Document:

EX-4.31

Exhibit 4.31

ASSET SALE AND PURCHASE AGREEMENT

by and among

Hoshin GigaMedia Center Inc.

as Seller

and

,

as Buyer

and

China Network Systems Co., Ltd.

and

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
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE
	 	 	2	 
	 
	 	 	 	 
	Section 2.1 Purchase and Sale of the Transferred Business
	 	 	2	 
	Section 2.2 Excluded Assets
	 	 	2	 
	Section 2.3 Purchase Price
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	3	 
	 
	 	 	 	 
	Section 3.1 Representations and Warranties
	 	 	3	 
	Section 3.2 Limitation of Disclosure Schedules
	 	 	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
	 	 	4	 
	 
	 	 	 	 
	Section 5.1 Business Operation Prior to the Closing
	 	 	4	 
	Section 5.2 Transfer of Contracts
	 	 	5	 
	Section 5.3 Insurance
	 	 	5	 
	Section 5.4 Exclusivity
	 	 	5	 
	Section 5.5 Access to Information
	 	 	7	 
	Section 5.6 Update of Disclosure Schedules; Knowledge of Breach
	 	 	7	 
	Section 5.7 Reasonable Efforts
	 	 	7	 
	Section 5.8 Notification of Certain Matters
	 	 	7	 
	Section 5.9 Consents and Filings; Further Assurances
	 	 	8	 
	Section 5.10 Public Announcement
	 	 	8	 
	Section 5.11 Non-Competition
	 	 	8	 
	Section 5.12 Non-Interference
	 	 	8	 
	Section 5.13 Confidentiality
	 	 	9	 
	Section 5.14 Additional Agreements
	 	 	9	 
	Section 5.15 No Solicitation
	 	 	9	 
	Section 5.16 Financial Statements
	 	 	10	 
	Section 5.17 Guarantee by Guarantor
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VI CLOSING
	 	 	10	 
	 
	 	 	 	 
	Section 6.1 Closing
	 	 	10	 

 

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	 	 	Page	 
	Section 6.2 Closing Deliverables
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VII POST CLOSING ACTIONS
	 	 	11	 
	 
	 	 	 	 
	Section 7.1 Collection and Payment After the Closing
	 	 	11	 
	Section 7.2 Transitional Service
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION
	 	 	11	 
	 
	 	 	 	 
	Section 8.1 Termination
	 	 	11	 
	Section 8.2 Effect of Termination
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IX INDEMNIFICATION
	 	 	13	 
	 
	 	 	 	 
	Section 9.1 Survival of Representations, Warranties and Covenants
	 	 	13	 
	Section 9.2 Indemnification by Seller
	 	 	13	 
	Section 9.3 Indemnification by Buyer
	 	 	14	 
	Section 9.4 Manner of and Limitation on Indemnification
	 	 	14	 
	Section 9.5 General Limits on Indemnification
	 	 	14	 
	Section 9.6 Exclusivity
	 	 	15	 
	 
	 	 	 	 
	ARTICLE X GENERAL PROVISIONS
	 	 	15	 
	 
	 	 	 	 
	Section 10.1 Expenses and Taxes
	 	 	15	 
	Section 10.2 Amendment and Modification
	 	 	15	 
	Section 10.3 Waiver
	 	 	16	 
	Section 10.4 Notices
	 	 	16	 
	Section 10.5 Entire Agreement
	 	 	17	 
	Section 10.6 No Third-Party Beneficiaries
	 	 	17	 
	Section 10.7 Governing Law
	 	 	17	 
	Section 10.8 Dispute Resolution
	 	 	17	 
	Section 10.9 Assignment; Successors
	 	 	18	 
	Section 10.10 Severability
	 	 	18	 
	Section 10.11 Counterparts
	 	 	18	 
	Section 10.12 No Presumption Against Drafting Party
	 	 	18	 

 

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INDEX OF EXHIBITS

	 	 	 
	Exhibit	 	 
	1.1

	 	Definition
	2.1(a)

	 	List of Transferred Assets
	2.1(b)

