Document:

EX-4.29

Exhibit 4.29

SHARE SALE AND PURCHASE AGREEMENT

by and among

GigaMedia International Holdings Limited

as Seller

and

Champion Limited

as Buyer

and

GigaMedia Limited

as Guarantor

Dated as of August 28, 2008

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I TERMS AND DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Certain Defined Terms
	 	 	1	 
	Section 1.2 General Interpretation
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE
	 	 	2	 
	 
	 	 	 	 
	Section 2.1 Purchase and Sale of the Shares
	 	 	2	 
	Section 2.2 Purchase Price
	 	 	2	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	2	 
	 
	 	 	 	 
	Section 3.1 Representations and Warranties
	 	 	2	 
	Section 3.2 Limitation of Disclosed Materials
	 	 	3	 
	Section 3.3 Exclusivity of Representations and Warranties
	 	 	3	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	3	 
	 
	 	 	 	 
	Section 4.1 Buyer’s Representations and Warranties
	 	 	3	 
	 
	 	 	 	 
	ARTICLE V COVENANTS
	 	 	3	 
	 
	 	 	 	 
	Section 5.1 Business Operation Prior to the Closing
	 	 	3	 
	Section 5.2 Reasonable Efforts
	 	 	4	 
	Section 5.3 Notification of Certain Matters
	 	 	4	 
	Section 5.4 Access to Information
	 	 	5	 
	Section 5.5 Performance of the Contract
	 	 	5	 
	Section 5.6 Resignations
	 	 	5	 
	Section 5.7 Filings; Further Assurances
	 	 	5	 
	Section 5.8 Public Announcement
	 	 	6	 
	Section 5.9 Non-Competition.
	 	 	6	 
	Section 5.10 Confidentiality.
	 	 	6	 
	Section 5.11 Additional Agreements.
	 	 	7	 
	Section 5.12 Guarantee by Guarantor
	 	 	7	 
	 
	 	 	 	 
	ARTICLE VI CLOSING
	 	 	8	 
	 
	 	 	 	 
	Section 6.1 Closing
	 	 	8	 
	Section 6.2 Closing Deliverables
	 	 	8	 
	 
	 	 	 	 
	ARTICLE VII TERMINATION
	 	 	8	 
	 
	 	 	 	 
	Section 7.1 Termination
	 	 	8	 
	Section 7.2 Effect of Termination
	 	 	9	 

 

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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VIII INDEMNIFICATION
	 	 	9	 
	 
	 	 	 	 
	Section 8.1 Survival of Representations, Warranties and Covenants
	 	 	9	 
	Section 8.2 Indemnification by Seller
	 	 	9	 
	Section 8.3 Indemnification by Buyer
	 	 	10	 
	Section 8.4 Manner of and Limitation on Indemnification by Seller
	 	 	10	 
	Section 8.5 General Limits on Indemnification
	 	 	10	 
	Section 8.6 Exclusivity
	 	 	11	 
	 
	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS
	 	 	11	 
	 
	 	 	 	 
	Section 9.1 Fees and Expenses
	 	 	11	 
	Section 9.2 Amendment and Modification
	 	 	12	 
	Section 9.3 Waiver
	 	 	12	 
	Section 9.4 Notices
	 	 	12	 
	Section 9.5 Entire Agreement
	 	 	13	 
	Section 9.6 No Third-Party Beneficiaries
	 	 	13	 
	Section 9.7 Governing Law
	 	 	13	 
	Section 9.8 Dispute Resolution
	 	 	14	 
	Section 9.9 Assignment; Successors
	 	 	14	 
	Section 9.10 Severability
	 	 	14	 
	Section 9.11 Counterparts
	 	 	15	 
	Section 9.12 No Presumption Against Drafting Party
	 	 	15	 

 

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INDEX OF EXHIBITS

	 	 	 
	Exhibit	 	 
	A

	 	Broadband Service Contract
	1.1

	 	Definition
	3.1(a)

	 	Disclosure Schedules
	3.1(b)

	 	Representations and Warranties of Seller
	4.1

	 	Representations and Warranties of Buyer
	5.1

	 	Business Operation Prior to the Closing
	5.9

	 	Non-Competition
	6.1

	 	Conditions Precedent to the Closing
	6.2(b)

	 	Seller’s Closing Deliverables

 

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SHARE SALE AND PURCHASE AGREEMENT

THIS SHARE SALE AND PURCHASE AGREEMENT is entered into on this 28th day of August,
2008 (this “Agreement”), by and among

(i) GigaMedia International Holdings Limited, a company organized and existing under the laws
of BVI, having its registered office at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British
Virgin Islands (“Seller”); (ii) Champion Limited, a company organized and in existence
under the laws of Cayman Islands and having its registered office at PO Box 309GT, Ugland House,
South Church Street, George Town, Grand Cayman, Cayman Islands, (“Buyer”); and (iii)
GigaMedia Limited, a company organized and existing under the laws of Singapore, having its
principal office at 8th Floor, 207 Tiding Boulevard, Section 2, Taipei, Taiwan, R.O.C.
(“Guarantor”);

Seller and Buyer shall hereinafter be referred to, individually as a “Party” and
collectively as the “Parties.”

RECITALS

WHEREAS, Seller owns the shares of common stock, representing 100% of the total issued and
outstanding shares of Hoshin Multimedia Center Inc., a company incorporated under the laws of BVI
and having its registered office at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin
Islands (the “Company”);

WHEREAS, the Company has entered into an agreement with Hoshin GigaMedia Center Inc.
(“HGC”) to assume all rights and obligations of the Broadband Service Contract (the
“Broadband Service Contract”) set forth in Exhibit A attached hereto, and such
assignment and assumption is subject to the consent from the other party to such Contract before
the Closing of the Agreement; and

WHEREAS, Buyer wishes to acquire the total issued and outstanding shares of the Company from
Seller, and Seller wishes to sell such shares to the Buyer, subject to the terms and conditions set
forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the Parties agree the following terms
and conditions:

ARTICLE I

TERMS AND DEFINITIONS

Section 1.1 Certain Defined Terms

For purposes of this Agreement, the capitalized terms stated herein shall have the meanings
set forth in Exhibit 1.1 attached hereto.

 

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Section 1.2 General Interpretation

(a) Reference made in this Agreement to a Section, Article or Exhibit shall be reference to a
Section, Article or Exhibit of this Agreement unless otherwise stated. The table of contents and
headings contained in this Agreement and all Exhibits are solely for convenience in referencing and
shall not affect in any manner the meaning or interpretation of this Agreement. All words used in
this Agreement shall be construed to be of such gender or number as the circumstances require.

(b) Any and all capitalized terms used in any Exhibit but not otherwise defined therein shall
have the meanings set forth in this Agreement. All Exhibits attached hereto or referred to herein
are incorporated into and made a part of this Agreement as if set forth herein.

(c) The word “including” and words of similar import when used in this Agreement shall mean
“including, without limitation”, unless otherwise specified.

(d) All references to “NT$” in this Agreement refer to New Taiwan Dollars and references to
“US$” in this Agreement refer to United States Dollars.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Purchase and Sale of the Shares

(a) On the terms and subject to the conditions stated herein, at the Closing, Seller agrees to
sell, assign, transfer, convey and deliver to Buyer shares of common stock of the Company (the
“Shares”), representing total issued and outstanding shares in the Company, free and clear
of any Encumbrances, and Buyer hereby agrees to purchase and accept from Seller such Shares.

Section 2.2 Purchase Price

(a) Subject to the terms and conditions of this Agreement and in reliance upon the
representations, warranties and covenants of Seller contained herein, Buyer shall pay Seller for
the Shares an aggregate purchase price of US$7,000,000 (the “Purchase Price”).

(b) The stamp duty, security transactions, registration, and such other taxes incurred in
connection with the transfer of Shares pursuant to Section 2.1 of this Agreement shall be paid by
Seller when due, and the Parties shall cooperate with each other to file all necessary returns with
respect to all such taxes.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF SELLER

Section 3.1 Representations and Warranties

 

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(a) Seller hereby represents and warrants to Buyer that the matters contained in Exhibit
3.1(b) attached hereto.

Section 3.2 Limitation of Disclosed Materials

(a) Any and all information contained or referred to in the disclosure schedules attached
hereto as Exhibit 3.1(a) (the “Disclosure Schedules”) shall be treated as
disclosure by Seller in respect of each and every obligation of Seller under this Agreement,
including but not limited to the representations and warranties of Seller stipulated in Section 3.1
hereof. For the avoidance of doubt, any and all information contained or referred to in the
Disclosure Schedules shall be treated as a disclosure by Seller in respect of each and every
representation and warranty and not in respect of any particular representation or warranty.

(b) The headings and numbering stated in the Disclosure Schedules shall not affect the
interpretation thereof.

(c) The disclosure of any of the Disclosed Schedules shall not imply the existence of any
representation, warranty or undertaking not expressly stated in the Agreement, nor be taken as an
expansion of the scope of the representations and warranties of Seller as set forth in Exhibit
3.1(b) attached hereto.

Section 3.3 Exclusivity of Representations and Warranties 

Neither Seller, nor any of its respective Affiliates or Representatives has made any
representation or warranty of any kind or nature whatsoever, oral or written, express or implied
(including, but not limited to, any relating to financial condition, operating results, assets or
liabilities of the Company), except as expressly set forth in this Article III and Exhibit
3.1(b), and Seller hereby disclaims any such other representation or warranty.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF BUYER

Section 4.1 Buyer’s Representations and Warranties 

Buyer hereby represents and warrants to Seller those matters set forth in Exhibit 4.1
attached hereto.

ARTICLE V

COVENANTS

Section 5.1 Business Operation Prior to the Closing

Between the date of execution hereof and the Closing Date, unless (i) otherwise stated in this
Agreement; (ii) otherwise stated in Exhibit 5.1 attached hereto; or (iii) Buyer shall
otherwise agree in writing, Seller covenants and agrees that the Company shall not engage in any
business, including but not limited to:

(a) amend or otherwise change its organizational documents;

(b) issue, deliver, or sell, or authorize, or propose, or agree or commit to the issuance,
delivery, or sale of any shares of the Company, or any options, warrants, convertible securities,
commitments, agreements, understandings, restrictions, arrangements or other rights of any kind to
acquire any such shares;

 

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(c) declare, set aside, make or pay any dividend, payable in cash, shares, property or
otherwise with respect to any of its capital shares;

(d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire,
directly or indirectly, any of its shares or make any other change with respect to its capital
structure;

(e) acquire or agree to acquire by merging or consolidating with, or by purchasing, any
corporation, partnership, other business organization, division or any assets other than in the
ordinary course of business;

(f) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation or
recapitalization of the Company;

(g) incur any indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligations, conditional sale, guarantee, issue any debt securities or otherwise;

(h) enter into any Contract;

(i) authorize, or make any commitment with respect to, any single capital expenditure;

(j) make or commit to make any payment; or

(k) make any material change in any method of accounting or accounting practice or policy,
except as required by GAAP.

Section 5.2 Reasonable Efforts

Seller and the Company will use its commercially reasonable efforts to effectuate the
transactions contemplated hereby, to fulfill and cause to be fulfilled the conditions to closing
under this Agreement and assist in the satisfactory and smooth completion of the transfer.

Section 5.3 Notification of Certain Matters

(a) If prior to the Closing, either Party shall have reason to believe that any breach of a
representation or warranty of the other Party has occurred, the Party which does not breach the
representation or warranty shall promptly notify the other Party, in reasonable detail.

 

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(b) Until the Closing, the Party shall promptly notify the other Party in writing of any fact,
change, condition, circumstance or occurrence or nonoccurrence of any event of which it is aware
that will or is reasonably likely to result in any of the conditions set forth in Exhibit
6.1 attached hereto becoming incapable of being satisfied.

Section 5.4 Access to Information 

From the date of execution hereof until the Closing Date, upon reasonable notice, Seller shall
cause the Company to afford Buyer and its Representatives reasonable access to the Representatives,
properties, offices and other facilities, books and records of the Company and shall cause the
Company to furnish Buyer with such financial, operating and other data and information as Buyer may
reasonably request; provided, however, that any such access or furnishing of
information shall be conducted at Buyer’s expense, during normal business hours, under the
supervision of the Seller’s personnel and in such manner as not unreasonably to interfere with the
normal operations of the Company. Notwithstanding anything to the contrary in this Agreement, the
Company or Seller shall not be required to disclose any information to Buyer or its Representatives
if such disclosure would violate any applicable Law, while any such withholding of information
shall not relieve Seller and the Company from the provision of accurate representations and
warranties.

