such premium as may be agreed. | ||
(b) | To give to any Directors, officers or employees of the Company an interest in any particular business or transaction or participation in the profits thereof or in the general profits of the Company either in addition to or in substitution for a salary or other remuneration. | ||
(c) | To resolve that the Company be deregistered in the Cayman Islands and continued in a named jurisdiction outside the Cayman Islands subject to the provisions of the Law. |
28
29
30
31
32
33
(a) | of all elections and appointments of officers; | ||
(b) | of the names of the Directors present at each meeting of the Directors and of any committee of the Directors; | ||
(c) | of all resolutions and proceedings of each general meeting of the Members, meetings of the Board and meetings of committees of the Board and where there are managers, of all proceedings of meetings of the managers. | ||
(2) | Minutes shall be kept by the Secretary at the Office. |
34
(a) | any share certificate which has been cancelled at any time after the expiry of one (1) year from the date of such cancellation; | ||
(b) | any dividend mandate or any variation or cancellation thereof or any notification of change of name or address at any time after the expiry of two (2) years from the date such mandate variation cancellation or notification was recorded by the Company; |
35
(c) | any instrument of transfer of shares which has been registered at any time after the expiry of seven (7) years from the date of registration; | ||
(d) | any allotment letters after the expiry of seven (7) years from the date of issue thereof; and | ||
(e) | copies of powers of attorney, grants of probate and letters of administration at any time after the expiry of seven (7) years after the account to which the relevant power of attorney, grant of probate or letters of administration related has been closed; |
36
(a) | all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a share in advance of calls shall be treated for the purposes of this Article as paid up on the share; and | ||
(b) | all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. |
37
(a) | that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the Members entitled thereto will be entitled to elect to receive such dividend (or part thereof if the Board so determines) in cash in lieu of such allotment. In such case, the following provisions shall apply: |
(i) | the basis of any such allotment shall be determined by the Board; | ||
(ii) | the Board, after determining the basis of allotment, shall give not less than ten (10) days Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective; | ||
(iii) | the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and |
38
(iv) | the dividend (or that part of the dividend to be satisfied by the allotment of shares as aforesaid) shall not be payable in cash on shares in respect whereof the cash election has not been duly exercised (the non-elected shares) and in satisfaction thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the non-elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account, share premium account, capital redemption reserve other than the Subscription Rights Reserve) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the non-elected shares on such basis; or |
(b) | that the Members entitled to such dividend shall be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit. In such case, the following provisions shall apply: |
(i) | the basis of any such allotment shall be determined by the Board; | ||
(ii) | the Board, after determining the basis of allotment, shall give not less than ten (10) days Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective; | ||
(iii) | the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and | ||
(iv) | the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable in cash on shares in respect whereof the share election has been duly exercised (the elected shares) and in lieu thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account, share premium account, capital redemption reserve other than the Subscription Rights Reserve) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for |
39
allotment and distribution to and amongst the holders of the elected shares on such basis. |
(2) (a) | The shares allotted pursuant to the provisions of paragraph (1) of this Article shall rank pari passu in all respects with shares of the same class (if any) then in issue save only as regards participation in the relevant dividend or in any other distributions, bonuses or rights paid, made, declared or announced prior to or contemporaneously with the payment or declaration of the relevant dividend unless, contemporaneously with the announcement by the Board of their proposal to apply the provisions of sub-paragraph (a) or (b) of paragraph (2) of this Article in relation to the relevant dividend or contemporaneously with their announcement of the distribution, bonus or rights in question, the Board shall specify that the shares to be allotted pursuant to the provisions of paragraph (1) of this Article shall rank for participation in such distribution, bonus or rights. |
(b) | The Board may do all acts and things considered necessary or expedient to give effect to any capitalisation pursuant to the provisions of paragraph (1) of this Article, with full power to the Board to make such provisions as it thinks fit in the case of shares becoming distributable in fractions (including provisions whereby, in whole or in part, fractional entitlements are aggregated and sold and the net proceeds distributed to those entitled, or are disregarded or rounded up or down or whereby the benefit of fractional entitlements accrues to the Company rather than to the Members concerned). The Board may authorise any person to enter into on behalf of all Members interested, an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made pursuant to such authority shall be effective and binding on all concerned. |
40
41
(1) | If, so long as any of the rights attached to any warrants issued by the Company to subscribe for shares of the Company shall remain exercisable, the Company does any act or engages in any transaction which, as a result of any adjustments to the subscription price in accordance with the provisions of the conditions of the warrants, would reduce the subscription price to below the par value of a share, then the following provisions shall apply: | ||
(a) | as from the date of such act or transaction the Company shall establish and thereafter (subject as provided in this Article) maintain in accordance with the provisions of this Article a reserve (the Subscription Rights Reserve) the amount of which shall at no time be less than the sum which for the time being would be required to be capitalised and applied in paying up in full the nominal amount of the additional shares required to be issued and allotted credited as fully paid pursuant to sub-paragraph (c) below on the exercise in full of all the subscription rights outstanding and shall apply the Subscription Rights Reserve in paying up such additional shares in full as and when the same are allotted; | ||
(b) | the Subscription Rights Reserve shall not be used for any purpose other than that specified above unless all other reserves of the Company (other than share premium account) have been extinguished and will then only be used to make good losses of the Company if and so far as is required by law; |
42
(c) | upon the exercise of all or any of the subscription rights represented by any warrant, the relevant subscription rights shall be exercisable in respect of a nominal amount of shares equal to the amount in cash which the holder of such warrant is required to pay on exercise of the subscription rights represented thereby (or, as the case may be the relevant portion thereof in the event of a partial exercise of the subscription rights) and, in addition, there shall be allotted in respect of such subscription rights to the exercising warrantholder, credited as fully paid, such additional nominal amount of shares as is equal to the difference between: |
(i) | the said amount in cash which the holder of such warrant is required to pay on exercise of the subscription rights represented thereby (or, as the case may be, the relevant portion thereof in the event of a partial exercise of the subscription rights); and | ||
(ii) | the nominal amount of shares in respect of which such subscription rights would have been exercisable having regard to the provisions of the conditions of the warrants, had it been possible for such subscription rights to represent the right to subscribe for shares at less than par and immediately upon such exercise so much of the sum standing to the credit of the Subscription Rights Reserve as is required to pay up in full such additional nominal amount of shares shall be capitalised and applied in paying up in full such additional nominal amount of shares which shall forthwith be allotted credited as fully paid to the exercising warrantholders; and |
(d) | if, upon the exercise of the subscription rights represented by any warrant, the amount standing to the credit of the Subscription Rights Reserve is not sufficient to pay up in full such additional nominal amount of shares equal to such difference as aforesaid to which the exercising warrantholder is entitled, the Board shall apply any profits or reserves then or thereafter becoming available (including, to the extent permitted by law, share premium account) for such purpose until such additional nominal amount of shares is paid up and allotted as aforesaid and until then no dividend or other distribution shall be paid or made on the fully paid shares of the Company then in issue. Pending such payment and allotment, the exercising warrantholder shall be issued by the Company with a certificate evidencing his right to the allotment of such additional nominal amount of shares. The rights represented by any such certificate shall be in registered form and shall be transferable in whole or in part in units of one share in the like manner as the shares for the time being are transferable, and the Company shall make such arrangements in relation to the maintenance of a register therefor and other matters in relation thereto as the Board may think fit and adequate particulars thereof shall be made known to each relevant exercising warrantholder upon the issue of such certificate. |
43
44
45
(a) | if served or delivered by post, shall where appropriate be sent by airmail and shall be deemed to have been served or delivered on the day following that on which the envelope containing the same, properly prepaid and addressed, is put into the post; in proving such service or delivery it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly addressed and put into the post and a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board that the envelope or wrapper containing the notice or other document was so addressed and put into the post shall be conclusive evidence thereof; | ||
(b) | if sent by electronic communication, shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. A notice placed on the Companys website is deemed given by the Company to a Member on the day following that on which a notice of availability is deemed served on the Member; | ||
(c) | if served or delivered in any other manner contemplated by these Articles, shall be deemed to have been served or delivered at the time of personal service or delivery or, as the case may be, at the time of the relevant despatch or transmission; and in proving such service or delivery a certificate in writing signed by the Secretary or other officer of the |
46
Company or other person appointed by the Board as to the act and time of such service, delivery, despatch or transmission shall be conclusive evidence thereof; and | |||
(d) | may be given to a Member either in the English language or the Chinese language, subject to due compliance with all applicable Statutes, rules and regulations. |
47
48
49
50
1. | The name of the Company is SouFun Holdings Limited. |
2. | The Registered Office of the Company shall be at the offices of Offshore Incorporations (Cayman) Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, KY1-1112. Cayman Islands. |
3. | Subject to the following provisions of this Memorandum, the objects for which the Company is established are unrestricted and shall include, but without limitation: |
(a) to act and to perform all the functions of a holding company in all its branches and to co-ordinate the policy and administration of any subsidiary company or companies wherever incorporated or carrying on business or of any group of companies of which the Company or any subsidiary company is a member or which are in any manner controlled directly or indirectly by the Company; | ||
(b) to act as an investment company and for that purpose to acquire and hold upon any terms and, either in the name of the Company or that of any nominee, shares, stock, debentures, debenture stock, annuities, notes, mortgages, bonds, obligations and securities, foreign exchange, foreign currency deposits and commodities, issued or guaranteed by any company wherever incorporated or carrying on business, or by any government, sovereign, ruler, commissioners, public body or authority, supreme, municipal, local or otherwise, by original subscription, tender, purchase, exchange, underwriting, participation in syndicates or in any other manner and whether or not fully paid up, and to make payments thereon as called up or in advance of calls or otherwise and to subscribe for the same, whether conditionally or absolutely, and to hold the same with a view to investment, but with the power to vary any investments, and to exercise and |
enforce all rights and powers conferred by or incident to the ownership thereof, and to invest and deal with the moneys of the Company not immediately required upon such securities and in such manner as may be from time to time determined. |
4. | Subject to the following provisions of this Memorandum, the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by Section 27(2) of The Companies Law (Revised). | |
5. | Nothing in this Memorandum shall permit the Company to carry on a business for which a licence is required under the laws of the Cayman Islands unless duly licensed. | |
6. | If the Company is exempted, it shall not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this clause shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. |
7. | The liability of each member is limited to the amount from time to time unpaid on such members shares. |
8. | The authorized share capital of the Company is HK$600,000,000 divided into 50,767,426 Class A Ordinary Shares of a par value of HK$1.00 each and 25,298,329 Class B Ordinary Shares of a par value of HK$1.00 each, with power for the Company insofar as is permitted by law to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of the Companies Law (Revised), this Memorandum and the Articles of Association and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether stated to be preference or otherwise shall be subject to the powers hereinbefore contained. |
SUBJECT | Article No. | |
Table A |
1 | |
Interpretation |
2 | |
Share Capital |
3 | |
Alteration Of Capital |
4-7 | |
Share Rights |
8-9 | |
Variation Of Rights |
10-11 | |
Shares |
12-15 | |
Share Certificates |
16-21 | |
Lien |
22-24 | |
Calls On Shares |
25-33 | |
Forfeiture Of Shares |
34-42 | |
Register Of Members |
43-44 | |
Record Dates |
45 | |
Transfer Of Shares |
46-51 | |
Transmission Of Shares |
52-54 | |
Untraceable Members |
55 | |
General Meetings |
56-58 | |
Notice Of General Meetings |
59-60 | |
Proceedings At General Meetings |
61-65 | |
Voting |
66-77 | |
Proxies |
78-83 | |
Corporations Acting By Representatives |
84 | |
No Action By Written Resolutions Of Members |
85 | |
Board Of Directors |
86 | |
Disqualification Of Directors |
87 | |
Executive Directors |
88-89 | |
Alternate Directors |
90-93 | |
Directors Fees And Expenses |
94-96 | |
Directors Interests |
97-100 | |
General Powers Of The Directors |
101-106 | |
Borrowing Powers |
107-110 | |
Proceedings Of The Directors |
111-120 | |
Audit Committee |
121-123 | |
Officers |
124-127 | |
Register of Directors and Officers |
128 | |
Minutes |
129 | |
Seal |
130 | |
Authentication Of Documents |
131 | |
Destruction Of Documents |
132 | |
Dividends And Other Payments |
133-142 | |
Reserves |
143 | |
Capitalisation |
144-145 | |
Subscription Rights Reserve |
146 | |
Accounting Records |
147-151 |
SUBJECT | Article No. | |
Audit |
152-157 | |
Notices |
158-160 | |
Signatures |
161 | |
Winding Up |
162-163 | |
Indemnity |
164 | |
Amendment To Memorandum and Articles of Association
And Name of Company |
165 | |
Information |
166 | |
Discontinuance |
167 |
WORD | MEANING | |
Audit Committee
|
the audit committee of the Company formed by the Board pursuant to Article 121 hereof, or any successor audit committee. | |
Auditor
|
the independent auditor of the Company which shall be an internationally recognized firm of independent accountants. | |
Articles
|
these Articles in their present form or as supplemented or amended or substituted from time to time. | |
Board or Directors
|
the board of directors of the Company or the directors present at a meeting of directors of the Company at which a quorum is present. | |
capital
|
the share capital from time to time of the Company. | |
Class A Ordinary Share
|
a class A ordinary share of HK$1.00 in the capital of the Company. | |
Class B Ordinary Share
|
a class B ordinary share of HK$1.00 in the capital of the Company. |
- 4 -
WORD | MEANING | |
clear days
|
in relation to the period of a notice, that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect. | |
clearing house
|
a clearing house recognised by the laws of the jurisdiction in which the shares of the Company (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction. | |
Company
|
SouFun Holdings Limited. | |
competent regulatory authority
|
a competent regulatory authority in the territory where the shares of the Company (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such territory. | |
debenture and
debenture holder
|
include debenture stock and debenture stockholder respectively. | |
Designated Stock Exchange
|
the New York Stock Exchange. | |
dollars and $
|
dollars, the legal currency of the United States of America. | |
Exchange Act
|
the Securities Exchange Act of 1934, as amended. | |
Hong
Kong dollars and HK$
|
Hong Kong dollars, the legal currency of The Hong Kong Special Administrative Region of The Peoples Republic of China | |
head office
|
such office of the Company as the Directors may from time to time determine to be the principal office of the Company. | |
Law
|
The Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. | |
Member
|
a duly registered holder from time to time of the shares in the capital of the Company. | |
month
|
a calendar month. | |
NASD
|
National Association of Securities Dealers. | |
NASD Rules
|
the rules set forth in the NASD Manual. |
- 5 -
WORD | MEANING | |
Notice
|
written notice unless otherwise specifically stated and as further defined in these Articles. | |
Office
|
the registered office of the Company for the time being. | |
ordinary resolution
|
a resolution shall be an ordinary resolution when it has been passed by a simple majority of votes cast by such Members as, being entitled so to do, vote in person or, in the case of any Member being a corporation, by its duly authorised representative or, where proxies are allowed, by proxy at a general meeting of which not less than ten (10) clear days Notice has been duly given; | |
paid up
|
paid up or credited as paid up. | |
Register
|
the principal register and where applicable, any branch register of Members of the Company to be maintained at such place within or outside the Cayman Islands as the Board shall determine from time to time. | |
Registration Office
|
in respect of any class of share capital such place as the Board may from time to time determine to keep a branch register of Members in respect of that class of share capital and where (except in cases where the Board otherwise directs) the transfers or other documents of title for such class of share capital are to be lodged for registration and are to be registered. | |
SEC
|
the United States Securities and Exchange Commission. | |
Seal
|
common seal or any one or more duplicate seals of the Company (including a securities seal) for use in the Cayman Islands or in any place outside the Cayman Islands. | |
Secretary
|
any person, firm or corporation appointed by the Board to perform any of the duties of secretary of the Company and includes any assistant, deputy, temporary or acting secretary. | |
special resolution
|
a resolution shall be a special resolution when it has been passed by a majority of not less than two-thirds of votes cast by such Members as, being entitled so to do, vote in person or, in the case of such Members as are corporations, by their respective duly authorised representative or, where proxies are allowed, by proxy |
- 6 -
WORD | MEANING | |
at a general meeting of which not less than ten (10) clear days Notice, specifying (without prejudice to the power contained in these Articles to amend the same) the intention to propose the resolution as a special resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a majority in number of the Members having the right to attend and vote at any such meeting, being a majority together holding not less than sixty-six and two-thirds per cent. (66.66%) in nominal value of the shares giving that right and in the case of an annual general meeting, if it is so agreed by all Members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which less than ten (10) clear days Notice has been given; | ||
a special resolution shall be effective for any purpose for which an ordinary resolution is expressed to be required under any provision of these Articles or the Statutes. | ||
Statutes
|
the Law and every other law of the Legislature of the Cayman Islands for the time being in force applying to or affecting the Company, its Memorandum of Association and/or these Articles. | |
year
|
a calendar year. |
(a) | words importing the singular include the plural and vice versa; | ||
(b) | words importing a gender include both gender and the neuter; | ||
(c) | words importing persons include companies, associations and bodies of persons whether corporate or not; | ||
(d) | the words: |
(i) | may shall be construed as permissive; | ||
(ii) | shall or will shall be construed as imperative; |
(e) | expressions referring to writing shall, unless the contrary intention appears, |
- 7 -
be construed as including printing, lithography, photography and other modes of representing words or figures in a visible form, and including where the representation takes the form of electronic display, provided that both the mode of service of the relevant document or notice and the Members election comply with all applicable Statutes, rules and regulations; | |||
(f) | references to any law, ordinance, statute or statutory provision shall be interpreted as relating to any statutory modification or re-enactment thereof for the time being in force; | ||
(g) | save as aforesaid words and expressions defined in the Statutes shall bear the same meanings in these Articles if not inconsistent with the subject in the context; | ||
(h) | references to a document being executed include references to it being executed under hand or under seal or by electronic signature or by any other method and references to a notice or document include a notice or document recorded or stored in any digital, electronic, electrical, magnetic or other retrievable form or medium and information in visible form whether having physical substance or not; | ||
(i) | Section 8 of the Electronic Transactions Law (2003) of the Cayman Islands, as amended from time to time, shall not apply to these Articles to the extent it imposes obligations or requirements in addition to those set out in these Articles. |
(a) | entitle the holder to one vote per share; | ||
(b) | entitle the holder to such dividends as the Board may from time to time declare; | ||
(c) | in the event of a winding-up or dissolution of the Company, whether voluntary |
- 8 -
or involuntary or for the purpose of a reorganization or otherwise or for the purpose of a reorganization or otherwise or upon any distribution of capital, entitle to the surplus assets of the Company; |
(d) | generally entitle the holder to enjoy all of the rights attaching to the Class A Ordinary Shares. |
(a) | entitle the holder to ten votes per share; | ||
(b) | entitle the holder to such dividends as the Board may from time to time declare; | ||
(c) | in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganization or otherwise or for the purpose of a reorganization or otherwise or upon any distribution of capital, entitle to the surplus assets of the Company; | ||
(c) | entitle the holder to convert such shares into Class A Ordinary Shares on a one to one (1:1) basis at any time upon delivery of written notice to the Board of Directors; | ||
(d) | upon any sale, pledge, transfer, assignment or disposition of Class B Ordinary Shares by a holder thereof to any person or entity which is not at any time a majority-owned and majority-controlled subsidiary of SouFun Holdings Limited, automatically convert into Class A Ordinary Shares (and, for the avoidance of doubt, at any time such subsequent holder ceases to be a majority-owned and majority-controlled subsidiary of SouFun Holdings Limited, the Class B Ordinary Shares held by such holder shall automatically convert into Class A Ordinary Shares; and | ||
(f) | generally entitle the holder to enjoy all of the rights attaching to the Class B Ordinary Shares. |
(a) | increase its capital by such sum, to be divided into shares of such amounts, as the resolution shall prescribe; | ||
(b) | consolidate and divide all or any of its capital into shares of larger amount than its existing shares; | ||
(c) | without prejudice to the powers of the Board under Article 12, divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or such restrictions which in the absence of any such determination by the Company in general meeting, as the Directors may determine provided always that, for the avoidance of doubt, where a class of shares has been authorized by the Company no resolution of the Company in general meeting is required for the issuance of shares of that class and the Directors may issue shares of that class and determine such rights, privileges, conditions or restrictions attaching thereto as aforesaid, and further provided that where the Company issues shares which do not carry voting rights, the words non-voting shall appear in the designation of such shares and where the |
- 9 -
equity capital includes shares with different voting rights, the designation of each class of shares, other than those with the most favourable voting rights, must include the words restricted voting or limited voting; | |||
(d) | sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the Law), and may by such resolution determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred, deferred or other rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unissued or new shares; | ||
(e) | cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled or, in the case of shares, without par value, diminish the number of shares into which its capital is divided. |
- 10 -
(a) | the necessary quorum (whether at a separate general meeting or at its adjourned meeting) shall be a person or persons (or in the case of a Member being a corporation, its duly authorized representative) together holding or representing by proxy not less than one-third in nominal value of the issued shares of that class; | ||
(b) | every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him; and | ||
(c) | any holder of shares of the class present in person or by proxy or authorised representative may demand a poll. |
- 11 -
- 12 -
- 13 -
- 14 -
- 15 -
(a) | requiring payment of the amount unpaid together with any interest which may have accrued and which may still accrue up to the date of actual payment; and | ||
(b) | stating that if the Notice is not complied with the shares on which the call was made will be liable to be forfeited. |
- 16 -
- 17 -
(a) | the name and address of each Member, the number and class of shares held by him and the amount paid or agreed to be considered as paid on such shares; | ||
(b) | the date on which each person was entered in the Register; and | ||
(c) | the date on which any person ceased to be a Member. |
- 18 -
- 19 -
(a) | a fee of such maximum sum as the Designated Stock Exchange may determine to be payable or such lesser sum as the Board may from time to time require is paid to the Company in respect thereof; | ||
(b) | the instrument of transfer is in respect of only one class of share; | ||
(c) | the instrument of transfer is lodged at the Office or such other place at which the Register is kept in accordance with the Law or the Registration Office (as the case may be) accompanied by the relevant share certificate(s) and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); and | ||
(d) | if applicable, the instrument of transfer is duly and properly stamped. |
- 20 -
(a) | all cheques or warrants in respect of dividends of the shares in question, being not less than three in total number, for any sum payable in cash to the holder of such shares in respect of them sent during the relevant period in the manner authorised by the Articles of the Company have remained uncashed; | ||
(b) | so far as it is aware at the end of the relevant period, the Company has not at any time during the relevant period received any indication of the existence of the Member who is the holder of such shares or of a person entitled to such shares by death, bankruptcy or operation of law; and | ||
(c) | the Company, if so required by the rules governing the listing of shares on the Designated Stock Exchange, has given notice to, and caused advertisement in newspapers to be made in accordance with the requirements of, the Designated Stock Exchange of its intention to sell such shares in the manner |
- 21 -
required by the Designated Stock Exchange, and a period of three months or such shorter period as may be allowed by the Designated Stock Exchange has elapsed since the date of such advertisement. |
- 22 -
(a) | in the case of a meeting called as an annual general meeting, by all the Members entitled to attend and vote thereat; and | ||
(b) | in the case of any other meeting, by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than sixty-six and two-thirds per cent. (66.66%) in nominal value of the issued shares giving that right. |
(a) | the declaration and sanctioning of dividends; | ||
(b) | consideration and adoption of the accounts and balance sheet and the reports of the Directors and Auditors and other documents required to be annexed to the balance sheet; and | ||
(c) | the election of Directors. |
- 23 -
- 24 -
- 25 -
(a) | any objection shall be raised to the qualification of any voter; or | ||
(b) | any votes have been counted which ought not to have been counted or which |
- 26 -
might have been rejected; or | |||
(c) | any votes are not counted which ought to have been counted; |
- 27 -
- 28 -
- 29 -
- 30 -
- 31 -
(a) | hold any other office or place of profit with the Company (except that of Auditor) in conjunction with his office of Director for such period and upon such terms as the Board may determine. Any remuneration (whether by way of salary, commission, participation in profits or otherwise) paid to any Director in respect of any such other office or place of profit shall be in addition to any remuneration provided for by or pursuant to any other Article; | ||
(b) | act by himself or his firm in a professional capacity for the Company (otherwise than as Auditor) and he or his firm may be remunerated for professional services as if he were not a Director; | ||
(c) | continue to be or become a director, managing director, joint managing director, deputy managing director, executive director, manager or other |
- 32 -
officer or member of any other company promoted by the Company or in which the Company may be interested as a vendor, shareholder or otherwise and (unless otherwise agreed) no such Director shall be accountable for any remuneration, profits or other benefits received by him as a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of or from his interests in any such other company. Subject as otherwise provided by these Articles the Directors may exercise or cause to be exercised the voting powers conferred by the shares in any other company held or owned by the Company, or exercisable by them as Directors of such other company in such manner in all respects as they think fit (including the exercise thereof in favour of any resolution appointing themselves or any of them directors, managing directors, joint managing directors, deputy managing directors, executive directors, managers or other officers of such company) or voting or providing for the payment of remuneration to the director, managing director, joint managing director, deputy managing director, executive director, manager or other officers of such other company and any Director may vote in favour of the exercise of such voting rights in manner aforesaid notwithstanding that he may be, or about to be, appointed a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer of such a company, and that as such he is or may become interested in the exercise of such voting rights in manner aforesaid. |
- 33 -
(a) | he is a member or officer of a specified company or firm and is to be regarded as interested in any contract or arrangement which may after the date of the Notice be made with that company or firm; or | ||
(b) | he is to be regarded as interested in any contract or arrangement which may after the date of the Notice be made with a specified person who is connected with him; |
- 34 -
(a) | To give to any person the right or option of requiring at a future date that an allotment shall be made to him of any share at par or at such premium as may be agreed. | ||
(b) | To give to any Directors, officers or employees of the Company an interest in any particular business or transaction or participation in the profits thereof or in the general profits of the Company either in addition to or in substitution for a salary or other remuneration. | ||
(c) | To resolve that the Company be deregistered in the Cayman Islands and continued in a named jurisdiction outside the Cayman Islands subject to the provisions of the Law. |
- 35 -
- 36 -
- 37 -
- 38 -
- 39 -
(a) | of all elections and appointments of officers; | ||
(b) | of the names of the Directors present at each meeting of the Directors and of any committee of the Directors; | ||
(c) | of all resolutions and proceedings of each general meeting of the Members, meetings of the Board and meetings of committees of the Board and where there are managers, of all proceedings of meetings of the managers. | ||
(2) | Minutes shall be kept by the Secretary at the Office. |
- 40 -
- 41 -
(a) | any share certificate which has been cancelled at any time after the expiry of one (1) year from the date of such cancellation; | ||
(b) | any dividend mandate or any variation or cancellation thereof or any notification of change of name or address at any time after the expiry of two (2) years from the date such mandate variation cancellation or notification was recorded by the Company; | ||
(c) | any instrument of transfer of shares which has been registered at any time after the expiry of seven (7) years from the date of registration; | ||
(d) | any allotment letters after the expiry of seven (7) years from the date of issue thereof; and | ||
(e) | copies of powers of attorney, grants of probate and letters of administration at any time after the expiry of seven (7) years after the account to which the relevant power of attorney, grant of probate or letters of administration related has been closed; |
- 42 -
(a) | all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a share in advance of calls shall be treated for the purposes of this Article as paid up on the share; and | ||
(b) | all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. |
- 43 -
(a) | that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the Members entitled thereto will be entitled to elect to receive such dividend (or part thereof if the Board so determines) in cash in lieu of such allotment. In such case, the following provisions shall apply: |
(i) | the basis of any such allotment shall be determined by the Board; |
- 44 -
(ii) | the Board, after determining the basis of allotment, shall give not less than ten (10) days Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective; | ||
(iii) | the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and | ||
(iv) | the dividend (or that part of the dividend to be satisfied by the allotment of shares as aforesaid) shall not be payable in cash on shares in respect whereof the cash election has not been duly exercised (the non-elected shares) and in satisfaction thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the non-elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account, share premium account, capital redemption reserve other than the Subscription Rights Reserve) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the non-elected shares on such basis; or |
(b) | that the Members entitled to such dividend shall be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit. In such case, the following provisions shall apply: |
(i) | the basis of any such allotment shall be determined by the Board; | ||
(ii) | the Board, after determining the basis of allotment, shall give not less than ten (10) days Notice to the holders of the relevant shares of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective; | ||
(iii) | the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded; and | ||
(iv) | the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable in cash on shares in respect whereof the share election has been duly exercised (the |
- 45 -
elected shares) and in lieu thereof shares of the relevant class shall be allotted credited as fully paid up to the holders of the elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company (including profits carried and standing to the credit of any reserves or other special account, share premium account, capital redemption reserve other than the Subscription Rights Reserve) as the Board may determine, such sum as may be required to pay up in full the appropriate number of shares of the relevant class for allotment and distribution to and amongst the holders of the elected shares on such basis. |
(2) | (a) | The shares allotted pursuant to the provisions of paragraph (1) of this Article shall rank pari passu in all respects with shares of the same class (if any) then in issue save only as regards participation in the relevant dividend or in any other distributions, bonuses or rights paid, made, declared or announced prior to or contemporaneously with the payment or declaration of the relevant dividend unless, contemporaneously with the announcement by the Board of their proposal to apply the provisions of sub-paragraph (a) or (b) of paragraph (2) of this Article in relation to the relevant dividend or contemporaneously with their announcement of the distribution, bonus or rights in question, the Board shall specify that the shares to be allotted pursuant to the provisions of paragraph (1) of this Article shall rank for participation in such distribution, bonus or rights. | |||
(b) | The Board may do all acts and things considered necessary or expedient to give effect to any capitalisation pursuant to the provisions of paragraph (1) of this Article, with full power to the Board to make such provisions as it thinks fit in the case of shares becoming distributable in fractions (including provisions whereby, in whole or in part, fractional entitlements are aggregated and sold and the net proceeds distributed to those entitled, or are disregarded or rounded up or down or whereby the benefit of fractional entitlements accrues to the Company rather than to the Members concerned). The Board may authorise any person to enter into on behalf of all Members interested, an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made pursuant to such authority shall be effective and binding on all concerned. |
- 46 -
- 47 -
(1) | If, so long as any of the rights attached to any warrants issued by the Company to subscribe for shares of the Company shall remain exercisable, the Company does any act or engages in any transaction which, as a result of any adjustments to the subscription price in accordance with the provisions of the conditions of the warrants, would reduce the subscription price to below the par value of a share, then the following provisions shall apply: | ||
(a) | as from the date of such act or transaction the Company shall establish and thereafter (subject as provided in this Article) maintain in accordance with the provisions of this Article a reserve (the Subscription Rights Reserve) the amount of which shall at no time be less than the sum which for the time being would be required to be capitalised and applied in paying up in full the nominal amount of the additional shares required to be issued and allotted credited as fully paid pursuant to sub-paragraph (c) below on the exercise in full of all the subscription rights outstanding and shall apply the Subscription Rights Reserve in paying up such additional shares in full as and when the same are allotted; |