	 	List of Assumed Liabilities
	2.2

	 	List of Excluded Assets
	3.1(a)

	 	Disclosure Schedules
	3.1(b)

	 	Representations and Warranties of Seller
	4.1

	 	Representations and Warranties of Buyer
	5.1

	 	Conducts Prior to the Closing
	5.11

	 	Non-Competition
	5.13

	 	Form of Confidentiality Agreement
	6.1

	 	Conditions Precedent to the Closing
	6.2(b)(i)

	 	List of Seller’s Closing Deliverables
	6.2(b)(ii)

	 	List of Buyer’s Closing Deliverables
	7.2

	 	Form of Transitional Service Agreement

 

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ASSET SALE AND PURCHASE AGREEMENT

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

(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”);

(ii) , a company organized and existing under the laws of the ROC, having its
principal office at No. 345, Jilin Rd., Jhongshan District, Taipei City, Taiwan (“Buyer”);
and

(iii) 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 (the
“Guarantor”).

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

RECITALS

WHEREAS, Seller provides, among others, consumer ISP business and other related services; and

WHEREAS, Seller intends to sell all assets, rights and interests of the consumer ISP business,
in particular cable modem services (“Transferred Business”), and Buyer intends to purchase
from Seller such assets, rights and interests as of the Closing Date (as defined below).

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$” in this Agreement or any Ancillary Agreement refer to New Taiwan
Dollars and references to “US$” 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 Transferred Business

(a) On the terms and subject to the conditions stated herein, upon the Closing, Seller shall
sell, transfer, convey, assign and deliver to Buyer or any other company designated by Buyer, and
Buyer agrees to buy and acquire, or cause such other company to buy and acquire, from Seller, all
the rights, titles, and interests in and to the Transferred Assets, as set forth in Exhibit
2.1(a) attached hereto, free and clear of all Encumbrances.

(b) On the terms and subject to the conditions contained herein, at the Closing, Buyer or any
other company designated by Buyer shall assume and agree to pay, discharge and perform as and when
due, and Seller shall transfer, convey and assign to Buyer the Assumed Liabilities as set forth in
Exhibit 2.1(b) attached hereto.

(c) The Parties acknowledge and agree that, unless otherwise expressly provided herein, Buyer
is not assuming and shall not be responsible or liable for, and Seller shall perform and discharge
as and when due, any and all liabilities or obligations of Seller (whether fixed, contingent or
unliquidated, absolute or otherwise and whether relating to any tort, statutory or regulatory
obligation, product liability, environmental claim, Taxes, contract, operations of the business in
the ordinary course of business or otherwise).

Section 2.2 Excluded Assets

Notwithstanding any provision to the contrary contained herein, the assets set forth in
Exhibit 2.2 are excluded from the Transferred Assets (“Excluded Assets”) and shall
remain the assets of Seller.

 

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Section 2.3 Purchase Price 

Buyer shall pay Seller for purchase of the Transferred Assets and assumption of the Assumed
Liabilities an aggregate purchase price of US$3,000,000, payable in New Taiwan Dollars at the
Exchange Rate immediately on or prior to the Closing Date, exclusive of any VAT payable for sale of
the Transferred Assets (the “Purchase Price”).

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF SELLER

Section 3.1 Representations and Warranties

(a) 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.

(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 the Transferred Business), 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.

 

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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 shall operate the Transferred Business only in the ordinary
course of business in all material respects and consistent with past practices and use commercially
reasonable efforts to preserve intact the Transferred Assets and related relationships with
customers, suppliers and other third parties. Except as otherwise contemplated by this Agreement,
Seller covenants and agrees that, to the extent applicable to the Transferred Assets, Assumed
Liabilities and Transferred Business, it shall not:

(a) 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;

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

(c) 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 Seller 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 Seller, 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 Seller’s working capital from the amount
reflected in the Financial Statement, except as would not be materially adverse to the Transferred
Business and inconsistent with Seller’s past business practice;

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

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

(f) 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 Transferred Business; or

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

 

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Provided, that, the numerical restriction set out in the above clause (f) shall apply on the
consolidated basis of the Transferred Business and KBT’s business (including the OEM Business and
Webs-TV ADSL Service).