Section 5.5 Performance of the Contract

Seller shall procure the Company to engage HGC to continue the performance of the Broadband
Service Contract set forth in Exhibit A in the ordinary course of business consistent with
past practice in all material respects between the effective date of the assignment and assumption
of the Broadband Service Contract the Closing Date, and Buyer shall procure the other party to such
contract to cooperate with the Company and/or HGC in the performance of such contract through the
Closing Date.

Section 5.6 Resignations

Seller shall deliver at the Closing the written resignations issued by all of the directors
and supervisors of the Company, effective as of the Closing Date.

Section 5.7 Filings; Further Assurances

Each Party shall promptly notify the other Party of any communication that it or any of its
Affiliates or Representatives receives from any Governmental Authority relating to the subject
matters of this Agreement and permits the other Party to review in advance any proposed
communication by such Party to any Governmental Authority. No Party to this Agreement shall agree
to participate in any meeting with any Governmental Authority in respect of any filings,
investigation or other inquiry unless it consults with the other Party in advance and, to the
extent permitted by such Governmental Authority, gives the other Party the opportunity to attend
and participate at such meeting.

 

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Section 5.8 Public Announcement

During the period from the date of execution hereof and the Closing Date, Buyer and Seller
shall consult with each other before issuing any press release or making any other public statement
with respect to this Agreement or the transactions contemplated hereunder, and neither Buyer nor
Seller shall issue any press release or make any public statement prior to obtaining the written
approval of Seller or Buyer, as the case may be, which approval shall not be unreasonably withheld,
provided, however, the foregoing shall not limit the ability of a party to make
announcements and filings required by applicable Laws. Buyer and Seller shall cooperate with each
other in releasing, to the extent required, information concerning this Agreement and the
transactions contemplated herein. Where practicable each of the parties shall furnish to the other
drafts of all releases and filings prior to publication or filing and shall duly take into account
suggestions of the other party. Nothing contained herein shall prevent either party at any time
from furnishing any information to any Governmental Authority or from issuing any release when it
believes it is legally required to do so, provided such party gives the other party prompt notice
of such order and complies with any protective order (or equivalent) imposed on such disclosure.

Section 5.9 Non-Competition. 

For the duration of five (5) years after the Closing, except as otherwise set forth in
Exhibit 5.9 hereto, Seller shall not and shall cause each GigaMedia Group Member not to,
directly or indirectly, invest, own, engage or participate in any manner in any business or any
company, joint venture, partnership, or other entity that is engaged in the Relevant Business in
Taiwan.

In Sections 5.9, “Relevant Business” means the operation of commercial and consumer
Internet access and cable modem business in Taiwan, the Republic of China. For avoidance of any
doubt, the on-line game business currently operated by Seller and its Affiliates and any ancillary
services relating to on-line game business shall be excluded from the Relevant Business; provided
that Seller shall not, without Buyer’s prior written consent, provide any ancillary service which
could be in direct or indirect competition with the Relevant Business in any material respect.

Section 5.10 Confidentiality. 

(a) The parties acknowledge that they and their respective employees, nominees, advisors,
agents or other Representatives will have access to and will be entrusted with detailed
confidential information and trade secrets (“Confidential Information”) relating to the
present and contemplated operations of the other party, the disclosure of any of which Confidential
Information to competitors of the other party or to the general public would be highly detrimental
to the best interests of such party. The parties acknowledge and agree that the right to maintain
the confidentiality of such Confidential Information and the right to preserve the goodwill of the
parties constitute proprietary rights which either party is entitled to protect.

 

6

 

(b) Neither party shall at any time disclose any Confidential Information to any person nor
use the same for any purpose other than the purposes of this Agreement, nor
disclose or use for any purpose other than this Agreement the private affairs of the other
party or any other non-public information relating to the business and affairs of the other party;
provided, however, that any party may disclose any information which (i) a party can demonstrate
was already lawfully in its possession prior to the disclosure thereof by the other party, (ii) is
generally known to the public and did not become so known through any violation of law,
(iii) became known to the public through no fault of such party, (iv) is later lawfully acquired by
such party without confidentiality restrictions from other sources, (v) is required to be disclosed
by order of court or Government Authority with subpoena powers (provided, that such party shall
have provided the other party with prior notice of such order and an opportunity to object or take
other available action) or (vi) is disclosed to an Affiliate which agrees to be bound by the terms
of this Section 5.10. Notwithstanding anything in this Section to the contrary, upon and after
Closing, the above provisions shall not apply to Buyer regarding Confidential Information of the
Company.

Section 5.11 Additional Agreements. 

In case within 6 months after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement or to vest the Company with full title to all
properties, assets, rights, approvals, and immunities, the proper officers and directors of each
party to this Agreement shall take all such necessary action.

Section 5.12 Guarantee by Guarantor

(a) The Guarantor hereby irrevocably guarantees for a period of twelve (12) months after the
Closing Date (i) the due and punctual payment in full when due of any and all sums, whether fees,
expenses, indemnities or other amounts payable by Seller, pursuant to or arising under, out of or
in connection with this Agreement, and (ii) the prompt and complete performance by Seller of all
other terms and provisions of this Agreement (the obligations to pay all such sums and perform all
such terms and provisions are hereafter collectively referred to as the “Guaranteed
Obligations”). A notice to Guarantor for Seller’s failure in performance of the Guaranteed
Obligations shall be deemed sufficient that the Guarantor must perform the Guaranteed Obligations. 
Except for such notice, the Guarantor waives all other rights to other notice, presentment, demand
and protest and any right to require Buyer to proceed against Seller or to pursue or exhaust any
remedy in respect of the Guaranteed Obligations against Seller or any other person or entity.

(b) The Guarantor hereby represents and warrants that the execution and delivery by Guarantor
of this Agreement and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of the Guarantor.

 

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ARTICLE VI

CLOSING

Section 6.1 Closing

The completion of the transaction contemplated in this Agreement (the “Closing”) shall
take place at the office of Lee and Li, Attorneys-at-Law, 9th Floor, No. 201, Tun Hua N.
Road, Taipei 105, Taiwan, ROC, at 10:00 A.M., Taiwan time on [September 3, 2008] subject to the
satisfaction or, to the extent permitted by applicable Law, waiver of all conditions to the
obligations of the Parties set forth in Exhibit 6.1 attached hereto (other than such
conditions as may, by their terms, only be satisfied at the Closing), or at such other place or at
such other time or on such other date as the Parties may mutually agree. The day on which the
Closing takes place is referred to as the “Closing Date”.

Section 6.2 Closing Deliverables

(a) At the Closing, Buyer shall (i) pay the Purchase Price by wire transfer of immediately
available funds in United States Dollars to Seller’s designated account, and (ii) deliver or cause
to be delivered to Seller a copy of consent from New Vision Wave Cable TV Co. Ltd. for the
assignment of Broadband Service Agreement from Hoshin GigaMedia Center Inc. to Seller.

(b) At the Closing, Seller shall deliver or cause to be delivered to Buyer share certificates
representing the Shares owned by Seller, duly endorsed by Seller and such other closing
deliverables as listed in Exhibit 6.2(b) attached hereto.

ARTICLE VII

TERMINATION

Section 7.1 Termination

This Agreement shall be deemed terminated if the HGC Agreement or the KBT Agreement is
terminated in accordance with their respective terms. In addition, this Agreement may be terminated
at any time prior to the Closing in any of the following circumstances:

(a) by mutual written consent of Seller and Buyer;

(b) by Seller, if Buyer breaches or fails to perform in any respect any of its obligations,
representations, warranties or covenants contained in this Agreement entered into prior to the
Closing, and such breach or failure to perform cannot be or has not been cured within fifteen (15)
days following delivery of written notice of such breach or failure to perform; and has not been
waived by Seller in writing;

(c) by Buyer, if Seller breaches or fails to perform in any respect any of its obligations,
representations, warranties or covenants contained in this Agreement entered into prior to the
Closing, and such breach or failure to perform cannot be or has not been cured within fifteen (15)
days following delivery of written notice of such breach or failure to perform; and has not been
waived by Buyer in writing;

 

8

 

(d) (i) by Seller, if any of the conditions set forth in Parts A and B of the Exhibit 6.1
attached hereto shall have become incapable of fulfillment prior to December 31, 2008 (the
“Termination Date”); or (ii) by Buyer, if any of the conditions set forth in Parts A and C
of the Exhibit 6.1 attached hereto shall have become incapable of fulfillment prior to the
Termination Date; provided, that the right to terminate this Agreement pursuant to this Section
7.1(d) shall not be available if the failure of the Party claiming termination hereof or requesting
to fulfill any obligation under this Agreement shall have been the cause of the failure of such
condition to be satisfied on or prior to such date; or

(e) by either (i) Seller, in the event that any Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable; provided, that Seller shall have complied with Section
5.7 hereof, or (ii) Buyer, in the event that any Governmental Authority shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or other action shall
have become final and non-appealable; provided, that Buyer shall have complied with Section 5.7
hereof.

The Party seeking to terminate this Agreement pursuant to this Section 7.1 (other than Section
7.1(a)) shall give prompt written notice of such termination to the other Party.

Section 7.2 Effect of Termination

In the event of termination of this Agreement as provided in Section 7.1 hereof, this
Agreement shall forthwith cease to be in effect and there shall be no obligation or liability on
the part of any Party arising thereafter except (a) Sections 5.8, 5.10, 8.2, 8.3, 8.4, 9.1, 9.4,
9.7, 9.8 and this Section 7.2, all of which provisions shall survive termination indefinitely and
(b) that no termination of this Agreement shall relieve any Party from liability for any breach
prior to the date this Agreement is terminated of this Agreement as they may be amended, modified
or supplemented after the date of execution hereof.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Survival of Representations, Warranties and Covenants

The representations and warranties of Seller and Buyer contained in this Agreement shall
survive the Closing for a period of 12 months after the Closing Date (the “Survival
Period”), except for otherwise provided in this Agreement. The covenants and agreements of
Seller and Buyer contained in this Agreement shall not survive the Closing, except for those
covenants and agreements that by their terms contemplate performance in whole or in part after the
Closing, which shall remain in full force and effect for the time period specified therein, if any,
or if no such time period is specified, indefinitely.

 

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Section 8.2 Indemnification by Seller

Seller shall save, defend, indemnify and hold harmless Buyer and its Affiliates, officers,
directors, employees, agents, successors and assigns (collectively, the “Buyer Indemnified
Parties”) from and against any and all losses, damages, liabilities, deficiencies, claims,
interest, awards, judgments, penalties, costs and expenses (including reasonable attorneys’ fees,
costs and other out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (hereinafter collectively, “Losses”) to the extent resulting from:

(a) any breach of any representation or warranty made by Seller contained in this Agreement;
and

(b) any breach of any covenant or agreement by Seller contained in this Agreement.

Section 8.3 Indemnification by Buyer

Buyer shall save, defend, indemnify and hold harmless Seller and its Affiliates, officers,
directors, and employees (collectively, the “Seller Indemnified Parties”) from and against
any and all Losses to the extent arising out of or resulting from:

(a) any breach of any representation or warranty made by Buyer contained in this Agreement;
and

(b) any breach of any covenant or agreement by Buyer contained in this Agreement.

The maximum amount of the indemnifiable Losses that may be recovered from Buyer by Seller
Indemnified Parties under this Section 8.3 shall be equivalent to 15% of the Purchase Price.

Section 8.4 Manner of and Limitation on Indemnification by Seller 

Notwithstanding anything to the contrary contained in this Agreement:

The indemnified party shall have no right to recover for Losses until such time as the
cumulative amount of such Losses exceed NT$5,000,000 (the “Basket Amount”), provided that
at such time as the amount to which such indemnified party is entitled to be indemnified exceeds
NT$5,000,000, such indemnified party shall be entitled to be indemnified for all such Losses (i.e.
including the initial NT$5,000,000).

Section 8.5 General Limits on Indemnification 

(a) In the event Buyer proceeds with the Closing notwithstanding actual knowledge by Buyer or
any Affiliate of Buyer at or prior to the Closing of any breach by Seller of any representation,
warranty or covenant in this Agreement, no Buyer Indemnified Party shall have any claim or recourse
against Seller or any of its Affiliates or Representatives with respect to such breach, under this
Article VIII or otherwise.

