AGREEMENT

 

THIS AGREEMENT for sale and purchase of equity interest of Beijing Sihitech Co., Ltd. is made on December 20, 2005

 

Among

 

(1)                                   BEIJING XINYUAN TIANYU TECHNOLOGIES CO., LTD. [ILLEGIBLE], with limited liability established and existing pursuant to the laws of the PRC whose registered office is at Room 312, Shunpinda Bus Terminal, 8 Chuangxin Road, Beijing Changping Technology Park, Beijing, PRC ( Shareholder #1 );

 

(2)                                   BEIJING ZHANHENG JIYUAN SOFTWARE TECHNOLOTIES CO., LTD. [ILLEGIBLE], with limited liability established and existing pursuant to the laws of the PRC whose registered office is at Room 305, Shunpinda Bus Terminal, 8 Chuangxin Road, Beijing Changping Technology Park, Beijing, PRC ( Shareholder #2 );

 

(3)                                   BEIJING SIHITECH CO., LTD. [ILLEGIBLE], a company with limited liability established and existing pursuant to the laws of the PRC whose registered office is at 3rd Floor, Tower B, Beijing Financial Trust Building, 5 Anding Road, Chaoyang District, Beijing, 100029, PRC (the Company or Sihitech );

 

(4)                                   AHEAD BILLION VENTURE LIMITED , a company incorporated under the laws of the British Virgin Islands whose registered office is at TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands (the Purchaser ); and

 

(5)                                   INDIVIDUAL SHAREHOLDERS listed in Appendix A.

 

Whereas

 

(A)                               Sihitech provides application developments and information technology services to customers in the banking and financial services industry (the Sihitech Business ) in the People’s Republic of China (the PRC ).  Detailed information in respect of Sihitech is set out in Schedule 1.

 

(B)                                 Individual Shareholders are currently the registered owners of such equity interest in Sihitech as set forth opposing their names respectively on Appendix A (collectively, the Shares ).

 

(C)                                 Shareholder #1 and Shareholder #2 have entered into an equity transfer agreement with the Individual Shareholders (the Equity Transfer Agreement ), a copy of which is attached hereto as Appendix B, on the date hereof pursuant to which, prior to Closing, Individual Shareholders will irrevocably transfer the Shares to Shareholder #1 and Shareholder #2 (the Vendors ), and the Vendors will become the registered owners of the

 

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entire equity interest in Sihitech.

 

(D)                             subject to the terms and conditions of this Agreement, the Purchaser, at the Closing, shall acquire by payment of the Purchase Price, the Shares from the Vendors (the Transfer ).

 

(E)                                  On the even date hereof, shareholder(s) of e-Channels entered into an agreement for sale and purchase of equity interest of e-Channels with e-Channels BVI in a form that is substantially the same as this Agreement for the transfer of 100% equity interest in e-Channels to e-Channels BVI.

 

(F)                                  Upon completion of the Transfer as contemplated by this Agreement, the Purchaser will be the registered owner of one hundred per cent (100%) of the Shares and Sihitech will be converted into a company wholly owned by the Purchaser, and Sihitech shall remain the sole owner, user, occupier and conductor of the Sihitech Business.

 

It is Agreed as follows:

 

ARTICLE I

Interpretation

 

1.1                                  In this Agreement, unless this Agreement or the Schedules hereto otherwise stipulate, the following expressions shall have the following meanings:

 

Accountants means KPMG Huazhen.

 

Action means any claim, action, suit, litigation, arbitration, inquiry, proceeding or investigation by or pending before any Governmental Authority.

 

Approval Authority means the Ministry of Commerce of China [ILLEGIBLE], and its local branches in Beijing (as the case may be), as well as the State Administration of Foreign Exchange.

 

Business Day means any day, other than a Saturday, Sunday or a day on which banking institutions in Beijing or New York City are authorized or obligated by law, regulation or executive order to close.

 

Claim means any claim, demand, suit, proceeding or action.

 

Contracts mean any contract, agreement, arrangement, plan, lease, license or similar instrument.

 

Copyrights shall mean all copyrights, including rights in and to works of authorship and all other rights corresponding thereto throughout the world, whether published or unpublished, including rights to prepare, reproduce, perform, display and distribute copyrighted works and copies, compilations and derivative works thereof.