Section 5.2 Transfer of Contracts

(a) Seller shall make commercially reasonable efforts to retain the subscribers of its cable
modem services before the completion of transfer of such subscribers to Buyer.

(b) Seller shall assign or subcontract exclusively to Buyer all rights and obligations under
the Assumed Contracts. Seller shall provide Buyer with a list of the Assumed Contracts which shall
set out the names and addresses of the subscribers and the key commercial terms thereof at the
Closing, and within twelve (12) months after the Closing Date, shall make commercially reasonable
efforts to assist Buyer to enter into new contracts with Seller’s cable modem subscribers in form
and substance satisfactory to Buyer.

(c) For those Assumed Contracts with the subscribers who refuse to be transferred to Buyer
(the “Non-Assigned Contracts”), Seller shall pass on all of Seller’s economic interest in
each Non-Assigned Contract to Buyer by way of subcontracting arrangements without any Person being
able to set-off any amounts due to it or claimed by it and shall provide Buyer with billing
services for the Non-Assigned Contracts free of charge until expiration of the respect Non-Assigned
Contracts between Seller and each such subscriber.

(d) Without jeopardizing the rights and obligations of the Parties under Section 5.2(c),
Seller shall cooperate fully with Buyer to resolve any dispute, controversy or claim with or by any
cable modem subscribers arising within six (6) months after the Closing Date out of or in relation
to the transactions contemplated hereunder. Any expenses and costs incurred therefrom shall be
borne equally by Seller and Buyer.

Section 5.3 Insurance

During the period from the date of this Agreement until the Closing Date, Seller, shall
maintain or cause to be maintained in effect all equipment, fire and liability insurance policies
maintained on the date hereof relating to the Transferred Business, or procure comparable
replacement policies and maintain such replacement policies in effect until such time.

 

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Section 5.4 Exclusivity 

Until the earlier of the Closing Date or the date this Agreement is terminated pursuant to
Section 8.1 hereof, Seller and its Board of Directors shall not, and Seller and its Board of
Directors shall direct and use its 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 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, nor any committee thereof shall:

(a) withdraw or modify, in a manner adverse to Buyer, the approval or recommendation by
Seller’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 5.4, 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 Seller’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 5.4. 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 forty-eight (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.

Any violation of the restrictions set forth in this Section 5.4 by any officer or director of
Seller, or any Person acting pursuant to instruction or authorization by Seller, shall be deemed to
be a breach of this Section by Seller.

 

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Section 5.5 Access to Information 

From the date of execution hereof until the Closing Date, upon reasonable notice, Seller shall
afford Buyer and its Representatives reasonable access to the Representatives, properties, offices
and other facilities, books and records of the Transferred Business and furnish Buyer with such
financial, operating and other data and information of the Transferred Business 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 Seller’s
personnel and in such manner as not unreasonably to interfere with the normal operations of the
Transferred Business. Notwithstanding anything to the contrary in this Agreement, 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 from
the provision of accurate representations and warranties.

Section 5.6 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 or known 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 IX 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 detail.

Section 5.7 Reasonable Efforts.

Seller 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, including but not
limited to cooperating with Buyer in examination and inspection of all Transferred Assets before
Closing.

Section 5.8 Notification of Certain Matters

Until the Closing, Seller and Buyer 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 5.9 Consents and Filings; Further Assurances

Seller and Buyer 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 all the other Party to review in advance any proposed
communication by such Party to any Governmental Authority. Seller and Buyer shall not 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.

Section 5.10 Public Announcement

During the period from the date of execution hereof and the Closing Date, Seller and Buyer
shall consult with each other before issuing any press release or making any other public statement
with respect to this Agreement or the transaction 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 5.11 Non-Competition.

For the duration of five (5) years after the Closing, except as otherwise set forth in
Exhibit 5.11 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 5.12 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
Buyer 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 Seller and/or its Affiliates;

 

8

 

(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 Seller or its affiliates;or

(c) hire, solicit for employment, or recruit any Seller employee, or induce or encourage any
of the foregoing to terminate their employment relationship with Buyer or its Affiliates, 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.