 

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(b) No indemnification claim may be asserted against any Party unless written notice of such
claim is received by such Party, describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim on or prior to the end of the Survival Period, in which
case the applicable representation, warranty, covenant or agreement shall survive as to such claim
until such claim has been finally resolved.

(c) For all purposes of this Article VIII, “Losses” shall be net of (i) any insurance or other
recoveries payable to and received by the Indemnified Party or its Affiliates in connection with
the facts giving rise to the right of indemnification and (ii) any Tax benefit realized by such
Indemnified Party or its Affiliates arising in connection with the accrual, incurrence or payment
of any such Losses (including, without limitation, the net present value of any Tax benefit arising
in subsequent taxable years).

(d) No Party hereto shall have any liability under any provision of this Agreement for any
punitive, incidental, consequential, special or indirect damages, including business interruption,
loss of future revenue, profits or income, or loss of business reputation or opportunity relating
to the breach or alleged breach of this Agreement.

Section 8.6 Exclusivity

(a) Except as specifically set forth in this Agreement, effective as of the Closing, Buyer, on
behalf of itself and the other Buyer Indemnified Parties, waives any rights and claims any Buyer
Indemnified Party may have against Seller, whether in law or equity, relating to the Company and/or
the transactions contemplated by this Agreement. After the Closing, subject to the foregoing, this
Article VIII will provide the exclusive remedy against Seller for any breach of any representation,
warranty, covenant or other claim arising out of or relating to this Agreement and/or the
transactions contemplated hereby.

(b) Except as specifically set forth in this Agreement, effective as of the Closing, Seller,
on behalf of itself and the other Seller Indemnified Parties, waives any rights, claims, liens,
demands, causes of action, obligations, damages and liabilities, known or unknown, anticipated or
unanticipated, contingent or non-contingent, any Seller Indemnified Party has had in the past or
may have against Buyer Indemnified Parties, whether in law or equity, through the date of execution
of this Agreement and the Closing, including, without limitation, those arising from or with
respect to any transactions with Buyer Indemnified Parties prior to the Closing.

ARTICLE IX

GENERAL PROVISIONS

Section 9.1 Fees and Expenses 

Except as otherwise provided herein, all fees and expenses incurred in connection with or
arising from this Agreement and the transaction contemplated hereunder and thereunder shall be
borne by the Party incurring such fees or expenses, whether or not such transaction is consummated.
In the event of termination of this Agreement, the obligation of each Party to pay
its own fess and expenses shall be subject to any and all rights of such Party arising from a
breach of this Agreement by the other Party.

 

11

 

Section 9.2 Amendment and Modification

This Agreement may not be amended, modified or supplemented in any manner, whether by course
of conduct or otherwise, except by an instrument in writing signed by Seller and Buyer, and
otherwise as expressly set forth herein.

Section 9.3 Waiver

No failure or delay of any Party in exercising any right or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, or any course of conduct,
preclude any other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have hereunder. Any agreement on the part of Seller to any
such waiver shall be valid only if set forth in a written instrument executed and delivered by
Seller. Any agreement on the part of Buyer to any such waiver shall be valid only if set forth in
a written instrument executed and delivered by Buyer.

Section 9.4 Notices

All notices and other communications hereunder shall be in writing and shall be deemed duly
given (a) on the date of delivery if delivered personally, or if by facsimile, upon written
confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following
the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or
(c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the Party to receive such notice:

	 	(a)	 	if to Seller:
	 
	 	 	 	GigaMedia International Holdings Limited

OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands

Attention: General Counsel

Facsimile: 886-2-2656-8073
	 
	 	 	 	with a copy (which shall not constitute notice) to:
	 
	 	 	 	GigaMedia International Holdings Limited

OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands

Attention: Executive Operating Officer

Facsimile: 886-2-2656-8090

 

12

 

	 	(b)	 	if to Buyer:
	 
	 	 	 	Champion Limited

Unit 3904, K. Wah Center, 1010 Huai Hai Middle Road, Shanghai 200031, China

Attention: Brendan Tu

Facsimile: 86-21-5404-8996
	 
	 	 	 	with a copy (which shall not constitute notice) to:
	 
	 	 	 	China Network Systems Co., Ltd.

3F, 399, Recom Rd., Neihu District, Taipei City, Taiwan

Attention: Chief Legal Officer

Facsimile: 886-2-8751-8976
	 
	 	(c)	 	if to Guarantor:
	 
	 	 	 	GigaMedia Limited

8th Floor, 207 Tiding Boulevard, Section 2, Taipei, Taiwan, R.O.C.

Attention: General Counsel

Facsimile: 886-2-2656-8073

Section 9.5 Entire Agreement

This Agreement (including the Exhibits attached hereto) constitutes the entire agreement, and
supersedes all prior written agreements, arrangements, communications and understandings and all
prior and contemporaneous oral agreements, arrangements, communications and understandings among
the Parties with respect to the subject matter of this Agreement. This Agreement shall not be
deemed to contain or imply any restriction, covenant, representation, warranty, agreement or
undertaking of any Party with respect to the transactions contemplated hereby or thereby other than
those expressly set forth herein or therein or in any document required to be delivered hereunder
or thereunder, and none shall be deemed to exist or be inferred with respect to the subject matter
hereof. Notwithstanding any oral agreement of the Parties or their Representatives to the
contrary, no Party to this Agreement shall be under any legal obligation to enter into or complete
the transactions contemplated hereby unless and until this Agreement shall have been executed and
delivered by each of the Parties.

Section 9.6 No Third-Party Beneficiaries

Unless otherwise provided herein, nothing in this Agreement is intended to or shall confer
upon any Person other than the Parties and their respective successors and permitted assigns any
legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.

Section 9.7 Governing Law

This Agreement and all disputes or controversies arising out of or relating to this Agreement
or the transactions contemplated hereby shall be governed by, and construed in
accordance with, the internal laws of Republic of China, without regard to the laws of any
other jurisdiction that might be applied because of the conflicts of laws principles.

 

13

 

Section 9.8 Dispute Resolution

(a) The Parties shall seek to solve through negotiations any dispute, controversy or claim
arising out of or relating to this Agreement, or the breach, termination or invalidity hereof. If
the Parties fail to solve such dispute, controversy or claim by a written agreement within thirty
days after one of the Parties has requested such negotiations by notice to the other Party, such
dispute, controversy or claim shall be submitted to the Hong Kong International Arbitration Centre
(“HKIAC”) and finally settled by arbitration in accordance with the UNCITRAL Arbitration
Rules (“Arbitration Rules”) in force at the date of this Agreement, as modified by the rest
of this Section 9.8. The place of arbitration shall be Taipei. There shall be three arbitrators.
The appointing authority shall be Hong Kong International Arbitration Centre and the arbitration
shall be administered in accordance with the HKIAC Procedures for the Administration of
International Arbitration (“HKIAC Procedures”) in force at the date of this Agreement
including such amendments to the Arbitration Rules as are contained in the HKIAC Procedures. The
language of the arbitration shall be English. The awards rendered by the arbitrator shall be final
and binding on the Parties. The Parties agree to be bound by any awards made by the arbitrator(s)
and execute the awards accordingly.

(b) Each Party and the Guarantor shall cooperate with each other in making full disclosure of
and providing complete access to all information and documents requested by any other Party in
connection with such arbitration proceedings, subject only to any confidentiality obligations
binding on the disclosing Party. The cost of the arbitration (including the reasonable and properly
incurred fees and expenses of the lawyers appointed by each party to the arbitration) shall be
borne by the Party or Parties against whom the arbitration award is made or otherwise in accordance
with the ruling of the arbitration tribunal..

Section 9.9 Assignment; Successors

Neither this Agreement nor any of the rights, interests or obligations under this Agreement
may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any Party
without the prior written consent of the other Party, and any such assignment without such prior
written consent shall be null and void.

Section 9.10 Severability

Whenever possible, each provision or portion of any provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable Law, but if any provision
or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision or portion of any provision had never been
contained herein.

 

14

 

Section 9.11 Counterparts 

This Agreement may be executed in three counterparts, both of which shall be considered one
and the same instrument and shall become effective when one or more counterparts have been signed
by the parties and delivered to the other parties. This Agreement may be executed by facsimile
signature and a facsimile signature shall constitute an original for all purposes.

Section 9.12 No Presumption Against Drafting Party

Buyer and Seller acknowledge that each Party to this Agreement has been represented by counsel
in connection with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the drafting Party has no application and is expressly
waived.

[The remainder of this page is intentionally left blank.]

 

15

 

IN WITNESS WHEREOF, Seller, Buyer and Guarantor have caused this Agreement to be executed as
of the date first written above.

	 	 	 	 	 
	 	GigaMedia International Holdings Limited

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Champion Limited

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	GigaMedia Limited

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

16EX-4.30

Exhibit 4.30

SHARE SALE AND PURCHASE AGREEMENT

by and between

Hoshin GigaMedia Center Inc.,

as Seller

and

China Network Systems Co., Ltd.

as Buyer

Dated as of August 28, 2008

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I TERMS AND DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Certain Defined Terms
	 	 	1	 
	Section 1.2 General Interpretation
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE
	 	 	2	 
	 
	 	 	 	 
	Section 2.1 Purchase and Sale of the Shares
	 	 	2	 
	Section 2.2 Purchase Price
	 	 	2	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	5	 
	 
	 	 	 	 
	Section 3.1 Representations and Warranties
	 	 	5	 
	Section 3.2 Limitation of Disclosure Schedules
	 	 	5	 
	Section 3.3 Exclusivity of Representations and Warranties
	 	 	6	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	6	 
	 
	 	 	 	 
	Section 4.1 Buyer’s Representations and Warranties
	 	 	6	 
	 
	 	 	 	 
	ARTICLE V COVENANTS
	 	 	6	 
	 
	 	 	 	 
	Section 5.1 Business Operation Prior to the Closing
	 	 	6	 
	Section 5.2 Dividends; Changes in Shares
	 	 	8	 
	Section 5.3 Plans; Employees
	 	 	8	 
	Section 5.4 Insurance
	 	 	9	 
	Section 5.5 Exclusivity
	 	 	9	 
	Section 5.6 Access to Information
	 	 	11	 
	Section 5.7 Update of Disclosure Schedules; Knowledge of Breach
	 	 	11	 
	Section 5.8 Transition Period
	 	 	11	 
	Section 5.9 Notification of Certain Matters
	 	 	11	 
	Section 5.10 No Solicitation
	 	 	12	 
	Section 5.11 Resignations
	 	 	12	 
	Section 5.12 Consents and Filings; Further Assurances
	 	 	12	 
	Section 5.13 Public Announcement
	 	 	13	 
	Section 5.14 Non-Competition
	 	 	13	 
	Section 5.15 Non-Interference
	 	 	13	 
	Section 5.16 Confidentiality
	 	 	14	 
	Section 5.17 Additional Agreements
	 	 	14	 
	Section 5.18 Transitional Service Agreement
	 	 	14	 
	Section 5.19 Seller’s Post Closing Covenant
	 	 	14	 
	Section 5.20 Buyer’s Post Closing Covenant
	 	 	15	 

 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VI CLOSING
	 	 	15	 
	 
	 	 	 	 
	Section 6.1 Closing
	 	 	15	 
	Section 6.2 Closing Deliverables
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VII TERMINATION
	 	 	16	 
	 
	 	 	 	 
	Section 7.1 Termination
	 	 	16	 
	Section 7.2 Effect of Termination
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VIII INDEMNIFICATION
	 	 	17	 
	 
	 	 	 	 
	Section 8.1 Survival of Representations, Warranties and Covenants
	 	 	17	 
	Section 8.2 Indemnification by Seller
	 	 	17	 
	Section 8.3 Indemnification by Buyer
	 	 	18	 
	Section 8.4 Manner of and Limitation on Indemnification
	 	 	18	 
	Section 8.5 General Limits on Indemnification
	 	 	20	 
	Section 8.6 Exclusivity
	 	 	20	 
	 
	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS
	 	 	21	 
	 
	 	 	 	 
	Section 9.1 Fees and Expenses
	 	 	21	 
	Section 9.2 Amendment and Modification
	 	 	21	 
	Section 9.3 Waiver
	 	 	22	 
	Section 9.4 Notices
	 	 	22	 
	Section 9.5 Entire Agreement
	 	 	23	 
	Section 9.6 No Third-Party Beneficiaries
	 	 	23	 
	Section 9.7 Governing Law
	 	 	23	 
	Section 9.8 Dispute Resolution
	 	 	23	 
	Section 9.9 Assignment; Successors
	 	 	24	 
	Section 9.10 Severability
	 	 	24	 
	Section 9.11 Counterparts
	 	 	24	 
	Section 9.12 No Presumption Against Drafting Party
	 	 	24	 

 

ii

 

INDEX OF EXHIBITS

	 	 	 
	Exhibit	 	 
	1.1

	 	Definition
	2.2 (b)

	 	Assumption of Financials of KBT and HGC Broadband Business
	2.2(e)

	 	Formula to Calculate Earn-out Target
	3.1(a)

	 	Disclosure Schedules
	3.1(b)

	 	Representations and Warranties of Seller
	4.1

	 	Representations and Warranties of Buyer
	5.1(e)

	 	Agreements
	5.3(b)

	 	Designated KBT Employees
	5.14

	 	Non-Competition
	5.16

	 	Confidentiality Agreement
	5.18

	 	Form of Transitional Service Agreement
	6.1

	 	Conditions Precedent to the Closing
	6.2(b)

	 	Seller’s Closing Deliverables

 

i

 

SHARE SALE AND PURCHASE AGREEMENT

THIS SHARE SALE AND PURCHASE AGREEMENT is entered into on this 28th day of August,
2008 (this “Agreement”), by and between

(i) Hoshin GigaMedia Center Inc., a company organized and existing under the laws of the ROC,
having its principal office at 8F, 207, Sec.2, Tiding Blvd., Neihu District, Taipei City 114,
Taiwan (“Seller” or “HGC”); and

(ii) China Network Systems Co., Ltd., a company organized and existing under the laws of the
ROC, having its principal office at 3F, 399, Recom Rd., Neihu District, Taipei City, Taiwan
(“Buyer”).