 

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Damages means the dollar amount of any loss, damage, expense or liability, including, without limitation, reasonable attorneys’ fees and disbursements incurred by an Indemnified Party in any action or proceeding between the Indemnified Party and the Indemnifying Party or between the Indemnified Party and a third party, which is determined (as provided in Article X) to have been sustained, suffered or incurred by a Party or the Company and to have arisen from or in connection with an event or state of facts which is subject to indemnification under this Agreement; the amount of Damages shall be the amount finally determined by a court of competent jurisdiction or appropriate governmental administrative agency (after the exhaustion of all appeals) or the amount agreed to upon settlement in accordance with the terms of this Agreement, if a Third Party Claim, or by the Parties, if a Direct Claim.

 

Direct Claim means any claim other than a Third Party Claim.

 

E-Channels means Beijing E-Channels Century Technology Co., Ltd.

 

E-Channels BVI means Port Wing Development Company Limited..

 

E-Channels SPA means an agreement for sale and purchase of equity interest of e-Channels between shareholder(s) of e-Channels and e-Channels BVI for the transfer of 100% equity interest in e-Channels to e-Channels BVI of the even date hereof.

 

Encumbrance means any mortgage, pledge, lien and/or security interest, as provided for, recognized and/or enforceable under the laws of the PRC.

 

Governmental Authority means any PRC or non-PRC national, supranational, state, provincial, local or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal or judicial or arbitral body.

 

Intellectual Property means any intellectual property rights, including, without limitations, Patents, Copyrights, service marks, moral rights, Trade Secrets, Trademarks, designs and Technology, together with (a) all registrations and applications for registration therefore and (b) all rights to any of the foregoing (including (i) all rights received under any license or other arrangement with respect to the foregoing, (ii) all rights or causes of action for infringement or misappropriation (past, present or future) of any of the foregoing, (iii) all rights to apply for or register any of the foregoing, (iv) domain names and URLs of or relating to the Sihitech and variations of the domain names and URLs, (vi) Contracts which related to any of the foregoing, including invention assignment, intellectual property assignment, confidentiality, and non-competition agreements, and (vii) goodwill of any of the foregoing).

 

Laws means all statutes, rules, regulations, ordinances, orders, writs, injunctions, judgments, decrees, awards and restrictions, including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to zoning, land use, safety, health, environment, hazardous substances, pollution controls, employment and employment practices and access by the handicapped.

 

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Material Adverse Effect means any change, circumstance, condition, development, effect, event, occurrence or state of facts that, individually or in the aggregate, has been, or would reasonably be expected to be, materially adverse to the business, condition (financial or otherwise), operations or results of operations of Sihitech, other than any change, circumstance, condition, development, effect, event, occurrence or state of facts relating to (i) economic, industry, or securities market conditions in the PRC or (ii) any change in legal, regulatory or political conditions affecting the information technology industry generally in the PRC, including any acts of war or terrorist activities.

 

Party means the Purchaser, on the one hand, and Sihitech, each Vendor or each of the Individual Shareholders, on the other hand (collectively, the Parties )

 

Patents means all United States and foreign patents and utility models and applications therefore and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries.

 

Permits means all governmental registrations, licenses, permits, authorizations and approvals.

 

Person means an individual, partnership, corporation, joint venture, unincorporated organization, cooperative or a governmental entity or agency thereof.

 

PRC means the People’s Republic of China, which, for the purposes of this Agreement only, shall not include Chinese territories of Hong Kong, Macau and Taiwan.

 

PRC GAAP means PRC Accounting Standards for Business Enterprises in effect from time to time applied consistently throughout the periods involved.

 

Purchase Price is defined in Section 2.2.

 

Representatives of either Party means such Party’s employees, accountants, auditors, actuaries, counsel, financial advisors, bankers, investment bankers and consultants.

 

Renminbi or RMB means the legal currency of the PRC.

 

SAIC means the State or Beijing Administration of Industry and Commerce, as the case may be.

 

Sihitech Business shall have the meaning ascribed to it in the recitals to this Agreement.

 

Software means all software, in object, human-readable or source code, whether previously completed or now under development, including programs, applications, databases, data files, coding and other software, components or elements thereof, programmer annotations, and all versions, upgrades, updates, enhancements and error corrections of all of the foregoing.

 

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Tax or Taxes means all income, gross receipts, sales, stock transfer, excise, bulk transfer, use, employment, social security, franchise, profits, property or other taxes, tariffs, imposts, fees, stamp taxes and duties, assessments, levies or other charges of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, additions to tax or additional amounts imposed by any government or taxing authority with respect thereto.