In Sections 5.11 and 5.12, “Relevant Business” means the operation of commercial and consumer
Internet access and cable modem business in Taiwan, 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 5.13 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 5.13 as if each Party hereto were a party thereto.

Section 5.14 Additional Agreements. 

In case within six (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 Buyer or its
designated company 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 5.15 No Solicitation

If this Agreement is terminated prior to the Closing, Buyer shall not, for a period of six (6)
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 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 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 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 HGC.

 

9

 

Section 5.16 Financial Statements

Seller shall deliver or cause to be delivered to Buyer (i) the balance sheet of the
Transferred Business as of the Closing Date within 20 days after the Closing Date, and (ii) the
income statement of the Transferred Business for the 12-month period ended the LTM EBITDA End
Day as provided under the KBT Agreement within 20 days after the LTM EBITDA End Day. Seller
undertakes that (i) such balance sheet and income statement shall(x) be prepared in accordance with
the books and records of Seller, (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 Seller and of the
Transferred 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 sheet and income statement, but are not included therein which is, in
aggregate and on the consolidated basis of the Transferred Business and KBT’s business, in excess
of NT$2,000,000.

Section 5.17 Guarantee by Guarantor

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 Buyer, pursuant to or arising under, out of or in
connection with this Agreement, and (ii) the prompt and complete performance by Buyer 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 “Buyer’s Guaranteed
Obligations”). A notice to the Guarantor for Buyer’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 Seller to proceed against Buyer or to pursue or exhaust any
remedy in respect of the Guaranteed Obligations against Buyer or any other person or entity.

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 the Purchase Price by remitting the immediately available
funds in New Taiwan Dollars at the Exchange Rate to Seller’s designated account.

 

10

 

(b) At the Closing, Seller shall deliver or cause to be delivered to Buyer those closing
deliverables listed in Exhibit 6.2(b)(i) attached hereto and Buyer shall deliver or cause
to be delivered to Seller those closing deliverables listed in Exhibit 6.2(b)(ii) attached
hereto.

ARTICLE VII

POST CLOSING ACTIONS

Section 7.1 Collection and Payment After the Closing

(a) At and after the Closing, Buyer shall have the right and authority to collect Seller’s
Accounts Receivable included as the Transferred Assets and service fees under the Non-Assigned
Contracts, and Seller shall, within one (1) week after its receipt thereof, properly endorse and
deliver to Buyer any and all Accounts Receivable, letters of credit, cash payments and checks that
are part of the Transferred Assets or such service fees and received by Seller after the Closing.

(b) At and after the Closing Date, Buyer shall pay or perform when due, the accounts payable
and other payables included as the Assumed Liabilities. In the event of any request made to Seller
of any of the foregoing for any reason after the Closing, which Seller is not obligated to do so,
Seller shall immediately inform Buyer about any such payment.

Section 7.2 Transitional Service 

In order to facilitate a smooth transfer of the Transferring Business from Seller to Buyer,
Seller agrees to enter into a transitional services agreement with KBT and Buyer in the form as
Exhibit 7.2 attached hereto, pursuant to which Seller will provide certain transitional
services as may be necessary for carrying out the Transferred Business on terms and conditions
agreed to by and between the parties concerned in the transitional service agreement.

ARTICLE VIII

TERMINATION

Section 8.1 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; provided, however, that this Agreement
shall be deemed terminated by mutual consent of Seller and Buyer if the KBT Agreement is terminated
by mutual consent of the parties thereto;

(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 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 8.1(b)
with an immediate effect if Seller terminates the KBT Agreement in accordance with Section
7.1(b) of the KBT Agreement;

 

11

 

(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 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 8.1(c) with an immediate effect if CNS terminates the KBT Agreement in accordance with
Section 7.1(c) of the KBT Agreement;

