exv10w1w6






Exhibit 10.1.6




August 12, 2009




Redgate Media Group



Redgate Interactive Advertising (Beijing) Co., Ltd.

(  )



And



Jinyu Fan  (  )



Juanjuan
Tang (  )



 





AMENDMENT AND SUPPLEMENTAL AGREEMENT



 





 









 





     THIS AMENDMENT AND SUPPLEMENTAL AGREEMENT (this “Amendment”) is made on August 12, 2009:


Among



Redgate Media Group (formerly known as Redgate Media Inc., “Company”), a company incorporated under
the laws of Cayman Islands with its registered office at Scotia Centre, 4th Floor, P.O. Box 2804,
George Town, Grand Cayman, Cayman Islands, British West Indies;



and




Redgate Interactive Advertising (Beijing) Co., Ltd. (  )(“WFOE Redgate
()”), a company incorporated under the laws of the PRC with its registered office at Room
804, 2nd Building, No.19 Jianwai St, Chaoyang District, Beijing, the PRC;



and



Jinyu Fan (in Chinese ), citizen of the PRC, whose PRC identity card number is
310104195808141612;



Juanjuan Tang (in Chinese , together with Jinyu Fan, the “Allottees” and each an
“Allottee”), citizen of the PRC, whose PRC identity card number is 310103195712232046;



The Company, WFOE Redgate (  ) and the Allottees are collectively referred to as the
“Parties” and individually as a “Party”.



WHEREAS:





	A.	 	The Parties have executed a Share Issuance Agreement on April 8, 2008 (the “SIA”), pursuant
to which the Company agreed to allot and issue or procure the allotment and issuance of the
Issued Shares (as defined therein) and effect the Cash Payment (as defined therein) to the
Allottees in consideration of the provision of management services by the Allottees to
Dianguang, and the giving of confidentiality undertaking and Non-Competition Undertaking by
the Allottees to the Company as set out therein.




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	B.	 	The Parties have executed an amendment and supplemental agreement to the Equity Transfer
Agreement on August 4, 2009 in connection with the payment of considerations under the Equity
Transfer Agreement.
	 
	C.	 	The Parties now wish to amend and supplement certain provisions of the SIA on and subject to
the terms of this Amendment.




IT IS AGREED as follows:





	1.	 	AMENDMENTS AND SUPPLEMENTS
	 
	 	 	On and from the date of this Amendment:






	 	1.1	 	The provisions of the SIA shall be amended and/or supplemented in accordance
with the terms stipulated herein; and
	 
	 	1.2	 	Except as provided for under this Amendment, the remaining provisions of the
SIA shall remain in full force and effect and this Amendment and the SIA shall be read
and construed as one and the same agreement.






	2.	 	INTERPRETATION
	 
	 	 	All capitalized terms used but not defined herein shall have the meaning ascribed to them in
the SIA.
	 
	3.	 	PAYMENT OF OFFSHORE CONSIDERATION






	 	3.1	 	General Principles
	 
	 	 	 	Notwithstanding anything to the contrary in the SIA, the Parties hereby acknowledge
and agree that the Issued Shares and Cash Payment (collectively, the “Offshore
Consideration”) in the SIA shall be adjusted according to Clause 3.2 of this
Amendment.
	 
	 	3.2	 	Amendments to the SIA
	 
	 	 	 	For the avoidance of doubt, “this Agreement” referred to in Clause 3.2 of this
Amendment means the SIA as defined therein.






	 	3.2.1	 	The definition of the Tranche A Shares as well as any
reference to the Tranche A Shares in the SIA shall be deleted.




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	 	3.2.2	 	The definitions of certain capitalized terms in Section 1.1 of
the SIA shall be replaced with the following definitions:






“Tranche A Cash Payment” means the cash payment to be made to the Allottees (if
any) pursuant to Sections 2.2(a)(i), 2.2(b)(i) or 2.2(c)(i) of this Agreement.




“Tranche B Cash Payment” means the cash payment to be made to the Allottees (if
any) pursuant to Sections 2.2(b)(ii) or 2.2(c)(ii) of this Agreement.




“Tranche B Shares” means the Shares to be issued to the Allottees pursuant to
Section 2.2(a)(ii) of this Agreement, subject to the adjustment (if applicable)
set forth in Section 2.7 of this Agreement.