 

Technology means any know-how, confidential or proprietary information, name, data, discovery, formulae, idea, method, process, procedure, other invention, record of invention, model, research, Software, technique, technology, test information, market survey, website, or information or material of a like nature, whether patentable or unpatentable and whether or not reduced to practice.

 

Third Party Claim means a Claim by a person, firm, corporation or government entity other than a party hereto or any affiliate of such party.

 

Trademarks means any and all United States and foreign trademarks, service marks, logos, trade names, corporate names, trade dress, Internet domain names and addresses, and all goodwill associated therewith throughout the world.

 

U.S. Dollars and US$ mean the legal currency of the United States of America.

 

U.S. GAAP means generally accepted accounting principles, consistently applied in the United States.

 

Vendors shall have the meaning ascribed to it in the recitals to this Agreement.

 

1.2                                  The Appendices, Schedules and Recitals comprise appendices, schedules and recitals to this Agreement and form part of this Agreement.

 

1.3                                  The expressions Vendors, Sihitech and the Purchaser and references to any other person in this Agreement shall, where the context permits, include their respective successors, transferees and permitted assigns and any persons deriving title under them.

 

1.4                                  References to person mean any natural person, corporation, firm, joint venture, partnership, association, enterprise, trust or other entity or organization or any governmental agency.

 

ARTICLE II

SHARE PURCHASE

 

2.1                                  Purchase and Sale.  Upon the terms and subject to the conditions hereof, at the Closing, the Vendors shall sell, transfer, assign and convey to the Purchaser, and the Purchaser shall purchase from the Vendors, all of the right, title and interest of the Vendors in and to the Shares.  The Shares represent all of the equity interest in Sihitech

 

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and shall be sold and transferred to the Purchaser free from any Encumbrance.

 

2.2                                  Purchase Price.

 

(a)           Subject to adjustment and the Holdback Amount as hereinafter set forth, the purchase price ( Purchase Price ) to be paid by the Purchaser to the Vendors or its designees for the Shares shall be the following:

 

(i)              cash in the amount of Two Million Seven Hundred Thirty One Thousand Eight Hundred and Eighty Four U.S. Dollars (US$2,731,884), or

 

(ii)           cash in the amount equal to the total current assets minus the total current liabilities of Sihitech at Closing, whichever amount is lower;

 

(b)          Payments.

 

(i)     Initial Payment.  Within sixty (60) days after the Closing, the sum of the Purchase Price, less the Holdback Amount (the Initial Payment ), will be paid by wire transfer of immediately available U.S. Dollars to the Vendors to the accounts of the Vendors as specified on Schedule 2.2 (b).

 

(ii)    Holdback.  The sum of US$150,000 ( Holdback Amount ) to be withheld from the Initial Payment, representing a portion of the Purchase Price, shall be retained by the Purchaser for a period of 12 months starting from Closing. The Holdback Amount will be security for the indemnification obligations of the Vendors set forth in Article X. Subject to this Section and Article X, on the first anniversary of the Closing, or the first business day thereafter, the Purchaser shall deliver the Holdback Amount pro rata to the Vendors in the same proportions as the Initial Payment was allocated among them.  The Purchaser may withhold from the Holdback Amount the equivalent of any amount then in dispute related to the Vendors’ indemnification obligations arising pursuant to Article X or for which the Purchaser has notified the Vendors of an indemnification Claim.  Any withheld Holdback Amount, to the extent not applied in satisfaction of an indemnification claim, will be paid by the Purchaser promptly on resolution of the dispute or claim.  Nothing in this section shall be construed as limiting the liability of the Vendors for indemnification claims or any other claim by the Purchaser or any other rightful claimant, and the Holdback Amount shall not be considered liquidated damages or any breach of this Agreement or any other matter related hereto.

 

(c)           Allocation of Purchase Price.  All payments of the Purchase Price shall be made in proportion as requested by the Vendors as set forth on Schedule 2.2(c).

 

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ARTICLE III

THE CLOSING

 

3.1                                  The Closing. Subject to the terms and conditions of this Agreement, the consummation of the Transfer and the transactions contemplated by this Agreement shall take place at a closing ( Closing ) to be held at 9:30 p.m., local time, on the fourth business day after the date on which the last of the conditions to Closing set forth in Article IX is fulfilled, at the office of Beijing Sihitech Co., Ltd, 3rd Floor, Tower B, Beijing Financial Trust Building, 5 Anding Road, Chaoyang District, Beijing 100029, the PRC,, or at such other time, date or place as the Parties may agree upon in writing.  The date on which the Closing occurs is referred to herein as the Closing Date .