- 48 -
(b) | the Subscription Rights Reserve shall not be used for any purpose other than that specified above unless all other reserves of the Company (other than share premium account) have been extinguished and will then only be used to make good losses of the Company if and so far as is required by law; | ||
(c) | upon the exercise of all or any of the subscription rights represented by any warrant, the relevant subscription rights shall be exercisable in respect of a nominal amount of shares equal to the amount in cash which the holder of such warrant is required to pay on exercise of the subscription rights represented thereby (or, as the case may be the relevant portion thereof in the event of a partial exercise of the subscription rights) and, in addition, there shall be allotted in respect of such subscription rights to the exercising warrantholder, credited as fully paid, such additional nominal amount of shares as is equal to the difference between: |
(i) | the said amount in cash which the holder of such warrant is required to pay on exercise of the subscription rights represented thereby (or, as the case may be, the relevant portion thereof in the event of a partial exercise of the subscription rights); and | ||
(ii) | the nominal amount of shares in respect of which such subscription rights would have been exercisable having regard to the provisions of the conditions of the warrants, had it been possible for such subscription rights to represent the right to subscribe for shares at less than par and immediately upon such exercise so much of the sum standing to the credit of the Subscription Rights Reserve as is required to pay up in full such additional nominal amount of shares shall be capitalised and applied in paying up in full such additional nominal amount of shares which shall forthwith be allotted credited as fully paid to the exercising warrantholders; and |
(d) | if, upon the exercise of the subscription rights represented by any warrant, the amount standing to the credit of the Subscription Rights Reserve is not sufficient to pay up in full such additional nominal amount of shares equal to such difference as aforesaid to which the exercising warrantholder is entitled, the Board shall apply any profits or reserves then or thereafter becoming available (including, to the extent permitted by law, share premium account) for such purpose until such additional nominal amount of shares is paid up and allotted as aforesaid and until then no dividend or other distribution shall be paid or made on the fully paid shares of the Company then in issue. Pending such payment and allotment, the exercising warrantholder shall be issued by the Company with a certificate evidencing his right to the allotment of such additional nominal amount of shares. The rights represented by any such certificate shall be in registered form and shall be transferable in whole or in part in units of one share in the like manner as the shares for the time being are transferable, and the Company shall make such arrangements in relation to the maintenance of a register therefor and other matters in relation thereto |
- 49 -
as the Board may think fit and adequate particulars thereof shall be made known to each relevant exercising warrantholder upon the issue of such certificate. |
- 50 -
- 51 -
(a) | if served or delivered by post, shall where appropriate be sent by airmail and shall be deemed to have been served or delivered on the day following that on |
- 52 -
which the envelope containing the same, properly prepaid and addressed, is put into the post; in proving such service or delivery it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly addressed and put into the post and a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board that the envelope or wrapper containing the notice or other document was so addressed and put into the post shall be conclusive evidence thereof; | |||
(b) | if sent by electronic communication, shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. A notice placed on the Companys website is deemed given by the Company to a Member on the day following that on which a notice of availability is deemed served on the Member; | ||
(c) | if served or delivered in any other manner contemplated by these Articles, shall be deemed to have been served or delivered at the time of personal service or delivery or, as the case may be, at the time of the relevant despatch or transmission; and in proving such service or delivery a certificate in writing signed by the Secretary or other officer of the Company or other person appointed by the Board as to the act and time of such service, delivery, despatch or transmission shall be conclusive evidence thereof; and | ||
(d) | may be given to a Member in the English language or such other language as may be approved by the Directors, subject to due compliance with all applicable Statutes, rules and regulations. |
- 53 -
- 54 -
- 55 -
NAME AND ADDRESS OF SHAREHOLDER | CERTIFICATE NUMBER | DISTINCTIVE NUMBERS | PAR VALUE PAR SHARE | |||||
FROM | TO | |||||||
[Specify] | HK$1.00 | |||||||
[Specify]
|
[Specify] | [Specify] | ||||||
DATE OF ISSUE | NO. OF SHARES | CONSIDERATION PAID | ||||||
[Specify] | [Specify] | HK$ |
SHAREHOLDER | NO. OF SHARES | DISTINCTIVE NUMBERS | CERTIFICATE NUMBER | DATE OF ISSUE | ||||||
FROM | TO | |||||||||
[Specify]
|
[Specify] | [Specify] | [Specify] | [Specify] | [Specify] |
DIRECTOR
|
DIRECTOR/SECRETARY |
Contents | Page | |||||
1
|
Interpretation | 1 | ||||
2
|
The Business of the Company | 1 | ||||
3
|
The Board and Board committees | 2 | ||||
4
|
Business Plan and financial information | 7 | ||||
5
|
Distribution policy | 8 | ||||
6
|
Transfers of Shares | 9 | ||||
7
|
Termination of Management Agreement | 13 | ||||
8
|
Default | 14 | ||||
9
|
Terms and consequences of transfers of Shares | 16 | ||||
10
|
Rights in relation to Licence Companies | 19 | ||||
11
|
Employee compensation plan | 25 | ||||
12
|
Enforcement of rights | 26 | ||||
13
|
IPO | 27 | ||||
14
|
Competition with the Business | 31 | ||||
15
|
Information, insurance, records, licences | 33 | ||||
16
|
Conditions precedent, duration and termination | 34 | ||||
17
|
Public announcements | 35 | ||||
18
|
Confidentiality | 35 | ||||
19
|
Whole agreement and remedies | 37 | ||||
20
|
General | 37 | ||||
21
|
Notices | 39 | ||||
22
|
Settlement of Disputes | 41 |
i
Contents | Page | |||||
23
|
Governing law and submission to jurisdiction | 43 | ||||
24
|
Authority to deliver | 44 | ||||
25
|
Guarantee by Controllers | 44 | ||||
26
|
Undertaking by Vincent Mo | 44 | ||||
Schedule 1 Definitions and Interpretation | 51 | |||||
Schedule 2 Other Parties | 60 | |||||
Schedule 3 Deed of Adherence | 61 | |||||
Schedule 4 Determination of Fair Value | 62 | |||||
1
|
Appointment of expert | 62 | ||||
2
|
Determination of Fair Value | 62 | ||||
3
|
Fair Value Guidelines | 63 | ||||
Schedule 5 Agreements affecting Licence Companies | 65 | |||||
Schedule 6 Transitional Business Plan | 67 | |||||
Schedule 7 Integration Plan | 71 |
ii
(1) | Telstra International Holdings Limited, whose registered office is at Clarendon House, 2 Church Street, Hamilton HM 11 Bermuda (Telstra); | |
(2) | Tianquan Mo, of 4/F Tower B, COFCO Plaza, No 8 Jianguomennei Avenue, Beijing 100005, PRC (Vincent Mo); | |
(3) | The several persons named in Part A of Schedule 2; and | |
(4) | SouFun Holdings Limited, whose registered office is at Codan Trust Company (Cayman) Limited, Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies (the Company). |
(A) | Telstra, Trader Mauritius, the Continuing Shareholders and others have entered into a share purchase agreement dated 31 August 2006 (the Share Purchase Agreement) and other Transaction Documents, under which Trader Mauritius and each of the Continuing Shareholders have agreed to transfer certain of their respective shares and other securities (where applicable) in the Company to Telstra. | |
(B) | Upon completion of the Share Purchase Agreement, the shareholders of the Company shall be Telstra and the Continuing Shareholders. | |
(C) | The Parties have agreed to enter into this Agreement to regulate the management and control of the Company and the operation of the Business on the terms and conditions set out herein. |
1 | Interpretation | |
In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply: | ||
1.1 | Definitions | |
In this Agreement, unless the context otherwise requires, the capitalised and other terms used in this Agreement shall have the meanings ascribed to them in Part A of Schedule 1. | ||
1.2 | Interpretation | |
In this Agreement, unless the context otherwise requires, the rules of interpretation set out in Part B of Schedule 1 shall apply. | ||
2 | The Business of the Company | |
2.1 | Conduct of the Business | |
The Shareholders agree that their respective rights in the Company shall be regulated by this Agreement and the Articles. The Shareholders and the Company agree to be bound by and comply with the provisions of this Agreement which relate to them and all provisions of the |
1
Articles will be enforceable by the Parties between themselves in whatever capacity. Subject to applicable laws and the Articles, the Shareholders shall: |
2.1.1 | promote the best interests of the Company; | ||
2.1.2 | ensure that the Company performs and complies with all relevant laws and regulations and (so far as they lawfully can) all of its obligations under this Agreement and the Articles; and | ||
2.1.3 | ensure that the business of the Group is conducted in accordance with sound and good business practice and the highest ethical standards and in accordance with the Business Plan. |
2.2 | Promotion of the Business |
2.2.1 | Except as otherwise provided in this Agreement, the business of the Group shall be confined to the Business. | ||
2.2.2 | The Company and each Group Company shall use all reasonable and proper means to maintain, improve and extend the business in accordance with the Business Plan and the terms of this Agreement. |
2.3 | CEO and CFO |
2.3.1 | The CEO immediately following Closing shall be Vincent Mo. Subject to Clauses 3.5.7(i) and 3.5.7(ii), each subsequent CEO shall be nominated by the Chairman and approved by the Board. | ||
2.3.2 | If the Vincent Mo Shareholding Proportion ceases to be 15 per cent. or more as a result of one or more transfers by Vincent Mo or the Vincent Mo Shareholders, Vincent Mo may be removed as CEO in accordance with this Agreement. | ||
2.3.3 | The CFO immediately following Closing shall be Li-Lan Cheng. Subject to Clauses 3.5.7(i) and 3.5.7(ii), each subsequent CFO shall be nominated by the Chairman and approved by the Board. |
2.4 | Principal executive office | |
The principal executive office of the Company is situated at Suite 401-419, Level 4, Tower B, COFCO Plaza, No 8 Jianguomennei Avenue, Beijing 100005, PRC. | ||
2.5 | Financial year | |
The financial year of the Company and each Group Company shall commence on 1 January of a calendar year and end on 31 December of the following calendar year. | ||
3 | The Board and Board committees | |
3.1 | Telstra Directors |
3.1.1 | Subject to Clauses 3.4.3 and 13.2, Telstra may appoint 3 persons as Telstra Directors. | ||
3.1.2 | Any Telstra Director may be removed by Telstra in accordance with the Articles, in which case the Shareholders shall procure that the Company promptly removes the Telstra Director from his or her position. Telstra can appoint any person as a Telstra Director in place of any Telstra Director who vacates his or her office. |
2
3.2 | Vincent Mo Directors |
3.2.1 | Subject to Clause 3.4.3, Vincent Mo may appoint 3 persons as Vincent Mo Directors. | ||
3.2.2 | Any Vincent Mo Director may be removed by Vincent Mo in accordance with the Articles, in which case the Shareholders shall procure that the Company promptly removes the Vincent Mo Director from his or her position. Vincent Mo can appoint any person as a Vincent Mo Director in place of any Vincent Mo Director who vacates his or her office. |
3.3 | Chairman |
3.3.1 | The Chairman immediately following Closing shall be Vincent Mo. Subject to Clause 3.5.7(i), each subsequent Chairman shall be appointed by the Board. If the Chairman or his duly appointed proxy is not present at any Board meeting, the Directors present may appoint any one of their number to act as chairman for the purpose of that meeting. | ||
3.3.2 | For the period of 24 months following Closing, Vincent Mo may only be removed as Chairman in accordance with this Agreement if any one of the following events occurs: |
(i) | Vincent Mo commits an act of serious and material misconduct; | ||
(ii) | Vincent Mo commits or causes to be committed a serious or persistent breach of any material term of this Agreement or the Management Agreement whether directly or indirectly, and which is not capable of remedy or, if capable of remedy, is not remedied within the period in which the breach is required to be remedied by the terms of the foregoing agreements; | ||
(iii) | the Group fails to achieve an increase in its consolidated net profit for each of the 12-month periods ending 30 June 2007 or 30 June 2008 by 60 per cent. or more compared with the consolidated net profit for the 12-month period ending 30 June 2006 (on an annual compounding basis), which shall be calculated on the basis of the audited consolidated profit and loss statements of the Group for each of the 12 months ending 30 June 2007 and 30 June 2008 respectively and the consolidated profit and loss statements of the Group for the 12 months ending 30 June 2006 initialled by Telstra and the Chairman for the purposes of identification; or | ||
(iv) | the Vincent Mo Shareholding Proportion ceases to be 15 per cent. or more as a result of one or more transfers by Vincent Mo or the Vincent Mo Shareholders. |
3.4 | Shareholder consultation and approval for appointments |
3.4.1 | A Shareholder who wishes to make an appointment of a Director in accordance with this Agreement shall take reasonable steps to ensure that its nominee is able to perform his duties competently. | ||
3.4.2 | Each Shareholder who wishes to make an appointment of a Director in accordance with this Agreement after the commencement of this Agreement shall give notice to the other Shareholders of the name, qualifications and experience of its nominee and intended date of appointment at least 28 Business Days prior to the intended date of appointment. |
3
3.4.3 | Immediately following Closing, the Board shall comprise 3 Directors appointed by Telstra and 3 Directors appointed by Vincent Mo. Subject to Clause 13.3, if the Shareholders agree to a change in the number of Directors, they shall ensure that the number of Directors remain an even number and the right to appoint Directors shall be allocated between Telstra and Vincent Mo in the same proportions as provided for in Clause 3.1.1 and Clause 3.2.1 (and Clauses 3.1.1 and 3.2.1 shall be varied accordingly) and the Shareholders shall procure the Company to pass a resolution to give effect to the change in the number of Directors in accordance with the Articles. |
3.5 | Board Meetings |
3.5.1 | Board meetings shall be held in Beijing, PRC, or Hong Kong and at a minimum of 3-monthly intervals. A Board meeting may be convened by Vincent Mo or any Telstra Director. At least one months written notice shall be given to each of the Directors of all Board meetings (except if there are exceptional circumstances or a majority of Directors agree to shorter notice). | ||
3.5.2 | No later than 5 Business Days before the scheduled date of a Board Meeting, a further notice shall be given to the Directors which shall: |
(i) | specify a reasonably detailed agenda; | ||
(ii) | be accompanied by any relevant papers; and | ||
(iii) | be sent by courier, facsimile or electronic transmission if sent to an address outside the PRC. |
3.5.3 | The quorum at a Board meeting shall be one Telstra Director and Vincent Mo (or his proxy duly appointed in accordance with the Articles) present at the time when the relevant business is transacted. If a quorum is not present within half an hour of the time appointed for the meeting or ceases to be present, the Director(s) present shall adjourn the meeting to a specified place and time five Business Days after the original date. If a quorum is not present within an hour of the time appointed for the adjourned meeting, the quorum shall be deemed to be satisfied by any two Directors then present at the meeting. Directors may participate in any meeting of the Board by means of a conference telephone or other communications equipment through which all persons participating in the meeting can communicate with each other simultaneously and instantaneously and for the purpose of counting a quorum such participation shall constitute presence at a meeting as if those participating were present in person. | ||
3.5.4 | Any notice(s) referred to in Clauses 3.5.1, 3.5.2 or 3.5.3 shall be given by the secretary of the Company. | ||
3.5.5 | Board meetings shall be chaired by the Chairman or his proxy duly appointed in accordance with the Articles. | ||
3.5.6 | Subject to Clause 3.5.7, Clause 3.5.9 and any applicable laws, the following matters relating to the Group shall be decided by the Board: |
(i) | subject to Clause 3.3, the appointment or dismissal of the Chairman; | ||
(ii) | subject to Clauses 2.3.1 and 2.3.3, (a) the dismissal or approval of the appointment of the CEO and the termination of (including the amount of any |
4
compensation payable upon termination) or any amendment or variation to the Management Agreement and (b) the approval of the appointment or the dismissal of the CFO and the termination of or any amendment or variation to the CFOs employment agreement (if any); |
(iii) | any change in the share capital of the Company or, to the extent it causes a change in the total share capital of the Group, of any other Group Company or the creation, allotment or issue of any shares or of any other security or the grant of any option or rights to subscribe for or to convert any instrument into shares or securities in a Group Company; | ||
(iv) | any reduction of the share capital of the Company or, to the extent it causes a change in the total share capital of the Group, of any other Group Company or variation of the rights attaching to any class of shares in any Group Company; | ||
(v) | the disposal or the creation of an Encumbrance over or the dilution of the Companys interests (to the extent it causes a change in the total share capital of the Group), directly or indirectly, in any Group Company; | ||
(vi) | subject to Clause 4.2, adoption of and approval of any deviations from the Business Plan, proposed in accordance with Clause 4.1; | ||
(vii) | any acquisitions and divestments by any Group Company (by merger, de-merger, division or otherwise) of any material assets, share capital, equity interests or other securities in or debt instruments issued by any body corporate, or of any businesses or undertakings other than between 100 Percent Associated Companies of the Company; | ||
(viii) | the cessation by any Group Company of any material business operation; | ||
(ix) | any material change to the nature, scope or geographical area of the Business or carrying on any business other than the Business; | ||
(x) | the borrowing of any amount or the creation of any charge or other security over any assets or property of any Group Company other than between 100 Percent Associated Companies of the Company; | ||
(xi) | the making of any loan or advance by any Group Company to any person, firm, body corporate or other business other than in the normal course of business and on an arms length basis, or to a 100 Percent Associated Company of the Company; | ||
(xii) | any expenditure by any Group Company in one transaction or in a series of related transactions exceeding US$1 million in any 12-month period; | ||
(xiii) | the payment or declaration of any dividend or the making of any profit distribution by the Company and the formulation of or amendment to any policy in relation thereto; | ||
(xiv) | the entry into or variation, termination or enforcement of any right under any agreement or transaction between a Group Company and (a) any other Group Company that is not a 100 Percent Associated Company of the Company, (b) any Shareholder, (c) any Controller, (d) any Associated Company of a Shareholder, (e) any Licence Company, or (f) any shareholder, director or |
5
employee of any Group Company or any of the foregoing companies (other than, in the case of such a director or employee, any agreement for his engagement or employment with the Company or relating to his engagement or employment with the Company, unless the terms of this clause otherwise require); and |
(xv) | the exercise of any other powers granted to the Board under this Agreement, the Articles or any applicable laws. |
Where any matter listed in this Clause 3.5.6 is required by any applicable law to be approved by the shareholders or by a general meeting of the Company, the Boards powers in this respect shall be to approve the putting of a resolution on the matter to a vote by a general meeting of the Company. | |||
3.5.7 | At any Board meeting, each Director shall be entitled to one vote and the Chairman (or his proxy duly appointed in accordance with the Articles) shall have a casting vote, subject to the following: |
(i) | subject to Clause 3.5.7(ii), on any matter specified in Clauses 3.5.6(i) and 3.5.6(ii), the Telstra Directors present collectively and the Vincent Mo Directors present collectively shall be entitled to the number of votes in the Respective Proportions of their respective nominating Shareholders (where, for the avoidance of doubt, the Chairman shall not have any casting vote); | ||
(ii) | for so long as Vincent Mo is the Chairman, Vincent Mo shall have the exclusive right to appoint the CEO and the CFO and each of the Telstra Directors and Vincent Mo shall have a right of veto; | ||
(iii) | on any of the matters specified in Clauses 3.5.6(iii) to (xiv) (inclusive), each Telstra Director shall have a right of veto (except where Telstras Respective Proportion becomes less than 40 per cent. as a result of one or more transfers by Telstra or where any other Shareholder, together with any other Shareholder Controlled by such Shareholder, has a larger Respective Proportion than Telstra), provided that where one or more Telstra Director exercise(s) his right of veto, the Chairman or his duly appointed proxy shall not have any casting vote; and | ||
(iv) | as otherwise provided in this Agreement. |
3.5.8 | Each Shareholder shall use its reasonable endeavours to ensure that at least one Director appointed by it attends Board meetings. | ||
3.5.9 | Any specific matter expressly provided for in sufficient detail in the Business Plan or Transitional Business Plan (as applicable), including but not limited to the matters listed in Clauses 3.5.6(iii) to (xiv) (inclusive), shall be deemed to be approved by the Board. The Chairman shall be responsible for the management of the Company and for implementing decisions of the Board. The Chairman shall have the right to make decisions in accordance with the Articles on any matters that are not listed in Clauses 3.5.6(i) to (xiv) (inclusive) and/or that are described in sufficient detail in the Business Plan or Transitional Business Plan (as applicable). | ||
3.5.10 | The Company shall procure that each Group Company acts strictly in accordance with and carries out all decisions of the Board. The Company, acting through the Board, |
6
shall ensure that it has the power under the articles of association of each other Group Company (or equivalent document) to perform its obligations under this Clause and, where necessary, shall cause the articles of association of a Group Company (or equivalent document) to be duly amended to grant this power to the Company. |
3.6 | Committees of Directors |
3.6.1 | The Board may constitute committees of Directors. | ||
3.6.2 | The quorum for Board committee meetings shall be the same as for Board meetings. | ||
3.6.3 | As at Closing: |
(i) | there shall be an Audit Committee which must have one Telstra Director and one Vincent Mo Director as members. The Audit Committee shall review the Audited Accounts and discuss with the Auditors the accounting policies to be adopted; | ||
(ii) | there shall be a Compensation Committee which must have one Telstra Director and one Vincent Mo Director as members. The Compensation Committee shall decide the compensation for the Directors, Chairman, CEO, CFO and President (or Chief Operating Officer) of the Company; and | ||
(iii) | the Nomination Committee existing prior to Closing shall be dissolved with immediate effect. |
4 | Business Plan and financial information | |
4.1 | Information to be prepared | |
The CEO shall prepare, or cause to be prepared, and shall submit to the Board and the Shareholders the following information as soon as possible and no later than the dates/times set out below: |
4.1.1 | the unaudited results of the Company and all Group Companies for the previous financial year within 25 Business Days of the end of each financial year; | ||
4.1.2 | Audited Accounts or audited consolidation returns for the previous financial year within three months of the end of each financial year; | ||
4.1.3 | a draft Business Plan for the Group for the following three years, 45 days prior to the end of each financial year; | ||
4.1.4 | any proposed deviation from the Business Plan at any time the CEO deems such deviation appropriate; | ||
4.1.5 | monthly unaudited management accounts in English including (1) a detailed profit and loss statement, balance sheet and cash flow statement; (2) an analysis of subscriptions and other revenue; (3) a review of the budget contained in the Business Plan including a reconciliation of results with revenue and capital budgets; and (4) number of staff, within 20 Business Days following the end of each month, and for the months of June and December such information shall be provided on an entity-by-entity basis as soon as possible to enable Telstra to comply with its reporting and disclosure obligations; and |
7
4.1.6 | any further information as any Shareholder may reasonably require relating to the Business or financial condition of the Company or of any Group Company, within 20 Business Days of the Shareholder making the request. |
4.2 | Approval of Business Plans |
4.2.1 | The Board shall decide whether or not to approve the draft Business Plan within 30 Business Days of receiving it. | ||
4.2.2 | If the draft Business Plan is not approved by the Board in accordance with Clauses 3.5.6(vi), 3.5.7 and 4.2.1, the CEO shall resubmit new versions of the draft Business Plan to the Board for approval and the Telstra Directors present collectively and the Vincent Mo Directors present collectively shall be entitled to the number of votes in the Respective Proportions of their respective nominating Shareholders (where, for the avoidance of doubt, the Chairman shall not have any casting vote). | ||
4.2.3 | In the event that a new Business Plan has not been approved by the end of the then current financial year, the Company shall be managed by the CEO in accordance with an Operating Budget starting after the end of such financial year. An Operating Budget shall mean, for any month, the operating budget for the immediately preceding month. |
4.3 | Transitional Business Plan | |
The Parties agree that, until the first Business Plan is approved by the Board in accordance with Clauses 3.5.6(vi), 3.5.7 and 4.2, the business of the Group shall be conducted in accordance with the Transitional Business Plan. | ||
4.4 | Integration | |
Each Shareholder agrees to perform or procure the performance of the obligations imposed on it, any of its Associated Companies and any Group Company in the integration plan set out in Schedule 7. | ||
4.5 | KPMG audit | |
The Company shall procure that KPMG complete the audit of the management accounts of the Company for the period ended 30 June 2006 as soon as practicable after Closing. |
5 | Distribution policy | |
5.1 | Distribution of net profit |
5.1.1 | The annual general meeting of the Company at which Audited Accounts are laid before the Shareholders must be held as soon as practicable but not later than 4 months after the end of the relevant financial year. | ||
5.1.2 | The Auditors shall be instructed to report (at the expense of the Company) the amount of the profits available for distribution by the Company at the same time as they sign their report on the Audited Accounts. | ||
5.1.3 | The Company shall each year distribute to the Shareholders a percentage as the Board determines of all of the Companys profits lawfully available for distribution of the then most recently ended financial year subject to the Board making reasonable |
8
provisions and transfers to reserves and retaining adequate funds for the Companys planned cash outflows and capital expenditure as set out in the Business Plan. |
5.1.4 | Each Group Company (excluding the Company) shall distribute to its shareholders all of its available profits in each financial year unless otherwise determined by the Board. |
5.2 | Conditions for distribution of net profit | |
Distribution of profits in accordance with this Clause 5 may not be made if the Board resolves that the distribution is materially prejudicial to the interests of any Group Company having regard to: |
5.2.1 | implementation of the investment programme approved by the Board in the Business Plan or otherwise; | ||
5.2.2 | the trading prospects of the Company and the Group; and | ||
5.2.3 | the need to maintain the sound financial standing of the Group. |
6 | Transfers of Shares | |
6.1 | General prohibition against Share transfers | |
No Shareholder can do, or agree to do, any of the following without the prior written consent of the other Shareholders, unless it is permitted by this Clause 6, Clause 7 or Clause 8: |
6.1.1 | pledge, mortgage, charge or otherwise Encumber any of its Shares or any interest in any of its Shares; | ||
6.1.2 | sell, transfer or otherwise dispose of, or grant any option over, any of its Shares or any interest in its Shares; or | ||
6.1.3 | enter into any agreement in respect of the votes attached to any of its Shares. |
6.2 | Transfers to Associated Companies |
6.2.1 | Any Shareholder may transfer all or some of its Shares to any 100 Percent Associated Company by giving prior written notice to the other Shareholders. A 100 Percent Associated Company must be under an obligation to retransfer its Shares to the Shareholder or another 100 Percent Associated Company of that Shareholder immediately if it ceases to be a 100 Percent Associated Company of the Shareholder. | ||
6.2.2 | Following a transfer of Shares to a 100 Percent Associated Company in accordance with this Clause 6.2, the original transferring Shareholder (but not a subsequent transferor in a series of transfers to 100 Percent Associated Companies) shall guarantee, as sole or principal obligor to the Parties, the due and punctual performance by the transferee of all obligations, commitments and undertakings under or pursuant to this Agreement (and each Transaction Document to which the original transferring Shareholder is a party and to which the transferee accedes). | ||
6.2.3 | Where not all of the Shares held by the original transferring Shareholder (but not a subsequent transferor in a series of transfers) are transferred to its 100 Percent Associated Company: |
(i) | the transferring Shareholder must be granted the exclusive right to exercise votes in respect of each Share transferred on behalf of the transferee; |
9
(ii) | this Agreement and the Articles shall apply as if the transferring Shareholder and the transferee are one Shareholder; | ||
(iii) | all the rights of the transferee under this Agreement and the Articles shall be exercised exclusively by the transferring Shareholder; | ||
(iv) | any notice given by the transferring Shareholder under the Agreement or the Articles shall be deemed also to be given by the transferee; and | ||
(v) | any notice required to be given to the transferee shall be given also to the transferring Shareholder. |
6.3 | Notice of Offers | |
If (a) a Shareholder receives a bona fide offer in writing from any party other than a 100 Percent Associated Company of that Shareholder (Shareholder Level Offeror) to purchase all or some of that Shareholders Shares (a Shareholder Level Offer), or (b) Vincent Mo receives a bona fide offer in writing from any party other than a 100 Percent Associated Company of Vincent Mo (Controller Level Offeror) to purchase all of the Vincent Mos equity interests in both Vincent Mo Shareholders (a Controller Level Offer), (both a Shareholder Level Offer and a Controller Level Offer, an Offer and both a Shareholder Level Offeror and a Controller Level Offeror, an Offeror) which it wishes to accept, it shall immediately give written notice (the Transfer Notice) to the other Shareholders (the Remaining Shareholders) offering to sell, in the case of a Shareholder Level Offer, those Shares which are the subject of the Shareholder Level Offer or, in the case of a Controller Level Offer, all the Shares of the Vincent Mo Shareholders (in each case Offer Shares) to the other Shareholders (or where the Remaining Shareholder is Telstra, any person or entity nominated by Telstra) at the same cash price or cash price-equivalent (which in the case of a Controller Level Offer, shall be the cash price or cash price-equivalent for the Vincent Mos equity interests in the Vincent Mo Shareholders representing the value attributable to the Shares held by the Vincent Mo Shareholders) as set out in the Offer, and on terms which are no less favourable than those contained in the Offer. The Transfer Notice shall also state: |
6.3.1 | the period within which the offer to sell the Offer Shares to the Remaining Shareholders shall remain open to be accepted. This period must be at least 30 Business Days from the date of the Transfer Notice (the Acceptance Period); | ||
6.3.2 | the identity of the Offeror; | ||
6.3.3 | in the case of a Shareholder Level Offer, the number of Shares of the Selling Shareholder for which the Offer is made and, where the selling Shareholder is the Vincent Mo Shareholders or Telstra in the circumstances specified in Clause 6.4.2 the number of Shares which a Remaining Shareholder which issues a Tag-Along Notice is entitled to sell; and | ||
6.3.4 | full details of all other terms and conditions of the Offer and where the selling Shareholder is the Vincent Mo Shareholders or Telstra in the circumstances specified in Clause 6.4.2, that the Offer is made for all of the Shares of any Remaining Shareholder who issues a Tag-Along Notice. |
Unless as permitted under this Clause 6, Vincent Mo shall not sell, transfer or otherwise dispose of, grant any option over, Encumber, any of its shares in any Vincent Mo Shareholder or any interest in any of these shares and shall not enter into any agreement in respect of the |
10
votes attached to any of these shares. For the avoidance of doubt, an Offeror under this Clause may be a Shareholder other than the selling Shareholder. |
6.4 | Options of Remaining Shareholders | |
Once a Remaining Shareholder has received a Transfer Notice it may either: |
6.4.1 | send a written notice to the selling Shareholder (an Acceptance Notice) within the Acceptance Period accepting the selling Shareholders offer set out in the Transfer Notice; or | ||
6.4.2 | in the case of a Shareholder Level Offer, where the selling Shareholder is: |
(i) | the Vincent Mo Shareholders (to the extent that Vincent Mo is the Chairman or the CEO of the Company); or | ||
(ii) | Telstra, where at the date of the Transfer Notice Telstra Controls the Company, |
send a written notice to the selling Shareholder (a Tag-Along Notice) within the Acceptance Period declining the offer set out in the Transfer Notice and accepting the Offerors Offer, subject to the delivery of an Acceptance Notice by any other Remaining Shareholder. |
If a Remaining Shareholder neither sends an Acceptance Notice nor a Tag-Along Notice, it shall be deemed not to have accepted the selling Shareholders offer set out in the Transfer Notice, and where the selling Shareholder is the Vincent Mo Shareholders or Telstra in the circumstances described in Clause 6.4.2, any Offer by an Offeror. | ||
6.5 | Consequences of Transfer Notice |
6.5.1 | If the selling Shareholders offer set out in the Transfer Notice is accepted, then upon the expiry of the Acceptance Period, the selling Shareholder must sell the Offer Shares to each Remaining Shareholder (or where the Remaining Shareholder is Telstra, its nominee) who has accepted the selling Shareholders offer, in the proportion which the Respective Proportion of that Remaining Shareholder bears to the total Respective Proportions of all the Remaining Shareholders who have accepted the offer. If any Tag-Along Notice has also been issued, the Shareholder who has issued the Tag-Along Notice must sell its Shares to each Remaining Shareholder (or where the Remaining Shareholder is Telstra, its nominee) who has accepted the selling Shareholders offer, in the proportion which the Respective Proportion of that Remaining Shareholder bears to the total Respective Proportions of all of the Remaining Shareholders who have accepted the offer. | ||
6.5.2 | If the selling Shareholders offer set out in the Transfer Notice is not accepted or deemed not to have been accepted by any Remaining Shareholder and a Tag-Along Notice has not been issued, the selling Shareholder or Vincent Mo (as the case may be) must upon the expiry of the Acceptance Period accept the Offer and in the case of a Shareholder Level Offer, the selling Shareholder must sell the Offer Shares to the Offeror on the terms and conditions of the Offer and in the case of a Controller Level Offer, Vincent Mo shall sell its equity interests in the Vincent Mo Shareholders, and where a Tag-Along Notice has been issued, any Remaining Shareholder who has issued the Tag-Along Notice must sell its Shares to the Offeror on the terms and conditions of the Offer. |
11
6.6 | Completion of transfer | |
The sale of Shares in accordance with this Clause 6 shall be made on the following terms: |
6.6.1 | completion of the transfer of the Shares shall be completed 10 Business Days after the date of expiry of the Acceptance Period or the date of satisfaction or waiver of all Permitted Conditions (whichever is the later) (the Transfer Date) and at a reasonable time and place as the selling Shareholder(s) and the buyer may agree or, failing which, at the registered office of the Company; | ||
6.6.2 | the selling Shareholder(s) must deliver to the buyer in respect of the Shares which it is selling on or before the Transfer Date: |
(i) | duly executed share transfer forms; | ||
(ii) | the relevant share certificates; and | ||
(iii) | a power of attorney in favour of any person or entity as the buyer may nominate to enable that person or entity to exercise all rights of ownership in respect of the Shares to be sold including voting rights; |
6.6.3 | the buyer must pay the total consideration due for the Shares to the selling Shareholder(s) by telegraphic transfer to the bank account of the selling Shareholder(s) notified to it for the purpose on the Transfer Date; | ||
6.6.4 | the completion of the sale of the Shares of all selling Shareholder(s) must take place simultaneously; and | ||
6.6.5 | in accordance with Clause 9. |
6.7 | Failure to complete sale |
6.7.1 | If any selling Shareholder fails or refuses to transfer any Shares in accordance with this Clause 6, the buyer or where the buyer is not a Party, the Company on its behalf and acting on its instructions may serve a default notice. Within five Business Days of service of a default notice (unless the non-compliance has previously been remedied to the reasonable satisfaction of the buyer), the defaulting selling Shareholder shall not exercise any of its powers or rights in relation to management of, and participation in the profits of, the Company under this Agreement, the Articles or otherwise. The Directors appointed by the defaulting seller (or its predecessor in title) shall not: |
(i) | be entitled to vote at any Board meeting; | ||
(ii) | be required to attend any meeting of Directors in order to constitute a quorum; or | ||
(iii) | be entitled to receive or request any information from the Company. |
6.7.2 | Without prejudice to any other rights or remedies which a Party may have, the Parties acknowledge and agree that damages would not be an adequate remedy for any breach of this Clause 6.7 and the remedies of injunction, specific performance and other equitable relief are appropriate for any actual or anticipatory breach of this provision and no proof of special damages shall be necessary for the enforcement of the rights under this Clause 6.7. |
12
7 | Termination of Management Agreement | |
7.1 | Sell Right |