(d) (i) by Seller if any of the conditions set forth in Parts A and B of the Exhibit
6.1 attached hereto or any of the conditions set forth in Parts A and B of the Exhibit
6.1 attached to the KBT Agreement 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 or any of the conditions set forth in
Parts A and C of the Exhibit 6.1 attached to the KBT Agreement shall have become incapable
of fulfillment prior to the Termination Date; provided, that the right to terminate this
Agreement pursuant to this Section 8.1(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 CNS terminates the KBT Agreement in accordance with
Section 7.1(d) of the KBT Agreement, this Agreement shall be deemed terminated by the same Party
(by Buyer, if CNS terminates the KBT Agreement) in accordance with this Section 8.1(d) with an
immediate effect; or

(e) by either (i) Seller 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 transaction contemplated by this Agreement or the KBT Agreement and such
order, decree, ruling or other action shall have become final and non-appealable; provided,
that the Party so requesting termination shall have complied with Section 5.9 hereof
provided, further, that if a Party or CNS terminates the KBT Agreement in accordance with
Section 7.1(e) of the KBT Agreement, this Agreement shall be deemed terminated by the same Party(by
Buyer, if CNS terminates the KBT Agreement) in accordance with this Section 8.1(e) with an
immediate effect;;

The Party seeking to terminate this Agreement pursuant to this Section 8.1 (other than Section
8.1(a)) shall give prompt written notice of such termination to the other Party.

Section 8.2 Effect of Termination

In the event of termination of this Agreement as provided in Section 8.1 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 5.10, 5.13, 9.2, 9.3, 9.4, 10.1, 10.4,
10.7, 10.8, and this Section 8.2, 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.

 

12

 

ARTICLE IX

INDEMNIFICATION

Section 9.1 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 twelve (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 9.2 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.

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 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
KBT 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 KBT agreement.

 

13

 

Section 9.3 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 9.3 shall be equivalent to 15% of the Purchase Price.

Section 9.4 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 KBT 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).

(ii) 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.

Section 9.5 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 IX or otherwise; provided, however, nothing contained in this Section shall prejudice the
rights of CNS 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) of the KBT
Agreement.

(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 IX, “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).

 

14

 

(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 9.6 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 Transferring
Business by this Agreement or any of the Ancillary Agreements. After the Closing, subject to the
foregoing, this Article IX 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 transaction contemplated hereby or thereby.

(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 X

GENERAL PROVISIONS

Section 10.1 Expenses and Taxes

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
transactions are consummated. For the avoidance of doubt, the stamp duties incurred for the
transaction contemplated hereunder shall be borne by Seller. 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 or any of the Ancillary
Agreements by the other Party

Section 10.2 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.

 

15

 

Section 10.3 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 10.4 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.

8F, 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.

8F, 207 Tiding Boulevard — Section 2, Taipei 114, Taiwan R.O.C.

Attention: Chief Operating Officer

Facsimile: 886-2-2656-8090

(b) if to Buyer:

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

Attention: Chief Legal Officer

Facsimile: 886-2-8751-8976

(c) if to CNS:

China Network Systems Co., Ltd.

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

Attention: Chief Legal Officer

Facsimile: 886-2-8751-8976

 

16

 

Section 10.5 Entire Agreement

This Agreement (including the Exhibits attached hereto), the Ancillary Agreements, the
Confidentiality Agreement constitute the entire agreement, and supersede 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 transaction 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
unless and until this Agreement shall have been executed and delivered by each of the Parties.

Section 10.6 No Third-Party Beneficiaries

Except as otherwise provided in this Agreement, 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 10.7 Governing Law

This Agreement and all disputes or controversies arising out of or relating to this Agreement
or the transaction 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 10.8 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 or 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.

 

17

 

(b) Each Party and the Guarantors 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.

Section 10.9 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 10.10 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 10.11 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 each of 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 10.12 No Presumption Against Drafting Party

Seller and Buyer acknowledge that each Party to this Agreement has been represented by counsel
in connection with this Agreement and the transaction 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.]