 

3.2                                  Deliveries.

 

(a)           Vendors.  At the Closing, each Vendor will (i) assign and transfer to the Purchaser all of such Vendor’s right, title and interest in and to his, her or its respective portion of the Shares by delivering to the Purchaser the certificates representing such Shares, duly endorsed for transfer and free and clear of Encumbrance and (ii) deliver to the Purchaser the certificates, opinions and other agreements contemplated by Article IX hereof and the other provisions of this Agreement.

 

(b)          the Purchaser.  Within sixty (60) days after Closing, the Purchaser shall pay to the Vendors the Purchase Price to which each of the Vendors is entitled pursuant to Section 2.2 and (ii) the certificates, opinions and other agreements and instruments contemplated by Article IX hereof and the other provisions of this Agreement.

 

3.3                                  Further Assurances.  Subject to the terms and conditions of this Agreement, at any time or from time to time after the Closing, each of the Parties hereto shall execute and deliver such other documents and instruments, provide such materials and information and take such other actions as may reasonably be necessary, proper or advisable, to the extent permitted by law, to fulfill its obligations under this Agreement.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF SIHITECH, INDIVIDUAL SHAREHOLDERS AND THE VENDORS

Sihitech, Individual Shareholders, jointly and severally, and the Vendors, jointly and severally, represent and warrant to the Purchaser as of the Closing, as follows:

 

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4.1                                  The Shares.

 

(a)           Ownership. Prior to the Closing Date, the Vendors will become the registered and beneficial owners of all of the Shares in the amounts set forth in Schedule 4.1(a) free and clear of all Encumbrance, which shares constitute all of the shares of capital stock of Sihitech.  There are no options, warrants or other contractual rights outstanding which give any person the right to acquire shares of Sihitech owned by the Vendors, whether or not such rights are presently exercisable.

 

(b)          Capitalization. The registered capital of Sihitech is set forth in Schedule 1.  There are no options, warrants or other contractual rights outstanding which give any person the right to require the issuance of any capital stock of Sihitech, whether or not such rights are presently exercisable.  All of the Shares are validly issued, fully paid and non-assessable.

 

4.2                                  Organization of Sihitech.  Sihitech is a private owned limited liability company duly organized, validly existing and in good standing under the law of the PRC.  Sihitech has all requisite power and authority to own, lease and operate its properties and to carry on the Sihitech Business as now being conducted and as presently contemplated to be conducted.

 

4.3                                  Authority and Corporate Action; No Conflict.

 

(a)           Sihitech and each of the Individual Shareholders and Vendors have all necessary power and authority to enter into this Agreement and to consummate the Transfer and other transactions contemplated hereby.  All actions, corporate and otherwise, necessary to be taken by Sihitech and Vendors to authorize the execution, delivery and performance of this Agreement, and all other agreements and instruments delivered by Sihitech and the Vendors in connection with the Transfer have been duly and validly taken.  This Agreement has been duly executed and delivered by Sihitech and each of the Vendors and Individual Shareholders and constitute the valid, binding, and enforceable obligation of Sihitech and each of the Vendors and Individual Shareholders, enforceable in accordance with its terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws of general application now or hereafter in effect affecting the rights and remedies of creditors and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and (ii) as enforceability of any indemnification provision may be limited by federal and state securities laws and public policy of the United States, BVI and the PRC.

 

(b)          Neither the execution and delivery of this Agreement by Sihitech or each of the Vendors and Individual Shareholders nor the consummation of the transactions contemplated hereby will (i) except as set forth in Schedule 4.3, conflict with, result in a breach or violation of or constitute (or with notice of lapse of time or both constitute) a default under, (1) the Articles of Association of Sihitech or (2) any law, statute, regulation, order, judgment or

 

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decree or any instrument, contract or other agreement to which Sihitech, any Individual Shareholder or a Vendor is a party or by which it (or any of its properties or assets) is subject or bound; (ii) result in the creation of, or give any party the right to create, any lien, charge, option, security interest or other encumbrance upon the assets of Sihitech or a Vendor; (iii) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract to which Sihitech, any Individual Shareholder or a Vendor is a party; or (iv) result in any suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, qualification, authorization or approval applicable to Sihitech, any Individual Shareholder or a Vendor.