Seller and Buyer shall hereinafter be referred to, individually as a “Party” and
collectively as the “Parties.”

RECITALS

WHEREAS, Seller is the sole shareholder of KBT, which currently operates and provides
commercial customer broadband access, hosting and other related services (as well as OEM Business
and Webs-TV ADSL Service); and

WHEREAS, Seller intends to sell and Buyer intends to buy the total issued and outstanding
shares in KBT.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the Parties agree the following terms
and conditions:

ARTICLE I

TERMS AND DEFINITIONS

Section 1.1 Certain Defined Terms

For purposes of this Agreement, the capitalized terms stated herein shall have the meanings
set forth in Exhibit 1.1 attached hereto.

Section 1.2 General Interpretation

(a) Reference made in this Agreement to a Section, Article or Exhibit shall be reference to a
Section, Article or Exhibit of this Agreement unless otherwise stated. The table of contents and
headings contained in this Agreement and all Exhibits are solely for convenience in referencing and
shall not affect in any manner the meaning or interpretation of this Agreement. All words used in
this Agreement shall be construed to be of such gender or number as the circumstances require.

 

1

 

(b) Any and all capitalized terms used in any Exhibit but not otherwise defined therein shall
have the meanings set forth in this Agreement. All Exhibits attached hereto or referred to herein
are incorporated into and made a part of this Agreement as if set forth herein.

(c) The word “including” and words of similar import when used in this Agreement shall mean
“including, without limitation”, unless otherwise specified.

(d) All references to “NT$” in this Agreement or any Ancillary Agreement refer to New Taiwan
Dollars and references to “US$” in this Agreement or any Ancillary Agreement refer to United States
Dollars.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Purchase and Sale of the Shares

On the terms and subject to the conditions stated herein, at the Closing, Seller agrees to
sell, assign, transfer, convey and deliver to Buyer shares of common stock in KBT (the
“Shares”), representing total issued and outstanding shares in KBT, free and clear of any
Encumbrances, and Buyer hereby agrees to purchase and accept from Seller such Shares.

Section 2.2 Purchase Price 

(a) Subject to the terms and conditions of this Agreement, including but not limited to the
adjustment stipulated in subsection (b) of this Section 2.2, and in reliance upon the
representations, warranties and covenants of Seller contained herein, as consideration for the
purchase of the Shares, Buyer shall pay Seller an aggregate purchase price of US$10,000,000,
payable in New Taiwan Dollars at the Exchange Rate on or immediately prior to the Closing Date (the
“Initial Purchase Price”).

(b) The Initial Purchase Price is offered on the assumptions set out in Exhibit 2.2(b). The
Parties agree that the Initial Purchase Price shall be adjusted, downward but not upward, by the
following amounts: (i) the full amount of any deficiency in Total Current Assets (excluding Cash
and Cash Equivalent) less Total Liabilities, Total Non-Current Asset, and Minimum Net Cash and Cash
Equivalent, and (ii) an amount equal to 6 times the deficiency in LTM EBITDA; provided, however,
the maximum amount of the adjustment to the Initial Purchase Price that may be claimed against
Seller by Buyer under this Section 2.2(b) shall be US$8,000,000; provided, further, Buyer agrees
(i) not to make the price adjustment in relation to the deficiency in Minimum Cash and Cash
Equivalent, if such deficiency is a direct result of the deficiency in LTM EBITDA and a price
adjustment equivalent to 6 times of such LTM EBITDA deficiency has already been made, and (ii) to
release Seller from the liabilities under the Clause 5 of Exhibit 3.1(b) Part B with
respect to the relevant Financial Statements to the extent the same deficiency has been recovered
through the price adjustment mechanism stipulated in this Section 2.2(b).

 

2

 

(c) Buyer shall procure a certified public accountant to review and audit the consolidated
financials of KBT and pro forma financials for HGC Broadband Business, and pro

forma consolidated combined financials of KBT and HGC Broadband Business for the twelve-month
period ended as of the Closing Date; provided however, the review and audit on LTM EBITDA shall be
for the twelve-month period ended (i) the end of the calendar month immediately before the Closing
Date, if the Closing Date is on or before the 14th day of a calendar month, or (ii) the
end of the calendar month immediately subsequent to the Closing Date, if the Closing Date is on or
beyond the 15th day of a calendar month (the “Post Audit”, and the end of the
LTM EBITDA for Post Audit, the “LTM EBITDA End Day”). Within 90 days from the Closing Date,
Buyer shall deliver a written notice of the result of Post Audit to Seller which shall set out
adjustment, if any, that shall be made to the Initial Purchase Price pursuant to Section 2.2(b)
(the “Price Adjustment Notice”). In the event that Seller has any objection to the Price
Adjustment Notice, Seller shall prepare, or cause to be prepared, and deliver to Buyer a statement
setting out in detail the basis of such objections together with the supporting documents within 30
days after Seller’s receipt of the Price Adjustment Notice (the “Seller’s Objection
Notice”). In the event that Seller accepts the Price Adjustment Notice or fails to timely
submit a Seller’s Objection Notice, the Price Adjustment Notice shall become final and binding on
the Parties. Buyer shall then be entitled to demand Seller to refund immediately the amount of
adjustment required under the Price Adjustment Notice within 7 Business Days from the date when the
Price Adjustment Notice shall become final and binding on the Parties. In the event that Seller
delivers a Seller’s Objection Notice and Seller and Buyer are unable to resolve any disagreement
resulting from such Seller’s Objection Notice through negotiation within 30 days after Buyer’s
receipt of the Seller’s Objection Notice, either party may refer such disagreement to a firm of
independent public accountants of international reputation reasonably acceptable to the other party
(the “CPA Firm”). Seller and Buyer shall instruct the CPA Firm to deliver its written
determination to Seller and Buyer within 30 days after such disagreement is referred to the CPA
Firm or as otherwise agreed to between the Parties and the CPA firm. Both Seller and Buyer shall
cooperative fully with CPA Firm and make readily available to the CPA Firm all relevant books and
records and other items reasonably requested by the CPA Firm in connection with the determination
of the amount of adjustment to the Initial Purchase Price pursuant to Section 2.2(b). The CPA
Firm’s determination shall be conclusive and binding on Seller and Buyer. Buyer shall then be
entitled to demand Seller to refund the amount of adjustment determined by the CPA Firm, and Seller
shall pay such amount within 7 Business Days from the date of receipt of the CPA Firm’s
determination. The fees and disbursements to the CPA Firm shall be borne equally by Seller and
Buyer.

(d) Seller shall bear the ROC securities transaction tax (the “STT Payable”) for the
sale and transfer of the Shares at 0.3% of the Initial Purchase Price. Buyer shall withhold the
STT Payable and pay the same to the ROC tax authorities on the Closing Date and deliver a copy of
the receipt for payment of the STT Payable to Seller’s designated person at the Closing.

(e) The Parties further agree that (i) in event that (x) the KBT ISP Gross Profits are no less
than NT$200 Million, and (y) subject to the proviso (A) of this Section 2.2(e), the Giga Brand CM
Gross Profits of the Company are no less than NT$39.1 Million, for the first twelve months period
from the LTM EBITDA End Day (the “First Earn-out Target”), as determined in accordance with
the formula set forth in Exhibit 2.2(e), in addition to the Initial Purchase Price for the
Shares, Buyer shall pay Seller the amount of US$3,000,000 (the “First Earn-out Payment”)
and the First Earn-out Payment shall be paid by remitting immediately available fund in New Taiwan
Dollars at the Exchange Rate into the account designated by Seller within 7 Business

 

3

 

Days once the achievement of the First Earn-out Target is confirmed
by the Parties; (ii) in event that (x) the KBT ISP Gross Profits are no less than NT$215 Million,
and (y) subject to the proviso (A) of this Section 2.2(e), the Giga Brand CM Gross Profits are no
less than NT$39.1 Million, for the second twelve months period from the LTM EBITDA End Day (the
“Second Earn-out Target”), as determined in accordance with the formula set forth in
Exhibit 2.2(e), in addition to the Initial Purchase Price for the Shares, and, if any, the
First Earn-out Payment, Buyer shall pay Seller the amount of US$2,000,000 (the “Second Earn-out
Payment”) and the Second Earn-out Payment shall be paid by remitting immediately available fund
in New Taiwan Dollars at the Exchange Rate into the account designated by Seller within 7 Business
Days once the achievement of the Second Earn-out Target is confirmed by the Parties; provided,
however, (A) the target of Giga Brand CM Gross Profits shall be adjusted proportionally in
accordance with the formula set forth in Exhibit 2.2(e) to account for the number of
subscribers to Giga Brand Cable Modem who are transferred to CNS Brand Cable Modem after Closing;
(B) the target of Giga Brand CM Gross Profit shall cease to apply if 95% or more of Giga Brand
Cable Modem subscribers have been transferred to CNS Brand Cable Modem within two months after
Closing; and (C) any excess of the KBT ISP Gross Profits can be counted towards the Giga Brand CM
Gross Profits for the applicable twelve-month period. In order for Seller to monitor the
achievement of the First Earn-out Target and the Second Earn-out Target (each, an “Earn-out
Target”), Buyer shall, on a quarterly basis, provide Seller with complete and accurate profit
and loss accounts, and balance sheet in respect of the corporate ISP business and the consumer ISP
business of the Company, and earn-out target calculation based on the quarterly profit and loss
accounts, and shall provide Seller with a quarterly report certified by Buyer’s management on the
number of broadband internet subscribers who are using KBT internet bandwidth/services at the end
of such period; provided, however, that Seller shall keep all such records in strict confidence and
shall only use any such records for exercise of its rights set forth herein.