7.1.1 | If the Management Agreement is terminated by the Company and the Company has not at that time completed an IPO, the Company shall promptly advise each Shareholder in writing of the termination. Each Continuing Shareholder shall, subject to this Clause 7, have the right (the Sell Out Right) to require Telstra to purchase (or, at Telstras sole discretion, to procure the purchase of) all of the Shares held by the Continuing Shareholder, provided that the Sell Out Right can be exercised not earlier than six months after the termination. | ||
7.1.2 | The Sell Out Right is exercisable in whole but not in part by written notice from a Continuing Shareholder to Telstra (the Sell Out Notice) given at any time during a period of 20 Business Days from the date the Sell Out Right first becomes exercisable under Clause 7.1.1 (the Sell Out Period). No Continuing Shareholder may exercise its Sell Out Right, unless all Vincent Mo Shareholders exercise their respective Sell Out Rights. No Vincent Mo Shareholder may exercise a Sell Out Right unless all other Vincent Mo Shareholders exercise their Sell Out Rights. |
7.2 | Exercise |
7.2.1 | Where all Vincent Mo Shareholders have exercised their respective Sell Out Rights, Telstra shall within a period of 20 Business Days following the expiry of the Sell Out Period or when all Sell Out Notices are received, whichever is earlier, inform each Continuing Shareholder which has delivered a Sell Out Notice in writing (the Telstra Notice) of its decision to carry out any one of the following: |
(i) | purchase or nominate a third party to purchase the Shares which are the subject of the Sell Out Notice for an amount equal to the Fair Value of the Shares (the Sell Out Price); or | ||
(ii) | procure a trade sale of the Company to any bona fide, unrelated third party arms length buyer(s). |
7.2.2 | If the Telstra Notice contains an election under Clause 7.2.1(i), the relevant Continuing Shareholder shall sell and Telstra or a buyer nominated by Telstra shall purchase the relevant Shares which are the subject of the Sell Out Notice in accordance with Clause 7.3.1. | ||
7.2.3 | If the Telstra Notice contains an election under Clause 7.2.1(ii), and no formal and binding agreement has been executed with any third party buyer(s) for the trade sale of the Company within a period of six months of the Telstra Notice, then within seven days following the expiry of that six-month period, each Continuing Shareholder who has given a Sell Out Notice shall sell and Telstra or a buyer nominated by Telstra shall purchase the relevant Shares which are the subject of the Sell Out Notice in accordance with Clause 7.3.1. | ||
7.2.4 | A Sell Out Notice shall be irrevocable and unconditional except for any Permitted Condition. | ||
7.2.5 | The Shareholders shall fully cooperate and provide all reasonable assistance to Telstra if an election is made under Clause 7.2.1(ii). |
13
7.3 | Completion of transfer |
7.3.1 | The sale and purchase of Shares in accordance with Clause 7.2.2 (or Clause 7.2.3 where no formal and binding agreement with any third party buyer(s) has been executed) shall be made on the following terms: |
(i) | completion of the transfer of the Shares shall be completed seven Business Days after the date of determination of the Fair Value of the Shares or the date of the satisfaction or waiver of all Permitted Conditions, whichever is the later (the Sell Out Date) at a reasonable time and place that the Shareholders may agree or, failing which, at the registered office of the Company; | ||
(ii) | the selling Shareholder shall deliver to Telstra in respect of the Shares on or before the Sell Out Date: |
(a) | duly executed share transfers forms; and | ||
(b) | the relevant share certificates; and | ||
(c) | a power of attorney in favour of any person or entity as the buyer may nominate to enable that person or entity to exercise all rights of ownership in respect of the Shares including voting rights; and |
(iii) | Telstra shall pay the Sell Out Price to the selling Shareholder by telegraphic transfer to the bank account of the selling Shareholder notified to Telstra for the purpose on the Sell Out Date; and | ||
(iv) | in accordance with Clause 9. |
7.3.2 | If a formal and binding agreement is executed with third party buyer(s) for the trade sale of the Company within the six-month period referred to in Clause 7.2.3, all Shareholders shall, upon Telstras request in writing, sell their Shares to the third party buyer(s) on the terms of the formal and binding agreement and the sale and purchase of Shares to the third party buyer(s) shall be made on the terms of the relevant sale agreement executed with the third party buyer(s). The completion of the sale of the Shares of all selling Shareholders must take place simultaneously. |
8 | Default | |
8.1 | Events of Default | |
A Shareholder (the Defaulting Shareholder) suffers an Event of Default where one or more of the following occurs: |
8.1.1 | it or its Controller commits a material breach of this Agreement and either (1) the breach is not capable of being remedied or (2) the Defaulting Shareholder does not remedy that breach within 45 calendar days of the other Shareholder sending it written notice requiring it to remedy that breach; | ||
8.1.2 | a Licence Company Controlled by the Defaulting Shareholder or by the Defaulting Shareholders Controller commits a material breach of any agreement between it and a Group Company and either (1) the breach is not capable of being remedied or (2) the Licence Company does not remedy that breach within 45 calendar days of the Group Company sending it written notice requiring it to remedy that breach; |
14
8.1.3 | it is unable to pay its material debts as they fall due, suspends making payments on any of its debts; | ||
8.1.4 | the value of its assets is less than its liabilities (taking into account contingent and prospective liabilities) provided that it becomes subsequently bankrupt; | ||
8.1.5 | any corporate action, legal proceedings or other procedure or step is taken (or any analogous procedure or step is taken in any jurisdiction) in relation to: |
(i) | the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) other than a solvent liquidation or reorganisation of any of its Associated Companies; | ||
(ii) | a composition, assignment or arrangement with any creditor; | ||
(iii) | the appointment of a liquidator (other than in respect of a solvent liquidation of any of its Associated Companies), receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any of its assets; or |
8.1.6 | enforcement of any security over any of its assets. |
For the purposes of this Clause 8.1, a Controller of a Defaulting Shareholder shall mean a person or entity who Controls the Defaulting Shareholder by virtue of the person or entity (solely or collectively with any Immediate Family Member) directly or indirectly, legally or beneficially, owning 100 per cent. of the voting securities of the Defaulting Shareholder. | ||
8.2 | Notification of Default | |
If an Event of Default occurs, the Defaulting Shareholder shall notify the other Shareholders as soon as reasonably practicable. | ||
8.3 | Default Notice |
8.3.1 | Following an Event of Default, without prejudice to any rights or remedies it may have under Clause 10, a non-defaulting Shareholder may give written notice (a Default Notice) to the Defaulting Shareholder(s) within 60 Business Days of receiving notification of the Event of Default from the Defaulting Shareholder(s) or of its becoming aware of the Event of Default, whichever is the earlier requiring the Defaulting Shareholder(s) to sell all of the Shares held by the Defaulting Shareholder(s) (the Default Sale Shares) to the non-defaulting Shareholder or any person or entity nominated by the Defaulting Shareholder at a price per Share equal to the Fair Value of the Sale Shares. | ||
8.3.2 | Where more than one non-defaulting Shareholder issue a Default Notice, the Default Sale Shares shall be sold to each of the non-defaulting Shareholders (other than a Vincent Mo Shareholder where the other Vincent Mo Shareholder is the Defaulting Shareholder), in the proportion which the Respective Proportion of that non-defaulting Shareholder bears to the total Respective Proportions of all the non-defaulting Shareholders who have issued a Default Notice. |
15
8.4 | Completion of transfer | |
The completion of the sale of the Default Sale Shares pursuant to this Clause 8.4 shall be made in accordance with Clauses 6.6 and 6.7, save that for the purposes of this Clause 8.4, the Acceptance Period shall be the 60 Business Day period referred to in Clause 8.3.1. | ||
8.5 | Period between Default Notice and transfer | |
The Shareholders shall do all things within their power to ensure that the Business is continued to be run as a going concern during the period between the service of the Default Notice and the completion of the transfer of the Default Sale Shares. | ||
8.6 | Failure to complete transfer | |
If any Defaulting Shareholder fails or refuses to transfer any Shares in accordance with this Clause 8, the non-defaulting Shareholder may serve a further default notice. Within 5 Business Days of service of the further default notice, the Defaulting Shareholder shall not exercise any of its powers or rights in relation to management of, and participation in the profits of, the Company under this Agreement, the Articles or otherwise. The Directors appointed by the Defaulting Shareholder (or its predecessor in title) shall not: |
8.6.1 | be entitled to vote at any Board meeting; | ||
8.6.2 | be required to attend any meeting of Directors in order to constitute a quorum; or | ||
8.6.3 | be entitled to receive or request any information from the Company. |
9 | Terms and consequences of transfers of Shares | |
9.1 | Notices | |
The Shareholders shall keep the Company informed at all times of the issue and contents of any notice served in relation to the transfer of Shares pursuant to this Agreement (including without limitation a Transfer Notice, Tag-Along Notice, Sell Out Notice or Default Notice) and any election or acceptance relating to those notices. | ||
9.2 | Transfer terms | |
Any sale and/or transfer of Shares pursuant to this Agreement shall be on terms that those Shares: |
9.2.1 | are transferred free from all Encumbrances; and | ||
9.2.2 | are transferred with the benefit of all rights attaching to them as at the date of the relevant Transfer Notice, Tag-Along Notice, Sell Out Notice or Default Notice as appropriate. |
9.3 | Registration | |
The Parties shall procure that a transfer of Shares is not approved for registration unless this Agreement and Articles have been complied with. The Company shall procure that each share certificate issued by it shall carry the following statement: | ||
Any disposition, transfer, charge of or dealing in any other manner in the Shares represented by this certificate is restricted by a Shareholders Agreement dated [ ] and made between [ ]. |
16
9.4 | Waiver of pre-emption rights | |
The Shareholders waive their pre-emption rights to the transfer of Shares contained in this Agreement and the Articles to the extent necessary to give effect to Clause 6, Clause 7 and Clause 8. | ||
9.5 | Further assurance | |
Each Party shall do all things and carry out all acts which are reasonably necessary to effect the transfer of Shares in accordance with the terms of this Agreement in a timely fashion. | ||
9.6 | Return of documents, etc. | |
On ceasing to be a Shareholder, a Shareholder must hand over to the Company material correspondence, Business Plans, schedules, documents and records relating to the Business held by it or a Controller or an Associated Company of the Shareholder or any third party which has acquired them through that Shareholder, Controller or an Associated Company and shall not keep any copies. | ||
9.7 | Loans, borrowings, guarantees and indemnities |
9.7.1 | Upon a transfer of all the Shares held by a Shareholder: |
(i) | the remaining Shareholders shall procure that all loans, borrowings and indebtedness in the nature of borrowings outstanding owed by the Company to a transferring Shareholder (together with any accrued interest) are either assigned to each of the remaining Shareholders for a value as may be agreed between the transferring Shareholder and all the remaining Shareholders and in the proportion which the Respective Proportion of that remaining Shareholder bears to the total Respective Proportions of all the remaining Shareholders, or failing agreement with all the remaining Shareholders, are repaid by the Company; | ||
(ii) | all loans, borrowings and indebtedness in the nature of borrowings outstanding owed by that transferring Shareholder to the Company shall be repaid; and | ||
(iii) | the remaining Shareholders shall use all reasonable endeavours (but without involving any financial obligation on their part) to procure the release of any guarantees, indemnities, security or other comfort given by the transferring Shareholder to or in respect of the Company or its Business and, pending the release, shall indemnify the transferring Shareholder in respect of them. |
9.7.2 | Any assumption of the obligations of a transferring Shareholder by the remaining Shareholders is without prejudice to the rights of the remaining Shareholders and/or the Company to claim from the transferring Shareholder in respect of liabilities arising prior to the completion date of the transfer of Shares. |
9.8 | Assumption of obligations | |
The Parties shall procure that no person other than an existing Shareholder acquires any Shares (other than in an IPO) unless it enters into a Deed of Adherence agreeing to be bound by this Agreement as a Shareholder and any other agreements in connection with the Business as a Shareholder. |
17
9.9 | Removal of appointees |
9.9.1 | If a Shareholder ceases to be a Shareholder it shall immediately upon transfer of its Shares procure the resignation of all its appointees to the Board and as Director, Chairman and CEO and to the Board of directors of each Group Company. If the remaining Shareholders request, it shall do all things and sign all documents as may otherwise be necessary to procure the resignation or dismissal of these persons from their appointments in a timely manner. If Telstra or a Vincent Mo Shareholder ceases to be a Shareholder, immediately upon transfer of its Shares and resignation of all its appointees in accordance with this Clause, Clauses 3.5.7(i) and (ii) shall cease to have any further force and effect. For the purposes of this Clause, an appointee of a Vincent Mo Shareholder shall include any Vincent Mo Director and Vincent Mo in whatever capacity. | ||
9.9.2 | Those resignations shall take effect without any liabilities on the Company for compensation for loss of office or otherwise except to the extent that the liability arises in relation to a service contract with a Director who was acting in an executive capacity. Any Shareholder removing a Director appointed by it shall fully indemnify and hold harmless the other Shareholders and the Company from and against any claim for unfair or wrongful dismissal arising out of such removal. |
9.10 | Power of Attorney |
9.10.1 | Telstra irrevocably appoints each Vincent Mo Shareholder and each Vincent Mo Shareholder irrevocably appoints Telstra, by way of security for the performance of any such appointing Partys obligations owed to any such other Party under Clauses 6, 7 and 8, its attorney to execute, deliver and/or issue any necessary document, agreement, certificate and instrument required to be executed by the appointing Party in discharge of its obligations to the other Party under the provisions of Clauses 6, 7 and 8 where the other Party has exercised an Acceptance Notice, Tag-Along Notice, Sell Out Notice or Default Notice, solely in respect of any transfer of shares or other documents which may be necessary to transfer title to the Shares required by Clauses 6, 7 and 8. | ||
9.10.2 | Without prejudice to Clause 9.10.1, each of the Shareholders irrevocably appoints the Company by way of security for the performance of the appointing Shareholders obligations owed to each other Shareholder under Clauses 6, 7 and 8, its attorney to execute, deliver and/or issue any necessary document, agreement, certificate and instrument required to be executed by the appointing Shareholder in discharge of its obligations to the other Shareholder under the provisions of Clauses 6, 7 and 8 where the other Shareholder has exercised an Acceptance Notice, Tag-Along Notice, Sell Out Notice or Default Notice, solely in respect of any transfer of shares or other documents which may be necessary to transfer title to the Shares required by Clauses 6, 7 and 8. | ||
9.10.3 | After the relevant buyer has been registered as holder of the shares being sold in purported exercise of powers under Clause 9.10.1 or Clause 9.10.2, the validity of the proceedings shall not be questioned by any person. | ||
9.10.4 | The purchase monies shall, to the extent that they are not delivered to the selling party on or before the appropriate completion date, bear interest against the purchasing |
18
party at the rate of 2 per cent. over LIBOR calculated on a daily basis from that date until the selling party is reimbursed by the other party. |
9.11 | Change of name | |
If a Shareholder ceases to be a Shareholder and the corporate name of the Company or any Group Company contains any word the same or similar to the corporate name or any distinctive part of the corporate name of that Shareholder, the remaining Parties shall procure that the corporate name of the Company or any Group Company shall be changed to exclude that word within 30 days of the Shareholder ceasing to be a Shareholder. | ||
10 | Rights in relation to Licence Companies | |
10.1 | Right to acquire interests |
10.1.1 | If any of the following events occur: |
(i) | any Shareholder who Controls a Licence Company or whose Controller Controls a Licence Company becomes obliged to transfer or to offer to transfer all of its Shares to any other Shareholder(s) under the terms of this Agreement or otherwise (including without limitation by the issue of a Transfer Notice by that Shareholder in relation to all its Shares or by the issue of a Default Notice to that Shareholder); | ||
(ii) | a Continuing Shareholder who Controls a Licence Company or whose Controller Controls a Licence Company ceases to be a Shareholder of the Company; or | ||
(iii) | in relation to any Licence Company Owner: |
(a) | it commits a material breach of this Agreement and either (1) the breach is not capable of being remedied or (2) it does not remedy that breach within 45 calendar days of any Shareholder sending it written notice requiring it to remedy that breach; | ||
(b) | any Licence Company in which it has an equity interest commits a material breach of any agreement between it and a Group Company and either (1) the breach is not capable of being remedied or (2) the Licence Company does not remedy that breach within 45 calendar days of the Group Company sending it written notice requiring it to remedy that breach; | ||
(c) | it or any Licence Company Owner who Controls the same Licence Company in which it has an equity interest is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its material debts; | ||
(d) | the value of its assets or of any Licence Company Owner who Controls the same Licence Company in which it has an equity interest is less than its liabilities (taking into account contingent and prospective liabilities) provided that it becomes subsequently bankrupt; | ||
(e) | any corporate action, legal proceedings or other procedure or step is taken (or any analogous procedure or step is taken in any jurisdiction) in |
19
relation to it or any other Licence Company Owner who Controls the same Licence Company in which it has an equity interest: |
(I) | the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise); | ||
(II) | a composition, assignment or arrangement with any creditor; | ||
(III) | the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any of its assets; or | ||
(IV) | enforcement of any security over any of its assets; or |
(f) | it or any other Licence Company Owner who Controls the same Licence Company in which it has an equity interest is subject to any change of Control; or | ||
(g) | where the Licence Company Owner is a natural person or any other Licence Company Owner who Controls the same Licence Company in which it has an equity interest is a natural person, any such natural person: |
(I) | is incapacitated as a result of illness, disability or death; or | ||
(II) | becomes bankrupt or is subject to any analogous proceedings (whether voluntary or otherwise). |
then without prejudice to any other rights the Company or the Shareholders may have pursuant to this Agreement, the Articles or otherwise, any Shareholder may by notice in writing to the Company require the Company to, and all Shareholders shall procure the Company through exercising their rights as shareholders of the Company and through their appointed Directors (if any) to vote in favour of the Company undertaking to, purchase or procure any person or entity nominated by the Company to purchase all Licence Company Interests and/or SouFun FITE Interests and/or SouFun FIAE Interests held by the relevant Licence Company Owner or Licence Company (as the case may be) for consideration not exceeding the Outstanding Loan Amounts relating to that Licence Company by issuing a Licence Company Notice. Neither of Vincent Mo nor a Vincent Mo Director may vote on any resolution relating to the exercise of the pre-emptive right by the Company. | |||
10.1.2 | The sale of Licence Company Interests in accordance with this Clause 10.1 shall be made on the following terms: |
(i) | completion of the transfer of the Licence Company Interests shall be completed seven Business Days after the date of the Licence Company Notice or the date of satisfaction or waiver of all Permitted Conditions (whichever is the later) and at a reasonable time and place as the buyer and the Licence Company Owner may agree; | ||
(ii) | at completion of the transfer, the Licence Company Owner shall: |
20
(a) | deliver to the buyer in respect of the equity interests which it is selling, a power of attorney in favour of any person or entity as the buyer may nominate to enable that person or entity to exercise all rights of ownership in respect of the equity interests to be sold including voting rights; | ||
(b) | execute an amended articles of association of the Licence Company to reflect the transfer; and | ||
(c) | procure the registration of the buyer as an equity interest holder on the register of equity interest holders in the Licence Company; |
(iii) | as soon as practicable following completion of the transfer, the Licence Company Owner shall procure the registration of the buyer as an equity interest holder in the Licence Company with the State Administration for Industry and Commerce; | ||
(iv) | in accordance with this Clause 10.1. |
10.1.3 | Any sale and/or transfer of Licence Company Interests pursuant to this Clause 10.1 shall be on terms that those equity interests: |
(i) | are transferred free from all Encumbrances save for the Pledges and subject to Clause 10.1.4(ii); and | ||
(ii) | are transferred with the benefit of all rights attaching to them as at the date of the Licence Company Notice. |
10.1.4 | Each Party shall, and shall procure any person or entity shall, execute all documents and do all acts and things that are reasonably necessary to effect the transfer of Licence Company Interests in accordance with the terms of this Agreement in a timely fashion, including without limitation that: |
(i) | each Pledgee under a Pledge over Licence Company Interests to be transferred under this Clause 10.1, shall waive its rights to the extent necessary to give effect to the transfer and shall consent to the transfer; | ||
(ii) | the buyer of the Licence Company Interests to be transferred under this Clause shall agree that the Licence Company Interests shall be pledged to each Pledgee referred to in Clause 10.1.4(i) on the same terms and conditions as the existing Pledge; and | ||
(iii) | the Company shall waive and shall procure any relevant Group Company to waive its rights under the Call Option Agreements relating to the Licence Company Interests to be transferred under this Clause 10.1 to the extent necessary to give effect to the transfer and shall consent to the transfer. |
Without limiting the generality of the foregoing, the Company shall procure that each Pledgee shall execute all documents and do all acts and things that are necessary to give effect to this Clause 10.1.4 and each Shareholder shall procure that any Directors appointed by it shall vote in favour of any resolutions of the Board that are necessary to give effect to this Clause 10.1.4. |
21
10.1.5 | Each of the Licence Company Owners irrevocably appoints the Company by way of security for the performance of their respective obligations under this Clause 10.1, its attorney to execute, deliver and/or issue any necessary document, agreement, certificate and instrument required to be executed by it under the provisions of this Clause 10.1, including any transfer of equity interests or other documents which may be necessary to transfer title to the Licence Company Interests required by this Clause 10.1. After the relevant buyer has been registered as holder of the equity interests being sold in purported exercise of these powers, the validity of the proceedings shall not be questioned by any person. |
10.2 | Rights in relation to assets of Telecommunications Licence Companies |
10.2.1 | Subject to the obtaining of all necessary regulatory clearances, consents, approvals and permissions and Board approval as provided in Clause 10.2.5 below, Telstra shall have the right to, by written notice to the other Parties, require the other Parties to give effect to any of the following arrangements in relation to any one or more of the Telecommunications Licence Companies as specified in the written notice: |
(i) | the Company and/or Telstra or any Associated Company of Telstra as it nominates (Telstra FITE Investor) shall establish one or more foreign-invested telecommunications enterprises jointly with any one or more of the Telecommunications Licence Companies or any one or more of the Continuing Shareholders and their Associated Companies, in which case: |
(a) | the SouFun FITE shall apply for and obtain any Licence held and/or applied for by each relevant Telecommunications Licence Company or any other Licences specified by Telstra; and | ||
(b) | each relevant Telecommunications Licence Company shall transfer to the SouFun FITE any part or all of their business and undertakings (including without limitation rights under customer contracts) and/or their rights and obligations under any technical consultancy and service agreements, operating agreements, trade mark licence agreements, domain name licence agreements, and any similar or related agreements between that Telecommunications Licence Company and any Group Company for consideration not exceeding the Outstanding Loan Amounts relating to that Licence Company (in each case at the sole discretion of Telstra as to the rights, obligations, businesses and undertakings to be transferred and as to whether there shall be any variation or amendment to the terms of the agreements to which the rights and obligations relate); or |
(ii) | the Company and/or Telstra FITE Investor shall acquire Licence Company Interests in each relevant Telecommunications Licence Company for consideration not exceeding the Outstanding Loan Amounts relating to that Licence Company and shall, jointly with that Telecommunications Licence Company, do all things necessary to convert that Telecommunications Licence Company into a foreign-invested telecommunications enterprise and each SouFun FITE shall continue to carry on the businesses and undertakings of the relevant Telecommunications Licence Company, subject to any variation or amendments Telstra may require to be effected in relation to those businesses |
22
and undertakings and/or to the terms of any technical consultancy and service agreements, operating agreements, trade mark licence agreements, domain name licence agreements, and any similar or related agreements between that Telecommunications Licence Company and any Group Company, |
and in each case the Company and/or the Telstra FITE Investor shall have the right to hold up to the maximum equity interest (as specified by Telstra) permitted by PRC laws and regulations in the SouFun FITE taking into consideration the business to be operated by the SouFun FITE in accordance with Clauses 10.2.1(i)(b) and 10.2.1(ii) (as the case may be); | |||
10.2.2 | Each Party shall, and shall procure any person or entity shall, execute all documents and do all acts and things that are necessary to procure that the arrangements in Clause 10.2.1 are successfully given effect to, including without limitation, that: |
(i) | each Pledgee under a Pledge over Licence Company Interests to be transferred under Clause 10.2.1(ii), shall waive its rights to the extent necessary to give effect to the transfer and shall consent to the transfer; | ||
(ii) | the buyer of the Licence Company Interests to be transferred under this Clause shall agree that the Licence Company Interests shall be pledged to each Pledgee referred to in Clause 10.2.2(i) on the same terms and conditions as the existing Pledge; and | ||
(iii) | the Company shall waive and shall procure any relevant Group Company to waive its rights under the Call Option Agreements relating to the Licence Company Interests to be transferred under Clause 10.2.1(ii) to the extent necessary to give effect to the transfer and shall consent to the transfer. |
Without limiting the generality of the foregoing, the Company shall procure that each Pledgee shall execute all documents and do all acts and things that are necessary to give effect to this Clause 10.2.2 and each Shareholder shall procure that any Directors appointed by it shall vote in favour of any resolutions of the Board that are necessary to give effect to this Clause 10.2.2. | |||
10.2.3 | The Shareholders shall, upon Telstras request in writing and at Telstras sole discretion, cause the Company to carry out one or more feasibility studies into the arrangements contemplated in this Clause 10.2, the expenses and costs of which shall be borne by the Company. | ||
10.2.4 | Telstra may by notice in writing require that the Company and the Licence Company Owners discuss with Telstra in good faith a timetable to put in place the arrangements contemplated in this Clause 10.2. | ||
10.2.5 | For the avoidance of doubt, the rights under Clause 10.2.1 may be exercised by Telstra at any time in whole or in part and on one or more occasions after the Board has considered and approved the undertaking of the arrangements in this Clause 10.2 in a Board meeting (with each Director having a veto right), and are not subject to the commencement, completion or outcome of any feasibility study conducted pursuant to Clause 10.2.3. If the outcome of the feasibility study is viable, Vincent Mo agrees to support in a timely manner the undertaking of the arrangements in this Clause 10.2 , to the extent that such undertaking does not materially and adversely affect the Group. |
23
10.3 | Rights in relation to assets of Advertising Licence Companies |
10.3.1 | Subject to the obtaining of all necessary regulatory clearances, consents, approvals and permissions and Board approval as provided in Clause 10.3.3 below, Telstra shall have the right to, at any time in its sole discretion, by written notice to the other Parties, require the other Parties to give effect to any of the following arrangements in relation to any one or more of the Advertising Licence Companies as specified in the written notice: |
(i) | the Company and/or Telstra or any Associated Company of Telstra as it nominates (Telstra FIAE Investor) shall establish one or more foreign-invested advertising enterprises at its discretion solely or jointly with any one or more of the Advertising Licence Companies or any one or more of the Continuing Shareholders and their Associated Companies, in which case: |
(a) | the SouFun FIAE shall apply for and obtain any Advertising Licence held and/or applied for by each relevant Advertising Licence Company or any other Licences specified by Telstra; and | ||
(b) | each relevant Advertising Licence Company shall transfer to the SouFun FIAE any part or all of their business and undertakings (including without limitation rights under customer contracts) and/or their rights and obligations under any technical consultancy and service agreements, operating agreements, trade mark licence agreements, domain name licence agreements, and any similar or related agreements between that Advertising Licence Company and any Group Company for consideration not exceeding the Outstanding Loan Amounts relating to that Licence Company (in each case at the sole discretion of Telstra as to the rights, obligations, businesses and undertakings to be transferred and as to whether there shall be any variation or amendment to the terms of the agreements to which the rights and obligations relate); or |
(ii) | the Company and/or Telstra FIAE Investor shall acquire Licence Company Interests in each relevant Advertising Licence Company for consideration not exceeding the Outstanding Loan Amounts relating to that Licence Company and shall, jointly with that Advertising Licence Company (where not all of the Licence Company Interests are acquired by the Company and/or Telstra FIAE Investor), do all things necessary to convert that Advertising Licence Company into a foreign-invested advertising enterprise and each SouFun FIAE shall continue to carry on the businesses and undertakings of the relevant Advertising Licence Company, subject to any variation or amendments Telstra may require to be effected in relation to those businesses and undertakings and/or to the terms of any technical consultancy and service agreements, operating agreements, trade mark licence agreements, domain name licence agreements, and any similar or related agreements between that Advertising Licence Company and any Group Company, |
and in each case the Company and/or the Telstra FIAE Investor shall have the right to hold up to the maximum equity interest (as specified by Telstra) permitted by PRC laws and regulations in the SouFun FIAE. |
24
10.3.2 | Each Party shall, and shall procure any person or entity shall, execute all documents and do all acts and things that are necessary to procure that the arrangements in Clause 10.3.1 are successfully given effect to, including without limitation, that: |
(i) | each Pledgee under a Pledge over Licence Company Interests to be transferred under Clause 10.3.1(ii), shall waive its rights to the extent necessary to give effect to the transfer and shall consent to the transfer; | ||
(ii) | the buyer of the Licence Company Interests to be transferred under this Clause shall agree that the Licence Company Interests shall be pledged to each Pledgee referred to in Clause 10.3.2(i) on the same terms and conditions as the existing Pledge; and | ||
(iii) | the Company shall waive and shall procure any relevant Group Company to waive its rights under the Call Option Agreements relating to the Licence Company Interests to be transferred under Clause 10.3.1(ii) to the extent necessary to give effect to the transfer and shall consent to the transfer. |
Without limiting the generality of the foregoing, the Company shall procure that each Pledgee shall execute all documents and do all acts and things that are necessary to give effect to this Clause 10.3.2 and each Shareholder shall procure that any Directors appointed by it shall vote in favour of any resolutions of the Board that are necessary to give effect to this Clause 10.3.2. | |||
10.3.3 | For the avoidance of doubt, the rights under Clause 10.3.1 may be exercised by Telstra at any time in whole or in part and on one or more occasions after the Board has considered and approved the undertaking of the arrangements in this Clause 10.3 in a Board meeting (with each Director having a veto right) . Vincent Mo agrees to support in a timely manner the undertaking of the arrangements in this Clause 10.3, to the extent that such undertaking does not materially and adversely affect the Group. |
11 | Employee compensation plan | |
11.1 | Generally | |
The Shareholders shall procure that the Company shall, with effect from Closing, abolish the Employee Stock Option Plan (without prejudice to any options already issued under any such plan as at Closing) and shall implement an employee compensation plan under which each employee of the Company who is a member of the plan shall receive either: |
11.1.1 | a quantity of units which shall entitle the member to benefits equivalent to the fair value of a quantity of shares in the Company (in accordance with a predetermined formula), but which shall not entitle the member to shares, rights to shares or any other legal or beneficial interest in the Company or the right to vote at any shareholder meeting of the Company; or | ||
11.1.2 | a class of shares which shall entitle the member to a share of any available profits distributed by the Company to its shareholders and a cash payment reflecting the capital value of the shares (both in accordance with a predetermined formula) but which shall not entitle the member to any other legal or beneficial interest in the Company or the right to vote at any shareholder meeting of the Company, and which |
25
shall convert into ordinary shares on a pari passu basis, which may be sold into an IPO immediately prior to the IPO. |
The objective of the plan shall be to provide each member of the plan with the same economic benefit as if such member was the owner of Shares in the Company under an employee stock option plan. The terms of, entitlements under and criteria for participation in the plan or to the preference shares shall be determined by a unanimous decision of the Compensation Committee. Each Shareholder shall procure that any Directors appointed by it shall vote in favour of any resolutions of the Board or any Board committee that are necessary to give effect to this Clause 11. | ||
11.2 | Employee Share Repurchases | |
From time to time, the Chairman of the Company may authorise the Company to make limited repurchases or redemptions of options and/or shares of employees of the Company provided that the following conditions are satisfied: |
11.2.1 | the aggregate cumulative amount paid to employees for all such repurchases or redemptions must not exceed US$4 million, unless having otherwise been approved by the Board (and notwithstanding anything in this Agreement, each Telstra Director shall have a right of veto); | ||
11.2.2 | any repurchase or redemption shall not materially adversely affect the operations of the Group; | ||
11.2.3 | the consideration payable for any repurchase or redemption shall be determined on the basis of the Company having an enterprise valuation of not more than US$400 million, and in the case of repurchase or redemption of options, the consideration shall be the amount by which the value of the shares (as if the options were exercised, and determined as a proportion of the enterprise valuation of the Company) exceeds the exercise price of the options. Any repurchase or redemption at any valuation of the Company in excess of US$400 million shall first be approved by the Board (and notwithstanding anything in this Agreement, each Telstra Director shall have a right of veto); and | ||
11.2.4 | the Chairman cannot authorise a repurchase or redemption of any Shares held by him or any entity Controlled by him. |
12 | Enforcement of rights | |
12.1 | Rights of the Company | |
If at any time the Company: (1) wishes to enforce or exercise any right under; or (2) has any claim against or is the subject of a claim by any Controller or any one or more of the Shareholders and their respective Associated Companies in respect of: |
12.1.1 | this Agreement; | ||
12.1.2 | any other Transaction Document to which it is a party; | ||
12.1.3 | any other agreement or deed to which that Controller, Shareholder or Associated Company of a Shareholder is also a party; or |
26
12.1.4 | any obligation owed to the Company or another Group Company by any Controller, Shareholder or Associated Company of a Shareholder, |
that matter shall be dealt with on behalf of the Company by a committee of the Directors appointed by the other Shareholders not involved in the claim (which for the purposes of this Clause 12, in the case of a claim involving a Controller, shall mean the other Shareholders not Controlled by that Controller). The provisions of this Clause 12 do not prejudice to the right of any Party to dispute any claim to which it relates. For the purposes of this Clause 12, the Continuing Shareholders other than IDG shall be considered to be one Shareholder. | ||
12.2 | Authority of committee | |
The committee of Directors appointed under this Clause 12 has full authority to exercise rights on behalf of the Company. | ||
12.3 | Rights of Shareholders |
12.3.1 | The Shareholder involved in the claim (which for the purposes of this Clause 12, in the case of a claim involving a Controller shall mean the Shareholder Controlled by that Controller) shall be entitled to attend and speak at any general meeting of the Company in relation to this claim but shall not vote at the meeting. | ||