 

4.4                                  Consents and Approvals.  Other than as set forth on Schedule 4.4, the execution and delivery of this Agreement by Sihitech, each Individual Shareholder and each Vendor does not, and the performance of this Agreement by it will not, require any consent, approval, authorization or other action by, or filing with or notification to, any Governmental Authority, except where failure to obtain such consents, approvals, authorizations or actions, or to make such filings or notifications, would not prevent it from performing any of its material obligations under this Agreement.

 

4.5                                  Licenses, Permits, Etc.  To the best of the knowledge of each of the Vendors and Individual Shareholders, Sihitech possesses or will possess prior to the Closing all Permits necessary, in all material respects, to own and operate the Sihitech Business, which necessary Permits are described or are as set forth on Schedule 4.5 hereto.  To the best of the knowledge of Sihitech and each of the Vendors and Individual Shareholders, Sihitech is not in default in any material respect under any of such Permits and no event has occurred and no condition exists which, with the giving of notice, the passage of time, or both, would constitute a default thereunder.  Neither the execution and delivery of this Agreement, or any of the other documents contemplated hereby nor the consummation of the transactions contemplated hereby or thereby nor, to the best of the knowledge of Sihitech and each of the Vendors and Individual Shareholders, compliance by Sihitech with any of the provisions hereof or thereof will result in any suspension, revocation, impairment, forfeiture or nonrenewal of any Permit applicable to the Sihitech Business.

 

4.6                                  Taxes, Tax Returns and Audits.  Except as specifically set forth in Schedule 4.6, (a) Sihitech has filed on a timely basis (taking into account any extensions received from the relevant taxing authorities) all returns and reports pertaining to all Taxes that are or were required to be filed by Sihitech with the appropriate taxing authorities in all jurisdictions in which such returns and reports are or were required to be filed, and all such returns and reports are true, correct and complete in all material respects, (b) all Taxes that are due from or may be asserted against Sihitech (including deferred Taxes) in respect of or attributable to all periods ending on or before the Closing Date have been or will be fully paid, deposited or adequately provided for on the books and financial statements of Sihitech or are being contested in good faith by appropriate proceedings, (c) no issues have been raised (or are currently pending) by any taxing authority in connection with any of the returns and reports referred to in clause (a) which might be determined adversely to Sihitech, (d) Sihitech has not given or requested to give waivers or extensions of any statute of limitations with respect to the payment of Taxes, and (e)

 

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no tax liens which have not been satisfied or discharged by payment or concession by the relevant taxing authority or as to which sufficient reserves have not been established on the books and financial statements of Sihitech are in force as of the date hereof.

 

4.7                                  Financial Statements.  Prior to the execution of this Agreement, the Individual Shareholders and the Vendors have delivered to the Purchaser consolidated balance sheets of each of Sihitech as at December 31, 2002, 2003 and 2004, and related consolidated statements of income and source and application of funds for the three years ended December 31, 2004, audited by the Accountants, and the notes, comments, schedules, and supplemental data therein (collectively, the 2004 Financial Statements ).  An interim consolidated balance sheet as of June 30, 2005, and related consolidated statements of income and source and application of funds for the six (6) months then ended (collectively, the Last Financial Statements ) have been delivered to the Purchaser.  The 2004 Financial Statements and the Last Financial Statements shall be prepared in accordance with U.S. GAAP throughout the periods indicated and fairly present the financial condition of Sihitech at their respective dates and the results of the operations of Sihitech for the periods covered thereby in accordance with U.S. GAAP.  The 2004 Financial Statements and the Last Financial Statements are included in Schedule 4.7 to this Agreement.

 

4.8                                  No Undisclosed Liabilities.  Sihitech does not have any liabilities, whether known or unknown, absolute, accrued, contingent or otherwise, except (a) as and to the extent reflected or reserved against on the Last Financial Statements, and (b) those since the Last Financial Statement Date, incurred in the ordinary course of business and consistent with prior practice.  Schedule 4.8 contains an accurate and complete list and description and all liabilities of Sihitech whether or not reflected or reserved against on the Last Financial Statements which individually exceeds US $75,000 or, if related liabilities, exceed $75,000 (or the equivalent of US $75,000).

 

4.9                                  Real Property.  The Last Financial Statements and Schedule 4.9 together contain an accurate and complete list and description of all real estate owned by Sihitech as well as any other real estate that is in the possession of or leased by Sihitech and the improvements (including buildings and other structures) located on such real estate (collectively, the Real Property ), and lists and accurately describes any leases under which any such Real Property is possessed (the Real Estate Leases ).  Sihitech is not in default under any of the Real Estate Leases, and is not aware of any default by any of the lessors thereunder.