(f) (i)Within 90 days after the end of the first twelve months period and the end of the
second twelve months period from the LTM EBITDA End Day, Buyer shall send a written notice to
Seller each time to confirm whether the First Earn-out Target and the Second Earn-out Target have
been achieved (the “Buyer’s Statement”). In the event that the achievement of an Earn-out
Target is confirmed in the Buyer’s Statement, the obligation for the payment of said earn-out
payment shall become final and binding on the Parties. (ii) In the event that the achievement of
an Earn-out Target is denied in the Buyer’s Statement, Buyer shall at the same time provide Seller
with the necessary financial and accounting documents and information, including, without
limitation, a detailed earn-out target calculation derived from the profit and loss accounts for
the first and the second twelve months periods so that Seller can verify the achievement of such
Earn-out Target. Seller shall prepare, or cause to be prepared, and deliver to Buyer a statement
whether to accept Buyer’s Statement within 30 days after receiving Buyer’s Statement together with
the necessary financial and accounting information and documents (the “Seller’s
Statement”). In the event that Seller accepts the Buyer’s Statement or fails to timely submit
a Seller’s Statement, the Buyer’s Statement shall become final and binding on the Parties. (iii)
In the event that Seller and Buyer disagree on whether the First Earn-out Target and Second
Earn-out Target have been achieved and are unable to resolve such disagreement through negotiation,
they shall refer such disagreement to a CPA Firm reasonable acceptable to the other party. Seller
and Buyer shall instruct the CPA Firm to deliver its written

 

4

 

determination
to Seller and Buyer within 30 days after such disagreement is referred to the CPA Firm or as otherwise
agreed to between the Parties and the CPA firm. The CPA Firm’s determination shall be conclusive
and binding on Seller and Buyer. The fees and disbursements of the CPA Firm shall be borne equally
by Seller and Buyer. Buyer shall make readily available to the CPA Firm all relevant books and
records and any work papers relating to the determination on whether the First Earn-out Target and
the Second Earn-out Target have achieved and all other items reasonably requested by the CPA Firm
in connection therewith.

(g) If at any time before the end of the second twelve months period from the LTM EBITDA End
Day and there is a Change of Control of the Company, Buyer shall procure the transferee of the
Shares or assets of the Company, or the entity which the Company merges with, to execute and
deliver to the Company and Seller a consent letter under which such transferee or entity undertakes
to be bound by Sections 2.2 (e), (f) and (g).

(h) At the Closing, the equivalent, in New Taiwan Dollars, of US$2,500,000 at the Exchange
Rate on or immediately prior to the Closing Date (such amount, or the portion thereof held by the
Escrow Agent from time to time, the “Escrow Amount”) shall be withheld by Buyer from the
Initial Purchase Price and deposited into a trust established by the Escrow Agent (the “Escrow
Account”), which amount shall be available to be applied for any price adjustment payment,
severance payment, and indemnification payment payable to Buyer or Buyer Indemnified Parties
pursuant to Section 2.2(b), Section 5.3(b), Section 8.2 or 8.4(ii) hereof and indemnification
payment payable to  or the buyer indemnified parties pursuant to Section 9.2 of the HGC
Agreement, respectively, and to be released by the Escrow Agent to Seller, Buyer or , as
applicable, in accordance with Article II of the Escrow Agreement. The Parties agree that the fees
and expenses of the Escrow Agent will be borne equally by Buyer and Seller. As the Escrow Agent’s
fees and expenses will be deducted form the Escrow Account pursuant to Section 3.3 of the Escrow
Agreement, either Party agrees to contribute and reimburse the other Party to the extent necessary
so that the fees and expenses of the Escrow Agent shall have been borne equally by Buyer and
Seller.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF SELLER

Section 3.1 Representations and Warranties

Seller hereby represents and warrants to Buyer that the matters contained in Exhibit
3.1(b) attached hereto.

Section 3.2 Limitation of Disclosure Schedules

(a) Any and all information contained or referred to in the disclosure schedules attached
hereto as Exhibit 3.1(a) (the “Disclosure Schedules”) shall be treated as
disclosure by Seller in respect of each and every obligation of Seller under this Agreement,
including but not limited to the representations and warranties of Seller stipulated in Section 3.1
hereof. For the avoidance of doubt, any and all information contained or referred to in the
Disclosure Schedules shall be treated as a disclosure by Seller in respect of each and every
representation and warranty and not in respect of any particular representation or warranty.

 

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(b) The headings and numbering stated in the Disclosure Schedules shall not affect the
interpretation thereof.

(c) The disclosure of any of the Disclosure Schedules shall not imply the existence of any
representation, warranty or undertaking not expressly stated in the Agreement, nor be taken as an
expansion of the scope of the representations and warranties of Seller as set forth in Exhibit
3.1(b) attached hereto.

Section 3.3 Exclusivity of Representations and Warranties 

Neither Seller, nor any of its respective Affiliates or Representatives has made any
representation or warranty of any kind or nature whatsoever, oral or written, express or implied
(including, but not limited to, any relating to financial condition, operating results, assets or
liabilities of KBT), except as expressly set forth in this Article III and Exhibit 3.1(b),
and Seller hereby disclaims any such other representation or warranty.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Section 4.1 Buyer’s Representations and Warranties 

Buyer hereby represents and warrants to Seller those matters set forth in Exhibit 4.1
attached hereto.

ARTICLE V

COVENANTS

Section 5.1 Business Operation Prior to the Closing

Between the date of execution hereof and the Closing Date, unless (i) otherwise stated in this
Agreement; or (ii) Buyer shall otherwise agree in writing, Seller covenants and agrees that the
business of KBT shall be conducted only in the ordinary course of business in all material respects
and KBT shall not:

(a) amend or otherwise change its organizational documents;

(b) extend, modify, terminate, amend or enter into any contract with any Affiliate of KBT;

(c) sell, lease, license, abandon, transfer, dispose of, or grant rights under any
Intellectual Property Rights or materially modify any existing rights with respect thereto, except
in the ordinary course of business consistent with past practice;

(d) enter into any agreements to acquire or acquire any real property or enter into any
Leases;

 

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(e) terminate, modify or amend any agreement that is or would be required to be listed on
Exhibit 5.1(e), except in the ordinary course of business and not involving a material
increase in liability or material reduction in revenue;

(f) mortgage, pledge or grant a security interest in any assets, tangible or intangible, other
than purchase money liens in the ordinary course of business;

(g) fail to pay, or delay payment of, or contest the obligation to pay any account payable or
other payment obligation when due (other than a bona fide good faith dispute regarding such
obligation or the amount thereof, which dispute is immaterial in amount and is communicated to
Buyer in writing), or induce any customer of KBT to accelerate payment of, or initiate any
collection efforts outside the ordinary course of business with respect to, any accounts receivable
or other right to payment of KBT, or take any other action (or fail to take any other action) not
in the ordinary course of business that, individually or in the aggregate, would reasonably be
expected to result in a material increase or decrease in KBT’s working capital from the amount
reflected in the financial statements, except as would not be materially adverse to KBT;

(h) issue, deliver, or sell, or authorize, or propose, or agree or commit to the issuance,
delivery, or sale of any shares of KBT, or any options, warrants, convertible securities,
commitments, agreements, understandings, restrictions, arrangements or other rights of any kind to
acquire any such shares;

(i) acquire or agree to acquire by merging or consolidating with, or by purchasing, any
corporation, partnership, other business organization, division or any assets other than in the
ordinary course of business;

(j) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation or
recapitalization of KBT;

(k) sell, lease, license, transfer, mortgage, encumber or otherwise dispose of any of its
assets or cancel, release, or assign any indebtedness or claim, except in the ordinary course of
business or in amounts which are not material, individually or in the aggregate, to KBT;

(l) incur any indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligations, conditional sale, guarantee, issue any debt securities or otherwise,
except in the ordinary course of business;

(m) enter into any Material Contract, other than any such Contract entered into in the
ordinary course of business;

(n) conduct any transaction or incur any liability which is, individually or in aggregate, in
excess of NT$1,000,000, except in the ordinary course of business;

(o) authorize, or make any commitment with respect to, any single capital expenditure or
capital expenditures that are, in the aggregate, in excess of NT$600,000;

 

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(p) settle any claim, action, or proceeding, or waive any claims or rights with value in
excess of NT$1,000,000, except in the ordinary course of business or in amounts that are not
material, individually or in the aggregate, to KBT or the Giga Brand cable modem business and is
communicated to Buyer in writing;

(q) make or commit to make any payment that is in excess of NT$1,000,000, except in the
ordinary course of business; or

(r) make any change in accounting policies or material changes in accounting practice, methods
or practice, except as required by GAAP.

Provided, that, the numerical restrictions set out in the above clause (n), (o), (p) and (q)
shall apply on the consolidated basis of the Company’s business (including the OEM Business and
Webs-TV ADSL Service) and the Giga Brand cable modem business transferred under the HGC Agreement.

Section 5.2 Dividends; Changes in Shares

Between the date of execution hereof and the Closing Date, Seller covenants and agrees that
KBT shall not (i) declare, set aside, make or pay any dividend, payable in cash, shares, property
or otherwise with respect to any of its capital shares; (ii) reclassify, combine, split, subdivide
or redeem, or purchase or otherwise acquire, directly or indirectly, any of its shares or make any
other change with respect to its capital structure; (iii) repurchase or otherwise acquire, directly
or indirectly, any shares of its capital stock; or (iv) agree or propose to do any of the
foregoing.

Section 5.3 Plans; Employees

(a) Between the date of execution hereof and the Closing Date, Seller covenants and agrees
that (i) KBT shall not adopt or amend in any material respect any Plan, or pay any pension or
retirement allowance not required by any existing Plan; (ii) KBT shall not enter into or amend any
employment contracts without the prior approval of Buyer, which approval shall not be unreasonably
withheld, pay any special bonuses or special remuneration to officers, directors, or employees, or
increase the salaries, bonuses, wage rates, or fringe benefits of its officers or employees, other
than any such increases to non-management employees required by laws, or pursuant to the Plans or
agreements set forth on Schedule B.10, and consistent with the KBT’s existing policies and past
practice; and (iii) KBT shall not rescind or attempt to rescind, anticipatorily repudiate or
otherwise challenge the validity of, or amend or modify in any manner, the employment agreements or
Plans referred to in Schedule B.10 of this Agreement.

(b) Seller covenants and agrees to pay all severance payments to (i) the employees of KBT set
forth in Exhibit 5.3(b) (the “Designated KBT Employees”) and (ii) the HGC
Transferred Employees, who are given notices of dismissal by KBT within 80 days after the Closing
Date, pursuant to the Labor Standard Act and Labor Pension Act of the ROC, and insofar as such
employees are entitled to and already receive severance payments under the Labor Standard Act and
Labor Pension Act of the

 

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ROC.
Seller shall pay Buyer the aggregate amount of the severance payments all such dismissed employees are entitled to as of their
respective date of dismiss by remitting immediately available fund in New Taiwan Dollars into the
account designated by Buyer within 7 Business Days upon receipt of Buyer’s notice of such dismiss;
provided that the unpaid bonuses accrued for all such dismissed employees as of their respective
date of dismiss shall be deducted from the relevant financials of KBT and HGC Broadband Business
for the purpose of the Post Audit under Section 2.2(c) to the extent such bonuses will no longer be
payable to such dismissed employees by KBT under their individual contractual agreements with KBT,
ROC labor laws and ROC GAAP. With respect to any employee of KBT (including HGC Transferred
Employees) who is entitled to restricted stock units under the employee equity incentive plan of
GigaMedia Limited, Seller will be solely responsible for settlement of any payment due and payable
to any such employee and shall hold Buyer and KBT harmless from any damages, loss, cost and expense
as a result of any claim in relation to the benefits under such employee equity incentive plan by
any such employee.

(c) Within 30 days from the Closing Date, Buyer shall procure an actuarial firm to conduct an
actuarial valuation to assess the pension exposure (the “Pension Exposure”) based on the
KBT employees’ (including the HGC Transferred Employees’) seniority under the Labor Standard Act up
to the Closing; provided that no Pension Exposure shall be taken into account with respect to those
Designated KBT Employees and the HGC Transferred Employees dismissed or given by notice of
dismissal by KBT in accordance with Section 5.3(b). Buyer shall instruct the actuarial firm to
deliver its report on the Pension Exposure (the “Pension Report”) to Seller, Buyer and the
accountant who conducts the Post Audit pursuant to Section 2.2(c) within 90 days after such
engagement. Both Seller and Buyer shall cooperative fully with the actuarial firm and make readily
available to the actuarial firm all relevant documents reasonably requested by the actuarial firm
in connection with the determination of the Pension Exposure. The actuarial firm’ Pension Report
shall be conclusive and binding on Seller and Buyer and shall be used by the CPA firm to determine
the relevant financials for purpose of the Post Audit under Sections 2.2 (b) and (c). For
avoidance of doubt, this Pension Report shall take into account the severance payment made or to be
made pursuant to Section 5.3(b). The fees and disbursements to the actuarial firm shall be borne
equally by Seller and Buyer.

Section 5.4 Insurance

During the period from the date of this Agreement until the Closing Date, Seller shall
maintain or cause to be maintained in effect till the Closing all equipment, fire and liability
insurance policies maintained on the date hereof relating to the business of KBT consistent with
the past practice.

Section 5.5 Exclusivity. 