12.3.2 | The Directors appointed by the Shareholder involved in the claim shall be entitled to attend and speak at any Board meeting or any Board committee meeting in relation to this claim but shall not vote at the meeting. | ||
12.3.3 | No general meeting of the Company or Board meeting at which a resolution in relation to this claim proposed shall be inquorate by virtue of the absence of the Shareholder involved in the claim or of the Director(s) appointed by it. |
13 | IPO | |
13.1 | IPO | |
At any time after the date which is 12 months after Closing, and provided that, at the relevant time, the Vincent Mo Shareholding Proportion is at least 15 per cent., Vincent Mo has the right to cause the Company to effect the registration of the Companys ordinary shares under the Securities Act (by filing a registration statement on a confidential basis), or the listing of the Companys ordinary shares in a jurisdiction outside the United States pursuant to an IPO in accordance with applicable laws, regulations and exchange listing rules, provided that the IPO must be completed prior to 31 December 2011 and on the following conditions: |
13.1.1 | subject to Clause 13.7 below, each Continuing Shareholder may sell its Shares into the IPO pro rata based on its Respective Proportion with respect to any other Continuing Shareholder proposing to sell its Shares into the IPO; provided that any Vincent Mo Shareholder may only sell its Shares during the IPO to the extent that the Vincent Mo Shareholding Proportion continues to be at least 15 per cent. immediately after the IPO; | ||
13.1.2 | Telstra shall be entitled to maintain its voting rights as a shareholder at 51 per cent. on a fully diluted and as converted basis (including without limitation conversion of any rights issued under any Company employee compensation plan) immediately after the IPO in accordance with Clause 13.2 below; provided that Telstras Respective |
27
Proportion immediately before the IPO shall be at least 51 per cent. on a fully diluted and as converted basis (including without limitation conversion of any rights issued under any Company employee compensation plan) and Telstra shall not have sold into the IPO (whether or not through the exercise of its registration rights under Clause 13.7) or otherwise reduced, or agreed to reduce, its shareholding prior to exercising its rights under this Clause 13.1.2; | |||
13.1.3 | Telstra shall be entitled at its discretion to hold its Shares issued pursuant to the IPO or otherwise, as shares in the Company and not in the form of depositary receipts; and | ||
13.1.4 | Telstras Respective Proportion for the purposes of this Clause 13.1 only means the proportion of Shares held by Telstra as a percentage of total fully diluted share capital of the Company other than issued share capital comprising all Shares and all options, warrants, rights and other securities (as if they have been fully exercised, converted or exchanged into Shares), which have been issued by the Company in the period between Closing and the IPO in respect of any Company employee compensation plan. |
13.2 | Adjustments |
13.2.1 | At the sole discretion of Vincent Mo but subject to Clause 13.2.2, Clause 13.1.2 above shall be implemented through: |
(i) | the reclassification of ordinary shares registered in the name of Telstra immediately prior to the closing of the IPO into a new class of shares having substantially the same rights and preferences as those of the ordinary shares of the Company except with weighted voting rights, which new class of shares shall not be sold or transferred by Telstra to any third party without either the prior written consent of Vincent Mo or the prior conversion of such shares into ordinary shares with standard voting rights (which conversion shall not require the consent of Vincent Mo); or | ||
(ii) | subject to applicable laws and the Articles in effect immediately after the closing of the IPO, the redemption by the Company of a portion of the Shares held by the Continuing Shareholders and the employees of the Company at the valuation of the Company immediately pre-IPO plus the amount of gross proceeds received by the Company in the IPO, which Shares to be redeemed shall be allocated (i) pro rata among the Continuing Shareholders based on their Respective Proportion immediately prior to the closing of the IPO and (ii) as determined by Vincent Mo, among the employees; or | ||
(iii) | a combination of the above. |
13.2.2 | If none of the mechanisms contemplated in Clause 13.2.1 (i), (ii) or (iii) are achievable, the Parties agree to discuss in good faith prior to the IPO an alternative mechanism to successfully implement Clause 13.1.2. |
13.3 | Board appointment | |
Telstra shall have the right to, immediately prior to the IPO, appoint a majority of the Directors, subject to the applicable listing rules of the relevant exchange and each Shareholder shall do and procure any Directors appointed by it to do all things necessary to give effect to this clause. |
28
13.4 | Consultation |
13.4.1 | Vincent Mo shall notify the other Shareholders in writing no later than 12 weeks prior to making any filing or application for an IPO made pursuant to Clause 13.1. | ||
13.4.2 | Subject to the provisions of this Agreement, including, without limitation, those under Clauses 6 and 7, each Continuing Shareholder agrees that, prior to making any filing or application for the purposes of seeking an IPO, it shall discuss with Telstra in good faith possible arrangements under which Telstra may acquire that Continuing Shareholders Shares to facilitate the Continuing Shareholders objectives in seeking an IPO. |
13.5 | Undertaking by Shareholders | |
If the Company undertakes, or any Shareholder takes steps to procure the Company to undertake, to publicly offer or list its Shares for trading under an IPO (whether under this Clause 13 or otherwise), each Shareholder shall use all reasonable efforts to assist and cooperate with the Company to apply for and obtain approvals from the relevant authorities and stock exchanges to successfully procure an IPO of the Company, including without limitation furnishing information regarding itself and the Shares held by it, execute all necessary consents and other documents and perform, or cause to be performed, any other acts necessary or advisable in connection with the IPO. | ||
13.6 | Effect upon IPO | |
If an IPO occurs, immediately upon the listing of Shares for trading pursuant to the IPO this Agreement (save for Clause 13.7 and subject to Clause 16.3), shall automatically terminate and the Articles shall be amended as necessary to comply with the applicable listing rules of the relevant exchange. | ||
13.7 | Registration Rights |
13.7.1 | Applicability of Rights | ||
The Shareholders shall be entitled to the following rights with respect to any potential public offering of the Companys ordinary shares in the United States and shall be entitled to reasonably analogous or equivalent rights with respect to any other offering of the Companys securities in any other jurisdiction in which the Company undertakes to publicly offer or list such securities for trading on a recognised securities exchange. | |||
13.7.2 | Definitions | ||
For purposes of this Clause13.7: |
(i) | The terms register, registered, and registration refer to a registration effected by preparing and filing a registration statement which is in a form which complies with, and is declared effective by the SEC (as defined below) in accordance with, the Securities Act. | ||
(ii) | The term Registrable Securities shall mean the ordinary shares of the Company held by the Shareholders. | ||
(iii) | The term Holder shall mean any person owning or having the rights to acquire Registrable Securities or any permitted assignee of record of such Registrable Securities. |
29
(iv) | The term Registration Expenses shall mean all expenses incurred by the Company in complying with this Clause 13.7, including, without limitation, all registration and filing fees, printing expenses, fees, and disbursements of counsel for the Company, and reasonable fees and disbursements of counsel for the Holders. | ||
(v) | The term Selling Expenses shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities pursuant to this Clause 13.7. |
13.7.3 | Piggyback Registrations |
(i) | Registration. The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (other than a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities), and shall afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. | ||
(ii) | Underwriting. If a registration statement under which the Company gives notice under Clause 13.7.3(i) is for an underwritten offering, then the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holders Registrable Securities to be included in a registration pursuant to this Clause 13.7.3 shall be conditioned upon such Holders participation in such underwriting and the inclusion of such Holders Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected by the Company for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, second, to each of the Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the total number of shares of Registrable Securities then |
30
held by each such Holder, and third, to holders of other securities of the Company; provided, however, that the right of the underwriter(s) to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that the number of Registrable Securities included in any such registration is not reduced below thirty per cent. (30%) of the aggregate number of shares of Registrable Securities for which inclusion has been requested, unless such offering is the IPO, in which case the Registrable Securities may be excluded if the underwriters make the determination described above and no other shareholders securities are included. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For purposes of this Clause 13.7.3, for any Holder that is a partnership, corporation or limited liability company, the partners, retired partners, members and shareholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be single Holder, and any pro rata reduction with respect to such Holder shall be based on the aggregate amount of Registrable Securities owned by all such related entities and individuals. | |||
(iii) | Withdrawal. The Company shall have the right to terminate or withdraw any registration initiated by it under this Clause 13.7.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. | ||
(iv) | Termination of Registration Rights. No Holder shall be entitled to exercise any right under this Clause 13.7.3 after the earlier of (i) three (3) years following the closing of an IPO or (ii) as to any Holder such time at which all Registrable Securities held by such Holder can be sold in any three-month period without registration in compliance with Rule 144 of the Securities Act. |
13.7.4 | All Registration Expenses incurred in connection with any registration pursuant to Clause 13.7.3 (but excluding Selling Expenses) shall be borne by the Company. Each Holder participating in a registration hereunder shall bear such Holders proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all Selling Expenses or other amounts payable to underwriter(s) or brokers, in connection with such offering by the Holders. |
14 | Competition with the Business | |
14.1 | Restrictions | |
Each of Telstra and Vincent Mo undertakes to the other and the others Associated Companies that none of it, its Associated Companies, and their respective directors and officers will and it will procure that no person, firm or company carrying on with the consent or privity of it or any of its Associated Companies, any business in succession to it or any of its Associated Companies (as the case may be) (together with Telstra, Vincent Mo, their Associated |
31
Companies and their respective directors and officers, the Restricted Parties) will in any Relevant Capacity (other than as expressly permitted by this Agreement) during the Restricted Period: |
14.1.1 | carry on, be engaged in or be economically interested in any business in the PRC, Hong Kong, Macau or Taiwan which is a Relevant Business and which is or is likely to be in direct or indirect competition with any part of the business of the Group or the Licence Companies as carried on from time to time; | ||
14.1.2 | canvass or solicit in direct or indirect competition with any part of the business of the Group or the Licence Companies as carried on from time to time that is a Relevant Business the custom of any person, firm or company who has within two years prior to Closing or at anytime during the Restricted Period been a regular customer in relation to the business of the Group or the Licence Companies; or | ||
14.1.3 | induce or seek to induce any present Restricted Employee to become employed whether as employee, consultant or otherwise by any member of its group, whether or not such Restricted Employee would thereby commit a breach of his contract of service provided that this Clause 14.1.3 shall not prevent any Restricted Party from employing any person who responds to a public advertisement for a vacancy placed by or on behalf of the Restricted Party or who contacts such Restricted Party on his or her own initiative without direct solicitation, |
provided however that each of Telstra and Vincent Mo shall cease to have any right to enforce this Clause 14 immediately upon ceasing to be a Shareholder. | ||
14.2 | Reasonableness of Restrictions | |
Each of Telstra and Vincent Mo agrees that the restrictions contained in this Clause 14 are no greater than is reasonable and necessary for the protection of the interests of Telstra, the Group and Licence Companies but if any such restriction shall be held to be void but would be valid if deleted in part or reduced in application, such restriction shall apply with such deletion or modification as may be necessary to make it valid and enforceable. | ||
14.3 | Interpretation | |
The following terms shall have the following meanings respectively in this Clause 14: |
14.3.1 | Relevant Business means: |
(i) | in respect of Telstra, the business of internet advertising classifieds and internet research within the real estate and home improvement sectors; | ||
(ii) | in respect of Vincent Mo, the business of internet content provision and internet advertising within the real estate and home improvement sectors and any other business the Group or the Licence Companies carry on from time to time; |
14.3.2 | Relevant Capacity means for its own account or for that of any person, firm or company (other than Telstra, or the Group or the Licence Companies) or in any other manner and whether through the medium of any company controlled by it or him or as principal, partner, director, employee, consultant or agent; | ||
14.3.3 | Restricted Employee means any Relevant Employees or any employee of the Group who, in each case, (a) has access to trade secrets or other confidential |
32
information of the Group or the Licence Companies; (b) has participated in discussions relating to the transaction pursuant to this Agreement or any Transaction Document; (c) holds the position of direct report to the CEO or higher; or (d) is a senior employee of the Company; | |||
14.3.4 | Restricted Period means the period commencing from Closing during which Telstra or Vincent Mo (as the case shall be) remains a Shareholder and for a further period of five years after it or he ceases to be a Shareholder, or such shorter period of time recognised by applicable laws as being binding on it or him. |
14.4 | Exclusions |
14.4.1 | Nothing contained in this Clause 14 precludes or restricts any Shareholder, Controller or Licence Company Owner or any of their Associated Companies from: |
(i) | holding not more than five per cent. of the issued voting share capital of any company whose shares are listed on a stock exchange; | ||
(ii) | acquiring any business or company, as an integral part of a larger transaction or acquisition of a business, company or group of companies, not predominantly engaged in a competing business provided that: |
(a) | it uses all reasonable endeavours to dispose of the foregoing business or company which competes with the Business within 6 months of the date of completion of the original transaction (or as soon as possible thereafter); | ||
(b) | in making any disposal, it must grant the Company a right of first refusal to acquire the business or company on bona fide arms length terms; and | ||
(c) | if the Company does not purchase the business or company within a reasonable period it may dispose of the business or company to a third party. |
14.4.2 | Nothing contained in this Clause 14 precludes or restricts Telstra or any of its Associated Companies from carrying on, developing or acquiring any activity or business in Hong Kong. |
14.5 | Damages inadequate remedy | |
Each of Telstra and Vincent Mo acknowledges that damages may be an inadequate compensation for breach of any of the covenants contained in Clause 14.1 and, subject to a courts discretion, either of them may (for itself or himself, or on behalf of any of its or his Associated Companies) restrain, by injunction, equitable relief or similar remedy, any conduct or threatened conduct by the other which is or will be a breach of Clause 14.1. | ||
15 | Information, insurance, records, licences | |
15.1 | Rights to information | |
A Shareholder may at all reasonable times and at its own expense: |
15.1.1 | discuss the affairs, finances and accounts of the Company and the Group with their officers and principal executives; and |
33
15.1.2 | inspect and make copies of all books, records, accounts, documents and vouchers relating to the Business and the affairs of the Company and the Group. |
15.2 | Insurance, records and licences | |
The Shareholders undertake that they shall use their reasonable endeavours to procure that: |
15.2.1 | the Group maintains with a well established and reputable insurer prudent insurance in accordance with current industry practice from time to time against all risks usually insured against by companies carrying on the same or similar business to the Business which shall include product liability insurance, insurance against loss of profits and consequential loss and insurance for the full replacement or reinstatement value of all its assets of all insurable nature; | ||
15.2.2 | the Group keeps proper books of account and makes true and complete entries of all its dealings and transactions of and in relation to the Business; and | ||
15.2.3 | the Group shall use its best endeavours to obtain and maintain in full force and effect all approvals, consents or licences necessary for the conduct of the Business. |
16 | Conditions precedent, duration and termination | |
16.1 | Conditions Precedent | |
The provisions of Clauses 2 to 13, 14, 15.2, 20.3, 20.10 and 24 to 26 are conditional upon Closing taking place. The provisions of Clauses 1, 15.1, 16 to 19, 20.1 to 20.9, 20.11 to 20.13 and 21 to 23 are unconditional. | ||
16.2 | Duration | |
Subject to the other provisions of this Agreement, this Agreement shall continue in full force and effect without limit in point of time until the earlier of: |
16.2.1 | the Shareholders agree in writing to terminate this Agreement; and | ||
16.2.2 | termination occurs pursuant to Clause 13.6; and | ||
16.2.3 | an effective resolution is passed or a binding order is made for the winding-up of the Company other than to effect a scheme of reconstruction or amalgamation, |
provided that this Agreement shall cease to have effect as regards any Shareholder who ceases to hold any Shares save for any of its provisions which are expressed to continue in force after termination. | ||
16.3 | Termination | |
Termination of this Agreement shall be without prejudice to any liability or obligation in respect of any matters, undertakings or conditions which shall not have been observed or performed by the relevant Shareholder prior to the termination. This Clause 16 and Clauses 14, 18, 19, 20.2 to 20.9, 20.11 to 20.13 and 21 to 23 shall survive the termination of this Agreement. |
34
17 | Public announcements | |
17.1 | Shareholder approval | |
A Shareholder must not make any public announcement or issue any circular relating to the Group or this Agreement without the prior written approval of the other Shareholders. This does not affect any announcement or circular required by law or any regulatory body or the rules of any recognised stock exchange, but the Party with an obligation to make an announcement or issue a circular shall consult with the other Parties so far as is reasonably practicable before complying with this obligation. | ||
17.2 | Oral statements | |
The Shareholders intend that any oral statements made or replies to questions given by any Shareholder relating to the Group shall be consistent with any public announcements or circulars made in accordance with Clause 17.1. | ||
18 | Confidentiality | |
18.1 | Confidentiality |
18.1.1 | Subject to Clauses 17.1 and 18.1.2: |
(i) | each of the Parties shall treat as strictly confidential and not disclose or use any documents, materials and other information, in whatever form, whether technical or commercial, received or obtained by it prior to entering into this Agreement or as a result of entering into this Agreement or any other Transaction Document (or any agreement entered into pursuant to this Agreement or any Transaction Document), in each case which relates to: |
(a) | the provisions of this Agreement and any agreement entered into in relation to this Agreement; or | ||
(b) | the negotiations relating to this Agreement (and any other agreements entered into in relation to this Agreement); |
(ii) | each Party shall treat as strictly confidential and not disclose or use any information relating to the business, financial or other affairs (including future plans and targets) of any other Party or any member of their group; | ||
(iii) | each Party shall treat as strictly confidential and not disclose or use any information relating to the business, financial or other affairs (including future plans and targets) of the Group or the Licence Companies. |
18.1.2 | Clause 18.1.1 shall not prohibit disclosure or use of any information if and to the extent: |
(i) | the disclosure or use is required by law, any regulatory body or any recognised stock exchange on which the shares of any Party or Telstra Corporation Limited are listed; | ||
(ii) | the disclosure or use is required to vest the full benefit of this Agreement in any Party; |
35
(iii) | the disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreement entered into under or pursuant to this Agreement or the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing Party; | ||
(iv) | the disclosure is made to professional advisers or actual or potential financiers of any Party on a need to know basis and on terms that these professional advisers or actual or potential financiers undertake to comply with the provisions of Clause 18.1.1 in respect of such information as if they were a party to this Agreement; | ||
(v) | the information is or becomes publicly available (other than by breach of this Agreement); | ||
(vi) | the disclosure is made on a confidential basis to potential purchasers of all or part of any Party or to their professional advisers or financiers provided that any of these persons need to know the information for the purposes of considering, evaluating, advising on or furthering the potential purchase; | ||
(vii) | the other Party has given prior written approval, such approval not to be unreasonably withheld or delayed, to the disclosure or use (including without limitation disclosure or use for the purposes of publicising the transactions the subject of this Agreement or any other Transaction Document); | ||
(viii) | the information is independently developed after Closing; or | ||
(ix) | the disclosure or use is a disclosure by Telstra to any of its Associated Companies, is on a need to know basis and Telstra uses reasonable endeavours to ensure that the relevant Associated Company is aware of and complies with the confidentiality obligations set out in this Clause 18, |
provided that prior to disclosure or use of any information pursuant to Clause 18.1.2(i), (ii) or (iii), the Party concerned shall promptly notify the other Parties of these requirement with a view to providing the other Parties with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use. | |||
18.1.3 | A recipient of information may disclose the Confidential Information to its shareholders, employees, directors, representatives and agents only to the extent reasonably necessary for the achievement of the objectives of this Agreement and the other Transaction Documents. A recipient of information shall ensure that its relevant shareholders, employees, directors, representatives and agents are aware of and comply with the confidentiality obligations set out in this Clause 18. |
18.2 | Damages not an adequate remedy | |
Without prejudice to any other rights or remedies which a Party may have, the Parties acknowledge and agree that damages would not be an adequate remedy for any breach of this Clause 18 and the remedies of injunction, specific performance and other equitable relief are appropriate for any threatened or actual breach of this provision and no proof of special damages shall be necessary for the enforcement of the rights under this Clause 18. |
36
18.3 | Survival |
18.3.1 | The disclosing Party shall remain responsible for any breach of this Clause 18 by the person to whom that confidential information is disclosed. | ||
18.3.2 | The provisions of this Clause 18 shall survive the termination of this Agreement for whatever cause. |
19 | Whole agreement and remedies | |
19.1 | Whole agreement | |
This Agreement contains the whole agreement between the Parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the Parties in relation to the matters dealt with in this Agreement, including the Shareholders Agreement entered into by Traders Mauritius and the Continuing Shareholders dated 13 July 2005 and effective as of 13 July 2005. In this Clause 19.1 this Agreement includes the Transaction Documents and all documents entered into pursuant to the Transaction Documents. | ||
19.2 | No inducement | |
Each of the Shareholders acknowledges that it has not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated into it. | ||
19.3 | Remedies | |
So far as permitted by law and except in the case of fraud, each Party agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement to the exclusion of all other rights and remedies (including those in tort or arising under statute). | ||
19.4 | Legal advice | |
Each Party to this Agreement confirms it has received independent legal advice relating to all the matters provided for in this Agreement, including the provisions of this Clause 19.4, and agrees, having considered the terms of this Clause 19.4 and the Agreement as a whole, that the provisions of this Clause 19.4 are fair and reasonable. | ||
20 | General | |
20.1 | Warranties | |
Each of the Shareholders warrants to the other that, except as fairly disclosed in writing to the other prior to the execution of this Agreement: |
20.1.1 | it has the full power and authority to enter into and to perform its obligations under this Agreement which when executed will constitute valid and binding obligations on it in accordance with its terms; and | ||
20.1.2 | the entry and delivery of, and the performance by it of this Agreement will not result in any breach of any provision of its memorandum and articles of association or result in any claim by a third party against the other Shareholder or the Company; |
37
20.2 | Survival of rights, duties and obligations | |
Termination of this Agreement for any cause shall not release a Party from any liability which at the time of termination has already accrued to another Party or which thereafter may accrue in respect of any act or omission prior to the termination. | ||
20.3 | Conflict with the Articles | |
In the event of any ambiguity or discrepancy between the provisions of this Agreement and the Articles, it is intended that the provisions of this Agreement shall prevail and accordingly the Shareholders shall exercise all voting and other rights and powers available to them so as to give effect to the provisions of this Agreement and shall further if necessary procure any required amendment to the Articles. | ||
20.4 | No partnership | |
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties nor constitute any Party the agent of any other Party for any purpose. | ||
20.5 | Release etc. | |
Any liability to any Party under this Agreement may in whole or in part be released, compounded or compromised or time or indulgence given by that Party in its absolute discretion as regards any Party under such liability without in any way prejudicing or affecting its rights against any other Party under the same or a like liability, whether joint and several or otherwise. | ||
20.6 | Waiver | |
No failure of any Party to exercise, and no delay by it in exercising, any right, power or remedy in connection with this Agreement (each a Right) shall operate as a waiver of that Right, nor shall any single or partial exercise of any Right preclude any other or further exercise of that Right or the exercise of any other Right. The Rights provided in this Agreement are cumulative and not exclusive of any other Rights (whether provided by law or otherwise). Any express waiver of any breach of this Agreement shall not be deemed to be a waiver of any subsequent breach. | ||
20.7 | Variation | |
No variation of this Agreement shall be effective unless in writing and signed by or on behalf of all of the Parties. | ||
20.8 | No Assignment |
20.8.1 | This Agreement shall be binding on and inure to the benefit of the Parties and their successors and permitted assigns. | ||
20.8.2 | Other than in connection with a transfer of Shares by a Shareholder pursuant to this Agreement, and except as otherwise expressly provided in this Agreement, no Party may without the prior written consent of the other Parties, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of this Agreement. | ||
20.8.3 | Except as otherwise expressly provided in this Agreement, a Party may, without the consent of the other Parties, assign to a subsidiary the benefit of the whole or any part |
38
of this Agreement provided however that the assignment shall not be absolute but shall be expressed to have effect only for so long as the assignee remains a subsidiary of the Party concerned. |
20.9 | Time of the essence | |
Time shall be of the essence of this Agreement, both as regards any dates, times and periods mentioned and as regards any dates, times and periods which may be substituted for them in accordance with this Agreement or by agreement in writing between the Parties. | ||
20.10 | Further assurance | |
At any time after the date of this Agreement the Parties shall, and shall use all reasonable endeavours to procure that any necessary third party shall, at the cost of the relevant Party execute all documents and do all acts and things as that Party may reasonably require for the purpose of giving to that Party the full benefit of all the provisions of this Agreement. | ||
20.11 | Invalidity |
20.11.1 | If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intention of the parties. | ||
20.11.2 | To the extent it is not possible to delete or modify the provision, in whole or in part, under Clause 20.11.1, then this provision or part of it shall, to the extent that it is illegal, invalid or unenforceable, be deemed not to form part of this Agreement and the legality, validity and enforceability of the remainder of this Agreement shall, subject to any deletion or modification made under Clause 20.11.1, not be affected. |
20.12 | Counterparts | |
This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by executing any such counterpart. | ||
20.13 | Costs | |
Each Party shall bear all costs (other than stamp duty which shall be borne equally) incurred by it in connection with the preparation, negotiation and entry into this Agreement and the documents to be entered into pursuant to it. | ||
21 | Notices | |
21.1 | Any notice or other communication in connection with this Agreement (each, a Notice) shall be: |
21.1.1 | in writing in English; | ||
21.1.2 | delivered by hand, fax, registered post or by courier using an internationally recognised courier company. |
21.2 | A Notice to Telstra shall be sent to such Party with a copy to Telstra Corporation Limited at the following addresses, or such other persons or addresses as Telstra may notify to the other Parties from time to time: |
39
21.3 | A Notice to Vincent Mo shall be sent to him at the following address, or any other person or address as Vincent Mo may notify to the other Parties from time to time: |
21.4 | A Notice to the Company shall be sent to such Party at the following address, or any other person or address as the Company may notify to the other Parties from time to time: |
21.5 | A Notice to a Party listed in Part A of Schedule 2 shall be sent to such Party at the following address, or such other person or address as such Party may notify to the Parties from time to time: |
(i) | Next Decade Investments Limited / Media Partner Technology Limited |
40
4/F Tower B COFCO Plaza No.8 Jianguomennei Ave Beijing 100005 Peoples Republic of China Fax: (+86-10) 8511 1242 |
|||
Attention: Vincent T. Mo, Chairman of the Board, CEO and Managing Director |
(ii) | Shan Li / Digital Link Investments Limited | ||
Suite 6401, Two IFC 8 Finance Street, Central Hong Kong |
|||
Fax: (+852) 3527 7001 | |||
Attention: Shan Li |
(iii) | IDG Technology Venture Investment, Inc. | ||
IDGVC Venture Investment Consultancy (Beijing) Co., Ltd. Room 616, Tower A, COFCO Plaza, 8 Jianguomennei Dajie Beijing, 100005 Peoples Republic of China |
|||
Fax: (+86-10) 8512 0225 | |||
Attention: Ms Bin Li, Legal Counsel. |
(iv) | Jiangong Dai | ||
Room 401-419, Building B, Zhongliang Plaza, No. 8, Jianguomen Avenue, Beijing Peoples Republic of China Fax: (+86-10) 8511 1242 Attention: Yang Yan |
21.6 | A Notice shall be effective upon receipt and shall be deemed to have been received: |
21.6.1 | at the time of delivery, if delivered by hand, registered post or courier; | ||
21.6.2 | at the time of transmission in legible form, if delivered by fax. |
22 | Settlement of Disputes | |
22.1 | Choice of Arbitration | |
Any dispute or difference or claim (in each case of whatsoever nature) arising out of or in connection with or relating to this Agreement (including, without limitation, any dispute as to the validity or existence of this Agreement and/or this Clause 22) (each a Dispute) shall be submitted to and resolved by arbitration by the HKIAC pursuant to its Rules including any additions made by the UNCITRAL Rules and as modified by this Agreement. The arbitral |
41
tribunal shall consist of 3 arbitrators. The arbitral proceedings shall be conducted in English. Any arbitration commenced pursuant to this Clause 22 shall have its seat in Hong Kong. |
22.2 | Appointing Authority | |
The appointing authority shall be HKIAC or any other body as the Parties may agree (the Appointing Authority). | ||
22.3 | Arbitral tribunal | |
Unless the Parties agree otherwise: |
22.3.1 | the Party or Parties requesting arbitration shall jointly appoint an arbitrator in its or their notice for arbitration and the Party or Parties responding to the request for arbitration shall jointly appoint an arbitrator within 30 days of the date the notice for arbitration is received by them. In default of this appointment, the relevant arbitrator(s) shall be appointed by the Appointing Authority within 10 Business Days; and | ||
22.3.2 | the third arbitrator, who shall act as chairman of the tribunal, shall be chosen by the two arbitrators appointed by or on behalf of the Parties. If he is not chosen within 10 Business Days of the date of appointment of the later of the two party-appointed arbitrators to be appointed, he shall be appointed by the Appointing Authority. |
22.4 | Single Arbitral Proceeding | |
In order to facilitate the comprehensive, efficient and economical resolution of related Disputes, all Disputes between any of the parties which arise out of or in connection with this Agreement and any of the other Transaction Documents shall (so far as is reasonably practicable) be resolved by means of a single arbitral proceeding. Accordingly, where Disputes arise out of or in connection with this Agreement and any one or more of the other Transaction Documents a single arbitration may be conducted in respect of these Disputes. | ||
22.5 | Provision for Concurrent Arbitrations | |
If at any time two or more arbitrations are commenced and are pending in relation to Disputes which arise out of or in connection with this Agreement and any of the other Transaction Documents and it appears to the arbitral tribunal constituted in the arbitration that was initiated first in time (the First Arbitration) that there are issues of fact or law common to the arbitrations and that it is expedient for the Disputes to be resolved in the same proceedings, and that no party would be prejudiced materially (through undue delay or otherwise) as a result of the arbitrations being consolidated, then, upon the written request of any party to any such arbitration, that arbitral tribunal (the Consolidating Arbitral Tribunal) may, by procedural order, direct that the arbitration(s) to resolve any of the other Disputes shall be consolidated with the First Arbitration. If the Consolidating Arbitral Tribunal so orders, the parties to each Dispute which is a subject of the Consolidating Arbitral Tribunals order shall be treated as having consented to the Dispute being finally decided: |
22.5.1 | by the Consolidating Arbitral Tribunal; and | ||
22.5.2 | in accordance with the procedure, at the seat and in the language by which the First Arbitration is being conducted, save as otherwise agreed by all parties to the consolidated proceedings or, in the absence of this agreement, as ordered by the Consolidating Arbitral Tribunal. |
42
22.6 | Due performance | |
The Parties undertake: |
22.6.1 | to comply strictly with the time limits specified in the UNCITRAL Rules and this Agreement for the taking of any step or the performance of any act in or in connection with any arbitration; and | ||
22.6.2 | to comply with and to carry out, in full and without delay, any procedural orders (including, without limitation, any interim measures of protection ordered) or any award (interim or final) made by the arbitral tribunal. |
22.7 | Arbitration final and binding |
22.7.1 | Any arbitral award shall be final and binding upon the parties thereto and shall be enforceable in accordance with its terms. Each party irrevocably undertakes that it will execute and perform the arbitral award fully and without delay and waives any right of appeal against the award. | ||
22.7.2 | None of the Parties shall seek to commence any judicial proceeding with a view to appealing, reviewing or setting aside any arbitral award. All rights of appeal or judicial review of any arbitral award as would otherwise be exercisable by a Party are hereby excluded to the fullest extent permitted. |
22.8 | Enforcement of the Arbitral Award | |
Any arbitral award may be enforced by filing as a judgment in any court of competent jurisdiction, or by any other application or proceeding in any court, for the enforcement of the arbitral award, as the case may be. |
22.9 | Arbitration expenses |
22.9.1 | The costs of the arbitration, the arbitration fees and the liability for other expenses shall be borne by the losing party unless otherwise determined by the arbitral tribunal. | ||
22.9.2 | If it becomes necessary for a Party to enforce an arbitral award by legal action of any kind, the defaulting Party or Parties shall pay all reasonable costs and expenses and attorneys fees, including any cost of additional litigation or arbitration that shall be incurred by the Party seeking to enforce the award. |
22.10 | Continual Performance | |
During the period when a dispute is being resolved, the parties shall, in all respects other than the issue(s) in dispute, continue their performance of this Agreement. | ||
23 | Governing law and submission to jurisdiction | |
23.1 | Governing Law | |
This Agreement and the documents to be entered into pursuant to it, save as expressly referred to therein, shall be governed by and construed in accordance with Hong Kong law. | ||
23.2 | Submission to Jurisdiction |
43
Each of the parties irrevocably submits to the non-exclusive jurisdiction of the courts of Hong Kong to support and assist the arbitration process pursuant to Clause 22, including if necessary the grant of interlocutory relief pending the outcome of that process. |
24 | Authority to deliver | |
The signature or sealing of this Agreement by or on behalf of a Party shall constitute an authority to the solicitors, or an agent or employee of the solicitors, acting for that Party in connection with this Agreement to deliver it as a deed on behalf of that Party. | ||
25 | Guarantee by Controllers | |
