SERIES A PREFERRED SHARE FINANCING
August 24, 2006
The intent of this Term Sheet is to describe, for negotiation purposes only, some key terms of the proposed investment agreement by and among NDA Venture Partners, L.P. and its associated entities (“NDA”), and Wangyong Holdings, Ltd. (“Holdco”), a limited liability Cayman Islands company.
This Term Sheet is not a legally binding agreement between the Series A Investor, the Group and the Founders and Senior Management with respect to the subject matter hereof, except for the paragraphs below under the headings of “Confidentiality”, “Legal Jurisdiction” and “Exclusivity.” A legally binding agreement between the parties will not occur unless and until all necessary corporate approvals have been obtained by the parties hereof (as applicable) and the parties have negotiated, approved, executed and delivered the appropriate definitive agreements. Until execution and delivery of such definitive agreements, the parties shall have the absolute right to terminate all negotiations for any reason without liability therefor.
|Issuer: |Wangyong Holdings, Ltd. (“Holdco”), a Cayman Islands registered company. Holdco directly or | | |indirectly owns, controls or has the exercisable option to obtain the controlling stake of a | | |group of companies having their main business operations in the People’s Republic of China, | | |including, but not limited to, Shanghai Wangyong Software Co., Ltd., and ______________ (“WFOE”)| | |(collectively, “WANGYONG”, and together with Holdco known as the “Group”). | |Series A Investor: |NDA Venture Partners, L.P. and its associated entities (“NDA”). | |Existing Shareholders: |Prior to the issuance of the Series A Preferred, the existing shareholders own Common Shares in | | |Holdco, as follows: | | |Zhang Jinsong – % | | |Zhang Chunlei – % | |Amount of Financing: |$2,000,000 (unless otherwise indicated, all dollar references are to U.S. dollars) | |Type of Security: |A certain number of shares of Series A Preferred Stock (“Series A Preferred”), initially | | |convertible into an equal number of shares of common stock of the Holdco (“Common Shares”). | |Series A Preferred Valuation: |The post-money valuation on a fully diluted basis will be a maximum of $10,000,000 subject to | | |Performance-based Valuation Adjustment Mechanism (as defined below). | |Restructuring: |Prior to or upon the final closing, Group shall complete the restructuring as described in | | |Appendix 1, and any other changes to the shareholding structure as may be deemed necessary | | |during the legal due diligence process to the satisfaction of the Series A Investor. | |Target Signing and Closing Date: |Both parties agree to use their best efforts to sign the final legal documents by October 15, | | |2006 (“Signing”) and to close the transaction by...