Until the earlier of the Closing Date or the date this Agreement is terminated pursuant to
Section 7.1 hereof, Seller, KBT and their Boards of Directors shall not, and Seller, KBT and their
Boards of Directors shall direct and use their best efforts to cause their respective
Representatives not to (i) actively solicit, engage in discussions or negotiate, or take any other
action intended or designed to facilitate (including by way of furnishing information) any
inquiries or the making of any proposal which

 

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constitutes, or may reasonably be expected to lead
to, a Takeover Proposal (as hereinafter defined) or (ii) enter
into any agreement with respect to a Takeover Proposal. Additionally, neither the Board of Directors of Seller or KBT, nor any
committee thereof shall:

(a) withdraw or modify, in a manner adverse to Buyer, the approval or recommendation by
Seller’s or KBT’s Board of Directors or any such committee of the approval of this Agreement and
the transaction contemplated hereunder;

(b) approve or recommend, or propose publicly to approve or recommend, any Takeover Proposal;
or

(c) approve any letter of intent, agreement in principle, acquisition agreement or other
similar agreement related to any Takeover Proposal.

Notwithstanding the provisions of this Section 5.5, Seller may furnish information concerning
its business, properties or assets to a Person pursuant to appropriate confidentiality agreements,
and may negotiate and participate in discussions and negotiations with such Person concerning an
Takeover Proposal, if such Person has on an unsolicited basis submitted a bona fide Takeover
Proposal to Seller’s board which the Seller’s board determines, in good faith, after consultation
with its financial advisor and independent legal counsel that (i) such Takeover Proposal
constitutes, in light of all relevant circumstances and all terms and conditions of such Takeover
Proposal and this Agreement, a transaction to be more favorable to the Company’s stockholders than
the transaction contemplated by this Agreement and (ii) that the failure to take such action would
be inconsistent with Seller’s board’s or the parent of Seller’s board’s fiduciary duties to its
stockholders under applicable Law; provided, that (x) Seller has first given Buyer a
written notice that states that Seller has received such Takeover Proposal and includes the
information set forth below, (y) such Takeover Proposal was made after the date of this Agreement
and did not otherwise result from a breach of this Section 5.5. Contemporaneously with furnishing
any information to such Person, Seller shall furnish such information to Buyer (or, with respect to
any such information that has previously been furnished to Buyer or its representatives, a list
identifying such information).

As promptly as practicable (and, in any event, within 48 hours) after receipt of an Takeover
Proposal or any request for information or any discussions or inquiries which is reasonably likely
to lead to an Takeover Proposal, Seller shall provide Buyer with written notice of the material
terms and conditions of such Takeover Proposal, request, discussion or inquiry, and the identity of
the Person or group making such Takeover Proposal, request, discussion or inquiry, and a copy of
all written materials provided in connection with any such Takeover Proposal, request, discussion
or inquiry. After receipt of such Takeover Proposal, request, discussion or inquiry, Seller shall
promptly keep Buyer informed of the status and details (including changes or proposed changes to
the economic terms and any other material amendments or proposed material amendments and any
withdrawals or abandonment) of any such Takeover Proposal, request, discussion or inquiry and shall
promptly provide to Buyer a copy of all written materials subsequently provided in connection with
such Takeover Proposal, request, discussion or inquiry.

 

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Any violation of the restrictions set forth in this Section 5.5 by any officer or director of
Seller or KBT, or any Person acting pursuant to instruction or authorization by Seller or KBT shall
be deemed to be a breach of this Section by Seller.

Section 5.6 Access to Information 

From the date of execution hereof until the Closing Date, upon reasonable notice, Seller shall
cause KBT to afford Buyer and its Representatives reasonable access to the Representatives,
properties, offices and other facilities, books and records of KBT and shall cause KBT to furnish
Buyer with such financial, operating and other data and information as Buyer may reasonably
request; provided, however, that any such access or furnishing of information shall be conducted at
Buyer’s expense, during normal business hours, under the supervision of KBT’s personnel and in such
manner as not unreasonably to interfere with the normal operations of KBT. Notwithstanding
anything to the contrary in this Agreement, KBT or Seller shall not be required to disclose any
information to Buyer or its Representatives if such disclosure would violate any applicable Law,
while any such withholding of information shall not relieve Seller and KBT from the provision of
accurate representations and warranties.

Section 5.7 Update of Disclosure Schedules; Knowledge of Breach 

Seller shall from time to time ending on the 7th day prior to the Closing supplement or amend
the Disclosure Schedules with respect to any matter hereafter arising which if existing as of the
date of execution hereof would have been required to be set forth or described in such Disclosure
Schedules (the “Supplemental Disclosure”). Unless otherwise expressly provided herein,
nothing contained in this Section shall prejudice the rights of Buyer to exercise any right or
claim any remedies which Buyer has under this Agreement. The Supplemental Disclosure with respect
to any matter which if existing as of the date of execution hereof or arising after the date of
execution hereof shall not be deemed to have cured any breach of any representation and warranties
made in this Agreement for the purpose of determining whether or not any Buyer Indemnified Party
has an indemnification claim pursuant to Article VIII hereof. If prior to the Closing, either
Party shall have reason to believe that any breach of a representation or warranty of the other
Party has occurred, the Party which does not breach the representation or warranty shall promptly
notify the other Party, in reasonable details.

Section 5.8 Transition Period.

With respect to the proposed transaction that KBT will become a subsidiary of Buyer after the
Closing, Seller and KBT shall use commercially reasonable efforts to make adequate explanations to
KBT’s employees, customers and suppliers to facilitate a smooth transition. Seller and KBT will use
commercially reasonable efforts to effectuate the transactions contemplated hereby, to fulfill and
cause to be fulfilled the conditions to closing under this Agreement and assist in the satisfactory
and smooth completion of the transfer.

Section 5.9 Notification of Certain Matters

Until the Closing, the Party shall promptly notify the other Party in writing of any fact,
change, condition, circumstance or occurrence or nonoccurrence of any event of which it is
aware that will or is reasonably likely to result in any of the conditions set forth in
Exhibit 6.1 attached hereto becoming incapable of being satisfied.

 

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Section 5.10 No Solicitation

If this Agreement is terminated prior to the Closing, Buyer shall not, for a period of six
months after the date of execution hereof, without the prior written consent of Seller, solicit
(other than a solicitation by general advertisement) any person who is an employee of KBT or
Seller, at the date hereof or at any time during the period between the date of execution of hereof
and the date of termination hereof, to terminate his or her employment with KBT or Seller, as the
case may be. For avoidance of doubt, this Section shall not restrict Buyer from offering
employment to any person who is an employee of KBT or Seller, at the date hereof or at any time
during the period between the date of execution of hereof and the date of termination hereof, and
applies for a post at Buyer on his/ her own initiative or who is dismissed or terminated by KBT or
Seller.

Section 5.11 Resignations

Seller shall deliver at the Closing the written resignations issued by all of the directors
and supervisors of KBT, effective as of the Closing Date.

Section 5.12 Consents and Filings; Further Assurances

(a) Seller shall use commercially reasonable efforts to take, or cause to be taken, all
appropriate actions to do, or cause to be done, all things necessary, proper or advisable under
applicable Law to obtain the Seller Required Approval. Buyer shall cooperate as reasonably
requested by Seller to obtain the Seller Required Approval.

(b) The Parties acknowledge that certain consents and waivers may be required from the
counter-parties to Material Contracts to which KBT or Seller is a party for transfer of such
Material Contracts. Seller and KBT will use commercially reasonable efforts to obtain the consents
and/or waiver from each of the counter-parties to facilitate such transfer.

(c) Each Party shall promptly notify the other Party of any communication that it or any of
its Affiliates or Representatives receives from any Governmental Authority relating to the subject
matters of this Agreement and permits the other Party to review in advance any proposed
communication by such Party to any Governmental Authority. No Party to this Agreement shall agree
to participate in any meeting with any Governmental Authority in respect of any filings,
investigation or other inquiry unless it consults with the other Party in advance and, to the
extent permitted by such Governmental Authority, gives the other Party the opportunity to attend
and participate at such meeting.

(d) Seller shall use commercially reasonable efforts to cause KBT to execute a written
agreement with Gamania Digital Entertainment Co., Ltd.
() with the
terms and conditions no less favorable than those currently available before the
Closing and not to
terminate, modify or amend any verbal agreements related to the OEM Business.

 

12

 

Section 5.13 Public Announcement

During the period from the date of execution hereof and the Closing Date, Buyer and Seller
shall consult with each other before issuing any press release or making any other public statement
with respect to this Agreement or the transactions contemplated hereunder, and neither Buyer nor
Seller shall issue any press release or make any public statement prior to obtaining the written
approval of Seller or Buyer, as the case may be, which approval shall not be unreasonably withheld,
provided, however, the foregoing shall not limit the ability of a party to make
announcements and filings required by applicable Laws. Buyer and Seller shall cooperate with each
other in releasing, to the extent required, information concerning this Agreement and the
transactions contemplated herein. Where practicable each of the parties shall furnish to the other
drafts of all releases and filings prior to publication or filing and shall duly take into account
suggestions of the other party. Nothing contained herein shall prevent either party at any time
from furnishing any information to any Governmental Authority or from issuing any release when it
believes it is legally required to do so, provided such party gives the other party prompt notice
of such order and complies with any protective order (or equivalent) imposed on such disclosure.

Section 5.14 Non-Competition. 

For the duration of five (5) years after the Closing, except as otherwise set forth in
Exhibit 5.14 hereto, Seller shall not and shall cause each GigaMedia Group Member not to,
directly or indirectly, invest, own, engage or participate in any manner in any business or any
company, joint venture, partnership, or other entity that is engaged in the Relevant Business in
Taiwan.

Section 5.15 Non-Interference. 

Seller undertakes that, unless otherwise approved by Buyer in writing, for the duration of
five (5) years after the Closing, Seller and any GigaMedia Group Member shall not, directly or
indirectly:

(a) persuade or seek to persuade any customer, supplier, agent or independent contractor of
KBT or its Affiliates to cease to do business or to reduce the amount of business, to the extent
that such business is the Relevant Business, which such party has customarily done or contemplates
doing with KBT and/or its Affiliates;

(b) solicit, provide services to, or perform services for, in each case in a manner similar to
the Relevant Business, any person who is or was a customer of any of KBT or its affiliates; or

(c) hire, solicit for employment, or recruit any KBT employee, excluding those terminated or
dismissed by KBT after the Closing, or induce or encourage any of the foregoing to terminate their
employment relationship with KBT, or attempt to do any of the
foregoing either on its own behalf or
for the benefit of any third person, for the purposes of working in the Relevant Business.

 

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In Sections 5.14 and 5.15, “Relevant Business” means the operation of commercial and
consumer Internet access and cable modem business in Taiwan, the Republic of China. For avoidance
of any doubt, the on-line game business currently operated by Seller and its Affiliates and any
ancillary services relating to on-line game business shall be excluded from the Relevant Business;
provided that Seller and any GigaMedia Group Member shall not, without Buyer’s prior written
consent, provide any ancillary service which could be in direct or indirect competition with the
Relevant Business in any material respect.

Section 5.16 Confidentiality. 

Until the Closing Date, information furnished hereunder shall be subject to, and each of the
Parties shall and shall cause its Affiliates and Representatives to comply with, the terms of the
Confidentiality Agreement (the “Confidentiality Agreement”) in the form attached hereto as
Exhibit 5.16 as if each Party hereto were a party thereto.

Section 5.17  Additional Agreements. 

In case within 6 months after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement or to vest KBT with full title to all
properties, assets, rights, approvals, immunities, and franchises, the proper officers and
directors of each party to this Agreement shall take all such necessary action.

Section 5.18 Transitional Service Agreement

Seller shall have entered into the Transitional Service Agreement with KBT and —ì^
substantially in the form as Exhibit 5.18 attached hereto, pursuant to which Seller will
provide certain transitional services as may be necessary for carrying out the business of KBT.