 

18

 

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

	 	 	 	 	 
	 	Hoshin GigaMedia Center Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 	 	 
	 	 		 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

	 	 	 	 	 
	 	China Network Systems Co., Ltd.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

19EX-4.32

Exhibit 4.32

TRANSITIONAL SERVICE AGREEMENT

by and between

Hoshin GigaMedia Center Inc.

on the one part

and

and

Koos Broadband Telecom Company Limited

on the other part

Dated as of September 3, 2008

 

 

TRANSITIONAL SERVICE AGREEMENT

THIS TRANSITIONAL SERVICE AGREEMENT is entered into on this 3rd day of September 2008 (this
”Agreement”), by and between

(i) Hoshin GigaMedia Center Inc., a company duly organized and existing under the laws of the
Republic of China, having its principal office at 8F, 207, Sec.2, Tiding Blvd., Neihu District,
Taipei City 114, Taiwan (“Party A”) on the one part; and

(ii) , a company organized and existing under the laws of the ROC, having its
principal office at No. 345, Jilin Rd., Jhongshan District, Taipei City, Taiwan (“Ko Ying”), and
Koos Broadband Telecom Company Limited, a company organized and existing under the laws of the ROC,
having its principal office at 6F, No.20, Lane 478, Rueiguang Rd., Neihu District, Taipei, 114,
Taiwan (“KBT” together with Ko Ying, “Party B”) on the other part.

Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to
them in the Share Purchase Agreement or the Asset Purchase Agreement (as defined below).

RECITALS

WHEREAS, Party A and China Network Systems Co., Ltd. (“CNS”) have entered into that certain
share sale and purchase agreement (the “Share Purchase Agreement”), dated as of August 28, 2008,
pursuant to which, among other things, Party A has agreed to sell and CNS has agreed to purchase,
the shares of common stock of KBT (as defined in the Share Purchase Agreement);

WHEREAS, Party A and Ko Ying have entered into that certain asset sale and purchase agreement
(the “Asset Purchase Agreement”), dated as of August 28, 2008, pursuant to which, among other
things, Party A has agreed to sell and Ko Ying has agreed to purchase, the Transferred Business (as
defined in the Asset Purchase Agreement);

WHEREAS, in order to facilitate a smooth transition, Party B wishes to engage Party A to
provide, and Party A wishes to provide, certain transitional services, pursuant 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 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

TRANSITIONAL SERVICES

Section 2.1 Transitional Services

On the terms and subject to the conditions stated herein, Party A hereby agrees to provide,
and Party B hereby agrees to engage Party A to provide, certain transitional services (the
"Transitional Services”) as set forth below:

(a) Party A shall continue providing accounting services with KBT with respect to KBT and the
Transferred Business for a period of three (3) months from the Closing Date;

(b) Party A shall lease its premises in Taichung and Kaohsiung used for the Transferred
Business and KBT’s business to KBT for a period of six (6) months from the Closing Date, which may
be renewed with both Parties’ consent; provided that Party A and KBT will enter into a lease
agreement (the “Lease Agreement”) substantially in the form attached hereto as Exhibit 2.1(b) on or
before the Closing Date.

(c) Party A shall make available Hinet backbone bandwidth, ATM Trunk, and Ethernet Leased
Circuit in accordance with the terms and conditions set forth in the cooperation agreement
(the “Cooperation Agreement”) attached hereto as Exhibit 2.1(c) for use by KBT for a period of six
(6) months from the Closing Date; and

(d) Party A shall license two trademarks set forth in Exhibit 2.1(d) to Ko Ying for a period
of two (2) years from the Closing Date.

(e) Party A will provide billing services with Party B (i) for Giga Brand Cable Modem
subscribers for a period of 45 days from the Closing Date, and (ii) for the service contracts with
the Giga Brand Cable Modem subscribers who refuse to be transferred to Ko Ying
till the expiration or termination of the respective service contract between Party A and each
such subscriber.

 

 

Section 2.2 Technical Support by Party B

(a) In consideration of the Transitional Services provided by Party A to Party B, Party B
agrees to cause  and  (insofar as they remain employees of KBT) to provide their
technical expertise and knowledge free of charge to assist Party A in the patent lawsuits
relating to unauthorized use of PPPOE technology (Taiwan Patent Registration Number: I258284, the
“PPPOE Patent”) against Chunghwa Telecom Co., Ltd. and Taiwan Fixed Network Ltd. till the final
resolution of such lawsuits.

