Fortunet e Commerce : Announcements and Notices - Discloseable Transaction

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FORTUNET E-COMMERCE GROUP LIMITED

鑫網易商集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1039) DISCLOSEABLE TRANSACTION

The Board is pleased to announce that on 29 November 2016, Pointsea Holdings, a non wholly-owned subsidiary of the Company, entered into the Agreement with Extra Step and Joy Empire pursuant to which, among other things, Pointsea Holdings, Extra Step and Joy Empire have conditionally agreed to subscribe for shares in the JV Company and to cooperate in the development of the business of the JV Group.

After completion of the Additional Subscription, the JV Company will be held as to 50% by Pointsea Holdings and 50% by Investors.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Agreement and the transactions contemplated thereunder are more than 5% and all of such ratios are less than 25%, the Agreement and the transactions contemplated thereunder constitute a discloseable transaction for the Company under Chapter 14 of the Listing Rules and are therefore subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

As completion of the transactions contemplated under the Agreement is subject to the fulfillment (or waiver, if applicable) of the conditions precedent thereunder, the transactions contemplated under the Agreement may or may not proceed. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company. BACKGROUND

Reference is made to the June Announcement. As set out in the June Announcement, on 22 June 2016, the Company entered into an agreement with Chance Talent and Treasure Ease (the "June Agreement") pursuant to which, among other things, the Company and Chance Talent had conditionally agreed to subscribe for shares in Treasure Ease and to cooperate in the development of the business of Treasure Ease and its subsidiaries. Completion of the initial subscription under the aforesaid agreement took place on 27 June 2016 pursuant to the terms thereof, and Treasure Ease became a non wholly-owned subsidiary of the Company which is held as to 50.1% by the Company and 49.9% by Chance Talent. The paid-up capital of Treasure Ease as at the date of this announcement is US$10,000.

Reference is also made to the July Announcement. As set out in the July Announcement, Treasure Ease and its subsidiaries were discussing with famous business partners (which are leading enterprises in their respective industries) for possible cooperation.

Reference is also made to the August Announcement. As set out in the August Announcement, on 30 August 2016, Treasure Ease entered into an agreement with Easylink pursuant to which, among other things, Treasure Ease and Easylink have agreed to subscribe for shares in Pointsea Holdings and to cooperate in the development of the business of the Pointsea Holdings and its subsidiaries.

Reference is also made to the September Announcement. As set out in the September Announcement, on 13 September 2016, the Company, Chance Talent and Treasure Ease entered into a supplemental agreement to amend and supplement certain terms of the June Agreement.

The Board is pleased to announce that on 29 November 2016, Pointsea Holdings entered into the Agreement with Extra Step and Joy Empire pursuant to which, among other things, Pointsea Holdings, Extra Step and Joy Empire have conditionally agreed to subscribe for shares in the JV Company and to cooperate in the development of the business of the JV Group. The principal terms of the Agreement are summarized below.

THE AGREEMENT

Date: 29 November 2016

Parties: (1) Pointsea Holdings

1. Extra Step

2. Joy Empire

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Extra Step and Joy Empire and their ultimate beneficial owners are parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company as at the date of this announcement.

Incorporation of JV Company and Initial Subscription

Pursuant to the terms of the Agreement, Pointsea Holdings is responsible for incorporating the JV Company by initially subscribing for one new share in the JV Company. The subscription price payable by Pointsea Holdings for such share shall be RMB1. Such initial capital contribution was determined after arm's length negotiations among Pointsea Holdings, Extra Step and Joy Empire on the basis of the nominal value of each share in the JV Company.

Completion of the Initial Subscription

Completion of the Initial Subscription will take place on a business day falling within ten business days after the date of the Agreement or such other date as may be agreed by Pointsea Holdings, Extra Step and Joy Empire. The paid-up capital of the JV Company upon completion of the Initial Subscription will be RMB1. The subscription price payable by Pointsea Holdings for the one new share in the JV Company will be funded by the paid-up capital of Pointsea Holdings.

Additional Subscription

Pursuant to the terms of the Agreement, Pointsea Holdings, Extra Step and Joy Empire have conditionally agreed to subscribe for additional 5,999 shares, 2,000 shares and 2,000 shares respectively in the JV Company. The subscription price payable by each of Pointsea Holdings, Extra Step and Joy Empire for such additional shares shall be RMB99,999,999, RMB33,333,333 and RMB33,333,333 respectively. It is contemplated that an Other Investor may, subsequent to the date of the Agreement, join as a new party to Agreement and contribute RMB33,333,333 for an additional 2,000 shares in the JV Company. The above additional capital contribution was determined after arm's length negotiations among Pointsea Holdings, Extra Step and Joy Empire with reference to the capital requirement for developing the future business of the JV Group.

The additional subscription price payable by Pointsea Holdings for the additional shares in the JV Company will be funded by (i) the proceeds payable by Chance Talent and the Company for subscribing for additional shares of Treasure Ease; and (ii) the proceeds payable by Treasure Ease and China UnionPay for subscribing for additional shares of Pointsea Holdings.

Conditions precedent to completion of the Additional Subscription

Completion of the Additional Subscription by Pointsea Holdings is subject to the following conditions (the "PH Conditions") being satisfied:

1. The shareholders of Pointsea Holdings have completed the capital injection in Pointsea Holdings and the share capital of Pointsea Holdings after such capital injection is not less than RMB100,000,000;

2. The JV Company has entered into a cooperation agreement with each of the related company of Extra Step and Joy Empire;

3. All authorisations necessary for the consummation of the transactions contemplated in the Agreement have been obtained by Pointsea Holdings and remaining in full force and effect;

4. There is no breach, and there are no facts or circumstances that may reasonably be expected to lead to a breach, of any covenant, warranty, agreement, or obligation under the Agreement before the completion of the Additional Subscription by Pointsea Holdings; and

5. The Company has complied with all applicable disclosure, shareholders' approval, if required, and other requirements under the Listing Rules for the transactions contemplated under the Agreement.

Completion of the Additional Subscription by the Investors is subject to the following conditions (the "Investors Conditions") being satisfied:

1. Completion of the Additional Subscription by Pointsea Holdings shall have taken place;

2. All authorisations (including internal and external authorizations) necessary for the consummation of the transactions contemplated in the Agreement have been obtained by Investors and remaining in full force and effect;

3. There is no breach, and there are no facts or circumstances that may reasonably be expected to lead to a breach, of any covenant, warranty, agreement or obligation under the Agreement before the completion of the Additional Subscription by the Investors;

4. The Other Investor has agreed to become a party to the Agreement by executing a deed of adherence, and the Other Investor has provided the original copy of such deed of adherence to Pointsea Holdings, Extra Step and Joy Empire;

5. The Articles of Association of JV Company have become effective and are in such form and substance reasonably satisfactory to the Investors;

6. Each Investor has received a Hong Kong legal opinion and Cayman Islands legal opinion in such form and substance reasonably satisfactory to such Investor;

7. No event in respect of the JV Company which has an adverse effect to the transactions contemplated under the Agreement has occurred, nor has the JV Company conducted any business activity or, save as otherwise provided in the Agreement, borrowed any money or provided any guarantee to any external party;

8. Pointsea Holdings has provided (and has procured the JV Company to provide) a closing certificate to the Investors in such form and substance reasonably satisfactory to the Investors;

9. Each Investor has obtained or completed all necessary approvals and filing procedures for the execution and completion of the transactions contemplated under the Agreement; and