 

4.10                            Certain Personal Property.  The Last Financial Statements and Schedule 4.10 together contain an accurate and complete list and description of the material fixed assets of Sihitech specifying the location of all material items of tangible personal property of Sihitech.

 

4.11                            Non-Real Estate Leases.  The Last Financial Statements and Schedule 4.11 together contain an accurate and complete list and description of all assets and property (other than Real Property and Real Estate Leases) that are used as of the date of this Agreement in the operation of the Sihitech Business and that are possessed by Sihitech

 

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under an existing lease.  All of such leases are referred to herein as the Non-Real Estate Leases .  Sihitech is not in default under any of the Non-Real Estate Leases, and is not aware of any default by any of the lessors hereunder.

 

4.12                            Accounts Receivable.  The accounts receivable of Sihitech reflected on the Last Financial Statements and created after the Last Financial Statements Date, are bona fide accounts receivable, created in the ordinary course of business and subject to historical rates of uncollected liabilities, as reserved against on Sihitech’s financial statements, are good and collectible within periods of time normally prevailing in the industry at the aggregate recorded amounts thereof.

 

4.13                            Inventory.  The inventory of Sihitech consists of items of quality and quantity useable or saleable in the ordinary course of business at regular sales prices, subject to (a) changes in price levels as a result of economic and market conditions and (b) reserves reflected in the Last Financial Statements for spoiled and discontinued items.  Schedule 4.13 sets forth a break down of the inventory balance of Sihitech as of the date of the Last Financial Statement, but it is understood that any material or intentional inaccuracy in the Schedule 4.13 estimates will not be a breach of this representation and warranty.

4.14                            Contracts, Obligations and Commitments.  Except as set forth in the Last Financial Statements and on Schedule 4.14 together, other than the Real Estate Leases and the Non-Real Estate Leases, Sihitech does not have any existing contract, obligation or commitment (written or oral) of any nature (other than obligations involving payments of less than $300,000 individually or $300,000 in the aggregate), including without limitation the following:

 

(a)           Employment, bonus, severance or consulting agreements, retirement, stock bonus, stock option, or similar plans;

 

(b)          Loans or other agreements, notes, indentures or instruments relating to or evidencing indebtedness for borrowed money or mortgaging, pledging or granting or creating a lien or security interest or other encumbrance on any of the assets of Sihitech or any agreement or instrument evidencing any guaranty by Sihitech of payment or performance by any other Person;

 

(c)           Agreements of any kind relating to employment matters such as labor agreements or agreements providing for benefits under any plan;

 

(d)          Any contract or series of contracts with the same Person for the furnishing or purchase of equipment, goods or services, except for purchase and sales orders in the ordinary course of business;

 

(e)           Any joint venture contract or arrangement or other agreement involving a sharing of profits or expenses to which Sihitech is a party or by which it is bound;

 

(f)             Agreements which limit the freedom of Sihitech to compete in any line of business or in any geographic area or with any Person;

 

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(g)          Agreements providing for disposition of the assets, businesses or a direct or indirect ownership interest in Sihitech;

 

(h)          Any contract, commitment or arrangement not made in the ordinary course of business of Sihitech; or

 

(i)              Agreements with any Governmental Authority.

 

Except as set forth on Schedule 4.14, each Contract to which Sihitech is a party is a valid and binding obligation of Sihitech and, to the best of the knowledge of Sihitech, enforceable in accordance with its terms (except as the enforceability thereof may be limited by any applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally or by general principles of equity, regardless of whether such enforceability is considered in equity or at law), and is in full force and effect (except for any Contracts which by their terms expire after the date hereof or are terminated after the date hereof in accordance with the terms thereof, provided, however, that Sihitech will not terminate any Contract after the date hereof without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld or delayed), and Sihitech has not breached any material provision of, nor is in default in any material respect under the terms of any of the Contracts.

 

4.15                            Intellectual Property Rights.

 

(a)           Intellectual Property.  Schedule 4.15(a) contains an accurate and complete list and description of all Intellectual Property used by Sihitech in connection with the Sihitech Business, specifying as to each (i) the nature of such right, (ii) the ownership thereof, (iii) the Governmental Authority that has issued or recorded a registration or certificate or similar document with respect thereto or with which an application for such a registration, certificate or similar document is pending and (iv) any applicable registration, certificate or application number. Sihitech has provided the Purchaser with complete and accurate copies of all registered Intellectual Property relating to the Sihitech Business.