(b) For those Giga Brand Cable Modem subscribers who have not been transferred to Ko Ying on
the Closing Date, Ko Ying agrees to provide broadband Internet access services for Party A to such
subscribers from and after the Closing Date till the completion of transfer of the respective
service contracts with such subscribers to Ko Ying, or the expiration or termination of the
respective service contract between Party A and each such subscriber. Party A will issue invoices
to each such subscriber in its own name and will, on a monthly basis, settle with Ko Ying the
amount collected from such subscribers for services rendered from and after the Closing Date so as
to transfer the economic interests and service obligations with respect to such subscribers to Ko
Ying on the Closing Date.

Section 2.3 Waiver for PPPOE Patent

Party A agrees to irrevocably waive any right or claim it may have had in the past or may have
in the future against Party B for use of the PPPOE Patent and the relevant know-how and technology
by Party B in connection with providing internet services to Webs-TV Co., Ltd.
(). In the event Party A assigns the PPPOE Patent to a third party, Party A
shall procure that Party B is free from any claims or liabilities with respect to use of such
Patent for its services to Webs-TV, and from being sued by the assignee of such Patent. This
Section 2.3 shall survive termination of this Agreement indefinitely.

ARTICLE III

SERVICE CHARGES

Section 3.1 Service Charges

In consideration of the Transitional Services provided by Party A, Party B herby agrees to pay
Party A the service charges as set forth below.

(a) With respect to the accounting services provided by Party A with KBT in accordance with
Section 2.1 (a) hereof, Party A agrees to provide KBT with such services free of charge for a
period of forty-five (45) days from the Closing Date (the “First Period”) and KBT shall reimburse
Party A the costs for provision of such services for a period of forty-five (45) days following the
end of the First Period, which is agreed upon by and between the Parties at NT$207,480.

 

 

(b) With respect to the premises leased by KBT in accordance with Section 2.1 (b), KBT shall
make payment to Party A pursuant to the terms and conditions set forth in the Lease Agreement.

(c) With respect to the Hinet backbone bandwidth, ATM Trunk, and Ethernet Leased
Circuit made available to KBT by Party A in accordance with Section 2.1 (c) hereof, KBT
shall reimburse Party A the costs for acquiring such bandwidth, ATM Trunk, and Ethernet Leased
Circuit pursuant to the terms and conditions set forth in the Cooperation Agreement.

(d) With respect to the trademark license granted by Party A to Ko Ying in accordance with
Section 2.1 (d) hereof, Party A agrees to provide such trademark license free of any charge.

(e) With respect to the billing services provided by Party A with KBT in accordance with
Section 2.1 (e) hereof, Party A agrees to provide KBT with such services free of charge.

Section 3.2 Payment

(a) Except as otherwise agreed to by and between the Parties, Party A shall submit the
invoices to KBT (and Ko Ying, if there is any service fee to be paid by it) by the 10th day of each
month to request payment for services rendered in the previous month, and KBT shall effect payment
of the invoiced amount before the end of each such month by wire transfer of the amount payable to
the bank account designated by Party A or other payment method as may be agreed to by and between
the Parties.

(b) KBT shall make an advance payment of NT$4 million to Party A on or before September 20,
2008 with respect to its use of Hinet backbone bandwidth, ATM Trunk, and Ethernet Leased Circuit
made available by Party A pursuant to the Cooperation Agreement. Such advance payment will be
credited against the actual amount payable by KBT to Party A under the Cooperation Agreement.

ARTICLE IV

SERVICE CONDITIONS, DUTIES AND DISCLAIMER

Section 4.1 Access to Information 

To the extent Party A and its employees agree to keep confidential the information disclosed
by Party B during Party A’s performance of the services hereunder, Party B agree that employees of
Party A may need to have access to the facilities in Party B for the purpose of providing the
Transitional Services as described in Sections 2.1(a) and 2.1(e) and Party B shall afford Party A’s
employees reasonable access to the books, records and facilities of Party B or furnish Party A’s
employees with such financial, operating and other data and information as Party A’s employees may
reasonably request for the purpose of providing the Transitional Services as contemplated hereby.