Section 5.19 Seller’s Post Closing Covenant

(a) Seller shall deliver or cause to be delivered to Buyer (i) the balance sheet of KBT and
the pro forma consolidated balance sheet of KBT and HGC Broadband Business within 20 days after the
Closing Date, and (ii) the income statement of KBT and the pro forma consolidated income statement
of KBT and HGC Broadband Business for the 12-month period ended the LTM EBITDA End Day within 20
days after the LTM EBITDA End Day. Seller undertakes that (i) such balance sheets and income
statements shall(x) be prepared in accordance with the books and records of KBT and HGC Broadband
Business, (y) be prepared in accordance with GAAP applied on a consistent basis, and (z) show in
all material respects a fair view of the state of affairs, assets and liabilities, financial
position, profit or loss and results of operations of KBT and HGC Broadband Business as at the
respective dates thereof and for the periods covered thereby, applied on a consistent basis during
the periods concerned, and (ii) there shall not be any transaction or any liabilities (including
contingent liabilities) or payment, which ought to be included in such balance sheets and income
statements in accordance with GAAP, but are not
included therein which is, in aggregate and on the
consolidated basis of KBT’s business and the Giga Brand cable modem business, in excess of
NT$2,000,000.

 

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(b) Seller shall use its commercially reasonable efforts to assist Buyer in negotiating with
the landlords of the leased premises listed in Schedule B.17 not to terminate or renew any
such lease within two years after the Closing Date.

Section 5.20 Buyer’s Post Closing Covenant

In order to protect the Earn-out Payments due and payable to Seller pursuant to Section
2.2(e), Buyer acknowledges and agrees that KBT is acquired on a going concern basis and within two
(2) years after the Closing, Buyer shall cause KBT to continue operating its current lines of
business and shall use its commercially reasonable effort to develop, expand and grow corporate ISP
business of KBT, including, without limitation, to offer services to existing customers at terms
and conditions that are competitive in the market as determined by KBT management team in the best
interest of KBT.

ARTICLE VI

CLOSING

Section 6.1 Closing

The completion of the transaction contemplated in this Agreement (the “Closing”) shall
take place at the office of Lee and Li, Attorneys-at-Law, 9th Floor, No. 201, Tun Hua N.
Road, Taipei 105, Taiwan, ROC, at 10:00 A.M., Taiwan time on [September 3, 2008] subject to the
satisfaction or, to the extent permitted by applicable Law, waiver of all conditions to the
obligations of the Parties set forth in Exhibit 6.1 attached hereto (other than such
conditions as may, by their terms, only be satisfied at the Closing), or at such other place or at
such other time or on such other date as the Parties may mutually agree. The day on which the
Closing takes place is referred to as the “Closing Date”.

Section 6.2 Closing Deliverables

(a) At the Closing, Buyer shall pay an amount of cash equal to the Initial Purchase Price
minus the aggregate of (x) Escrow Amount which shall be transferred to the Escrow Account pursuant
to Section 2.2(h), and (y) the STT Payable, by remitting the immediately available funds in New
Taiwan Dollars at the Exchange Rate to Seller’s designated account, and shall deliver the receipt
of the STT Payable issued by the ROC tax authorities to Seller.

(b) At the Closing, Seller shall deliver or cause to be delivered to Buyer share certificates
representing the Shares owned by Seller, duly endorsed by Seller and such other closing
deliverables as listed in Exhibit 6.2(b) attached hereto.

 

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ARTICLE VII

TERMINATION

Section 7.1 Termination

This Agreement may be terminated at any time prior to the Closing in any of the following
circumstances:

(a) by mutual written consent of Seller and Buyer;

(b) by Seller, if Buyer breaches or fails to perform in any respect any of its
representations, warranties or covenants contained in this Agreement or any of the Ancillary
Agreements entered into prior to the Closing, and such breach or failure to perform (x) would give
rise to the failure of fulfillment of any condition set forth in Exhibit 6.1 attached
hereto; (y) cannot be or has not been cured within fifteen (15) days following delivery of written
notice of such breach or failure to perform; and (z) has not been waived by Seller in writing;
provided, however, that this Agreement shall be deemed terminated by Seller in
accordance with this Section 7.1(b) with an immediate effect if Seller terminates the HGC Agreement
in accordance with Section 8.1(b) of the HGC Agreement;

(c) by Buyer, if Seller breaches or fails to perform in any respect any of its
representations, warranties or covenants contained in this Agreement or any of the Ancillary
Agreements entered into prior to the Closing, and such breach or failure to perform (x) would give
rise to the failure to fulfillment of a condition set forth in Exhibit 6.1 attached hereto;
(y) cannot be or has not been cured within fifteen (15) days following delivery of written notice
of such breach or failure to perform; and (z) has not been waived by Buyer in writing;
provided, however, that this Agreement shall be deemed terminated by Buyer in
accordance with this Section 7.1(c) with an immediate effect if  terminates the HGC Agreement
in accordance with Section 8.1(c) of the HGC Agreement;

(d) (i) by Seller, if any of the conditions set forth in Parts A and B of the Exhibit
6.1 attached hereto shall have become incapable of fulfillment prior to December 31, 2008 (the
“Termination Date”); or (ii) by Buyer, if any of the conditions set forth in Parts A and C
of the Exhibit 6.1 attached hereto shall have become incapable of fulfillment prior to the
Termination Date; provided, that the right to terminate this Agreement pursuant to this
Section 7.1(d) shall not be available if the failure of the Party claiming termination hereof or
requesting to fulfill any obligation under this Agreement shall have been the cause of the failure
of such condition to be satisfied on or prior to such date; provided, further, that if a
Party or  terminates the HGC Agreement in accordance with Section 8.1(d) of the HGC Agreement,
this Agreement shall be deemed terminated by the same Party (by
Buyer, if   terminates the HGC
Agreement) in accordance with this Section 7.1(d) with an immediate effect; or

(e) by either (i) Seller, in the event that any Governmental Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable; provided, that Seller shall have complied with
Section 5.12 hereof, or (ii) Buyer, in the event that Seller fails to obtain Seller Required
Approval, or any Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and
non-appealable; provided, that Buyer shall have complied with Section 5.12 hereof;
provided, further, that if a Party or  terminates the HGC Agreement in accordance with
Section 8.1(e) of the HGC Agreement, this Agreement shall be deemed terminated by the same
Party (by Buyer, if  terminates the HGC Agreement) in accordance with this Section 7.1(e)
with an immediate effect

 

16

 

(f) The Party seeking to terminate this Agreement pursuant to this Section 7.1 (other than
Section 7.1(a)) shall give prompt written notice of such termination to the other Party.

Section 7.2 Effect of Termination

In the event of termination of this Agreement as provided in Section 7.1 hereof, this
Agreement shall forthwith cease to be in effect and there shall be no obligation or liability on
the part of any Party arising thereafter except (a) for Section 5.13, 5.16, 8.2, 8.3, 8.4, 9.1,
9.7, 9.8 and this Section 7.2, all of which provisions shall survive termination indefinitely and
(b) that no termination of this Agreement shall relieve any Party from liability for any breach
prior to the date this Agreement is terminated of this Agreement or any Ancillary Agreement as they
may be amended, modified or supplemented after the date of execution hereof.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Survival of Representations, Warranties and Covenants

The representations and warranties of Seller and Buyer contained in this Agreement shall
survive the Closing for a period of 12 months after the Closing Date (the “Survival
Period”), except as otherwise provided in this Agreement. The covenants and agreements of
Seller and Buyer contained in this Agreement shall not survive the Closing, except for those
covenants and agreements that by their terms contemplate performance in whole or in part after the
Closing, which shall remain in full force and effect for the time period specified therein, if any,
or if no such time period is specified, indefinitely.

Section 8.2 Indemnification by Seller

Seller shall save, defend, indemnify and hold harmless Buyer and its Affiliates, officers,
directors, employees, agents, successors and assigns (collectively, the “Buyer Indemnified
Parties”) from and against any and all losses, damages, liabilities, deficiencies, claims,
interest, awards, judgments, penalties, costs and expenses (including reasonable attorneys’ fees,
costs and other out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (hereinafter collectively, “Losses”) to the extent resulting from:

(a) any breach of any representation or warranty made by Seller contained in this Agreement;
and

(b) any breach of any covenant or agreement by Seller contained in this Agreement.

 

17

 

Seller hereby acknowledges that the Losses incurred to Buyer Indemnified Parties resulting
from any breach of any representative, warranty, covenant or agreement contained in this Agreement
by Seller may be greater than the Initial Purchase Price.

The maximum amount of the aggregate indemnifiable Losses that may be recovered from Seller by
Buyer Indemnified Parties resulting from any breach of any representation or warranty set forth in
Part B of Exhibit 3.1(b) of this Agreement and set forth in Part B of Exhibit 3.1(b) of the
HGC Agreement shall be US$20,000,000, and Buyer has the right in its sole discretion to allocate
the amount of the indemnifiable Losses under this Agreement and the HGC agreement.

Section 8.3 Indemnification by Buyer

Buyer shall save, defend, indemnify and hold harmless Seller and its Affiliates, officers,
directors, and employees (collectively, the “Seller Indemnified Parties”) from and against
any and all Losses to the extent arising out of or resulting from:

(a) any breach of any representation or warranty made by Buyer contained in this Agreement;
and

(b) any breach of any covenant or agreement by Buyer contained in this Agreement.

The maximum amount of the indemnifiable Losses that may be recovered from Buyer by Seller
Indemnified Parties under this Section 8.3 shall be equivalent to 15% of the Initial Purchase
Price.

Section 8.4 Manner of and Limitation on Indemnification 

Notwithstanding anything to the contrary contained in this Agreement:

(i) The indemnified party shall have no right to recover for Losses until such time as the
cumulative amount of such Losses under this Agreement and the HGC Agreement exceed NT$5,000,000
(the “Basket Amount”), provided that at such time as the amount to which such indemnified
party is entitled to be indemnified exceeds NT$5,000,000, such indemnified party shall be entitled
to be indemnified for all such Losses (i.e., including the initial NT$5,000,000). For the avoidance
of doubt, the payment of the price adjustment pursuant to Section 2.2 and of the severance payments
pursuant to Section 5.3 shall not be subject to the Basket Amount.

(ii) Claims by Buyer in respect of the tax liabilities pursuant to Clause 8 of the Exhibit
3.1(b) shall not be subject to, or counted against, the threshold in Section 8.4(i). Such claims
shall not be subject to the proviso regarding the maximum amount of the indemnifiable Losses in
Section 8.2. For the avoidance of doubt, when determining whether the total indemnifiable Losses
have exceeded the maximum amount of indemnifiable Losses under the proviso of Section 8.2, the
amount of Tax claims shall be excluded. In order for Buyer to claim the indemnification on the tax
liabilities (“Tax Claim”), Buyer shall deliver a written notice to Seller promptly after
receipt of the tax assessment from the ROC tax authority,

 

18

 

describing in reasonable detail such tax
assessment, and Seller shall have the right, upon written notice to Buyer within 30 days after
receipt of notice from Buyer, to assume the defense thereof at the expense of Seller with counsel
selected by Seller and reasonably satisfactory to Buyer. Notwithstanding the foregoing, Buyer shall
have the right to retain its own counsel in any such
action at its expense. If Seller assumes the defense thereof, Buyer shall cooperate with
Seller in such defense and make available to Seller all materials and information in Buyer’s
possession or under its control relating thereto as is reasonably required by Seller. Buyer shall
not admit, settle or compromise such tax liability without Seller’s prior written consent. Seller
shall not, without the prior written consent of Buyer, effect any settlement of any such tax
liability in respect of which Buyer Indemnified Party is or could have been a party and
indemnification could have been sought hereunder by such Buyer Indemnified Party, unless such
settlement (a) includes an unconditional release of such Buyer Indemnified Party from all liability
on such claims, and (b) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any Buyer Indemnified Party.

(iii) Seller shall not be obligated to indemnify any Buyer Indemnified Party with respect to
any Loss to the extent that a specific accrual or reserve for the amount of such Loss was reflected
in the financial statements or the notes thereto.