 

(b)          Other Intellectual Property Rights.  Schedule 4.15(b) includes an accurate and complete list and description of all material inventions and trade secrets that Sihitech has formally documented and that are owned, used, controlled, authorized for use or held by, or licensed to, Sihitech that relate to or are necessary to the Sihitech Business, including as conducted at or prior to Closing or as proposed to be conducted by Sihitech, together with a designation of the ownership thereof.

 

(c)           Software.  Schedule 4.15(c) includes an accurate and complete list and description of all Software used by Sihitech in connection with the Sihitech Business, including as conducted at or prior to Closing or as proposed to be conducted by Sihitech, together with a designation of ownership.

 

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(d)          Out-Bound Licenses.  Schedule 4.15(d) includes an accurate and complete list and description of all licenses, sublicenses, and other Contracts pursuant to which (i) any Person is authorized to use any Intellectual Property rights used in connection with the Sihitech Business or (ii) any right of Sihitech in, or its use of, any Intellectual Property right used in connection with the Sihitech Business is otherwise materially affected.

 

(e)           In-Bound Licenses.  Schedule 4.15(e) includes an accurate and complete list and description of all licenses, sublicenses, and other Contracts pursuant to which Sihitech is authorized to use, or can be authorized to use (through, for example, the grant of a sublicense), any Intellectual Property owned by any other Person in connection with the Sihitech Business.

 

(f)             Ownership.  As of the date hereof, Sihitech owns, and at the Closing Date, will own all right, title and interest in and to all Intellectual Property rights used in connection with the Sihitech Business, and those Intellectual Property rights were developed and created solely by employees of Sihitech acting within the scope of their employment or by third parties (all of which employees and third parties have validly and irrevocably assigned all of their rights therein to Sihitech) and Sihitech is duly and validly licensed to use all other Intellectual Property used in connection with the Sihitech Business, free and clear of royalties.  Sihitech has not assigned or transferred ownership of, agreed to so assign or transfer ownership of, or granted any exclusive license of or exclusive right to use, any Intellectual Property used in connection with the Sihitech Business.

 

(g)          Royalties.  Except for licenses listed and accurately and completely described on the Last Financial Statements or Schedule 4.15(g) as royalty-bearing, there are (and will be upon Closing) no royalties, honoraria, fees, or other payments payable by Sihitech to any Person by reason of the ownership, use, license, sale, or disposition of any Intellectual Property used in connection with the Sihitech Business.

 

(h)          Infringement.  The Intellectual Property used in connection with the Sihitech Business does not infringe or misappropriate any Intellectual Property rights of any Person under the laws of any jurisdiction.  To the best of Sihitech’s knowledge, no notice, claim or other communication (in writing or otherwise) has been received from any Person: (A) asserting any ownership interest in any material Intellectual Property used in connection with the Sihitech Business; (B) of any actual, alleged, possible or potential infringement, misappropriation or unauthorized use or disclosure of any Intellectual Property used in connection with the Sihitech Business, defamation of any Person, or violation of any other right of any Person (including any right to privacy or publicity) by Sihitech or relating to the Intellectual Property used in connection with the Sihitech Business; or (C) suggesting or inviting Sihitech to take a license or otherwise obtain the right to use any Intellectual Property in connection with the Sihitech Business.  To the best of its knowledge, no

 

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Person is infringing, misappropriating, using or disclosing in an unauthorized manner any Intellectual Property used in connection with the Sihitech Business owned by, exclusively licensed to, held by or for the benefit of, or otherwise controlled by Sihitech.

 

(i)              Proceedings.  Except as set forth on Schedule 4.15(i), there are no current or, to the best of its knowledge, threatened Proceedings (including but not limited to any interference, reexamination, cancellation, or opposition proceedings) arising out of a right or claimed right of any person before any Governmental Authority anywhere in the world related to any Intellectual Property used in connection with the Sihitech Business owned by, exclusively licensed to, held by or for the benefit of, or otherwise controlled by Sihitech.

 

4.16                            Title to and Condition of Assets.  Sihitech has good and marketable title to all the properties and assets owned by it.  Except as set forth in the Last Financial Statements and Schedule 4.16, none of such properties and assets is subject to any Encumbrance, option to purchase or lease, easement, restriction, covenant, condition or imperfection of title or adverse claim of any nature whatsoever, direct or indirect, whether accrued, absolute, contingent or otherwise.