25.1 | In consideration of the other Parties entering into this Agreement, each Controller hereby undertakes to the Parties that it will guarantee, as sole or principal obligor to the Parties, the due and punctual performance by each Shareholder Controlled by that Controller of all obligations, commitments and undertakings under or pursuant to this Agreement (and each Transaction Document to which the Shareholder is a party). | |
25.2 | Each Controller shall indemnify each other Party against all losses, liabilities, costs (including without limitation legal costs), charges, expenses, actions, proceedings, claims and demands which any Party may suffer through or arising from any breach of the Controller of its obligations under this Agreement or incurred by that Party in the course of enforcing its rights under this Clause 25. | |
25.3 | This guarantee is given for the benefit of the Parties and its respective successors and assigns and shall be binding on each Controller and its successors and assigns. | |
26 | Undertaking by Vincent Mo | |
Vincent Mo: | ||
26.1 | unconditionally and irrevocably undertakes to the Company that he shall not, in any of his capacity as a Licence Company Owner, the Chairman or CEO: |
26.1.1 | pledge, mortgage, charge or otherwise Encumber any of its equity interest in the Licence Companies he controls in his capacity as a License Company Owner, the Chairman or CEO except for the Pledges; | ||
26.1.2 | sell, transfer or otherwise dispose of, or grant any option over, any of its equity interest in the Licence Companies he controls in his capacity as a License Company Owner the Chairman or CEO; or | ||
26.1.3 | enter into any agreement in respect of the votes attached to any of its equity interest in the Licence Companies he controls in his capacity as a License Company Owner the Chairman or CEO; |
26.2 | unconditionally and irrevocably undertakes to the Company, that in his capacity as a Licence Company Owner, the Chairman or CEO, he will not take or cause to be taken any act or fail to take or cause to be taken any act which results in a Licence held by any Licence Company in which he has an interest as a License Company Owner ceasing to be valid and effective; | |
26.3 | shall indemnify the Company against all losses, liabilities, costs (including without limitation legal costs), charges, expenses, actions, proceedings, claims and demands which the |
44
Company may suffer through or arising from any breach by Vincent Mo of his obligations under this Clause 26 or incurred by the Company in the course of enforcing its rights against it under this Clause 26. |
45
/s/ Ben Forgiel-Jenkins | ||||
46
/s/ Ben Forgiel-Jenkins |
47
48
/s/ Ben Forgiel-Jenkins |
/s/ Lin Bin |
51
52
(i) | Goldman Sachs; | |
(ii) | Citigroup; | |
(iii) | Merrill Lynch; | |
(iv) | Credit Suisse First Boston; and | |
(v) | UBS. |
53
54
55
56
57
1 | Modification etc. of Statutes | |
References to a statute or statutory provision include: | ||
1.1 | that statute or provision as from time to time modified, re-enacted or consolidated whether before or after the date of this Agreement; | |
1.2 | any past statute or statutory provision (as from time to time modified, re-enacted or consolidated) which that statute or provision has directly or indirectly replaced; and | |
1.3 | any subordinate legislation made from time to time under that statute or statutory provision. | |
2 | Singular, plural, gender and other terms | |
2.1 | References to one gender include all genders and references to the singular include the plural and vice versa. | |
2.2 | The words includes and including mean includes without limitation and including without limitation, respectively. | |
3 | References to persons, companies and government authorities | |
References to: | ||
3.1 | a person include any company, partnership or unincorporated association (whether or not having separate legal personality); | |
3.2 | a company shall include any company, corporation or any body corporate, wherever incorporated; and | |
3.3 | PRC government authorities or departments include such authorities or departments at central, provincial, municipal and other levels and their successor authorities or departments. | |
4 | Schedules etc. | |
References to this Agreement shall include any recitals and schedules to it and references to Clauses and Schedules are to clauses of, and schedules to, this Agreement. References to paragraphs and Parts are to paragraphs and parts of the Schedules. | ||
5 | Headings | |
Headings shall be ignored in interpreting this Agreement. | ||
6 | Information | |
References to books, records or other information mean books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm. | ||
7 | Legal Terms | |
References to any legal term for any action, remedy, method or judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than Hong Kong, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction. |
58
8 | Time of day | |
References to time of day are to Hong Kong time unless otherwise stated. | ||
9 | Winding-up | |
References to the winding-up of a person include the amalgamation, reconstruction, reorganisation, administration, dissolution, liquidation, merger or consolidation of such person and any equivalent or analogous procedure under the law of any jurisdiction in which that person is incorporated, domiciled or resident or carries on business or has assets. |
59
1. | Next Decade Investments Limited with its registered office at P.O.Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands; | |
2. | Media Partner Technology Limited with its registered office at P.O.Box 957, Offshore Incorporation Center Road Town, Tortola, British Virgin Islands; | |
3. | Digital Link Investments Limited with its registered office at Suite 6401, Two IFC, 8 Finance Street, Central, Hong Kong; | |
4. | Shan Li of Apt 3B Taggart, 109 Repulse Bay Road, Hong Kong, holder of Hong Kong resident card number P393881(A); | |
5. | Jiangong Dai of 660 Shangcheng Road, Pudong New District, Shanghai, PRC, holder of PRC resident card number 450104197309251550; | |
6. | IDG Technology Venture Investment, Inc. with its registered office at 5 Speen Street, Framingham, MA, USA. |
1. | Next Decade Investments Limited | |
2. | Media Partner Technology Limited | |
3. | Digital Link Investments Limited | |
4. | IDG Technology Venture Investment, Inc. |
Shareholder Controlled by Controller | Name of Controller | |
Next Decade Investments Limited
|
Vincent Mo | |
Media Partner Technology Limited
|
Vincent Mo | |
Digital Link Investments Limited
|
Shan Li |
1. | Vincent Mo | |
2. | Jiangong Dai |
60
1 | The Covenantor confirms that it has been supplied with and has read a copy of the Agreement and covenants with each of the persons named in the Schedule to this Deed to observe perform and be bound by all the terms of the Agreement which are capable of applying to the Covenantor and which have not been performed at the date of this Deed to the intent and effect that the Covenantor shall be deemed with effect from the date on which the Covenantor is registered as a member of the Company to be a party to the Agreement (as if named as a Shareholder under that Agreement). | |
2 | This Deed shall be governed by and construed in accordance with Hong Kong law and the Covenantor hereby submits irrevocably to the non-exclusive jurisdiction of the Courts of Hong Kong (but accepts that this Deed may be enforced in any court of competent jurisdiction) and hereby appoints [a person resident in Hong Kong and reasonably acceptable to the Board of Directors of the continuing Shareholders] as its agent for service of all process in any proceedings in respect of the Agreement. |
61
1 | Appointment of expert | |
1.1 | Telstra and Vincent Mo shall each appoint an Independent Expert. | |
1.2 | A third Independent Expert shall be appointed by agreement between Telstra and Vincent Mo. | |
1.3 | If Telstra and Vincent Mo cannot agree on the identity of the third Independent Expert, the two Independent Experts already appointed pursuant to Clause 1.1 of this Schedule 4 shall appoint the third Independent Expert. | |
1.4 | Each of Telstra and Vincent Mo must bear the costs of the Independent Expert that is appointed by it under Clause 1.1 of this Schedule 4. The Company shall bear the costs of the third Independent Expert appointed under Clauses 1.2 and 1.3 of this Schedule 4. | |
2 | Determination of Fair Value | |
2.1 | The Independent Experts may determine the Fair Value of the shares in accordance with the valuation guidelines set out in Clause 3 of this Schedule 4 and/or such other procedures as they consider appropriate. | |
2.2 | Each Independent Expert acts as an independent expert and not as an arbitrator when valuing shares under this Agreement. | |
2.3 | The Company and each Shareholder must provide all information and assistance reasonably requested by the Independent Experts. | |
2.4 | Each Independent Experts determination of the value of the shares is binding on all Parties in the absence of manifest error and must be provided to the relevant Parties. | |
2.5 | The Fair Value of the shares will be equal to: |
2.5.1 | subject to sub-Clause 2.5.2, the average of the three valuations; | ||
2.5.2 | if the valuation that is furthest (in absolute dollar terms) from the average of the three valuations is more than 20% further from the average than the next furthest valuation then it shall be eliminated and the Fair Value of the shares will be the average of the two remaining valuations. |
Example | 1 | 2 | 3 | 4 | ||||||||||||
Valuation 1 |
90 | 70 | 60 | 96 | ||||||||||||
Valuation 2 |
100 | 100 | 100 | 100 | ||||||||||||
Valuation 3 |
113 | 127 | 110 | 110 | ||||||||||||
Average |
101 | 99 | 90 | 102 | ||||||||||||
Re-calculated
Average |
NA | NA | 105 | 98 |
62
3 | Fair Value Guidelines | |
3.1 | Definition | |
Subject to this Schedule 4, Fair Value shall be arrived at by applying the primary methodology specified in Clause 3.1.1 of this Schedule 4 and cross-checking the fair value so derived in the manner described in Clause 3.1.5 of this Schedule 4. | ||
For the purposes of this Agreement, Fair Value is the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arms length within a reasonable time frame and is to be determined on the following basis: |
3.1.1 | Methodology | ||
The primary methodology to be used in the calculation of Fair Value will be a discounted cash flow (DCF) analysis, utilising the best estimate of future free cash flows (i.e. after-tax cash flows less working capital and capital expenditure investments) expected to be derived from continuing the Business. | |||
3.1.2 | Control premium | ||
The valuation will explicitly exclude any control premium or minority discount. | |||
3.1.3 | Free cash flow projections |
(i) | Base free cash flow projections must be based on reasonable and reasonably supportable assumptions that utilise managements best estimate of the range of economic conditions. | ||
(ii) | Base free cash flow projections should exclude any estimated future cash inflows or outflows expected to arise from future restructuring or anticipated major changes in business activities unless contained in the current business plan. | ||
(iii) | Projections shall cover 5 years, unless a longer period can be justified. The free cash flow projections beyond this period should be extrapolated based on the budgets/forecasts using a steady growth rate for subsequent years unless an increasing rate can be justified. | ||
(iv) | Free cash flows should not include cash inflows or outflows from financial activities (because the effect of financial structure and related financial activities is already included in the discount rate). |
63
3.1.4 | Discount Rate | ||
The discount rate applied to the free cash flows must be post tax and reflect the time value of money and the risks specific to the asset for which the future free cash flow estimates have not been adjusted. The discount rate shall be equivalent to the Companys weighted average cost of capital (WACC). | |||
3.1.5 | Cross-checks |
(i) | The fair value derived should be cross-checked by the application of an appropriate multiple to estimated future maintainable earnings. This requires an assessment of: |
(a) | a maintainable level of earnings which can be sustained by the Company in the long run; | ||
(b) | the selection of an appropriate multiple to apply to the above earnings; and | ||
(c) | the identification of any assets or liabilities surplus to the needs of the business. |
(ii) | This methodology should only be used where an appropriate multiple can be recognised or iteration made from broadly comparable companies or transactions. |
64
Part 1 Pledges | ||
1. | Equity Pledge Agreement in relation to equity interests in Beijing SouFun Internet Information Service Co., Ltd, between SouFun Media Technology (Beijing) Co., Ltd, Vincent Mo and Jiangong Dai dated 9 May 2004. | |
2. | Equity Pledge Agreement, in relation to equity interests in Beijing China Index Information Co., Ltd. between SouFun Media Technology (Beijing) Co., Ltd., Beijing Jia Tian Xia Advertising Co., Ltd. and Beijing SouFun Internet Information Service Co., Ltd., dated 17 August 2006. | |
3. | Equity Pledge Agreement, in relation to equity interests in Beijing SouFun Science and Technology Development Co., Ltd. between SouFun Media Technology (Beijing) Co., Ltd., Vincent Mo and Jiangong Dai, dated 17 August 2006. | |
4. | Equity Pledge Agreement in relation to equity interests in Beijing Jia Tian Xia Advertising Co., Ltd, between SouFun Media Technology (Beijing) Co., Ltd, Vincent Mo and Jiangong Dai dated 9 May 2004. | |
5. | Equity Pledge Agreement in relation to equity interests in Shanghai Jia Biao Tang Advertising Co., Ltd, between SouFun Media Technology (Beijing) Co., Ltd, Beijing Jia Tian Xia Advertising Co., Ltd and Beijing SouFun Internet Information Service Co., Ltd., dated 17 August 2006. | |
Part 2 Call Option Agreements | ||
1. | Exclusive Call Option Agreement, between the Company, SouFun Media Technology (Beijing) Co., Ltd, Beijing SouFun Internet Information Service Co., Ltd, Vincent Mo and Jiangong Dai dated 9 May 2004. | |
2. | Exclusive Call Option Agreement, between SouFun.com Limited, Beijing SouFun Science and Technology Development Co., Ltd., Vincent Mo, Jiangong Dai and SouFun Media Technology (Beijing) Co., Ltd., dated 17 August 2006. | |
3. | Exclusive Call Option Agreement, between SouFun.com Limited, Beijing China Index Information Co., Ltd., Beijing Jia Tian Xia Advertising Co., Ltd., Beijing SouFun Internet Information Service Co., Ltd. and SouFun Media Technology (Beijing) Co., Ltd., dated 17 August 2006. | |
4. | Exclusive Call Option Agreement, between the Company, SouFun Media Technology (Beijing) Co., Ltd, Beijing Jia Tian Xia Advertising Co., Ltd, Vincent Mo and Jiangong Dai dated 9 May 2004. | |
5. | Exclusive Call Option Agreement, between SouFun.com Limited, Shanghai Jia Biao Tang Advertising Co., Ltd., Beijing Jia Tian Xia Advertising Co., Ltd., Beijing SouFun Internet Information Service Co., Ltd. and SouFun Media Technology (Beijing) Co., Ltd., dated 17 August 2006. |
65
Part 3 Loan Agreements | ||
1. | Loan Agreement, between Beijing SouFun Information Consultancy Co., Ltd, Vincent Mo and Hongbing You, dated 9 May 2004 (for capital increase in Beijing Jia Tian Xia Advertising Co., Ltd, to be repaid by transfer of equity interests in Beijing Jia Tian Xia Advertising Co., Ltd.). | |
2. | Supplemental Loan Agreement, between SouFun Media Technology (Beijing) Co., Ltd, Beijing SouFun Information Consultancy Co., Ltd, Vincent Mo, Hongbing You and Jiangong Dai, dated 9 May 2004 (under which SouFun Media Technology (Beijing) Co., Ltd adopted rights and obligations of Beijing SouFun Information Consultancy Co., Ltd.). | |
3. | Capital Increase Loan Agreement, between SouFun Media Technology (Beijing) Co., Ltd and Vincent Mo, dated 9 May 2004 (for capital increase in Beijing SouFun Internet Information Service Co., Ltd, to be repaid by transfer of equity interests in Beijing Jia Tian Xia Advertising Co., Ltd and Beijing SouFun Internet Information Service Co., Ltd.). | |
4. | Capital Increase Loan Agreement, between Vincent Mo and Beijing Jia Tian Xia Advertising Co., Ltd, dated 9 May 2004 (for capital increase in Beijing SouFun Internet Information Service Co., Ltd, to be repaid by transfer of equity interests in Beijing SouFun Internet Information Service Co., Ltd.). | |
5. | Capital Increase Loan Agreement, between Jiangong Dai and SouFun Media Technology (Beijing) Co., Ltd, dated 9 May 2004 (for capital increase in Beijing SouFun Internet Information Service Co., Ltd, to be repaid by transfer of equity interests in Shanghai SouFun Investment Consultancy Co., Ltd and Beijing SouFun Internet Information Service Co., Ltd.). | |
6. | Capital Increase Loan Agreement, between JianGong Dai and Shanghai SouFun Investment Consultancy Co., Ltd, dated 9 May 2004 (for capital increase in Beijing SouFun Internet Information Service Co., Ltd, to be repaid by transfer of equity interests in Beijing SouFun Internet Information Service Co., Ltd.). | |
7. | Loan Agreement, between SouFun Media Technology (Beijing) Co., Ltd, Vincent Mo and Jiangong Dai, dated 17 August 2006 (for capital increase in Beijing SouFun Science and Technology Development Co., Ltd, to be repaid by transfer of equity interests in Beijing SouFun Science and Technology Development Co., Ltd.). |
66
| Further Expand Our National Coverage and Listing Database |
| Continue to Strengthen Our Brand and Reputation in the Real Estate and Home Furnishing Industry |
| Grow Our Advertiser Base Within and Beyond the Real Estate Sector |
67
| Enhance the Community-oriented Offerings on Our Web Site |
| Continue to Invest in New Technologies and Features of Our Web Site |
| Pursue Selective Acquisitions and Alliances |
68
| New Homes: Display and listing advertising for new developments, total web solutions, and promotional events (mainly developers) | ||
| Home Furnishing/ Improvement: Display and listing advertising for home furnishings, total web solutions, and industry research and promotion events, targeted mostly at new home buying process related parties (companies involved in design, decorating, materials etc) | ||
| Resale & Rental: Listing and display advertising for resale and rental properties, industry research and promotion events (mainly real estate agents and brokers) | ||
| Research: Operations of the China Index Academy, research based branding & listing services, producing database and research reports for industry and government |
69
| Continue planned geographic expansion of the business into 10 new cities (mainly New Homes business unit), this typically involves: |
a. | Hiring a local team (sales, editorial, G&A) | ||
b. | Establishing a local website | ||
c. | Exploring partnership opportunities with local portals and websites | ||
d. | Marketing & Sales (trade shows, advertising, face-to-face etc) |
| Rapidly grow the Resale & Rental and Home Furnishing business units, by through expanding into cities where there is already a new homes presence | ||
| Product development and testing in monetising Soufuns strong community operations |
USD | USD | USD | USD | USD | ||||||||||||||||
2006 Sep | 2006 Oct | 2006 Nov | 2006 Dec | Total | ||||||||||||||||
Sales |
4,467,762 | 3,613,589 | 4,329,210 | 5,283,622 | 17,694,183 | |||||||||||||||
Business taxes and surcharges |
(290,405 | ) | (234,883 | ) | (281,399 | ) | (343,435 | ) | (1,150,122 | ) | ||||||||||
Net revenue |
4,177,358 | 3,378,705 | 4,047,811 | 4,940,187 | 16,544,061 | |||||||||||||||
Cost of sales |
(846,505 | ) | (573,891 | ) | (718,044 | ) | (708,397 | ) | (2,846,837 | ) | ||||||||||
Gross profit |
3,330,852 | 2,804,815 | 3,329,767 | 4,231,790 | 13,697,224 | |||||||||||||||
Sales and marketing expenses |
(1,026,939 | ) | (1,158,038 | ) | (1,231,620 | ) | (1,290,378 | ) | (4,706,975 | ) | ||||||||||
General and administrative expenses |
(678,684 | ) | (695,605 | ) | (909,726 | ) | (879,846 | ) | (3,163,861 | ) | ||||||||||
R&D expense |
(150,291 | ) | (115,602 | ) | (134,568 | ) | (162,840 | ) | (563,301 | ) | ||||||||||
Total operating expenses |
(1,855,913 | ) | (1,969,245 | ) | (2,275,914 | ) | (2,333,065 | ) | (8,434,137 | ) | ||||||||||
Income from operations |
1,474,939 | 835,570 | 1,053,853 | 1,898,725 | 5,263,087 | |||||||||||||||
Interest income |
14,594 | 14,619 | 17,094 | 18,344 | 64,652 | |||||||||||||||
Exchange gain |
3,134 | 2,301 | 3,320 | 4,529 | 13,284 | |||||||||||||||
Profit before income taxes |
1,492,668 | 852,490 | 1,074,267 | 1,921,598 | 5,341,024 | |||||||||||||||
Income tax expense |
(96,387 | ) | (96,387 | ) | (96,387 | ) | (96,387 | ) | (385,547 | ) | ||||||||||
Net profit |
1,396,281 | 756,104 | 977,881 | 1,825,212 | 4,955,477 | |||||||||||||||
70
Integration Principle | Comment | Implication for Integration | ||
Sensis will commit resources to assist
the Company
|
Sensis is anticipating
dedicating
resources to
the Companys
business on a
full-time
basis. The costs of these resources will be borne by Sensis, however this arrangement will need to be reviewed at the time of the IPO |
Sensis is currently anticipating the following: Senior manager Commercial manager Finance support Sensis specialists as required |
||
Integration management
|
Sensis will have a senior manager as the integration manager, who will be the point contact and channel for integration activities | |||
Governance Standards
|
The Company will need to comply with certain governance standards required by Telstra/ Sensis | Example areas include: | ||
Compliance with relevant Telstra
taxation policies as applicable in PRC
(eg. compliance with relevant
tax laws and regulations, review
of tax return by external adviser
approved by Telstra) Compliance with monthly reporting
details and process to be
discussed with Sensis Appropriate corporate
governance |
||||
Telstra has a 30 June year end |
Telstra reports to a 30 June year end, which is different to the Companys 31 Dec year end | Telstra will require accounts to be
prepared for the y/e 30 June in order
to be included in our consolidated
accounts will comply with
Australian GAAP. The cost of this
will be borne by Sensis |
71
Integration Principle | Comment | Implication for Integration | ||
These accounts will be
subject to a review by
Telstras auditors. The full audit
will continue to take place for the
year ending at 31 Dec |
||||
Telstras auditors
|
Telstras policy is to use one audit firm across the business (currently Ernest & Young), absent material reason for using another firm, and competitive pricing | Current plan is for KPMG to continue as
the company auditors
until the year ended 31
Dec 07. The
situation will then
be reviewed by the Company
and Telstra/ Sensis |
72
Integration Task1 | Comment | Preferred Timeline2 | ||
Establish monthly
reporting format and
process
|
For business performance monitoring and reporting to Sensis (and Telstra) | Agree final form of
monthly reporting within in
first 60 days following Closing |
||
Agree board timetable and
establish board
committees
|
Times and locations of board meetings to be agreed | Agree in first 30 days
following Closing |
||
Bonus scheme
|
Vincents management agreement does not yet include a bonus scheme. The intention is for this to be approved at the first board meeting. | Sensis to consult with
Vincent within 60 days of
completion |
||
2007 Business plan
|
The Company is required to submit its 2007 business plan to the board 45 days prior to 31 December 2006 Sensis will provide the Company with assistance in developing this plan. | Sensis to start
assisting the business in
preparing this plan
mid-October |
||
Business Continuity
|
The Company does not have disaster recovery infrastructure in place | The Company and Sensis to
develop a plan to
implement disaster
recovery
infrastructure (plan
developed by end month 3) |
||
Implement business
continuity insurance as
deemed appropriate (if not
covered by IDCs) |
||||
Sojiji
|
The business of Sojiji is included in the transaction however may not have been transferred at the time of this agreement. Vincent Mo has agreed to transfer this business, however it is immaterial and will be done post completion | Soufun CFO to determine the
most effective way of
transferring the business Transfer Sojiji business at
earliest convenience (within 6 months) |
1 | This list of integration tasks is not exhaustive and additional tasks may be included by agreement of CEO and Telstra. | |
2 | The details listed in the column represent a preferred timeline and as such are not definitive or exhaustive. To the extent that further actions may be required to implement the corresponding integration task then these may be added at a later date by agreement of CEO and Telstra. |
73
Integration Task1 | Comment | Preferred Timeline2 | ||
Finance and business systems review
|
Potential to enhance the
performance, efficiency and
reporting capability of the business through
further development of the Companys systems (finance,
ad management and contract
management) Sensis will assess the possibility for Soufun to leverage Telstra finance software licenses |
The Company to review and establish,
Sensis assistance, a plan
develop the
system and reporting
capability Planned to start by month 3 |
||
Financial and governance
processes, reporting
and skill base
|
The business has made many changes already, Sensis will help to accelerate this to ensure financial reporting and governance is efficient and to a good standard | Help CFO develop and
execute a
blue-print for
the finance function
based on review of
internal controls
and reporting |
||
Tax planning and
processes
|
Due diligence revealed a number of areas where tax activities of the company may not be in accordance with Telstra tax policies | Review tax
activities,
planning and process
with the Companys
CFO to ensure
compliance with
relevant
Telstra tax policies |
||
Establish approach to
maximise value and
opportunity between the
Company and Sensis
(strategic workshops etc)
|
The best approach will be discussed post-completion, however may involve semi-annual strategic and business development workshops | Agree best way to achieve
this outcome Agree timetables, location |
||
Explore opportunities to
enhance the value and
revenues of the Company
|
These will be assessed in the post- completion period, but may include: | No specific timeline |
||
Sales effectiveness (eg.
collateral, performance
management etc) New advertising models Increased monetisation of
community sites Training of managers,
leveraging Sensis
experience and know how Improving recruiting
effectiveness leverage
Sensis |
74
Integration Task1 | Comment | Preferred Timeline2 | ||
Monitor the
development of
the Companys
trademark ownership
|
The Company is in the process of seeking trademark registrations which have been objected to | Sensis and the Company
to discuss and develop a
strategy to address this issue |
||
Trademark control
|
Trademarks have been transferred outside the Group Companies to LicenceCos to comply with MII Circular | The Company to put in
place licence back
arrangements and call
options in respect of
transferred Trademarks
from LicenceCo to the
Company and/or Group
Companies |
||
Monitor the licensing
situation in respect of the
Group
|
For example, the current VAS, VAS Mobile and ICP Licence situation in the Group is not satisfactory. | Sensis to monitor The Company to ensure
that the correct entities
hold the required licences |
||
News Posting and Internet
Publishing Activities
|
The Company currently engages in activities that could be regarded as news posting and internet publishing, however it does not have the necessary approvals from the authorities in the PRC. | Sensis and the Company
to discuss how best to
proceed in this respect. |
||
Register property leases
|
The property leases enjoyed by the Group Companies are required to be registered to be enforceable | The Company to register
property leases |
||
Content monitoring system
|
The Company and Sensis to verify that there is an adequate monitoring system to ensure there is no violation of State secrets | The Company to review
and if determined
necessary implement |
||
Company Structure
|
The Company secures effective control of the Licence Companies through contractual arrangements. The current plan is to alter the structure, if feasible, so that the Licence Companies become FITEs or FIAEs owned either solely by the Company or under a JV structure. | Sensis to monitor Feasibility study to be
carried out at the
appropriate time in
relation to the conversion
of the Licence Companies
into FITEs or FIAEs. The Company to
potentially restructure if
feasible in accordance
with SHA in order to gain
equity interest in the
Licence Companies for
the Company |
75
Integration Task1 | Comment | Preferred Timeline2 | ||
Security of BBS Users
|
The Company shoul provide an adequate system, utilising standard technical security measures, to protect the security and integrity of all BBS users | Company to work with
Sensis to ensure
adequate systems are in
place to protect security
and confidentiality of BBS
users. |
||
Registration of Leases
|
Certain leases have not been registered with the relevant government authorities | Company to work with
Sensis to complete
registration of all leases
held by the Company |
||
Employment contracts
|
Not all employees have
employment contracts,
whilst some employment
contracts have been
entered into by the wrong
entity The staff handbook has not
been made available to
staff |
All employees should
enter into employment
contracts directly with their
employer Staff handbook to be
distributed to all
employees. |
||
Social Security Funds
|
The PRC Subsidiaries and PRC Affiliates have underpaid certain social insurance contributions and housing fund contributions. | Company to study and
find a way to solve this
problem |
76
GRANTEE
|
SOUFUN HOLDINGS LIMITED | ||||
By: | |||||
Signature
|
|||||
Print Name: Tianquan Mo | |||||
Title: Chairman of the Board | |||||
Print Name |
1
2
3
4
5
6
7
(i) | In the case of an Incentive Stock Option: |
(ii) | In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant unless otherwise determined by the Administrator; provided, however, that such per Share exercise price shall be one hundred percent (100%) with respect to any Grantee subject to Section 409A of the Code. | ||
(iii) | Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d) above, the exercise or purchase price for the Award shall be determined in accordance with the principles of Section 424(a) of the Code or other Applicable Law. | ||
(iv) | Notwithstanding the foregoing provisions of this Section 7(a), if the exercise price determined pursuant to the foregoing shall fall below the par value of the Shares, the exercise price shall be the par value of the Shares. |
8
9
10
11
12
13
Page | ||||
ARTICLE I DEFINITIONS |
1 | |||
1.1 Definitions |
1 | |||
ARTICLE II TRANSFER RESTRICTIONS |
8 | |||
2.1 Lock-Up |
8 | |||
2.2 Transfer to Competitors |
9 | |||
2.3 Right of First Offer |
9 | |||
2.4 Tag-Along Rights |
11 | |||
ARTICLE III CORPORATE GOVERNANCE |
12 | |||
3.1 Appointment of General Atlantic Designee and Apax Designee |
12 | |||
3.2 Re-election of General Atlantic Nominee and Apax Nominee |
13 | |||
3.3 Reimbursement; Insurance |
13 | |||
3.4 Termination |
13 | |||
3.5 Committees |
13 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
14 | |||
4.1 Corporate Existence and Power |
14 | |||
4.2 Authorization; No Contravention |
14 | |||
4.3 Governmental Authorization; Third Party Consents |
15 | |||
4.4 Binding Effect |
15 | |||
4.5 Litigation |
15 | |||
4.6 Intellectual Property |
15 | |||
4.7 Compliance with Laws |
16 | |||
4.8 SAFE 75 |
17 | |||
4.9 PFIC |
17 | |||
4.10 Capitalization |
17 | |||
4.11 No Default or Breach; Contractual Obligations |
17 | |||
4.12 Private Placement Memorandum; Financial Statements |
17 | |||
4.13 No Material Adverse Change |
18 | |||
4.14 Brokers, Finders or Similar Fees |
19 | |||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE INVESTORS |
19 | |||
5.1 Existence and Power |
19 | |||
5.2 Authorization; No Contravention |
19 | |||
5.3 Governmental Authorization; Third Party Consents |
19 | |||
5.4 Binding Effect |
19 | |||
ARTICLE VI COVENANTS |
20 | |||
6.1 PFIC Status |
20 | |||
6.2 Banking Relationship |
20 |
Page | ||||
6.3 Preemptive Rights |
20 | |||
6.4 No Issuance; Outstanding Shares |
21 | |||
6.5 Contemplated IPO |
21 | |||
6.6 Acquisition Proposal |
21 | |||
6.7 Offerees Voting |
22 | |||
ARTICLE VII INDEMNIFICATION |
23 | |||
7.1 Indemnification |
23 | |||
7.2 Notification |
24 | |||
7.3 Contribution |
24 | |||
7.4 Limits on Indemnification |
25 | |||
ARTICLE VIII TERMINATION OF AGREEMENT |
26 | |||
8.1 Termination |
26 | |||
8.2 Survival |
26 | |||
ARTICLE IX MISCELLANEOUS |
26 | |||
9.1 Survival of Representations and Warranties |
26 | |||
9.2 Notices |
26 | |||
9.3 Successors and Assigns; Third Party Beneficiaries |
28 | |||
9.4 Amendment and Waiver |
29 | |||
9.5 Counterparts |
29 | |||
9.6 Headings |
29 | |||
9.7 Governing Law |
29 | |||
9.8 Waiver of Jury Trial |
30 | |||
9.9 Severability |
30 | |||
9.10 Rules of Construction |
30 | |||
9.11 Entire Agreement |
30 | |||
9.12 Public Announcements |
30 | |||
9.13 Further Assurances |
31 | |||
9.14 Representations, Warranties and Covenants. |
31 | |||
9.15 Specific Performance |
31 | |||
9.16 New Shareholders Agreement and New Articles |
31 | |||
Schedule 1 List of Current Competitors |
||||
Exhibit A Terms of New Shareholders Agreement |
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
SOUFUN HOLDINGS LIMITED |
||||
By: | /s/ Vincent Tianquan Mo | |||
Name: | Vincent Tianquan Mo | |||
Title: | Executive Director | |||
Signature Page | Investors Rights Agreement |
GENERAL ATLANTIC MAURITIUS LIMITED |
||||
By: | /s/ Amit Gupta | |||
Name: | Amit Gupta | |||
Title: | Director | |||
Signature Page | Investors Rights Agreement |
SIGNED BY HUNT 7-A GP LIMITED as general partner of HUNT 7-A GUERNSEY L.P. INC |
||||
By: | /s/ David Critchlow | |||
Name: | David Critchlow | |||
Title: | Director | |||
SIGNED BY HUNT 7-A GP LIMITED as general partner of HUNT 7-B GUERNSEY L.P. INC |
||||
By: | /s/ David Critchlow | |||
Name: | David Critchlow | |||
Title: | Director | |||
SIGNED BY HUNT 6-A GP LIMITED as general partner of HUNT 6-A GUERNSEY L.P. INC |
||||
By: | /s/ David Critchlow | |||
Name: | David Critchlow | |||
Title: | Director | |||
Signature Page | Investors Rights Agreement |
NEXT DECADE INVESTMENTS LIMITED |
||||
By: | /s/ Jing Cao | |||
Name: | Jing Cao | |||
Title: | Director | |||
MEDIA PARTNER TECHNOLOGY LIMITED |
||||
By: | /s/ Jing Cao | |||
Name: | Jing Cao | |||
Title: | Director | |||
Signature Page | Investors Rights Agreement |
DIGITAL LINK INVESTMENTS LIMITED |
||||
By: | /s/ Shan Li | |||
Name: | Shan Li | |||
Title: | Director | |||
Signature Page | Investors Rights Agreement |
Voting Rights:
|
B Shares owned by Vincent Mo (the Founder) will have 10 votes per share and A Shares owned by the Investors will have 1 vote per share. | |
Major Actions:
|
The prior written consent of each of the Investors shall be required for the following: |
(a) | the redemption of share capital or securities convertible into or exercisable for share capital of the Company or its subsidiaries; | ||
(b) | the adoption of any stock option plan or similar equity compensation scheme for employees or directors of the Company or its subsidiaries and the allocation of options thereunder, or any amendment of the existing employee stock option plan of the Company; | ||
(c) | any amendment to or restatement of the Memorandum and Articles of Association or by-laws of the Company or any of its material subsidiaries (including, without limitation, Bravo Work Investments Limited, Max Impact Investments Limited, SouFun Media Technology (Beijing) Co., Ltd., Beijing SouFun Network Technology Co., Ltd., Beijing SouFun Science and Technology Development Co., Ltd., Shanghai SouFun Advertising Co., Ltd. and Beijing Century Jia Tian Xia Technology Development Co., Ltd.); provided that with respect to any material subsidiaries that are within the PRC, the Investors prior written consent is required for any amendment to or restatement of the Articles of Association of such subsidiaries; | ||
(d) | an IPO, unless the Company equity valuation is at least US$1 billion and the Companys ordinary shares are listed on The Nasdaq Stock Market, The New York Stock Exchange or other internationally recognized stock exchange; | ||
(e) | any sale of a majority of the voting power or a majority of the economic interests in the Company, or a sale of all or substantially all of the assets of the Company, in each case at a valuation lower than the fair market value; | ||
(f) | the declaration or payment of any dividend or other distribution by the Company or any of its subsidiaries; | ||
(g) | the assumption, incurrence or guarantee of any indebtedness by the Company or any of its subsidiaries in excess of US$10 million in aggregate during the trailing 12 months; | ||
(h) | any acquisition by the Company or any of its subsidiaries in which the aggregate consideration is in excess of US$10 million, either individually or in the aggregate when added to all other acquisitions during the trailing 12 months; |
3
(i) | any transaction between the Company or any of its subsidiaries, on the one hand, and any officer, director or shareholder (or affiliate or family member) of the Company or any of its subsidiaries, on the other hand; | ||
(j) | compensation of or payments to the Chairman of the Board of Directors; | ||
(k) | approval of the Companys annual operating budget; | ||
(l) | the appointment of a new CEO or CFO of the company; | ||
(m) | a material change in the nature, scope or geography of the business; | ||
(n) | any change the material accounting methods or policies of the Company, any change in the Companys auditor; or | ||
(o) | any change the size of the Board of Directors. |
Board of Directors:
|
Five members, comprised of the following: |
(i) | one member designated by the GA Shareholder | ||
(ii) | one member designated by the Apax Shareholder | ||
(iii) | three members designated by Vincent Mo |
Vincent Mo will be the Chairman of the Board. There will be an Audit, Compensation and Nominations Committee. The GA director will have the right to serve on the Compensation and Nominations Committee and the Apax director shall have the right to serve on the Audit Committee, provided that the GA Shareholder and the Apax Shareholder may agree to reallocate committee assignments. Each of the GA Shareholder and the Apax Shareholder shall have the right to designate one observer. | ||
Shareholder Matters:
|
(a) Transfer Restrictions. Until the second anniversary of the closing,
no shareholder may transfer its shares (other than transfers to family
members and affiliated funds). |
|
(b) Right of First Offer. Prior to the Companys initial public
offering, share transfers will be subject to a right of first offer as
follows: first, the Company, and second, the non-selling shareholders
on a pro rata basis. |
||
(c) Preemptive Rights. Prior to the Companys initial public offering,
new issues of share capital or securities convertible into or
exercisable for share capital will be subject to a preemptive right of
the Investors to purchase their pro rata share of the offering and up to
the amount of other shareholders applicable share of the offering not
subscribed for by such other shareholders. |
4
(d) | Initial Public Offering. If the Company has not completed a firm commitment initial public offering on or prior to the second anniversary of closing, then at any time thereafter each of the Founder, the GA Shareholder and the Apax Shareholder may require the Company to complete its initial public offering on the New York Stock Exchange, Nasdaq, the Hong Kong Stock Exchange or another reputable international stock exchange. The Registrations Rights Agreement and the Investor Rights Agreement Articles II, III, VI, VII, and IX shall become effective upon completion of an IPO. | ||
(e) | Co-Sale Rights. Prior to the Companys initial public offering, the GA Shareholder and the Apax Shareholder will have the right to participate pro rata in any sales of stock to third parties by Vincent Mo and his affiliates. If Vincent Mo and his affiliates wish to transfer 25% or more of their shares to a third party, then the GA Shareholder and the Apax Shareholder will have the right to sell their entire stake to such third party. | ||
(f) | Other. (i) The company will provide annual, quarterly and monthly financial statements. (ii) The following provisions from the existing shareholders agreement will be included in the new shareholders agreement with appropriate modifications: Section 4 (Business Plan and Financial Information), Section 10 (Rights in relation to License Companies) (the parties agree that, for purpose of this Section 10, the License Companies Interest shall only be transferred to the Company or its nominee and not to any Investor or Investors nominee), Section 11 (Employee Compensation Plan), Section 12 (Enforcement of Rights), Section 14 (Competition with the Business), Section 15 (information, Insurance, Records, Licenses) and Section 26 (Founder Undertakings). (iii) The Company will provide warranties and indemnification identical to Articles IV and VII of the Investor Rights Agreement. (iv) The company will provide covenants equal to Article VI of the Investor Rights Agreement. | ||