(iv) To provide a fund against which a Buyer Indemnified Party may assert claims of
indemnification pursuant Section 8.2 and 8.4(ii) and (iv) hereof and Section 9.2 of the HGC
agreement, the Escrow Amount shall be deposited with the Escrow Agent pursuant to the Escrow
Agreement. Subject to the Escrow Agreement, (a) the US$2,500,000 initially deposited with the
Escrow Agent hereunder (the “Initial Escrow Amount”) shall remain in the Escrow Account for
a period of 4 months following the Closing Date (the “First Escrow Period”), (b) within
five Business Days after the end of the First Escrow Period (the “First Release Date”) the
Escrow Agent shall distribute to an account designated by Seller an amount equal to all amounts
held in the Escrow Account in excess of US$1,000,000 as of the end of the First Escrow Period minus
the aggregate of (A) the amounts required to satisfy any claim resolved in the manner set forth in
Section 2.1 of the Escrow Agreement (a “Settled Reduction”) prior to the end of the First
Escrow Period and not previously distributed to an account designated by Buyer, and (B) any amount
reserved against unsatisfied and pending claim specified in any Notice of Claim delivered to the
Escrow Agent and Seller in accordance with Section 2.1 of the Escrow Agreement (“Retained
Amount”) prior to the end of the First Escrow Period. All of the Escrow Amount remaining after
the First Release Date, after giving effect to the reduction pursuant to Section 2.3(b) of the
Escrow Agreement, shall remain in the Escrow Account for a period of an additional eight months
following the end of the First Escrow Period (the “Second Escrow Period”). Within five
Business Days after the end of the Second Escrow Period (the “Second Release Date” and each
of the First Release Date and the Second Release Date, a “Release Date”), the Escrow Agent
shall distribute to an account designated by Seller an amount equal to all of the Trust Property
remaining in the Escrow Account as of the end of the Second Escrow Period minus the aggregate
amount of (A) any Settled Reduction resolved before the end of the Second Escrow Period and not
previously distributed to an account designated by Buyer, and (B) any Retained Amounts pursuant to
any Notice of Claim delivered to the Escrow Agent and Seller through the end of the Second Escrow
Period. As soon as any claim with respect to any indemnification claim pursuant to Section 8.2 or
8.4(ii) hereof or Section 9.2 of the HGC Agreement for which any Retained Amount has been retained
in the Escrow Account

 

19

 

beyond the applicable Release Date have been resolved by Seller and Buyer in
accordance with Section 2.1(c) of the Escrow Agreement, Buyer and Seller shall prepare a memorandum
to the Escrow Agent setting forth (i) the amount of the Retained Amount to be paid to an account
designated by Buyer to satisfy such claim (the “Settled Claim Amount”) and (ii) amount of
the
Retained Amount that is not required to satisfy such claim (the “Released Amount”) to
be distributed to an account designated by Seller. Within five Business Days after receipt of such
a memorandum or a written final determination by the arbitrators as provided in Section 9.8 hereof
or Section 10.8 of the HGC Agreement specifying the amount which such party has been awarded
relating to resolution of any such claim for which any Retained Amount has been retained in the
Escrow Account, the Escrow Agent shall release the Retained Amount in accordance with such
memorandum or final determination by the arbitrators.

Section 8.5 General Limits on Indemnification 

(a) In the event Buyer proceeds with the Closing notwithstanding actual knowledge by Buyer or
any Affiliate of Buyer at or prior to the Closing of any breach by Seller of any representation,
warranty or covenant in this Agreement, no Buyer Indemnified Party shall have any claim or recourse
against Seller or any of its Affiliates or Representatives with respect to such breach, under this
Article VIII or otherwise; provided, however, nothing contained in this Section shall prejudice the
rights of Buyer to adjust the Initial Purchase Price pursuant to Section 2.2(b) and (c) and to
claim the severance payments and pension liabilities pursuant to Section 5.3(b) and (c).

(b) No indemnification claim may be asserted against any Party unless written notice of such
claim is received by such Party, describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim on or prior to the end of the Survival Period, in which
case the applicable representation, warranty, covenant or agreement shall survive as to such claim
until such claim has been finally resolved.

(c) For all purposes of this Article VIII, “Losses” shall be net of (i) any insurance or other
recoveries payable to and received by the Indemnified Party or its Affiliates in connection with
the facts giving rise to the right of indemnification and (ii) any Tax benefit realized by such
Indemnified Party or its Affiliates arising in connection with the accrual, incurrence or payment
of any such Losses (including, without limitation, the net present value of any Tax benefit arising
in subsequent taxable years).

(d) No Party hereto shall have any liability under any provision of this Agreement for any
punitive, incidental, consequential, special or indirect damages, including business interruption,
loss of future revenue, profits or income, or loss of business reputation or opportunity relating
to the breach or alleged breach of this Agreement.

Section 8.6 Exclusivity

(a) Except as specifically set forth in this Agreement, effective as of the Closing, Buyer, on
behalf of itself and the other Buyer Indemnified Parties, waives any rights and claims any Buyer
Indemnified Party may have against Seller, whether in law or equity, relating to the transactions
contemplated by this Agreement or any of the Ancillary Agreements.
After the Closing, subject to
the foregoing, this Article VIII will provide the exclusive remedy against Seller for any breach of
any representation, warranty, covenant or other claim arising out of or relating to this Agreement
or any of the Ancillary Agreements and/or the transactions contemplated hereby or thereby.

 

20

 

(b) Except as specifically set forth in this Agreement, effective as of the Closing, Seller,
on behalf of itself and the other Seller Indemnified Parties, waives any rights, claims, liens,
demands, causes of action, obligations, damages and liabilities, known or unknown, anticipated or
unanticipated, contingent or non-contingent, any Seller Indemnified Party has had in the past or
may have against Buyer Indemnified Parties, whether in law or equity, through the date of execution
of this Agreement and the Closing, including, without limitation, those arising from or with
respect to any transactions with Buyer Indemnified Parties prior to the Closing.

ARTICLE IX

GENERAL PROVISIONS

Section 9.1 Fees and Expenses 

(a) Except as otherwise provided herein, all fees and expenses incurred in connection with or
arising from this Agreement and the Ancillary Agreements and the transaction contemplated hereunder
and thereunder shall be borne by the Party incurring such fees or expenses, whether or not such
transaction is consummated. In the event of termination of this Agreement, the obligation of each
Party to pay its own fees and expenses shall be subject to any and all rights of such Party arising
from a breach of this Agreement or any of the Ancillary Agreements by the other Party.

(b) Seller shall pay to Buyer a fee of US$5,000,000 (the “Termination Fee”) if (i) any
Person makes a Takeover Proposal that is not withdrawn, (ii) this Agreement is terminated or is not
consummated by reasons other than any withdrawal by Buyer from this transaction due to a Material
Adverse Effect or otherwise, and (iii) Seller enters into a definitive Contract to consummate, or
consummates, the transactions contemplated by any Takeover Proposal within 6 months of termination
of this Agreement (the “Payment Event”). For avoidance of doubt, no Termination Fee is
payable to Buyer in the event that this Agreement is terminated or is not consummated due to any
withdrawal by Buyer from this transaction. Any Termination Fee due under this Section 9.1(b) shall
be paid by wire transfer of same-day funds on the 7th Business Day following the date of the first
to occur of the above events. For the avoidance of doubt, nothing contained in this Section shall
prejudice the rights of Buyer to exercise any right or claim any remedy which Seller has under this
Agreement.

Section 9.2 Amendment and Modification

This Agreement may not be amended, modified or supplemented in any manner, whether by course
of conduct or otherwise, except by an instrument in writing signed by Seller and Buyer, and
otherwise as expressly set forth herein.

 

21

 

Section 9.3 Waiver

No failure or delay of any Party in exercising any right or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, or any course of conduct,
preclude any other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Parties hereunder are cumulative and are not exclusive of
any rights or remedies which they would otherwise have hereunder. Any agreement on the part
of Seller to any such waiver shall be valid only if set forth in a written instrument executed and
delivered by Seller. Any agreement on the part of Buyer to any such waiver shall be valid only if
set forth in a written instrument executed and delivered by Buyer.

Section 9.4 Notices

All notices and other communications hereunder shall be in writing and shall be deemed duly
given (a) on the date of delivery if delivered personally, or if by facsimile, upon written
confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following
the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or
(c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the Party to receive such notice:

(a) if to Seller:

Hoshin GigaMedia Center Inc.

207 Tiding Boulevard – Section 2, Taipei 114, Taiwan R.O.C.

Attention: General Counsel

Facsimile: 886-2-2656-8073

with a copy (which shall not constitute notice) to:

Hoshin GigaMedia Center Inc.

207 Tiding Boulevard – Section 2, Taipei 114, Taiwan R.O.C.

Attention: Chief Operating Officer

Facsimile: 886-2-2656-8090

(b) if to Buyer:

China Network Systems Co., Ltd.

3F, 399, Recom Rd., Neihu District, Taipei City, Taiwan

Attention: Chief Legal Officer

Facsimile: 886-2-8757-8976

 

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Section 9.5 Entire Agreement

This Agreement (including the Exhibits attached hereto), and the Ancillary Agreements
constitute the entire agreement, and supersedes all prior written agreements, arrangements,
communications and understandings and all prior and contemporaneous oral agreements, arrangements,
communications and understandings among the Parties with respect
to the subject matter of this
Agreement. Neither this Agreement nor any of the Ancillary Agreements shall be deemed to contain
or imply any restriction, covenant, representation, warranty, agreement or undertaking of any Party
with respect to the transactions contemplated hereby or thereby other than those expressly set
forth herein or therein or in any document required to be delivered hereunder or thereunder, and
none shall be deemed to exist or be
inferred with respect to the subject matter hereof. Notwithstanding any oral agreement of the
Parties or their Representatives to the contrary, no Party to this Agreement shall be under any
legal obligation to enter into or complete the transactions contemplated hereby unless and until
this Agreement shall have been executed and delivered by each of the Parties.

Section 9.6 No Third-Party Beneficiaries

Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person
other than the Parties and their respective successors and permitted assigns any legal or equitable
right, benefit or remedy of any nature under or by reason of this Agreement.

Section 9.7 Governing Law

This Agreement and all disputes or controversies arising out of or relating to this Agreement
or the transactions contemplated hereby shall be governed by, and construed in accordance with, the
internal laws of the ROC, without regard to the laws of any other jurisdiction that might be
applied because of the conflicts of laws principles.

Section 9.8 Dispute Resolution

(a) The Parties shall seek to solve through negotiations any dispute, controversy or claim
arising out of or relating to this Agreement, or the breach, termination or invalidity hereof. If
the Parties fail to solve such dispute, controversy or claim by a written agreement within thirty
days after one of the Parties has requested such negotiations by notice to the other Party, such
dispute, controversy or claim shall be submitted to the Hong Kong International Arbitration Centre
(“HKIAC”) and finally settled by arbitration in accordance with the UNCITRAL Arbitration
Rules (“Arbitration Rules”) in force at the date of this Agreement, as modified by the rest
of this Section 9.8. The place of arbitration shall be Taipei. There shall be three arbitrators.
The appointing authority shall be Hong Kong International Arbitration Centre and the arbitration
shall be administered in accordance with the HKIAC Procedures for the Administration of
International Arbitration (“HKIAC Procedures”) in force at the date of this Agreement
including such amendments to the Arbitration Rules as are contained in the HKIAC Procedures. The
language of the arbitration shall be English. The awards rendered by the arbitrator shall be final
and binding on the Parties. The Parties agree to be bound by any awards made by the arbitrator(s)
and execute the awards accordingly.

(b) Each Party and the Guarantor shall cooperate with each other in making full disclosure of
and providing complete access to all information and documents requested by any Party in connection
with such arbitration proceedings, subject only to any confidentiality obligations binding on the
disclosing Party. The cost of the arbitration (including the reasonable and properly incurred fees
and expenses of the lawyers appointed by each party to the
arbitration) shall be borne by the Party
or Parties against whom the arbitration award is made or otherwise in accordance with the ruling of
the arbitration tribunal.

 

23

 

Section 9.9 Assignment; Successors

Neither this Agreement nor any of the rights, interests or obligations under this Agreement
may be assigned or delegated, in whole or in part, by operation of law or otherwise,
by any Party without the prior written consent of the other Party, and any such assignment
without such prior written consent shall be null and void.

Section 9.10 Severability

Whenever possible, each provision or portion of any provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable Law, but if any provision
or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision or portion of any provision had never been
contained herein.

Section 9.11 Counterparts 

This Agreement may be executed in two counterparts, both of which shall be considered one and
the same instrument and shall become effective when one or more counterparts have been signed by
the parties and delivered to the other parties. This Agreement may be executed by facsimile
signature and a facsimile signature shall constitute an original for all purposes.

Section 9.12 No Presumption Against Drafting Party

Buyer and Seller acknowledge that each Party to this Agreement has been represented by counsel
in connection with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the drafting Party has no application and is expressly
waived.

[The remainder of this page is intentionally left blank.]

 

24

 

IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be executed as of the date
first written above.

	 	 	 	 	 
	 	Hoshin GigaMedia Center Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	China Network Systems Co., Ltd.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

25

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