 

4.17                            Absence of Certain Changes.  Except as set forth on Schedule 4.17 or agreed by the Purchaser in advance and incurred in ordinary business in compliance with past practice, Sihitech has not, since the Last Financial Statements Date:

 

(a)           issued, delivered or agreed to issue or deliver any stock, bonds or other corporate securities (whether authorized and unissued or held in the treasury), or granted or agreed to grant any options (including employee stock options), warrants or other rights for the issue thereof;

 

(b)          borrowed or agreed to borrow any funds exceeding $200,000 (or other currency equivalent) except current bank borrowings not in excess of the amount thereof shown on the Last Financial Statements;

 

(c)           incurred any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due exceeding $200,000 (or other currency equivalent), except current liabilities for trade obligations incurred in the ordinary course of business and consistent with prior practice;

 

(d)          discharged or satisfied any encumbrance exceeding $200,000 (or other currency equivalent) other than those then required to be discharged or satisfied, or paid any obligation or liability other than current liabilities shown on the Last Financial Statements and liabilities incurred since the Last Financial Statements Date in the ordinary course of business and consistent with prior practice;

 

(e)           sold, transferred, leased to others or otherwise disposed of any assets exceeding $100,000 (or other currency equivalent), except for inventories sold in the ordinary course of business and assets no longer used or useful in the

 

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conduct of its business, or canceled or compromised any debt or claim, or waived or released any right of substantial value;

 

(f)             received any notice of termination of any Contract, Lease or other agreement, or suffered any damage, destruction or loss exceeding $100,000 (or other currency equivalent) (whether or not covered by insurance) which, in any case or in the aggregate, has had, or might reasonably be expected to have, a Material Adverse Effect;

 

(g)          had any material change in its relations with its employees or agents, clients or insurance carriers which has had or might reasonably be expected to have a Material Adverse Effect;

 

(h)          transferred or granted any rights under, or entered into any settlement regarding the breach or infringement of, any Intellectual Property or modified any existing rights with respect thereto;

 

(i)              declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to any shareholder of any Sihitech or any affiliate of any shareholder of Sihitech, or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock, or made or agreed to make any payment to any shareholder of Sihitech or any affiliate of any shareholder of Sihitech, whether on account of debt, management fees or otherwise;

 

(j)              suffered any other material adverse effect in its assets, liabilities, financial condition, results of operations or business; or

 

(k)           entered into any agreement or made any commitment to take any of the types of action described in any of the foregoing clauses (other than clauses (f), (g) or (j)).

 

4.18                            Employee Plans; Labor Matters.  The Last Financial Statements and Schedule 4.18 together contain an accurate and complete list and description of all employee benefits, including, without limitation, pension, medical insurance, work related injury insurance, birth and nursery insurance, unemployment insurance and educational benefits, which Sihitech is obligated to pay, including amounts and recipients of such payments.  Except as disclosed in the Last Financial Statements or Schedule 4.18, Sihitech has complied with all applicable Laws relating to employment benefits, including, without limitation, pension, medical insurance, work-related injury insurance, birth and nursery insurance, unemployment insurance and educational benefits.  All contributions or payments required to be made by Sihitech with respect to employee benefits have been made on or before their due dates.  Except as disclosed in the Last Financial Statements or Schedule 4.18, all such contributions and payments required to be made by any employees of Sihitech with respect to the employee benefits have been fully deducted and paid to the relevant Governmental Authorities on or before their due dates, and no

 

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such deductions have been challenged or disallowed by any Governmental Authority or any employee of Sihitech.

 

4.19                            Compliance with Law.  To the best of its knowledge, the Sihitech Business has been conducted, and is now being conducted, by Sihitech in compliance in all material respects with all applicable Laws.  Neither Sihitech nor any officers, directors and employees of Sihitech (i) is, and during the past five years was, in violation of, or not in compliance with, in any material respect all such applicable Laws with respect to the conduct of the Sihitech Business; and (ii) has received any notice from any Governmental Authority, and to the best of its knowledge, no Action is threatened which alleges that Sihitech has violated, or not complied with, any of the above.

 

4.20                            No Illegal or Improper Transactions.  Neither Sihitech nor any other officer, director, employee, agent or affiliate of Sihitech has offered, paid or agreed to pay to any Person or entity (including any governmental official) or solicited, received or agreed to receive fr