(g) | Call Options. Notwithstanding anything else to the contrary, the transfer of Class A Ordinary Shares from the Investors to Next Decade Investments Limited upon its exercise of the call options shall not be subject to the transfer restrictions set forth in sections (a) and (b) above. |
Governing Law;
Dispute Resolution:
|
New York state law; state or federal court sitting in the County of New York, in the State of New York. |
Page | ||||
1. Definitions
|
1 | |||
2. Grant of Rights
|
6 | |||
3. Demand Registration
|
6 | |||
4. Incidental or Piggy-Back Registration
|
9 | |||
5. Form F-3 Registration
|
10 | |||
6. Holdback Agreement
|
14 | |||
7. Registration Procedures
|
14 | |||
8. Indemnification; Contribution
|
20 | |||
9. Additional Covenants
|
23 | |||
10. Non-U.S. Listings
|
23 | |||
11. Miscellaneous
|
24 |
i
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
(i) | if to the Company: | ||
SouFun Holdings Limited 8th Floor, Tower 3, Xihuan Plaza No. 1 Xizhimenwai Ave. Xicheng District, Beijing 100044 Peoples Republic of China Facsimile: (8610) 5930 6137 Attention: Jill Jiao, Chief Counsel and Investor Relations Officer |
|||
(ii) | if to the General Atlantic Shareholders: | ||
General Atlantic Mauritius Limited 6th Floor, Tower A 1 CyberCity, Ebene Mauritius Fax: +230 403-6060 Attention: The Directors |
|||
With a copy (which shall not constitute notice) to: | |||
c/o General Atlantic Service Company, LLC 3 Pickwick Plaza Greenwich, CT 06830 Telephone: (203) 629-8600 Facsimile: (203) 618-9207 Attention: David Rosenstein, Esq. |
|||
With a copy (which shall not constitute notice) to: | |||
Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019-6064 Telephone: (212) 373-3000 Facsimile: (212) 757-3990 Attention: Matthew W. Abbott, Esq. |
25
and | |||
Paul, Weiss, Rifkind, Wharton & Garrison 12th Floor, The Hong Kong Club Building 3A Chater Road, Central Hong Kong Facsimile: (852) 2840-4300 Attention: Jeanette K. Chan, Esq. |
|||
(iii) | If to the Apax Shareholders | ||
Hunt 7-A Guernsey L.P. Inc Hunt 7-B Guernsey L.P. Inc Hunt 6-A Guernsey L.P. Inc Third Floor, Royal Bank Place 1 Glategny Esplanade St Peter Port Guernsey GY1 2HJ Facsimile: +44 (0) 1481 810 099 Attention: Denise Fallaize |
|||
with a copy to: | |||
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Facsimile: +1 (212) 455-2502 Attention: Ryerson Symons, Esq. |
26
27
28
SOUFUN HOLDINGS LIMITED |
||||
By: | /s/ Vincent Tianquan Mo | |||
Name: | Vincent Tianquan Mo | |||
Title: | Executive Chairman | |||
Signature Page | Registration Rights Agreement |
GENERAL ATLANTIC MAURITIUS LIMITED |
||||
By: | /s/ Amit Gupta | |||
Name: | Amit Gupta | |||
Title: | Director | |||
Signature Page | Registration Rights Agreement |
SIGNED BY HUNT 7-A GP LIMITED | ||||||
as general partner of | ||||||
HUNT 7-A GUERNSEY L.P. INC | ||||||
By: | /s/ David Critchlow | |||||
Name: | ||||||
Title: | Director | |||||
SIGNED BY HUNT 7-A GP LIMITED | ||||||
as general partner of | ||||||
HUNT 7-B GUERNSEY L.P. INC | ||||||
By: | /s/ David Critchlow | |||||
Name: | ||||||
Title: | Director | |||||
SIGNED BY HUNT 6-A GP LIMITED | ||||||
as general partner of | ||||||
HUNT 6-A GUERNSEY L.P. INC | ||||||
By: | /s/ David Critchlow | |||||
Name: | ||||||
Title: | Director |
Signature Page | Registration Rights Agreement |
(1) | [ ] of [ ] (the New Party); |
(2) | THE PERSONS WHOSE NAMES ARE SET OUT IN SCHEDULE 1 HERETO (collectively the Current Parties and individually a Current Party); |
(3) | SOUFUN HOLDINGS LIMITED, a company incorporated in the Cayman Islands and having its registered address at [ ] (the Company). |
1. | In this Joinder, unless the context otherwise requires, words and expressions respectively defined or construed in the Registration Rights Agreement shall have the same meanings when used or referred to herein. | |
2. | The New Party hereby accedes to and ratifies the Registration Rights Agreement and covenants and agrees with the Current Parties and the Company to be bound by the terms of the Registration Rights Agreement as a [ ] and as if it had been a party thereto from the outset and to duly and punctually perform and discharge all liabilities and obligations whatsoever from time to time to be performed or discharged by it under or by virtue of the Registration Rights Agreement in all respects as if named as a party therein. | |
3. | Each of the Current Parties and the Company covenants and agrees that the New Party shall be entitled to all the benefits of the terms and conditions of the Registration Rights Agreement to the intent and effect that the New Party shall be deemed, with effect from the date on which the New Party is executes this Joinder, to be a party to the Registration Rights Agreement as a [ ]. | |
4. | This Joinder shall hereafter be read and construed in conjunction and as one document with the Registration Rights Agreement and references in the Registration Rights Agreement to the Agreement or this Agreement, and |
references in all other instruments and documents executed thereunder or pursuant thereto to the Registration Rights Agreement, shall for all purposes refer to the Registration Rights Agreement incorporating and as supplemented by this Joinder. | ||
5. | THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. The parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court sitting in the County of New York, in the State of New York over any suit, action or proceeding arising out of or relating to this Agreement or the affairs of the Company. To the fullest extent they may effectively do so under applicable law, the parties hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim that they are not subject to the jurisdiction of any such court, any objection that they may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. | |
6. | Section 11(j) of the Registration Rights Agreement shall apply to this Joinder and shall be incorporated herein by reference. | |
7. | The address of the undersigned for purposes of all notices under the Registration Rights Agreement is: [ ]. |
[NEW PARTY] |
||||
By: | ||||
Name: | ||||
Title: | ||||
2
-2-
SOUFUN HOLDINGS LIMITED |
||||
By: | /s/ Vincent Tianquan Mo | |||
Name: | Vincent Tianquan Mo | |||
Title: | Executive Chairman | |||
TELSTRA INTERNATIONAL HOLDINGS LIMITED |
||||
By: | /s/ Michael Sheehy | |||
Name: | Michael Sheehy | |||
Title: | M & A Counsel | |||
VINCENT TIANQUAN MO |
||||
/s/ Vincent Tianquan Mo | ||||
Vincent Tianquan Mo | ||||
1
1. | As at the Certificate Date, the Company is duly incorporated and existing under the laws of the Cayman Islands in good standing (meaning solely that it has not failed to make any filing with any Cayman Islands government authority or to pay any Cayman Islands government fee which would make it liable to be struck off by the Registrar of Companies and thereby cease to exist under the laws of the Cayman Islands). | |
2. | The Ordinary Shares, when sold as contemplated by the Registration Statement, will be duly authorised by the Company and validly issued, fully paid and non-assessable (which term means when used herein that no further sums are required to be paid by the holders thereof in connection with the issue of such shares). |
2
1
2
Re: | 2,933,238 American Depositary Shares, representing 11,732,952 Ordinary Shares of SouFun Holdings Limited |
Party A: [specify employer name]
|
Party B: [specify employee name] | |
Legal representative or authorized agent:
|
Level of education: [specify] | |
[specify]
|
Gender: [specify] | |
Date of birth: [specify date] | ||
Resident ID number: [specify] | ||
Location of household: [specify] | ||
Party As Address: [specify]
|
Home Address: [specify] | |
Postal Code: [specify] |
Article 1
|
This Contract is a contract with a fixed term. This Contract begins from [specify date] and ends on [specify date]. The term of this Contract shall be [specify] months, during which the period of time starting from [specify date] and ending on [specify date] shall be the probation time (not applicable to an employee on a sales position, the probation time for whom will be determined in accordance with the relevant sales system of the Company). | |
Article 2
|
[specify] day(s) prior to the expiration of this Contract, the Company and the Employee will discuss matters related to the renewal of this Contract. Unless the two parties enter into an agreement to renew this Contract in writing, this Contract will automatically expire on the expiration day of this Contract. | |
Article 3
|
The Employee guarantees to the Company that he/she does not have any existing contracts or obligations to prevent him/her from executing this Employment Contract. If the Employee is still in dispute with another organization, the Employee shall handle the matter and assume the responsibilities by himself/herself. The Company does not have anything to do with the matter. If the Company shall incur any losses therefrom, the Employee shall be liable therefor and shall hold the Company harmless therefrom. | |
Article 4
|
At the time the employment begins, the Employee shall honestly complete the Application for Employment and provide relevant supporting documents required by the Company. The Employee guarantees that all information and documents he/she provides are true and lawful. If it is found out that false information has been provided, the Company may terminate the employment relationship with the Employee at any time, and the Employee shall compensate the Company for any losses suffered by the Company therefrom. The Employee guarantees that he/she understands the job description, the work environment, the location of the employment, the occupational hazards, the safety in the workplace, the compensation for the employment, and other information at the time this Contract is executed. |
1
Article 1
|
The Employee agrees that he/she will assume his/her responsibility at [specify branch] based on the needs of the Company. | |
Article 2
|
The Company has the right to promote the Employee, relocate the Employee to a different department from time to time and adjust his/her position based on the needs of the Company and on the Employees capability and performance. The Employee, without justifiable reasons, may not refuse to accept such changes of responsibilities, and shall assume the new responsibilities after the change of position and accept the salary based on the changed position. All such changes shall be based on the position/salary adjustment notification sheet provided by the Company. | |
Article 3
|
The Employee shall work full time, observe the instructions of the Company, obey the management and arrangement of the Company, complete the tasks punctually, and meet the quality standards set forth by the Company. During the term of this Contract, without the Companys written permission, the Employee may not engage in activities in other industries, businesses, or occupations outside the employment. | |
Article 4
|
The Employee may request transfers to another department or position based on his/her own special skills and ability by following the relevant procedures therefor, including submission of an application and obtaining of the approval in accordance with the requirements set forth by the Company. The Employee may be so transferred only after obtaining the Companys agreement. | |
PART III: Employee labor protection and work environment | ||
Article 1
|
The Employees work hours, time off and vacations shall be determined according to the relevant stipulations set forth by the national government and the Company. | |
Article 2
|
The Company will provide necessary work environment and labor protection facilities for the Employee in accordance with the stipulations set forth by the national government with respect to the safety in the workplace, labor protection, sanitation, health, etc. | |
PART IV: The compensation for the Employee | ||
Article 1
|
The Company will determine the Employees compensation package based on the Employees performance, contribution to the Company, and the Companys operational results. The Company is committed to the development of the Company, to the continuous creation of best economic results and social effects, to the improvement of the Employees salary, bonus, and benefits in an effort to enable the Employees development. | |
Article 2
|
The Company will calculate the salary payable to the Employee in accordance with the established standards for salary payment and the performance of the Employee as evaluated by the management of the Company. The salary payment will be made in Renminbi through a bank wire. | |
Article 3
|
The Employees salary will be adjusted by the Company in accordance with his/her performance, the operational results of the department where the Employee works and the overall operational results of the Company, provided that it shall not be lower than the minimum salary set forth by the local government. | |
Article 4
|
The severance pay for the Employee will be determined in accordance with the stipulations set forth by the government. |
2
Article 5
|
The personal income tax, payable according to the law and relevant regulations, on all salaries, bonuses, and any other payments to the Employee made by the Company under this Contract shall be the Employees responsibility. | |
Article 6
|
The Employees salary remains the Companys confidential information. The Employee has the responsibility to keep such information confidential and may not disclose such information to anyone unless such disclosure is compelled by the applicable law. If there has been an unauthorized disclosure, the Company reserves the right to take actions against it, including economic penalties up to the total of the Employees salaries for 12 months and the right to terminate the employment. | |
PART V: The Employee and the insurance benefits | ||
Article 1
|
In accordance with the stipulations set forth by the national and local governments, the Company will make arrangements with respect to social endowment insurance, unemployment insurance, medical insurance, occupational injury insurance, and others. It is agreed that the portion of the social and labor insurances to be contributed by the Employee will be deducted from the Employees salary by the Company on behalf of the Employee. | |
Article 2
|
If the Employee is sick or injured outside of his/her work, the salary for the sick leave and medical benefit shall be determined as set forth by the Company in accordance with the applicable laws and regulations. | |
Article 3
|
If the Employee suffers from an occupational disease or an on-the-job injury, the Employees salary and medical insurance benefit shall be determined in accordance with the relevant stipulations set forth by the national and local governments. | |
PART VI: Employee labor disciplines | ||
Article 1
|
The Employee has the responsibility and obligation to understand, be familiar with, and abide by various rules and regulations. | |
Article 2
|
If the Employee is in violation of the labor disciplines or the Companys regulations and procedures or has caused damages to the Company (including but not limited to causing damages to the property of the Company, causing the Company to incur losses, causing damages to the Companys reputation, creating disaccord or disruption among employees), or has harmed himself/herself or other employees or staff members, the Company may take disciplinary actions against the Employee based on the seriousness of the consequences in accordance with the stipulations. The actions may include verbal warning, written warning, economic penalty, suspense of employment without pay, transfer to another position, or reduction of salary, compensation to the Company for the losses suffered by the Company to the extent caused by the Employee, and the termination of this Contract. | |
Article 3
|
The Company may amend and supplement the relevant rules and regulations based on its operational and managerial needs. The Employee shall abide by such stipulations and systems once they are released. | |
PART VII: Invention during employment and confidentiality clause | ||
Article 1
|
The Company owns the technical inventions, innovations, and other intellectual property created by the Employee during his/her employment with the Company, the right to file a patent application therefor, and the income from all operations and services generated therefrom. | |
Article 2
|
The Companys trade secrets include: the Companys operational strategies, report on market analysis, |
3
marketing strategies, managerial systems, intelligence and information, advertisement and creative work, archived video and data, accounting and auditing information, and other information related to the operations; such technical information as the process of developing the Companys platforms, technical data, technical documents, source programs, and such other confidential information as specified by the Company. | ||
Article 3
|
The Employee undertakes that, during his/her employment, he/she will assume responsibilities for keeping confidential the Companys trade secrets, and will not disseminate, duplicate, reprint, take with him/her, make public, disclose to any third party, or dispose of the Companys trade secrets without the authorization by the Company; in case of an unauthorized disclosure caused by the Employee, either on purpose or due to negligence on the part of the Employee, the Employee shall be liable for all damages so caused and shall compensate the Company for such damages. | |
Article 4
|
The Employee undertakes that, during his/her employment, he/she will not operate by himself/ herself or operate with others the same type of business as the Companys, and will not take a part-time job of similar nature from another organization. The Company shall have the right to initiate a legal actions against the Employee and his/her employer of such part-time job in such an event. | |
Article 5
|
The Employee agrees that at the time this Contract is executed, the Employee has carefully reviewed the content of the attachment entitled the Confidentiality Clauses and understands the legal implications of each of these Confidentiality Clauses. |
Article 1
|
If the law, administrative regulations, and rules on which this Contract is based are amended, the relevant contents of this Contract shall be revised accordingly. | |
Article 2
|
If the actual situations on which this Contract is based have significantly changed, which has rendered the performance of this Contract impossible, the relevant contents of this Contract may be amended upon the two parties agreement. | |
Article 3
|
The changes to this Contract will only be effective after Party A and Party B have agreed on the changes and confirmed the changes in writing after discussions. | |
Article 4
|
This Contract can be revoked after Party A and Party B have reached an agreement thereon after discussion. | |
Article 5
|
In case of any of the following situations, the Company may revoke this Contract and shall not be liable to the Employee for any economic compensation. In addition, the Department of Human Resources of the Company will keep a record and determine the economic penalties based on the breaches and the seriousness thereof. |
1. | The Employee did not meet the Companys standards for hiring during the probation period; | |||||
2. | The Employee seriously violated labor disciplines or rules and regulations (such as absence from work, failure to complete the tasks assigned to him/her on purpose); | |||||
3. | The Employee is found to be seriously negligent or trying to gain personal advantage by using his/her influence in his/her position; | |||||
4. | The Employee has caused the Company to suffer losses because of bribery, theft, or use of the Companys or other employees property for his/her personal advantage, serious negligence or misconduct, or actions that may result in serious personal injury or damage to the Companys property; | |||||
5. | The Employee engaged in business activities with the Companys customers, suppliers, or other partners that are not relevant to the Companys business by using the Companys name or utilizing |
4
his/her position in the Company; | ||||||
6. | The Employee disclosed the Companys confidential information or trade secrets without authorization; | |||||
7. | The Employee refused to take the position assigned to him/her or refused to be transferred to another department; | |||||
8. | The Employee in a sales position failed to meet the requirements set forth in the Methods for Evaluating the Performance of Sales Persons of the Company; | |||||
9. | Legal actions have been taken against the Employee in accordance with the law because of criminal activities; and | |||||
10. | The Employee has been absent from work for a succession of 3 days (inclusive) or for a total of 7 days (inclusive) within one year without cause or reason. Such behavior will be regarded as a serious violation of the Companys rules and regulations. |
Article 6
|
After the Employee has completed the probation period and become a formal employee, if one of the following situations exists, the Company can revoke this Contract provided the Employee shall be given a 30-day notice thereof in writing, or shall be paid a total sum that is equivalent to the Employees one-month salary before the termination of the employment in lieu of notice: |
1. | The Employee is not able to perform the original duty nor can the Employee perform other duties assigned by the Company after medical treatments for health conditions or injuries outside of work; | |||||
2. | The Employee is no longer competent for his/her current position due to his/her knowledge structure or ability to do the work, and he/she is still not competent in his/her position according to the requirements of the Company after receiving trainings or being transferred to another position; | |||||
3. | If the Company is on the verge of bankruptcy and is in the period of time when the Company is going through restructuring or the production and operations are experiencing serious difficulties, the Company may revoke this Contract after the matter is explained to all employees of the Company, the Company has listened to the opinions of the employees, and the relevant governmental administrative authority in charge of labor affairs has been informed thereof. |
Article 7
|
In any of the following events, the Company may not revoke this Contract with the Employee: |
1. | The Employee is sick or has been injured on the job, and is within the period of time when medical treatment should be received in accordance with the stipulations of the PRC Labor Law; and | |||||
2. | The Employee is a female and is pregnant, in the middle of prenatal period, or breastfeeding period. |
Article 8
|
In the case of one of the following events, the Employee may inform the Company to revoke this Contract: |
1. | The Employee is still during the probation time; provided that the Company shall be given at least 7 days of written notice in advance and that the Employee shall have made proper arrangement to hand over his/her work to other designated employees; provided further that, in the event of failure of such notice or proper handover, the Company reserves the right to impose economic penalties; | |||||
2. | The Company forces the Employee to work by using such means as force, threat, confinement, or illegal restriction of personal freedom; and | |||||
3. | The Company fails to pay the compensation for the work or provide a proper work environment. |
Article 9
|
Except for the probation time, during the term of this Contract, the Employee has the right to resign from his/her position and terminate this Contract; provided that the Company shall be given a 30-day written prior notice; except where the Employee has caused the Company to suffer economic losses and the matter is pending conclusion or the Employee is otherwise subject to investigation. | |
Article 10
|
If the Employee revokes this Contract in violation of provisions hereof and causes the Company to |
5
suffer losses, the Employee shall compensate the Company for the losses, including: |
1. | The cost for training the Employee paid by the Company, unless there are other agreements between the two parties, in which case the matter shall be handled in accordance with such other agreements; | ||||||
2. | The Employee has caused direct economic losses to the Company; and | ||||||
3. | Other costs indemnifiable by the Employee to the Company in accordance with this Contract. | ||||||
Despite the completion of the procedures for the termination of the employment, if the Employee is found to have caused the Company to suffer losses whether during or after his/her employ at the Company as provided in this Contract, the Company shall have the right to hold the Employee economically and legally liable and to seek compensation from the Employee for the losses so suffered by the Company and/or injunction with respect to the breaches by the Employee. |
Article 11
|
In the case of one of the following events, this Contract shall terminate automatically: |
1. | This Contract expires according to its terms; | |||||
2. | The conditions exist under which this Contract terminates as provided herein; | |||||
3. | The Employee has reached the legal retirement age as provided under the relevant laws; | |||||
4. | The Company is legally bankrupt or dissolved; and | |||||
5. | Other situations as set forth in the relevant law, legal decrees, rules and regulations. |
Article 12
|
Whatever the cause for the termination of this Contract, the Employee has the obligation to cooperate with the Company to complete the proper procedures for the termination of the employment. Before the procedures for the termination of the employment are completed, the Company has the right to temporarily postpone the payment of one months salary. |
Article 1
|
In the event of a labor dispute between the Company and the Employee, the two parties may request that the matter be subject to mediation, arbitration, or judicial ruling. The arbitral and judicial authorities should mediate the matter first. | |
Article 2
|
If the Employee has breached this Contract, the Company has the right to hold the Employee liable (including imposing economic penalties up to the total of the Employees salaries for 12 months) and the right to terminate the employment. If the Company has breached this Contract, the Employee reserves the right to seek economic compensation from the Company. | |
Article 3
|
A labor dispute shall be solved according to the following procedures: |
1. | The Employees supervisor or a representative from the Department of Human Resources of the Company will try their best to solve the dispute through negotiations. | |||||
2. | If the above mentioned efforts fail to solve the dispute, the General Manager of the Company or the representative designated by the General Manager will try once again on behalf of the Company to solve the dispute through negotiations. | |||||
3. | If the two parties still cannot reach an agreement after the above-mentioned mediation efforts, either party or both parties of the labor dispute may request arbitration by a labor dispute arbitral committee. | |||||
4. | If either party does not agree with such arbitral award, said party may initiate a lawsuit at the local Peoples Court within 15 days after said party is informed of the arbitral award. |
6
Article 1
|
This Contract falls into the category of the Companys confidential information about the management of human resources. The Employee shall not disclose such information to anyone in violation of his/her confidentiality obligations hereunder. If there has been an unauthorized disclosure, the Company reserves the right to take actions against the Employee for the unauthorized disclosure (including economic penalties up to the total of the Employees salaries for 12 months) and the right to terminate the Employees employment. | |
Article 2
|
During the term of this Contract, if the Employee cannot continue to work with the Company for reasons related to the Employees employment history register that is kept by the original employer and the household register, or other reasons related to personnel relation control, the Company has the right to deduct the Employees salary. If the Company has suffered additional economic losses therefrom, the Employee has the obligation to compensate the Company. | |
Article 3
|
For any dispute arising from the Employees employment history register that is kept by the original employer, the household register or other matters related to personnel relation control, the Company shall not assume any joint and several obligations. | |
Article 4
|
The rules and regulations published by the Company through various official channels and all agreements entered into and between the Company and the Employee are regarded as the appendices to this Contract. | |
Article 5
|
If the Employee is in violation of the labor disciplines, the Company may, in accordance with the Companys rules and regulations, take disciplinary actions, including the termination of this Contract. | |
Article 6
|
For matters that are not covered by this Contract or if this Contract is in conflict with the relevant stipulations set forth by the relevant national and/or local government, the relevant stipulations shall prevail. | |
Article 7
|
This Contract is executed in two counterparts with equal legal effect, and Party A and Party B shall each keep one copy. This Contract shall come into effect upon signature and seal by both parties. |
Party A (seal)
|
Party B: (signature and seal) | |
Legal representative or authorized agent |
||
(signature and seal) |
||
Date of Execution: [specify]
|
Date of Execution: [specify] |
7
8
9
10
(1) | SouFun Holdings Limited, a company organized under the laws of the Cayman Islands (the Company); and | |
(2) | (the Indemnitee). |
1. | INTERPRETATION | |
1.1 | In this Agreement unless the context otherwise requires, the following words and expressions shall have the following meanings: |
Business Day
|
means any day, except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the Peoples Republic of China, Hong Kong or the Commonwealth of Australia are generally authorized or required by law or governmental action to close. |
Corporate Status
|
means the status of a person who is or was a director, officer, employee, agent, or fiduciary of the Company or any other Group Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of any other company, corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other entity or enterprise. | |
Director
|
means a member of the Board. | |
Disinterested Director
|
means a Director of the Company who is not or was not a party to a Proceeding in respect of which indemnification is sought by Indemnitee. | |
Disinterested
Shareholder
|
means a Shareholder of the Company who is not or was not a party to a proceeding in respect of which indemnification is sought by the Indemnitee. | |
Expenses
|
means all fees, costs and expenses incurred in connection with any Proceeding (as defined below), including, without limitation, reasonable attorneys fees, disbursements and retainers (including, without limitation, any such fees, disbursements and retainers incurred by the Indemnitee pursuant to clause 6 of this Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services and other disbursements and expenses. | |
Group Companies
|
means the Company and each subsidiary of the Company (wherever incorporated or organized). | |
Independent Counsel
|
means a law firm, or a member of a law firm, who is experienced in matters of corporation law and neither is presently, nor in the past five years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party; or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of |
- 2 -
interest in representing either the Company or Indemnitee in an action to determine Indemnitees right to indemnification under this Agreement. | ||
Officer
|
means an officer of the Company. | |
Parties
|
means the parties to this Agreement, together, and Party means any one of them. | |
Proceeding
|
means any threatened, pending or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing, appeal or any other proceeding whether civil, criminal, administrative, arbitrative or investigative, and whether formal or informal, including any proceeding initiated by Indemnitee pursuant to clause 6 of this Agreement to enforce the Indemnitees rights hereunder. |
1.2 | In this Agreement, unless the context otherwise requires: |
1.2.1 | references to statutory provisions shall be construed as references to those provisions as amended or re-enacted, or as their application is modified by other provisions from time to time, and shall include references to any provisions of which they are re-enactments (whether with or without modification); | ||
1.2.2 | references to clauses are references to clauses hereof; references to sub-clauses are, unless otherwise stated, references to sub-clauses of the clause in which the reference appears; | ||
1.2.3 | references to the singular shall include the plural and vice versa, and references to the masculine shall include the feminine and/or neuter and vice versa; and | ||
1.2.4 | references to persons shall include companies, partnerships, associations and bodies of persons, whether incorporated or unincorporated. |
2. | AGREEMENT TO SERVE | |
In consideration of the Companys covenants and commitments hereunder, Indemnitee agrees to serve as a Director or Officer of the Company (as applicable). This Agreement does not create or otherwise establish any right or obligation on the part of Indemnitee to be, or to continue to be elected or appointed, a Director or Officer of the Company or any other Group Company, and does not create an employment contract between the Company and Indemnitee. | ||
3. | INDEMNITY OF DIRECTOR/OFFICER |
- 3 -
3.1 | Subject to clause 10, the Company shall indemnify Indemnitee if Indemnitee was or is a party, or is threatened to be made a party, to any Proceeding, including a Proceeding brought by or in the right of the Company, by reason of Indemnitees Corporate Status or by reason of anything done or not done by Indemnitee in such capacity. Subject to clause 10, pursuant to this sub-clause 3.1, Indemnitee shall be indemnified against: (i) all Expenses actually and reasonably incurred by Indemnitee or on Indemnitees behalf; and (ii) all liabilities, judgments, penalties, fines and amounts paid in settlement, in each case in connection with such Proceeding (including, but not limited to, the investigation, defense, settlement or appeal thereof). | |
3.2 | Notwithstanding any other provision of this Agreement other than clause 10, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitees behalf in defending any Proceedings referred to in clause 3.1 in which judgment is given in his favor or in which he is acquitted. | |
3.3 | Subject to clause 10, the Company shall indemnify Indemnitee for such portion of the Expenses, witness fees, liabilities, damages, judgments, fines and amounts paid in settlement, and any other amounts that Indemnitee becomes legally obligated to pay in connection with any Proceeding referred to in clause 3.1, in respect of which Indemnitee is entitled to indemnification hereunder, even if Indemnitee is not entitled to indemnification hereunder for the total amount thereof. | |
4. | INDEMNIFICATION FOR EXPENSES OF A WITNESS | |
Subject to clause 10, to the extent that Indemnitee is, by reason of Indemnitees Corporate Status, a witness in any Proceeding, Indemnitee shall be indemnified by the Company against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitees behalf in connection therewith. | ||
5. | DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION | |
5.1 | The Indemnitee shall request indemnification pursuant to this Agreement by notice in writing to the secretary of the Company. The secretary shall, promptly upon receipt of Indemnitees request for indemnification, advise in writing the Board or such other person or persons empowered to make the determination as provided in sub-clause 5.2 that Indemnitee has made such request for indemnification. Subject to clause 10, upon making such request for indemnification, Indemnitee shall be presumed to be entitled to indemnification hereunder, and the Company shall have the burden of proof in the making of any determination contrary to such presumption. | |
5.2 | Upon written request by Indemnitee for indemnification pursuant to sub-clause 3.1, the entitlement of the Indemnitee to indemnification pursuant to the terms of this Agreement shall be determined by the following person or persons, who shall be empowered to make such determination: |
- 4 -
5.2.1 | the Board, by a majority vote of the Disinterested Directors; or | ||
5.2.2 | if such vote is not obtainable or, even if obtainable, if such Disinterested Directors so direct by majority vote, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or | ||
5.2.3 | by a majority vote of Disinterested Shareholders. |
5.3 | For purposes of sub-clause 5.2, Independent Counsel shall be selected by the Board and approved by Indemnitee. Upon failure of the Board to so select such Independent Counsel, or upon failure of Indemnitee to so approve, such Independent Counsel shall be selected by a single arbitrator pursuant to the rules of the International Court of Arbitration of the International Chamber of Commerce. Such determination of entitlement to indemnification shall be made not later than twenty days after receipt by the Company of a written request for indemnification. Such request shall include the documentation and information that is necessary for such determination, and which is reasonably available to Indemnitee. Subject to clause 10, any Expenses incurred by Indemnitee in connection with Indemnitees request for indemnification hereunder shall be borne by the Company, irrespective of the outcome of the determination of Indemnitees entitlement to indemnification. If the person or persons making such determination shall determine that Indemnitee is entitled to indemnification as to a portion (but not all) of the application for indemnification, such persons may reasonably prorate such partial indemnification among such claims, issues or matters in respect of which indemnification is requested. | |
6. | ADVANCEMENT OF EXPENSES | |
All reasonable Expenses incurred by Indemnitee (including attorneys fees, retainers and advances of disbursements required of Indemnitee) shall be paid by the Company in advance of the final disposition of any Proceeding at the request of Indemnitee as promptly as possible, and in any event within twenty days after the receipt by the Company of a statement or statements from Indemnitee, requesting such advance or advances from time to time. Expenses for which Indemnitee is entitled to indemnification hereunder include, among others, those incurred in connection with any Proceeding brought by Indemnitee seeking an adjudication or award in arbitration pursuant to this Agreement. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee in connection therewith and shall include or be accompanied by an undertaking by or on behalf of Indemnitee to repay such amount if it is ultimately determined that Indemnitee is not entitled to be indemnified against such Expenses by the Company, pursuant to this Agreement or otherwise. Subject to clause 10, the Company shall have the burden of proof in any determination under this clause 6. No amounts advanced hereunder shall be deemed an extension of credit by the Company to Indemnitee. | ||
7. | REMEDIES OF INDEMNITEE IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO ADVANCE EXPENSES |
- 5 -
7.1 | In the event that: (a) a determination is made that Indemnitee is not entitled to indemnification hereunder; (b) payment has not been timely made following a determination of entitlement to indemnification pursuant to clause 5; or (c) Expenses are not advanced pursuant to clause 6, Indemnitee shall be entitled to petition any court of competent jurisdiction for a determination of Indemnitees entitlement to such indemnification or advance. | |
7.2 | Alternatively to sub-clause 7.1, Indemnitee, at Indemnitees option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association, such award to be made within sixty days following the filing of the demand for arbitration. The Company shall not oppose Indemnitees right to seek any such adjudication or award in arbitration. | |
7.3 | A judicial proceeding or arbitration pursuant to this clause 7 shall be made de novo and Indemnitee shall not be prejudiced by reason of a determination otherwise made hereunder (if so made) that Indemnitee is not entitled to indemnification. Subject to clause 10, if a determination is made pursuant to the terms of clause 5 that Indemnitee is entitled to indemnification, the Company shall be bound by such determination and is precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding or enforceable. If the court or arbitrator shall determine that Indemnitee is entitled to any indemnification hereunder, the Company shall pay all reasonable Expenses (including attorneys fees and disbursements) actually incurred by Indemnitee in connection with such adjudication or arbitration (including, but not limited to, any appellate proceedings). | |
8. | OTHER RIGHTS TO INDEMNIFICATION | |