 

 

Section 4.2 Duties; Disclaimer

Party A will exert commercially reasonable efforts to perform the Transitional Services with
the same level of diligence and care and in the same manner consistent with its past practice to
facilitate a smooth transition. Party B shall be entitled to a customary right to request Party A’s
employees to take any reasonable action for the purpose of providing the Transitional Services.
Neither Party A nor any of its Affiliates, representatives, or employees shall have any liability
to Party B or any of its Affiliates, representatives, or employees as a result of provision of the
Transitional Services contemplated hereby, unless such liability is arising out of any willful
misconduct or gross negligence on the part of Party A.

ARTICLE V

TERMINATION

Section 5.1 Termination

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

(a) by mutual written consent of the Parties;

(b) by Party A, if Party B or any of them breaches or fails to perform in any respect any of
its obligations contained in this Agreement, and such breach or failure to perform cannot be or has
not been cured within 15 days following delivery of written notice of such breach or failure to
perform;

(c) by Party B, if Party A breaches or fails to perform in any respect any of its obligations
contained in this Agreement, and such breach or failure to perform cannot be or has not been cured
within 15 days following delivery of written notice of such breach or failure to perform; or

(d) by Party B, if Party B does not wish to receive the Transitional Services; provided that
such termination of the Lease Agreement or the Cooperation Agreement shall be subject to the terms
and conditions thereof.

The Party seeking to terminate this Agreement pursuant to this Section 5.1 (other than Section
5.1(a) hereof) shall give prompt written notice of such termination to the other Party.

Section 5.2 Effect of Termination

In the event of termination of this Agreement as provided in Section 5.1 hereof, this
Agreement shall forthwith cease to be in effect, provided 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 it may be amended, modified or supplemented after the date of
execution hereof.

 

 

ARTICLE VI

GENERAL PROVISIONS

Section 6.1 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 the Parties, and otherwise as
expressly set forth herein.

Section 6.2 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 Party A to any
such waiver shall be valid only if set forth in a written instrument executed and delivered by
Party A. Any agreement on the part of Party B to any such waiver shall be valid only if set forth
in a written instrument executed and delivered by Party B.

Section 6.3 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 Party A:

Hoshin GigaMedia Center Inc.

Attention: General Counsel

Facsimile: 886-2-2656-8073

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

Hoshin GigaMedia Center Inc.

Attention: Chief Operating Officer

Facsimile: 886-2-2656-8090

 

 

(b) if to Party B:

Koos Broadband Telecom Company Limited

Attention: Chief Legal Officer

Facsimile: 886-2-8751-5700

Attention: Chief Legal Officer

Facsimile: 886-2-8751-8976

Section 6.4 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 6.5 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 Republic of China, without regard to the laws of any other jurisdiction that
might be applied because of the conflicts of laws principles.

Section 6.6 Dispute Resolution

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 Party has requested such negotiations by notice to the other Party, such dispute,
controversy or claim shall be subject to the jurisdiction of Taipei District Court for the first
instance.

Section 6.7 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 6.8 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 6.9 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 Party. This Agreement may be executed by facsimile
signature and a facsimile signature shall constitute an original for all purposes.

Section 6.10 No Presumption Against Drafting Party

Party A and Party B 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.]

 

 

IN WITNESS WEHREOF, the Parties have caused this Agreement to be executed as of the date first
written above.

	 	 	 
	 
	 	 
	Hoshin GigaMedia Center Inc.
	 	 
	 
	 	 
	 

Name:

	 	 
	Title:
	 	 
	 
	 	 
	
	 	 
	 
	 	 
	 

Name:

	 	 
	Title:
	 	 
	 
	 	 
	Koos Broadband Telecom Company Limited
	 	 
	 
	 	 
	 

Name:

	 	 
	Title:
	 	 

 

 

Exhibit 2.1(b)

Form of Lease Agreement

See attached.

 

 

Exhibit 2.1(c)

Form of Cooperation Agreement

See attached.

 

 

Exhibit 2.1(d)

Trademarks

See attached.

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