The indemnification and advancement of Expenses (including attorneys fees) provided by this Agreement shall not be deemed exclusive of any other right to which Indemnitee may now or in the future be entitled under any provision of the Companys articles of association, any agreement, vote of shareholders, the Board or Disinterested Directors, provision of law, or otherwise; provided, however, that: (a) this Agreement supersedes any other agreement that has been entered into by the Company with the Indemnitee which has as its principal purpose the indemnification of Indemnitee; and (b) where the Company may indemnify the Indemnitee pursuant to either this Agreement or the articles of association of the Company, the Company may indemnify the Indemnitee under either this Agreement or the articles of association, but the Indemnitee shall, in no case, be indemnified by the Company in respect of any Expense, liability or cost of any type, in each case for which payment has been actually made to Indemnitee under any insurance policy, indemnity clause, article, by-law or agreement, except in respect of any Expenses in excess of the actual payment made. |
- 6 -
9. | ATTORNEYS FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT | |
In the event that Indemnitee is subject to or intervenes in any Proceeding in which the validity or enforceability of this Agreement is at issue, or seeks an adjudication or award in arbitration to enforce Indemnitees rights under, or to recover damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole or in part in such action, shall be entitled to recover from the Company, and shall be indemnified by the Company against, any actual Expenses for attorneys fees and disbursements reasonably incurred by Indemnitee, provided that in bringing such action, Indemnitee acted in good faith. | ||
10. | LIMITATION OF INDEMNIFICATION | |
Notwithstanding any other terms of this Agreement, nothing herein shall require the Company to indemnify the Indemnitee against any liability arising directly as a result of fraud or dishonesty by the Indemnitee, as determined in a final judgment of a court or arbitral body of competent jurisdiction. | ||
11. | LIABILITY INSURANCE | |
To the extent the Company maintains an insurance policy or policies providing directors and officers liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. | ||
12. | DURATION OF AGREEMENT | |
This Agreement shall apply with respect to Indemnitees occupation of any of the position(s) described in the definition of Corporate Status in sub-clause 1.1 hereof: (i) prior to the date of this Agreement; and (ii) with respect to all periods of such service from and after the date of this Agreement, even if the Indemnitee shall have ceased to occupy such positions(s). | ||
13. | NOTICE OF PROCEEDINGS BY INDEMNITEE | |
13.1 | Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding which may be subject to indemnification hereunder; provided, however, that the failure to so notify the Company will not relieve the Company from any liability it may have to Indemnitee, except to the extent that such failure materially prejudices the Companys ability to defend such claim. With respect to any such Proceeding as to which Indemnitee notifies the Company of the commencement thereof: |
- 7 -
13.1.1 | the Company will be entitled to participate therein at its own expense; and | ||
13.1.2 | except as otherwise provided below, to the extent that it may wish, the Company, jointly with any other indemnifying party similarly notified, will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election so to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitees own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee and not subject to indemnification hereunder, unless (a) the employment of counsel by Indemnitee has been authorized by the Company; (b) in the reasonable opinion of counsel to Indemnitee, there is or may be a conflict of interest between the Company and Indemnitee in the conduct of the defense of such Proceeding; or (c) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases, subject to clause 10, the fees and expenses of counsel shall be borne by the Company. |
13.2 | Neither the Company nor the Indemnitee shall settle any claim without the prior written consent of the other (which shall not be unreasonably withheld). | |
14. | NOTICES | |
Any notice required to be given hereunder shall be in writing in the English language and shall be served by sending the same by prepaid recorded post, facsimile or by delivering the same by hand to the address of the Party or Parties in question as set out below (or such other address as such Party or Parties shall notify the other Parties of in accordance with this clause). Any notice sent by post as provided in this clause shall be deemed to have been served five Business Days after despatch, and any notice sent by facsimile as provided in this clause shall be deemed to have been served at the time of despatch; and in proving the service of the same, it will be sufficient to prove in the case of a letter that such letter was properly stamped, addressed and placed in the post; and in the case of a facsimile, that such facsimile was duly despatched to a current facsimile number of the addressee. | ||
Company - | ||
Attn: |
- 8 -
Fax: | ||
Indemnitee Name: Address: Fax: |
15. | MISCELLANEOUS | |
15.1 | Notwithstanding any expiration or termination of this Agreement, such expiration or termination shall not operate to affect such of the provisions hereof as are expressed or intended to remain in full force and effect. | |
15.2 | If any of the clauses, conditions, covenants or restrictions of this Agreement or any deed or document emanating from it shall be found to be void but would be valid if some part thereof were deleted or modified, then such clause, condition, covenant or restriction shall apply with such deletion or modification as may be necessary to make it valid and effective so as to give effect as nearly as possible to the intent manifested by such clause, condition, covenant or restriction. | |
15.3 | This Agreement shall be binding upon the Company and its successors and assigns (including any transferee of all or substantially all of its assets and any successor or resulting company by merger, amalgamation or operation of law) and shall inure to the benefit of Indemnitee and Indemnitees spouse, assigns, heirs, estate, devises, executors, administrators or other legal representatives. | |
15.4. | This Agreement constitutes the whole agreement between the Parties relating to its subject matter and supersedes any prior indemnification arrangement between the Company and Indemnitee. | |
15.5 | No provision in this Agreement may be amended unless such amendment is agreed to in writing, signed by the Indemnitee and by a duly authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Indemnitee or a duly authorized officer of the Company, as the case may be. | |
15.6 | The headings in this Agreement are inserted for convenience only and shall not affect the construction of this Agreement. |
- 9 -
15.7 | This Agreement may be executed in counterparts, each of which, when executed and delivered, shall constitute an original, and all such counterparts together shall constitute one and the same instrument. | |
15.8 | The terms and conditions of this Agreement and the rights of the parties hereunder shall be governed by and construed in all respects in accordance with the laws of the State of New York. |
In witness whereof the common
|
) | |||||
seal of THE COMPANY was
|
) | |||||
affixed hereto in the presence of
|
) | Name: | ||||
Title: | ||||||
SIGNED by
|
) | |||||
THE INDEMNITEE
|
) | |||||
in the presence of:
|
) | Name: |
Witness:
|
||||||
Name: |
- 10 -
(1) | Lender: | |
[specify name of a subsidiary of SouFun Holdings Limited] of [specify address] | ||
(2) | Borrowers: | |
[specify name of shareholder of a consolidated controlled entity] of [specify address]as
Borrower I; and [specify name of shareholder of a consolidated controlled entity] of [specify address]as Borrower II. |
1. Loan | |||
1.1 | Provision of the Loan |
1.2 | Term of the Loan |
1.3 | Use of the Loan |
1
1.4 | Repayment of the Loan |
1.5 | Advance Repayment of the Loan |
(1) | any Borrower dies or becomes incapacitated, or becomes limited in its capacity for civil conduct; | ||
(2) | any Borrower leaves, resigns from, or is suspended or dismissed from, the post at the Lender or the Lenders associated companies; | ||
(3) | any Borrower transfers, without the Lenders consent, its equity interest in the Lender or in the Lenders other associated companies held by such Borrower to any third party not contemplated by this Agreement; | ||
(4) | any Borrower commits a criminal act or is involved in criminal activities; | ||
(5) | any third party not contemplated hereunder raises a claim to any Borrower for over five hundred thousand Renminbi (RMB 500,000); or | ||
(6) | in accordance with applicable PRC laws, a foreign entity is able to solely operate a value-added telecommunication business, and the relevant authorities have started to examine and approve application for such businesses. |
2. Transfer of this Agreement |
3. Representations, Warranties and Undertakings of Each Borrower |
4. Confidential Terms |
2
5. Indemnification |
6. Effectiveness |
7. Governing Law and Dispute Resolution |
8. Force Majeure |
3
9. Miscellaneous |
9.1 | Notice |
(A) | Notices given by personal delivery shall be deemed effectively given on the date of personal delivery; | ||
(B) | Notices sent by registered airmail (postage prepaid) shall be deemed effectively given on the seventh (7th) day after the date on which they were mailed (as indicated by the postmark); | ||
(C) | Notices sent by a courier recognized by the Parties shall be deemed effectively given on the third (3rd) day after they were sent to such courier service agency; and | ||
(D) | Notices sent by facsimile transmission shall be deemed effectively given on the first business day following the date of transmission, as indicated on the document. |
9.2 | Non-implied Waiver |
9.3 | Severability |
9.4 | Copies |
4
9.5 | Amendment |
Lender: (seal)
|
Borrower I: (signature and seal) | |
Legal representative or authorized agent (signature and seal) |
Date of Execution: [specify] | |
Date of Execution: [specify] |
||
Borrower II: (signature and seal) | ||
Date of Execution: [specify] |
5
1. | Definition |
1.1 | Right of Pledge: as specified in Article 2 of this Agreement. | |
1.2 | Equity Interests: 100% of the equity interests held by the Pledgors in the Company. |
1.3 | Term of Pledge: the term specified in Article 3 hereunder. | |
1.4 | Service Agreement: the Exclusive Technical Consultancy and Services Agreement entered into by the Company and the Pledgee on [specify date]. | |
1.5 | Breach of Agreement: any circumstance specified in Article 6.1 hereunder. | |
1.6 | Notice of Breach: a notice sent by the Pledgee under this Agreement declaring a Breach of Agreement. |
2. | Pledge and Right of Pledge | |
2.1 | The Pledgors pledge all their Equity Interests in the Company to the Pledgee. The Right of Pledge means the priority right enjoyed by the Pledgee to claim the consulting and services fees, which the Pledgee is entitled to under the Service Agreement from funds obtained through conversion, auction or sale of the Equity Interests that the Pledgors pledge to the Pledgee. | |
3. | Term of Pledge | |
3.1 | This Agreement shall come into force upon the date when the pledge of Equity Interests hereunder is recorded in the register of shareholders of the Company, and such pledge shall remain valid for two (2) years after the expiry of the Service Agreement. | |
3.2 | During the Term of Pledge, the Pledgee is entitled to exercise its Right of Pledge should the Company not disburse part or all of the consulting and services fees under the Service Agreement. | |
4. | Custody of the Certificate for Pledge | |
4.1 | During the term of this Agreement, the Pledgee shall keep in custody the investment certificates of the Equity Interests in the Company and the register of shareholders of the Company in which the pledge of the Equity Interests hereunder is recorded. Within one (1) week of the execution of this Agreement, the Pledgors shall deliver these aforesaid documents to the Pledgee. | |
4.2 | The Pledgee is entitled to collect dividends arising out of the Equity Interests. | |
5. | Representations and Warranties of the Pledgors | |
5.1 | The Pledgors are PRC citizens with full capacity for civil act, with full and independent legal status, and are legally competent to sign, deliver and perform this Agreement. Each of the Pledgors can sue or be sued in a litigation. | |
5.2 | The Pledgors are the lawful owners of the Equity Interests. | |
5.3 | The Pledgors can sign this Agreement without the consent of any third party. | |
5.4 | When exercising its Right of Pledge under this Agreement, the Pledgee shall not be interfered by any other party. | |
5.5 | Except for the Right of Pledge, there are no other liens, pledges, mortgages, claims or other guarantee rights, or restrictions imposed by or belonging to any third party, in the Equity Interests. | |
5.6 | Without the prior written consent of the Pledgee, the Pledgors shall not transfer the Equity Interests, nor shall they establish or permit to be established any liens, pledges, mortgages, claims or other |
2
guarantee rights, or restrictions in favor of any third party, that may affect the rights and interests of the Pledgee. |
5.7 | The Pledgors shall observe and comply with any and all provisions of laws and regulations concerning the pledge. Within five (5) days after receiving any notice or decree issued or provided by relevant authorities, the Pledgors shall present such notice or decree to the Pledgee, and issue opinion on the aforesaid matters upon the reasonable request of the Pledgee. | |
5.8 | The Pledgors shall promptly notify the Pledgee of any event or circumstance that may affect the Equity Interests pledged, change any of the Pledgors warranties and obligations, or affect the performance of the Pledgors obligations hereunder. | |
5.9 | The Pledgors hereby agree that the Right of Pledge to be exercised by the Pledgee shall not be disrupted or impaired by the Pledgors, the Pledgors successors, or trustees, or any other person. | |
5.10 | Each of the Pledgors has full power to sign, deliver and perform this Agreement. This Agreement shall be signed and delivered by the Pledgors legally and properly. This Agreement shall be binding upon the Pledgors and may be enforced against the Pledgors in accordance with the terms and conditions hereunder. | |
5.11 | The Pledgors shall complete the procedures for registration and filing with the relevant government departments, including but not limited to the State Administration of Industry and Commerce in China. | |
5.12 | In the interests of the Pledgee, the Pledgors shall observe and perform all of the aforesaid warranties, undertakings, agreements, representations and conditions. Should any of the Pledgors not perform or fully perform such warranties, undertakings, agreements, representations and conditions, it shall be liable for damages to the Pledgee for any loss suffered by the Pledgee arising therefrom. | |
6. | Breach of Agreement | |
6.1 | Any of the following events shall be deemed a Breach of Agreement: |
6.1.1 | The Company fails to promptly disburse the total consulting and services fees under the Service Agreement. | ||
6.1.2 | Any of the representations and warranties contained in Article 5 are materially misleading or false, and/or the Pledgors breach any of the representations and warranties contained in Article 5. | ||
6.1.3 | The Pledgors breach any of the terms and conditions of this Agreement. | ||
6.1.4 | Unless otherwise agreed under Article 5.6, the Pledgors forfeit the Equity Interests pledged or transfer such Equity Interests without the written consent of the Pledgee. | ||
6.1.5 | Any loan, guaranty, indemnification, undertaking or other responsibility that the Company owes to any third party (1) is requested to be repaid or performed in advance due to breach of contract by the Company; or (2) is due but not repaid or performed by the Company such that the Pledgee believes that the capacity of the Company to perform its obligations has been affected thereby. | ||
6.1.6 | The Pledgors fail to repay any of their own debts. | ||
6.1.7 | This Agreement becomes illegal due to the publication of relevant laws or the Pledgors fail to continue performing their obligations hereunder. | ||
6.1.8 | Any consent, approval or authorization by government organizations required to render this Agreement enforceable, legal, or valid is rescinded, terminated, invalidated or materially amended. |
3
6.1.9 | Properties owned by the Pledgors have suffered an adverse change such that the Pledgee believes that the capacity of the Pledgors to perform their obligations has been adversely affected thereby. | ||
6.1.10 | The successor or custodian of the Company performs only part of, or refuses to perform, the payment obligations under the Service Agreement. | ||
6.1.11 | The Pledgee is unable to exercise its Right of Pledge under the relevant laws. |
6.2 | The Pledgors shall notify the Pledgee in writing if the Pledgors become aware of, or find out about, the occurrence of any of the events or circumstances specified in Article 6.1 or occurrences that may lead to the aforesaid events or circumstances. | |
6.3 | Unless the events or circumstances specified in Articles 6.1 under this Agreement have been settled to the Pledgees satisfaction, the Pledgee may send a Notice of Breach in writing to the Pledgors at any time during or after a Breach of Agreement by the Pledgors, requesting the Pledgors to forthwith pay any and all debts under the Service Agreement and other debts due, or it may exercise its Right of Pledge in accordance with the provisions contained in Article 7 hereunder. | |
7. | Exercise of Right of Pledge | |
7.1 | Before repaying in full the consulting and services fees under the Service Agreement, the Pledgors shall not transfer the Equity Interests pledged without the written consent of the Pledgee. | |
7.2 | The Pledgee shall send a Notice of Breach to the Pledgors when the Pledgee exercises its Right of Pledge. | |
7.3 | The Pledgee can exercise its Right of Pledge when it sends a Notice of Breach or at any time after sending such Notice in accordance with the provisions contained in Article 6.3. | |
7.4 | The Pledgee has priority in receiving repayment from funds obtained through conversion, auction or sale of part or all of the Equity Interests under this Agreement pursuant to legal procedures, until the consulting and services fees remaining unpaid under the Service Agreement and all other payments due have been paid off. | |
7.5 | When the Pledgee exercises its Right of Pledge under this Agreement, the Pledgors shall not obstruct such exercise in any way and shall instead render any necessary assistance so that the Pledgee can realize its Right of Pledge. | |
8. | Transfer | |
8.1 | Unless previously consented to in writing by the Pledgee, none of the Pledgors shall have any right to donate or transfer the rights and obligations under this Agreement. | |
8.2 | This Agreement shall be binding upon the Pledgors, the Pledgors successors and transferees of the Equity Interests pledged with the consent of the Pledgee, and shall remain a valid obligation on the Pledgee and any of its successors and transferees. | |
8.3 | The Pledgee can transfer, at any time, any and all rights and obligations under the Service Agreement to any person designated by the Pledgee. Under such circumstances, the transferee shall have the same rights and obligations of the Pledgee under this Agreement as if it were a Party hereto. The Pledgors shall sign any relevant agreements and/or documents effecting such transfer upon the request of the Pledgee when the Pledgee transfers the aforesaid rights and obligations. | |
8.4 | If the identity of the Pledgee or Pledgors changes due to the aforesaid transfer of the rights and obligations herein, the new parties involved in the pledge shall sign a new pledge agreement. |
4
9. | Termination | |
9.1 | When the consulting and services fees under the Service Agreement are fully repaid and the Company has performed all other obligations under the Service Agreement, this Agreement shall be terminated. | |
10. | Expenses | |
10.1 | Any and all expenses relating to this Agreement, to the extent reasonable, including but not limited to the legal fees, production costs, stamp duties and any other taxes and expenses, shall be borne by the Pledgors. Should the Pledgee pay any such expenses or taxes, the Pledgors shall fully reimburse the Pledgee for the aforesaid expenses or taxes paid by the Pledgee. | |
10.2 | The Pledgee may take any measure to claim from the Pledgors any such expenses or taxes arising under this Agreement or such other expenses or taxes that the Pledgors agreed to pay but have not yet paid. Any and all expenses (including but not limited to taxes and expenditures, handling charges, overhead expenses, legal costs, attorneys fees and insurance premiums) arising out of the aforesaid claims shall be borne by the Pledgors. | |
11. | Force Majeure | |
11.1 | Force majeure means any unforeseeable circumstance which is beyond the control of a Party, or any unavoidable event, even if foreseeable, as a result of which such Party is unable to perform its obligations, in whole or in part, under this Agreement. Such circumstances include, but are not limited to, any strike, factory closure, explosion, maritime peril, natural disaster, act by a public enemy, fire, flood, accident, war, riot, insurgence or any other similar event. | |
11.2 | Should the affected Party be prevented from performing its obligations hereunder due to any force majeure event, the aforesaid obligations shall be suspended during the continuation of such force majeure event, and the time for performing such obligations shall be extended automatically until the force majeure event ends. The affected Party shall not be liable for its non-performance during the force majeure event. | |
11.3 | Any Party encountering a force majeure event shall forthwith notify the other Parties in writing and supply proper evidence of the inception of the force majeure event and its continuing period. Such Party shall make every reasonable endeavor to mitigate the damages of such event of force majeure. | |
11.4 | If a force majeure event occurs, the Parties shall forthwith negotiate a fair solution, and shall make any and all reasonable efforts to minimize the effects of any event of force majeure. | |
11.5 | If the force majeure event lasts over ninety (90) days and the Parties do not reach any agreement on a just solution, any of the Parties shall be entitled to terminate this Agreement. In case of termination of this Agreement pursuant to the aforesaid provision, none of the Parties shall have any rights or obligations subsequent thereto, but the rights and obligations of each Party arising hereunder before such termination shall not be affected. | |
12. | Dispute Resolution | |
12.1 | The PRC law shall govern the execution, validity, interpretation, amendment, termination and resolution of disputes arising out of this Agreement. The PRC law referred to herein does not include the laws of Taiwan, the Hong Kong Special Administration Region or the Macau Special Administration Region. |
5
12.2 | Any dispute arising from or related to this Agreement shall be settled first through friendly negotiations. If such dispute cannot be settled within thirty (30) days after the start of negotiations, it shall be submitted to the China International Economic and Trade Arbitration Commission for arbitration and be arbitrated in Beijing, China in accordance with its arbitration rules when such arbitration application was submitted. The arbitral award shall be final and binding upon all Parties. Unless otherwise decided by the arbitration commission, arbitration fees and other expenses in relation to such arbitration shall be borne by the losing Party. | |
13. | Notice | |
13.1 | Any notice or other communication sent by any Party shall be written in Chinese, and sent by mail or facsimile transmission to the addresses of the other Parties set forth below or to other designated addresses previously notified by any such other Party. If any Party changes its address, it shall notify the other Parties of such change in a timely and effective manner. The dates on which such notices are deemed to have been effectively given shall be determined as follows: |
(A) | Notices given by personal delivery shall be deemed effectively given on the date of personal delivery; | ||
(B) | Notices sent by registered airmail (postage prepaid) shall be deemed effectively given on the seventh (7th) day after the date on which they were mailed (as indicated by the postmark); | ||
(C) | Notices sent by a courier recognized by the Parties shall be deemed effectively given on the third (3rd) day after they were sent to such courier service agency; and | ||
(D) | Notices sent by facsimile transmission shall be deemed effectively given on the first business day following the date of transmission, as indicated on the document. |
14. | Schedule | |
14.1 | The schedules contained herein constitute an integral part of this Agreement. |
6
15. | Effectiveness | |
15.1 | This Agreement and any amendment, supplement or modification hereto shall be made in writing and come into force upon execution and seal of the Parties. | |
15.2 | This Agreement is made in Chinese with [specify number] copies. |
Pledgor I: (signature and seal)
|
Pledgee: (seal) | |
Date of Execution: [specify]
|
Legal representative or authorized agent (signature and seal) |
|
Date of Execution: [specify] | ||
Pledgor II: (signature and seal) |
||
Date of Execution: [specify] |
7
1. | [specify name of a subsidiary of SouFun Holdings Limited] of [specify address] (the Subsidiary Company); | |
2. | [specify name of a consolidated controlled entity] of [specify address] (the VIE Company); | |
3. | [specify name of shareholder of the VIE Company] of [specify address]; and | |
4. | [specify name of shareholder of the VIE Company] of [specify address]. |
1. | The Shareholders are all the current shareholders of the VIE Company, holding all the equity interests in the VIE Company; and | |
2. | Each of the Shareholders intends to appoint the Subsidiary Company to act as its proxy to exercise its voting rights in the VIE Company, and the Subsidiary Company intends to accept such appointment. |
1.1 | The Shareholders hereby irrevocably appoint the Subsidiary Company, to act as proxy for the Shareholders to exercise their respective rights described below (the Proxy Rights) which the Shareholders are entitled to as shareholders of the VIE Company under the Articles of Association of the VIE Company: | |
(1) | to represent the Shareholders to attend meetings of shareholders (Shareholders Meetings) of the VIE Company; | |
(2) | to represent the Shareholders to vote on all matters to be discussed and resolved by the Shareholders; | |
(3) | to propose to convene interim Shareholders Meetings; | |
(4) | other shareholders voting rights under the Articles of Association of the VIE Company (including any other shareholders voting rights provided in the amendments to such Articles of Association, if any). | |
1.2 | The Shareholders shall recognize any legal consequence arising out of exercising the aforesaid Proxy Rights by the Subsidiary Company and shall bear corresponding responsibilities therefor. | |
1.3 | The Shareholders hereby confirm that the Subsidiary Company can exercise the aforesaid Proxy Rights without seeking the opinions of the Shareholders. The Subsidiary Company shall notify the Shareholders in a timely manner of any resolution, or any proposal to hold interim Shareholders Meetings, after such resolution or proposal is made. |
2.1 | In order to exercise the Proxy Rights hereunder, the Subsidiary Company is entitled to inspect all relevant information about the operations, businesses, customers, finances, employees and the like of the VIE Company, and refer to any relevant materials and documents of the VIE Company and the |
VIE Company shall render its full cooperation. |
3.1 | The Shareholders shall recognize that the Subsidiary Company may re-appoint, when necessary, specific person(s) in itself, to act as proxy for the Subsidiary Company to exercise any or all of its Proxy Rights within the scope of Article 1 and the Shareholders shall agree to bear all corresponding legal responsibilities. | |
3.2 | The Shareholders shall render full assistance to the Subsidiary Company in exercising its Proxy Rights, including the timely signing of resolutions of the Shareholders Meetings or other relevant legal documents of the VIE Company when necessary (e.g. upon the request of government departments to submit documents for examination and approval, registration and reference). | |
3.3 | If, at any time during the term of this Agreement and for any reason, the Proxy Rights hereunder cannot be granted or exercised (except for breach of this Agreement by the Shareholders or the VIE Company), the Parties shall forthwith seek a substitute similar to this Agreement, and sign, when necessary, a supplemental agreement to amend or modify the terms and conditions herein in order to ensure the continuing performance of this Agreement. |
4.1 | The Parties hereby confirm that the Subsidiary Company shall not be required to bear any responsibility for, or make any compensation, financially or otherwise, to the other Parties or any third party, with respect to the exercise of the Proxy Rights under this Agreement. | |
4.2 | The Shareholders and the VIE Company hereby agree to indemnify the Subsidiary Company for, and hold it harmless against, all losses suffered or likely to be suffered from exercising the Proxy Rights, including but not limited to any loss resulting from any litigation, collection, arbitration, claim or administrative investigation or punishment by governmental agency brought by any third party. However, losses due to intentional or serious misconduct of the Subsidiary Company shall not be compensated. |
5.1 | The Shareholders hereby respectively and jointly represent and warrant as follows: | |
5.1.1 | Each Party is a PRC citizen with full capacity for civil conduct, and has full and independent legal status and capacity to sign, deliver and perform this Agreement. It can become a party as the subject of litigation independently. | |
5.1.2 | Each Party has full power to sign and deliver this Agreement and all other documents related to the transactions described herein and to be signed by such Party and each Party has full power to complete the transactions described in this Agreement. This Agreement shall be binding upon, and may be enforced against, such Party in accordance with the terms and conditions hereunder. | |
5.1.3 | Each Party is a legal shareholder of the VIE Company at the time this Agreement comes into force. Other than the rights defined under this Agreement, no third-party rights exist in the Proxy Rights. Under this Agreement, the Subsidiary Company may fully and completely exercise such Proxy Rights in accordance with the Articles of Association of the VIE Company then in effect. | |
5.2 | Subsidiary Company and the VIE Company hereby respectively represent and warrant as follows: | |
5.2.1 | Each Party is a company with limited liability duly organized and validly existing under the laws where it is registered, with the qualification of independent legal person and fully independent legal |
2
status, and is legally competent to execute, deliver and undertake this Agreement. It can become a party as the subject of litigation independently. | ||
5.2.2 | Each Party has full power and authorization to sign and deliver this Agreement and all other documents related to the transactions described herein and to be signed by such Party; and each Party has full power and authorization to complete the transactions described in this Agreement. | |
5.3 | The VIE Company hereby declares and warrants as follows: | |
5.3.1 | The Shareholders are all the legal shareholders registered in the VIE Company when this Agreement comes into force. Under this Agreement, the Subsidiary Company can fully and completely exercise its Proxy Rights in accordance with the Articles of Association of the VIE Company then in effect. |
6.1 | This Agreement shall come into force upon due execution by the Parties hereof. Unless it is agreed by the Parties to terminate in advance, the term of this Agreement shall be extended indefinitely, provided that any of the Shareholders remains a shareholder of the VIE Company. | |
6.2 | If any of the Shareholders transfers all its equity interest in the VIE Company with prior consent of the Subsidiary Company, such Party shall no longer be a Party herein, but the obligations and undertakings of the other Parties herein shall not be affected. |
7.1 | Any notice or other communication sent by any Party shall be written in Chinese, and sent by mail or facsimile transmission to the addresses of the other Parties set forth below or to other designated addresses previously notified by any such other Party. If any Party changes its address, it shall notify the other Parties of such change in a timely and effective manner. The dates on which such notices are deemed to have been effectively given shall be determined as follows: |
(A) | Notices given by personal delivery shall be deemed effectively given on the date of personal delivery; | ||
(B) | Notices sent by registered airmail (postage prepaid) shall be deemed effectively given on the seventh (7th) day after the date on which they were mailed (as indicated by the postmark); | ||
(C) | Notices sent by a courier recognized by the Parties shall be deemed effectively given on the third (3rd) day after they were sent to such courier service agency; and | ||
(D) | Notices sent by facsimile transmission shall be deemed effectively given on the first business day following the date of transmission, as indicated on the document. |
Subsidiary Company: [specify] Address: [specify] Fax: [specify] Tel: [specify] Attention: [specify] |
||
VIE Company: [specify] Address: [specify] Fax: [specify] Tel: [specify] Attention: [specify] |
3
Shareholder: [specify] Address: [specify] Fax: [specify] Tel: [specify] |
||
Shareholder: [specify] Address: [specify] Fax: [specify] Tel: [specify] |
8.1 | The Parties hereby agree and confirm that if one Party (Breaching Party) materially breaches any of the agreed terms and conditions under this Agreement, or materially fails to perform any of its obligations herein, such Breaching Party shall be deemed to have breached this Agreement (Breach), any of the other non-breaching Parties (Non-Breaching Parties) is entitled to request the Breaching Party to redress or take remedial measures within a reasonable time period. If the Breaching Party, within a reasonable time period or within thirty (30) days upon receiving the written notice from any Non-Breaching Party requesting redress, but fails to redress or take remedial measures, then (1) the Subsidiary Company shall be entitled to terminate this Agreement and claim damages from the Breaching Party should the Shareholders or the VIE Company breach this Agreement; (2) the Non-Breaching Parties shall be entitled to claim damages but not be entitled to terminate or abrogate this Agreement or trust herein should the Subsidiary Company breach this Agreement. | |
8.2 | Notwithstanding the other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement. |
9.1 | This Agreement is made in Chinese with [specify number] original copies in total, each Party to hold one. | |
9.2 | The Laws of the Peoples Republic of China shall govern the conclusion, effectiveness, performance, amendment, interpretation and termination of this Agreement. | |
9.3 | Any dispute arising hereof or other relevant disputes shall be settled through negotiations. If such dispute cannot be settled within thirty (30) days after the negotiations start, it shall be submitted to the China International Economic and Trade Arbitration Commission and arbitrated in Beijing in accordance with the arbitration rules of such arbitration commission. The arbitration award shall be accepted as final and binding upon the Parties. | |
9.4 | Any rights, power or remedy of the Parties under any term and conditions herein shall not deprive such Parties of any other rights, power or remedy under the laws and this Agreement. A Partys exercise of its rights, power and remedy shall not affect the exercise of its other rights, powers and remedies. | |
9.5 | One Partys failure to exercise or delay in exercising any of its rights, powers or remedies (Rights of Such Party) under this Agreement or laws shall not lead to the waiver of the Rights of Such Party. Any individual or partial waiver of the Rights of Such Party shall not deprive such Partys rights in exercising in other ways of the Rights of Such Party or exercise other rights of such Party. |
4
9.6 | The title of each article is for reference and shall under no circumstance be used for, or affect, the interpretation of the terms and conditions hereunder. | |
9.7 | Any of the terms and conditions hereunder can be severed and independent from the others. If one or more of such terms and conditions shall be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining terms and conditions hereunder shall not be in any way affected or impaired. | |
9.8 | Any amendment and supplement to this Agreement shall be made in writing, and come into force upon proper signature by the Parties. | |
9.9 | Without the prior written consent of the other Parties, any Party shall not transfer any of its rights and/or obligations hereunder to any third party. | |
9.10 | This Agreement shall be binding upon each Partys legal successors and transferees permitted by the other Parties as if they were a contracting party to this Agreement. |
5
1. | Party A is a wholly foreign owned enterprise established in China; | |
2. | Party B is a wholly domestically funded company registered in China, with the approval of [specify city] Administration of Industry and Commerce to engage in the advertising business; | |
3. | Party A and Party B have established a business relationship through an Exclusive Technical Consultancy and Services Agreement; | |
4. | Pursuant to the Exclusive Technical Consultancy and Services Agreement between Party A and Party B, Party B shall pay Party A certain specified amounts, which have not yet been paid by Party B, while Party Bs daily operations have a material effect on the ability of Party B to pay such remuneration to Party A; | |
5. | Party C is a shareholder of Party B, holding [specify percentage]% equity interests in Party B; | |
6. | Party D is a shareholder of Party B, holding [specify percentage]% equity interests in Party B; and | |
7. | Party A, Party B, Party C and Party D hereby agree to further identify matters in relation to the operation of Party Bs business pursuant to this Agreement. |
1. | When Party B enters into a business contract or agreement with any third party (Third Party) and is in line with the relevant terms and conditions hereunder, Party A hereby agrees that it shall sign, with such Third Party upon its request, a written agreement to be the performance guarantor of Party B by furnishing complete guaranty for Party Bs performance under such contract or agreement in order to ensure the normal operation of Party Bs business. As counter security, Party B hereby agrees that it shall mortgage to Party A its accounts receivable and all of its assets. | |
2. | In accordance with the provisions of Article 1 and in order to guarantee the performance of all business agreements, including the Exclusive Technical Consultancy and Services Agreement, between Party A and Party B, and the |
1
disbursement of all accounts payable by Party B to Party A under the Exclusive Technical Consultancy and Services Agreement, Party B and its shareholders, Party C and Party D, hereby agree that Party B, without the prior written consent of Party A or its designee, shall not engage in any transaction that may materially affect the assets, obligations, rights and operations of Party B, including but not limited to the following: |
2.1 | borrowing money or undertaking any obligation from any Third Party; | ||
2.2 | selling to or acquiring from any Third Party any assets or rights, including but not limited to any intellectual property rights; | ||
2.3 | providing security with the title of its assets or intellectual property rights for the benefit of any Third Party; and | ||
2.4 | Transferring rights and obligations herein to any Third Party. |
3. | In order to guarantee the performance of all business agreements, including the Exclusive Technical Consultancy and Services Agreement, between Party A and Party B, and the payment of all accounts payable by Party B to Party A under the Exclusive Technical Consultancy and Services Agreement, Party B and its shareholders, Party C and Party D, hereby agree to accept company policies and instructions provided by Party A from time to time on the employment and termination of working staff, daily operations and management, and financial management systems and other similar policies. | |
4. | Party B and its shareholders, Party C and Party D, hereby agree that Party B, Party C and Party D shall appoint the persons designated by Party A to be the directors of Party B, and senior management personnel employed by, and as designated by, Party A to be the general manager, chief financial officer and other senior management personnel of Party B. If the aforesaid directors or senior management personnel designated by Party A leave Party A, regardless of whether they resign or are dismissed by Party A, such persons shall lose the qualification of being in charge of any post of Party B. Under such circumstances, Party B, Party C and Party D shall appoint other senior management personnel designated by Party A to assume such posts. | |
5. | Party C and Party D hereby agree that they shall, concurrently with the execution this Agreement, execute a corresponding Shareholders Proxy Agreement under which Party C and Party D shall authorize and entrust Party A or a person designated by Party A to exercise any and all shareholders rights of Party C and Party D to vote pursuant to provisions of laws and Party Bs Articles of Association. | |
6. | Party B and its shareholders, Party C and Party D, hereby agree and confirm that, apart from the agreed provisions in Article 1 herein, if Party B is in need of any other guaranty for Party Bs performance or security for borrowing to finance its working capital, it shall first seek guaranty or security from Party A. Under such circumstances, |
2
Party A is entitled to decide whether to furnish proper guaranty or security for Party B based on Party As own judgment. If Party A decides not to furnish such guaranty or security for Party B, it shall notify Party B in writing in time, and thereafter, Party B can seek guaranty or security from any Third Party. | ||
7. | In case of the termination or expiry of any agreement between Party A and Party B, Party A is entitled, but not obligated, to terminate all other agreements between Party A and Party B, including but not limited to the Exclusive Technical Consultancy and Services Agreement. | |
8. | Amendments and supplements to this Agreement shall be made in writing. Such amendments and supplements properly signed by the Parties shall constitute an integral part of this Agreement with the same validity. | |
9. | This Agreement shall be governed by and interpreted in accordance with the PRC law, excluding, for purposes of this Agreement, the laws of Taiwan, the Hong Kong Special Administration Region or the Macau Special Administration Region. | |
10. | Dispute Settlement | |
Any dispute arising from the interpretation of or the performance of the terms and conditions hereunder shall be settled through bona fide negotiations. If such dispute cannot be so settled, it may be submitted by any Party to the China International Economic and Trade Arbitration Commission and arbitrated in Beijing, China pursuant to the current arbitration rules. The language for arbitration will be Chinese. The arbitration award shall be accepted as final and binding upon the Parties. | ||
11. | Notice | |
Any notice or other communication sent by any Party shall be written in Chinese, and sent by mail or facsimile transmission to the addresses of the other Parties set forth below or to other designated addresses previously notified by any such other Party. If any Party changes its address, it shall notify the other Parties of such change in a timely and effective manner. The dates on which such notices are deemed to have been effectively given shall be determined as follows: |
(A) | Notices given by personal delivery shall be deemed effectively given on the date of personal delivery; | ||
(B) | Notices sent by registered airmail (postage prepaid) shall be deemed effectively given on the seventh (7th) day after the date on which they were mailed (as indicated by the postmark); | ||
(C) | Notices sent by a courier recognized by the Parties shall be deemed effectively given on the third (3rd) day after they were sent to such courier service agency; and |
3
(D) | Notices sent by facsimile transmission shall be deemed effectively given on the first business day following the date of transmission, as indicated on the document. |
12. | This Agreement shall come into force upon signature by authorized representatives of the Parties hereof on the date contained at the beginning. This Agreement shall remain valid for ten (10) years unless it is terminated in advance pursuant to the terms and conditions hereunder. Party B, Party C and Party D hereby agree that the term of this Agreement, upon Party As confirmation before termination, can be extended to a date designated in Party As written confirmation. | |
13. | This Agreement shall be terminated on the expiry date unless validity of the terms and conditions concerned herein is extended. During the term, Party B, Party C and Party D shall not terminate this Agreement. Notwithstanding the above, Party A can terminate this Agreement at any time by notifying Party B, Party C and Party D in writing thirty (30) days in advance. | |
14. | This Agreement shall be binding upon each Partys successors and transferees permitted under this Agreement in the same effect as if they were contracting parties to this Agreement. |
4
5
( 1 ) | Party A is a wholly foreign owned enterprise registered and established on [specify date] in [specify city] and engages in [specify business scope in business license]; | |
( 2 ) | Party B is a domestically funded enterprise registered and established on [specify date] in [specify city] and, as approved by [specify city] Industry and Commerce Administration, is authorized to engage in [specify business scope in business license]; and | |
( 3 ) | Party A hereby agrees to provide technical consulting and related services to Party B, and Party B agrees to accept such consulting and related services. |
1. | Technical Consulting and Related Services |
1.1 | During the term of this Agreement, Party A, as a provider of technical consulting and related services, hereby agrees to provide Party B with the technical consulting and related services specified in Schedule I under the terms and conditions contained herein. | |
1.2 | Party B hereby agrees to accept such technical consulting and related services provided by Party A. Party B further agrees that it shall not, without the prior written consent of Party A, accept the aforesaid technical consulting and related services |
1
provided by any third party not a Party hereto during the term of this Agreement. |
2. | Exclusive Rights |
2.1 | Any and all rights, ownership interests and intellectual property rights including but not limited to copyrights, patents, technical know-how and trade secrets, no matter whether developed by Party A, or developed by Party B based on Party As intellectual property rights or services provided by Party A, shall be the exclusive property of Party A. |
3. | Fee for Technical Consulting and Related Services |
3.1 | Party B hereby agrees to calculate and pay the fees for the technical consulting and related services arising hereunder (the Consulting and Services Fee) pursuant to the method specified in Schedule II. |
4. | Guaranty for the Performance of this Agreement |
4.1 | In order to guarantee Party Bs payment to Party A of the Consulting and Services Fee, [specify name of shareholder of Party B] and [specify name of additional shareholder of Party B], as shareholders of Party B, are willing to pledge their equity interests in Party B to Party A and to sign a separate Equity Pledge Agreement with Party A. |
5. | Effectiveness and Term |
5.1 | This Agreement shall come into force upon its execution on the date first written above. |
|
5.2 | This Agreement shall remain valid for ten (10) years. | |
5.3 | Party B hereby agrees that the term of this agreement shall be extended automatically for another ten (10) years unless Party A sends to Party B a written notice terminating this Agreement within six (6) months prior to the expiry date of this Agreement. |
6. | Termination |
6.1 | This Agreement shall terminate on the expiry date unless it is terminated in advance in accordance with Article 6.2 hereunder. | |
6.2 | During the term hereof, Party B may not terminate this Agreement prior to its expiry date unless any act of Party A constitutes a gross negligence, a violation of law, |
2
bankruptcy or a material breach of this Agreement. Party A, however, is entitled to terminate this Agreement at any time provided that it notifies Party B in writing thirty (30) days in advance. |
7. | Representations and Warranties |
7.1 | Party A hereby represents and warrants as follows: |
7.2.1 | Party A is a company duly registered and validly existing under the PRC law. | ||
7.2.2 | Party A has taken the necessary corporate actions and any other necessary steps to acquire the authorization to execute and perform this Agreement. | ||
7.2.3 | The execution and performance of this Agreement or observance of the terms and provisions hereof by Party A shall not: |
a) | violate any law, regulation, rule, court order, judgment, finding, ban or mandate of government; or | ||
b) | be in conflict with or contradict any term, provision, condition or prescription under any agreement, contract or document of Party B, restrict Party Bs actions, or result in a breach of the aforesaid terms, provisions, conditions or prescriptions. |
7.2.4 | This Agreement, upon its execution, shall be legal, valid and binding upon Party A and shall be enforceable in accordance with the terms and conditions herein. |
7.2 | Party B hereby represents and warrants as follows: |
7.2.1 | Party B is a company duly registered and validly existing under the PRC law and is authorized to engage in the advertising business. | ||
7.2.2 | Party B has taken the necessary corporate actions and any other necessary steps to acquire the authorization to execute and perform this Agreement. | ||
7.2.3 | The execution and performance of this Agreement and the observance of the terms and provisions hereunder by Party B shall not: |
a) | violate any law, regulation, rule, court order, judgment, finding, ban or mandate of government; or | ||
b) | be in conflict with or contradiction to any term, provision, condition or prescription under any agreement, contract or document of Party B or restrict Party Bs actions, or result in a breach of the aforesaid terms, provisions, conditions or prescriptions. |
3
7.2.4 | This Agreement, upon its execution, shall be legal, valid and binding upon Party B and shall be enforceable in accordance with the terms and conditions herein. |
8. | Taxation |
8.1 | All taxes arising out of a Partys performance of this Agreement shall be born by such Party. |
9. | Confidentiality |
9.1 | Each Party hereby agrees that it shall make every endeavor and take all reasonable measures to keep confidential the other Partys confidential materials and information (Confidential Information) known or acquired by such Party due to the entry into and performance of this Agreement. Without prior written consent of the owner of the aforesaid Confidential Information, the other Party shall not divulge, grant or transfer to any third party such Confidential Information. Upon the termination of this Agreement, such Party shall return to the owner of such Confidential Information upon its request, or destroy any documents, materials, software or other sources carrying such Confidential Information, delete any such Confidential Information from any memory device and shall cease using such Confidential Information. | |
9.2 | Both Parties hereby agree that this article shall remain valid no matter whether this Agreement is amended, cancelled or terminated. |
10. | Indemnification |
10.1 | Each Party shall indemnify the other Party for, and hold the other Party harmless against, any loss, damage, obligation or expense resulting from any litigation, claim or other request to the other Party which occurs or arises out of the other Partys performance of its obligations under this Agreement and any of its business contracts. |
11. | Governing Laws and Dispute Resolution |
12.1 | The PRC law shall govern the execution, validity, interpretation, amendment, termination and resolution of disputes arising out of this Agreement. The PRC law referred to herein does not include the laws of Taiwan, the Hong Kong Special Administration Region or the Macau Special Administration Region. | |
12.2 | Any dispute arising from or related to this Agreement shall be settled first through |
4
friendly negotiations. If such dispute cannot be settled within thirty (30) days after the start of negotiations, it shall be submitted to the China International Economic and Trade Arbitration Commission for arbitration and be arbitrated in Beijing, China in accordance with its arbitration rules when such arbitration application was submitted. The arbitral award shall be final and binding upon all Parties. Unless otherwise decided by the arbitration commission, arbitration fees and other expenses in relation to such arbitration shall be borne by the losing Party. |
12. | Force Majeure |
12.1 | Force majeure means any unforeseeable circumstance which is beyond the control of a Party, or any unavoidable event, even if foreseeable, as a result of which such Party is unable to perform its obligations, in whole or in part, under this Agreement. Such circumstances include, but are not limited to, any strike, factory closure, explosion, maritime peril, natural disaster, act by a public enemy, fire, flood, accident, war, riot, insurgence or any other similar event. | |
12.2 | Should the affected Party be prevented from performing its obligations hereunder due to any force majeure event, the aforesaid obligations shall be suspended during the continuation of such force majeure event, and the time for performing such obligations shall be extended automatically until the force majeure event ends. The affected Party shall not be liable for its non-performance during the force majeure event. | |
12.3 | Any Party encountering a force majeure event shall forthwith notify the other Parties in writing and supply proper evidence of the inception of the force majeure event and its continuing period. Such Party shall make every reasonable endeavor to mitigate the damages of such event of force majeure. | |
12.4 | If a force majeure event occurs, the Parties shall forthwith negotiate a fair solution, and shall make any and all reasonable efforts to minimize the effects of any event of force majeure. | |
12.5 | If the force majeure event lasts over ninety (90) days and the Parties do not reach any agreement on a just solution, any of the Parties shall be entitled to terminate this Agreement. In case of termination of this Agreement pursuant to the aforesaid provision, none of the Parties shall have any rights or obligations subsequent thereto, but the rights and obligations of each Party arising hereunder before such termination shall not be affected. |
13. | Miscellaneous Terms |
13.1 | Notice |
5
(A) | Notices given by personal delivery shall be deemed effectively given on the date of personal delivery; | ||
(B) | Notices sent by registered airmail (postage prepaid) shall be deemed effectively given on the seventh (7th) day after the date on which they were mailed (as indicated by the postmark); | ||
(C) | Notices sent by a courier recognized by the Parties shall be deemed effectively given on the third (3rd) day after they were sent to such courier service agency; and | ||
(D) | Notices sent by facsimile transmission shall be deemed effectively given on the first business day following the date of transmission, as indicated on the document. |
Party A: [specify] Address: [specify] Fax: [specify] Tel: [specify] Attention: [specify] |
||
Party B: [specify] Address: [specify] Fax: [specify] Tel: [specify] Attention: [specify] |
13.2 | Non-implied Waiver |
13.3 | Severability |
6
13.4 | Non-transfer |
13.5 | Counterparts |
13.6 | Amendment |
Party A: [specify] |
||||
Authorized Representative: [specify] | ||||
Party B: [specify] |
||||
Authorized Representative: [specify] |
7
1. | Fees for consulting and related services to be charged by Party A from Party B shall be calculated as follows: |
(1) | According to the time for services provided to Party B by Party As technical personnel during normal working hours. The fees for services by Party As employees will be calculated as the sum of the products of each persons rate at their respective level and the number of hours worked; and | ||
(2) | Both Parties hereby agree to negotiate separately about the charging standards of the services not contained in (1) provided by Party A. |
The Consulting and Services Fee to be paid by Party B shall comprise the fees in the foregoing (1) and (2). | ||
2. | Party A shall notify Party B, prior to the fifth day of each month, with respect to the Consulting and Services Fees for the prior month, and Party B shall, within two (2) days after receiving such notice, pay the whole amount of the aforesaid Fee to an account designated by Party A. |
8
(1) | SouFun Holdings Limited, a company with limited liability duly incorporated and validly existing under the laws of the Cayman Islands with its registered address at Codan Trust Company (Cayman) Limited, Century Yard, Cricket Square, Hutchins Drive, P. O. Box 2681 GT, George Town, Grand Cayman, British West Indies (Party A); | |
(2) | [specify name of shareholder of a consolidated controlled entity] of [specify address] (Party B(I)); | |
(3) | [specify name of other shareholder of a consolidated controlled entity] of [specify address] (Party B(II)); | |
(4) | [specify name of a consolidated controlled entity], a company with limited liability duly registered and validly existing under the PRC laws at [specify address] (Party C); and | |
(5) | [specify name of a subsidiary of Party A], a company with limited liability duly registered and validly existing under the PRC laws at [specify address] and a wholly owned subsidiary of Party A (Party D). |
1. | Party A holds 100% equity interests in Party D; | |
2. | Party B(I) holds [specify percentage]% equity interests in Party C; | |
3. | Party B(II) holds [specify percentage]% equity interests in Party C; | |
4. | Party B(I), Party B(II) and Party D entered into a loan agreement (the Loan Agreement) on [specify date]; | |
5. | Party D and Party C entered into an exclusive technical consultancy and services agreement (the Exclusive Technical Consultancy and Services Agreement) on [specify date]; and | |
6. | Party B(I), Party B(II) and Party D entered into an equity pledge agreement (the Equity Pledge Agreement) on [specify date]. |
1. | Transfer of Equity Interest |
1.1 | Granting of Rights |
1
1.2 | Exercise Procedure |
1.3 | Equity Price |
1.4 | Transfer of Target Equity |
1.5 | Payment |
2
2. | Undertakings in Relation to Equity Interest |
2.1 | Party Cs Undertakings |
3
2.2 | Party Bs Undertakings |
4
3. | Representations and Warranties |
4. | Effective Date and Term |
5. | Governing Law and Dispute Resolution |
5.1 | Governing Law |
5
5.2 | Dispute Resolution |
6. | Taxation and Expenses |
7. | Notice |
(A) | Notices given by personal delivery shall be deemed effectively given on the date of personal delivery; | ||
(B) | Notices sent by registered airmail (postage prepaid) shall be deemed effectively given on the seventh (7th) day after the date on which they were mailed (as indicated by the postmark); | ||
(C) | Notices sent by a courier recognized by the Parties shall be deemed effectively given on the third (3rd) day after they were sent to such courier service agency; and | ||
(D) | Notices sent by facsimile transmission shall be deemed effectively given on the first business day following the date of transmission, as indicated on the document. |
Party A: SouFun Holdings Limited Address: Scotia Centre, 4th Floor, P.O. Box 2804, George Town, Grand Cayman, KY1-1112 Cayman Islands Fax: +86-10-8511 1242 Tel: +86-10-8511 1241 Attention: Tianquan Vincent Mo |
||
Party B(I): [specify] Address: [specify] Fax: [specify] Tel: : [specify] |
6
Party B(II): [specify] Address: [specify] Fax: [specify] Tel: [specify] |
||
Party C: [specify] Address: [specify] Fax: [specify] Tel: [specify] Attention: [specify] |
||
Party D: [specify] Address: [specify] Fax: [specify] Tel: [specify] Attention: [specify] |
8. | Confidentiality |
9. | Further Warranties |
10. | Miscellaneous Terms |
10.1 | Modification, Amendment and Supplement |
7
10.2 | Observance of Laws and Regulations |
10.3 | Complete Agreement |
10.4 | Title |
10.5 | Language |
10.6 | Severability |
10.7 | Successor |
10.8 | Continuous Validity |
8
10.9 | Non-waiver |
9
a) | Article 3 of the Operating Agreement shall be deleted in its entirety and in its place and stead insert the following: In order to ensure the performance of the Exclusive Technical Consultancy and Services Agreement and other business agreements between Party A and Party B and the payment of the various payable sums by Party B to Party A in accordance with the Exclusive Technical Consulting and Services Agreement and other business agreements, Party B and its shareholders, Party C and Party D, agree (1) to accept the policies and guidelines on appointment and dismissal of company personnel, on daily operations and administration, on corporate finance management and on such other things as may be provided by Party A from time to time, and (2) that Party Bs annual budget shall be subject to review and approval by Party A, including the profit forecast, working capital, pricing strategies and payment policies. Party Bs operating costs shall not exceed the annual budget approved by Party A. |
b) | The following provision shall be added to Article 6 of the Operating Agreement as Paragraph 2 thereof: Party A hereby agrees to and confirms that it has the obligation to provide Party B |
1
with funding or other financial assistance upon the reasonable request by Party B in the event that Party B suffers serious losses in its business operations. Party A and Party B agree to discuss the specific plan and forms of assistance on the basis of Party Bs actual situation at that time. |
Party A: [specify]
|
Party B: [specify] | |
Signed by: [specify]
|
Signed by: [specify] | |
Party C: [specify]
|
Party D: [specify] | |
Signed by: [specify]
|
Signed by: [specify] | |
Party E: [specify]
|
Party F: SouFun Holdings Limited | |
Signed by: [specify]
|
Signed by: [specify] |
2
No. | Name of the Agreement | Parties | Date | |||
1
|
Operating Agreement | [specify] | [specify] | |||
2
|
Exclusive Call Option Agreement | [specify] | [specify] | |||
3
|
Exclusive Technical Consultancy and Services Agreement | [specify] | [specify] | |||
4
|
Loan Agreement | [specify] | [specify] | |||
5
|
Equity Pledge Agreement | [specify] | [specify] | |||
6
|
Shareholders Proxy Agreement | [specify] | [specify] |
3
Number of pageviews in that month | ||||||||
Monthly fee | = | Standard monthly fee for every 1,000 pageviews | x | | ||||
1,000 |
4
Party A: [specify]
|
Party B: [specify] | |
Signed by: [specify]
|
Signed by: [specify] |
Party A (Official seal)
|
Party B (Official seal) | |
Legal representative (Person-in-charge)
|
Legal representative (Person-in-charge) | |
or authorized representative
|
or authorized representative | |
(Signature or affix seal)
|
(Signature or affix seal) | |
Signed: 5 November 2009
|
Signed: 5 November 2009 | |
Party C (Seal of the entity) |
||
Person-in-charge or Authorized Representative |
||
(Signature or affix seal) |
||
Signed: 5 November 2009 |
Party A:
|
CNED Hengshui Zhong Cheng Wanyuan Home Co., Ltd. | |
Address:
|
Room 1207, No. 1988, Yongxingxi Road, Hengshui | |
Contact:
|
Lin Jincheng | |
Party B:
|
SouFun Media Technology (Beijing) Co., Ltd. | |
Address:
|
Room 202, Tower 14, South District Service Building, No. 46, Zhongguancun Dajie, Haidian District, Beijing | |
Contact:
|
Mo Tianquan |
I. | Content of Cooperation |
II. | Payment of Earnest Money and Service Fee |
III. | Term of Service |
IV. | Rights and Obligations of Both Parties |
1
V. | Duty of Confidentiality |
VI. | Special Disclaimers |
2
7. | Force Majeure |
VIII. | Contract Alteration, Rescission and Breach of Contract |
IX. | Dispute Resolution |
X. | Coming into Force |
3
4
Borrower (hereinafter referred to as Party A):
|
CNED Hengshui Zhongcheng Wanyuan Home Co., Ltd. | |
Legal representative (Person in charge):
|
Mo Tianquan | |
Legal address:
|
Room 1207, 1988 Yongxing West Road, Hengshui City | |
Mailing Address:
|
Room 1207, 1988 Yongxing West Road , Hengshui City |
Document type:
|
Business License | ID Number: 131100000025280 | ||
Postal Code:
|
053000 | Contact Tel: |
Principal (hereinafter referred to as Party B):
|
SouFun Media Technology (Beijing) Co., Ltd. | |
Legal representative (Person in charge):
|
Mo Tianquan | |
Legal address:
|
Room 202, 2/F, South District Service Building 14 | |
46 Zhongguancun South Street, Haidian District, Beijing | ||
Mailing Address:
|
Room 202, 2/F, South District Service Building 14 | |
46 Zhongguancun South Street, Haidian District, Beijing | ||
Lender (namely the trustee, hereinafter referred to as
Party C): |
||
Bank of Communications Co., Ltd. | ||
Beijing Gongzhufen Branch | ||
Person in charge:
|
Hua Tianxue | |
Mailing Address:
|
A14 Fuxing Road, Haidian District, Beijing |
Article 1 | Details of the Loan |
1.1
|
Loan amount: | RMB FIFTY MILLION ONLY. | ||
1.2
|
Purpose of Loan: | Working capital | ||
1.3
|
Tenure: | From 5 November 2009 to 5 May 2010. |
Article 2 | Interest Rate and Calculation and Payment of Interest |
1
Article 3 | Disbursement and Repayment of the Loan |
Article 4 | Handling Fees for the Entrusted Loan |
2
Article 5 | Extension of Loan Term |
Article 6 | Party As Statement and Guarantee |
Article 7 | Party As Obligations |
3
4
Article 8 | Other Stipulated Matters |
Article 9 | Loans Due in Advance |
Article 10 | Breach of Contract |
5
Article 11 | Dispute Resolution |
Article 12 | Other Provisions |
Party A (Official seal)
|
Party B (Official seal) | |
/Sealed/
|
/Sealed/ | |
Legal representative (Person-in-charge) or authorized representative (Signature or affix seal) |
Legal representative (Person-in-charge) or authorized representative (Signature or affix seal) |
|
/s/ Lin Jincheng
|
/s/ Mo Tianquan | |
Dated: November 5, 2009
|
Dated: November 5, 2009 | |
Party C (Seal of the entity) Person-in-charge or authorized representative (Signature or affix seal) |
||
/Sealed/ |
||
Dated: 5 November 2009 |
6
1. | Through amicable negotiation, both Parties agree to terminate the Contract. Party A hereby agrees to repay the principal of commitment deposit to Party B. Upon the repayment of the commitment deposit to Party B, there is no debtor-creditor or commercial relationship between both Parties. | |
2. | This Agreement shall come into force once the authorized representatives of both Parties have signed and affixed their official seals. | |
3. | Laws of the Peoples Republic of China shall be applied for resolving the coming into force, the interpretation, implementation, jurisdiction and dispute of this Agreement. | |
4. | This Agreement shall be executed in two copies, each of which shall constitute the same instrument. |
/Seal/
Beijing Dong Fang Xi Mei Investment Consulting Co., Ltd. |
/Seal/
Beijing SouFun Technical Development Co., Ltd. |
1
2
3
4
5
6
7
2
3
4
Very truly yours, |
||||
/s/ King & Wood | ||||
Sincerely yours, |
||||
/s/ Qian Zhao | ||||
Qian Zhao | ||||
Sincerely yours, |
||||
/s/ Hanhui Sun | ||||
Hanhui Sun | ||||
2
3
A. | each employee, officer and director must take all reasonable steps to ensure that these reports and other public communications furnish the marketplace with full, fair, accurate, timely and understandable disclosure regarding the financial and business condition of our Company; | ||
B. | each employee, officer and director must promptly bring to the attention of the contact persons designated in this Code of Business Conduct and Ethics any material information of which such employee, officer and director may become aware that affects the disclosures made by our Company in its public filings or otherwise would assist the Audit Committee of our Board of Directors in fulfilling its responsibilities as specified in applicable securities laws and regulations; and | ||
C. | each employee, officer and director must promptly bring to the attention of the contact persons designated in this Code of Business Conduct and Ethics any information he or she may have concerning (i) significant deficiencies in the design or operation of our internal controls that could adversely affect our Companys ability to record, process, summarize and report financial data or (ii) any fraud, whether or not material, involving management or other employees who have a significant role in our Companys financial reporting, disclosures or internal controls. |
4
5
6
1. | Overview. We, SouFun Holdings Limited, have established this Anti-Fraud and Whistle-blower Policy (the Anti-Fraud Policy) as we are committed to the highest possible standards of openness, honesty and accountability in all of our affairs. We are determined to maintain a culture of honesty and opposition to fraud and corruption. Based on this commitment, this Anti-Fraud Policy outlines the principles to which we are committed in relation to preventing, reporting and managing fraud and corruption. Our Anti-Fraud policy reinforces our approach to business dealings by articulating our core values and by setting out the ways in which our employees or members of the public can voice their concerns about suspected fraud or corruption. It also outlines who at our company will deal with such complaints. | |
2. | Objectives. The primary objective of this Anti-Fraud Policy is to prevent fraud, enhance our governance and internal controls, standardize our business activities, maintain integrity in our business dealings, establish procedures and protections that allow our employees and members of the public to act on suspected fraud or corruption with potentially adverse ramifications and to achieve our legitimate business objectives for the benefit of our shareholders. | |
3. | Implementation. This Anti-Fraud Policy shall be implemented immediately upon its approval and adoption by our Board of Directors. This Anti-Fraud Policy is to be implemented where suspicions of fraud or corruption have been raised. |
1. | Definition. Fraud in this Anti-Fraud Policy is defined as (a) the use of deception with the intention of pursuing personal interests and causing loss to the proper interests of our company, (b) the illegitimate pursuit of inappropriate company interests for personal gain, and (c) the intentional distortion of financial statements or other records by persons internal or external to our company, which is carried out to conceal misappropriation of assets or personal gain. | |
2. | Examples of Fraud and Fraudulent Behavior. Some examples of fraud or fraudulent behavior include: |
| Usurpation of corporate interests for personal gain; | ||
| Misappropriation of assets, embezzlement and theft; | ||
| Payment or receipt of bribes, kickbacks or other inappropriate payments; | ||
| Participation in sham or fraudulent transactions; | ||
| Deceptive, misleading or false statements about corporate transactions; | ||
| Forgery or alteration of accounting record or vouchers; | ||
| Failing to keep confidential trade secrets of our company; |
Page 1 of 6
| Non-disclosure of material information needed for an informed investment decision; and | ||
| Other fraud behaviors causing loss to our company interests. |
This is not an exhaustive list. If you are in doubt about the seriousness of your concern, advice and guidance can be sought from the Office of the Chief Counsel. |
1) | Managers shall lead by example in complying with this Anti-Fraud Policy; | ||
2) | Managers shall regularly communicate our message of honesty and integrity with our employees through the Employee Handbook and other written and verbal presentations of the principles underlying this Anti-Fraud Policy; | ||
3) | Managers shall conduct periodic meetings to ensure employees attend trainings regarding business ethics and the related laws and regulations; | ||
4) | Managers shall notify all direct or indirect interest parties, including external parties (customers, suppliers, supervision authorities and shareholders) regarding this Anti-Fraud Policy and the obligation of the employees to comply therewith; | ||
5) | Managers shall notify employees and external third parties of the opportunity and procedures for anonymously reporting wrongdoings and dishonest behavior; |
Page 2 of 6
6) | In connection with our annual overall risk management assessment process (including the risk assessment for SOX 404 compliance), Managers shall identify and assess the importance and possibility of fraud risk at entity level, in each business department level and at all significant accounts levels. The assessment should include a report disclosing any inaccuracies or misrepresentations in our financial reports, incidents involving embezzlement of company assets, improper income or expenditures and a fraud risk assessment in respect of senior management and our Board of Directors; | ||
7) | Periodic reports shall be issued by the Manager of each Division to the Office of the Chief Counsel which shall then issue to the Internal Audit Department regarding the operations of this Anti-Fraud Policy within each such Division; | ||
8) | Managers shall establish control procedures to reduce the potential occurrence of fraud through protective approval, authorization and audit checks, segregation of duties, periodic compliance reviews and similar prophylactic measures; and | ||
9) | Managers shall perform customary background checks (education, work experience and criminal records) for individuals being considered for employment or for promotion to positions of trust. Formal written documents for background checks shall be retained and filed in employees record. |
1) | The Internal Audit Department shall establish and maintain reliable communications channels (telephone hotlines, e-mail and mail) allowing for the anonymous reporting of actual or suspected instances of fraud or fraudulent behavior committed by our company or any of our employees, representatives or advisors. Contact information for the various channels of communication shall be publicized so that actual or suspected cases of fraud or fraudulent behavior and violation of business ethics can be reported. | ||
2) | Complaints and concerns relating to instances of actual or suspected instances of fraud or fraudulent behavior or questionable accounting, internal control or auditing matters shall be reportable through the established channels of communications and may be reported on an anonymous basis. | ||
3) | The Internal Audit Department shall promptly investigate alleged and/or reported instances of fraud or fraudulent behavior. If any member of our senior management is involved in the alleged and/or reported instances of fraud or fraudulent behavior, a special investigation team shall be organized to conduct an investigation with the assistance of the Internal Audit Department and shall report directly to our Board of Directors. | ||
4) | Quarterly reports shall be issued by the Internal Audit Department to the Board of Directors regarding the nature and status of any complaints and/or investigations involving fraud or |
Page 3 of 6
fraudulent behavior. Such reports shall be retained and made available in accordance with our customary document retention policies. |
1) | The Internal Audit Department, which is appointed as our anti-fraud organization, shall implement and execute this Anti-Fraud Policy. Among other things, the Internal Audit Department shall: |
| organize and assist each of the Managers with an annual fraud risk assessment for each Division; | ||
| perform an independent anti-fraud assessment on each Division; | ||
| review and assess the establishment and operation of this Anti-Fraud Policy for SOX 404 compliance; | ||
| receive, assess, investigate and resolve complaints and/or reports of alleged fraud or fraudulent behavior; | ||
| review and assess reports from our internal auditors, which shall be issued on a quarterly basis; and | ||
| implement, execute and oversee the operation of the policies and procedures contained in the Anti-Fraud Policy. |
2) | Annual reports shall be issued by the Internal Audit Department to the Board of Directors regarding the implementation and effectiveness of this Anti-Fraud Policy. Such reports shall be retained and made available in accordance with our customary document retention policies. |
1) | Adequate monetary and human resources shall be committed by our company to implement and maintain the policies and procedures articulated in this Anti-Fraud Plan. | ||
2) | The annual report of the Internal Audit Department to the Board of Directors shall address the following: |
| measures taken during the preceding year by Managers to implement the policies and procedures in this Anti-Fraud Policy; | ||
| the effectiveness of anti-fraud procedures and control policies, including the identification of fraud risk; |
Page 4 of 6
| the possibility of management override of controls, or other inappropriate influences over the financial reporting process; | ||
| the status of investigations into alleged fraud and fraudulent behavior; | ||
| review account policies and procedures utilized to detect and eliminate fraud and fraudulent behavior in financial reporting; and | ||
| review significant non-recurring transactions and related party transactions. |
1) | General Policy. We recognize that the decision to report a concern about suspected fraud or fraudulent behavior can be a difficult one to make. Employees are often the first to realize that there is something seriously wrong within our company. However, they may not express their concerns because they feel that speaking up would be disloyal to their colleagues or to our company. They may also fear reprisals, harassment or victimization. In these circumstances, it may be easier to ignore the concern rather than report what may just be a suspicion. We encourage and enable employees, staff and external parties, such as agents, advisors and representatives, to raise serious concerns within our company rather than overlooking a problem or blowing the whistle to the media or other external bodies. | ||
2) | Confidentiality. We will do our best to protect an individuals identity when he or she raises a concern; however, the investigation process may reveal the source of the information and a statement by the individual may be required as part of the evidence. | ||
3) | Anonymous Allegations. Individuals are encouraged to put their names to allegations. Concerns expressed anonymously are much less powerful, but they will be considered and investigated at our discretion. In exercising this discretion, the factors to be taken into account would include: the seriousness of the issues raised; the credibility of the concern; and the likelihood of confirming the allegation from attributable sources. | ||
4) | Untrue Allegations. If an allegation is made in good faith, no action will be taken against the originator. If, however, individuals make malicious and false allegations, action may be considered against the individual making the allegation. | ||
5) | Public Actions. We encourage members of the public who suspect fraud and corruption to contact our CEO, CFO, the Office of General Counsel, the Internal Audit Department or the Chairman of our Audit Committee. | ||
For issues raised by employees or members of the public, the action taken by us will depend on the nature of the concern. The matters raised may be investigated internally or be referred to the appropriate authorities. Within 5 working days of a concern being received, the complainant will receive a letter acknowledging that the concern has been received, indicating that the matter |
Page 5 of 6
will be addressed, giving an estimate of how long it will take to provide a final response and telling them whether any further investigations will take place. | |||
6) | Internal Report. A written report regarding an investigation into an allegation of fraud or fraudulent behavior shall be produced by the Internal Audit Department. | ||
7) | Remedial Action. If, after an investigation into the alleged fraud or fraudulent behavior, it is determined that the allegation have merit or are materially true, we reserve the right to take all appropriate actions including terminating the employment of any perpetrators, reporting the fraud or fraudulent activities to appropriate government authorities and pursuing legal actions, both civil and criminal, against the perpetrator. |
Whistleblower hotline: | Chairman of the Audit Committee | |||
Tel: +86 139 1181 5937 | Mr. Sam Hanhui Sun | |||
The Internal Audit Department | ||||
Tel: +86 10 5930 6165 | Ms. Ran Huang | |||
Email address: | Chairman of the Audit Committee | |||
Email: sunhhsam@msn.com | Mr. Sam Hanhui Sun | |||
The Internal Audit Department | ||||
Email: huangran@soufun.com | Ms. Ran Huang |
Mail address: | Internal Audit Department and/or the Chairman of the Audit Committee SouFun Holdings Limited, 10th Floor, Tower 3 Xihuan Plaza, No.1 Xizhimenwai Avenue Xicheng District, Beijing 100044, P.R. China |
Page 6 of 6