“Tranche C Cash Payment” means the cash payment to be made to the Allottees (if
any) pursuant to Section 2.2(c)(iii) of this Agreement.




“Tranche C Shares” means the Shares to be issued to the Allottee pursuant to
Sections 2.2(a)(iii) or 2.2(b)(iii) of this Agreement, subject to the adjustment
(if applicable) set forth in Section 2.7 of this Agreement.




	 	3.2.3	 	Section 2.2 of the SIA shall be replaced with the following clauses:






Section 2.2 Determination of Consideration




(a) if an IPO occurs before 31st December 2009, then the Allottee
shall be entitled to receive:




(i) the following amount of Tranche A Cash Payment:




Y = 7 x A x 30%




Where:




Y = the amount of Tranche A Cash Payment




A = the audited net profits of Dianguang for the year ended 31st
December 2008 calculated in accordance with US GAAP with an unqualified audit
opinion (“Dianguang 2008 Net Profits”)




The Company will pay an amount equivalent to RMB 1,800,000 (“Payment of RMB
1,800,000”) as part of Tranche A Cash Payment into the bank account(s) designated
by the Allottees within seven (7) days after the



4









 







completion of the audit on Dianguang for the year 2008 as set forth in Section
2.4(a), provided that conditions precedent to the Tranche A Completion under
Section 2.4 of this Agreement are satisfied or waived by the Company,.




If the Tranche A Cash Payment is more than RMB 1,800,000, then the rest amount of
Tranche A Cash Payment will be paid to the Allottes in the 4th quarter of 2009
provided that conditions precedent to the Tranche A Completion under Section 2.4
of this Agreement are satisfied or waived by the Company. But the Company will
try its best to pay the Tranche A Cash Payment before November 30th of
2009.




If the Tranche A Cash Payment is less than RMB 1,800,000, then the Payment of RMB
1,800,000 will be deemed as the full completion of Tranche A Cash Payment.




(ii) the following number of Tranche B Shares on the Tranche B Completion Date:



	 	 	 	 
	X =

	 	A x C x 30% x D - ( F+Dianguang Equity Transfer Consideration)x 1/2	 
	 	 	 
	 	B	 







Where:




X = the number of the Tranche B Shares




A = the audited net profits of Dianguang for the year ended 31st
December 2009 calculated in accordance with US GAAP with an unqualified audit
opinion (“Dianguang 2009 Net Profits”)




B = the average of the closing price per Share for the ten (10) trading days
after the announcement of Listco’s audited accounts for the financial year ended
31st December 2009




C = P/E multiple used for Listco IPO share pricing




     The P/E will be Non GAAP P/E set out in the first research reports to be
issued by each of the bookrunners and co-managers of the IPO of Redgate Media
Group .




D = 60% (subject to the adjustments stated in Section 2.7)




F = the Audit fee for years 2005 to 2008 historical financial report auditing.
The final amount shall be decided by the auditing firm’s working hours
allocation. The audit fee should be less than USD 100,000. USD-RMB exchange rate
should use closing USD-RMB exchange rate on August 4th, 2009.




provided that, the Company may elect at its sole discretion to pay cash
or procure the payment of cash to the Allottee in lieu of all or part of the
Tranche B Shares issuable to the Allottee under this Section 2.2(a)(ii), in which
case, the amount of cash payable in lieu of Tranche B Shares shall be



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equal to the number of Tranche B Shares for which the Company has elected to pay
cash (in lieu of issuance of Tranche B Shares) under this Section 2.2(a)(ii)
multiplied by B;




(iii) the following number of Tranche C Shares on the Tranche C Completion Date:



	 	 	 	 
	X =

	 	A x C x 40% x D - ( F+Dianguang Equity Transfer Consideration) x 1/2	 
	 	 	 
	 	B	 







Where:




X = the number of the Tranche C Shares




A = the audited net profits of Dianguang for the year ended 31st
December 2010 calculated in accordance with US GAAP with an unqualified audit
opinion (“Dianguang 2010 Net Profits”)




B = the average of the closing price per share of Listco for the ten (10) trading
days after the announcement of Listco’s audited accounts for the financial year
ended 31st December 2010




C = P/E multiple used for Listco IPO share pricing




     The P/E will be Non GAAP P/E set out in the first research reports to be
issued by each of the bookrunners and co-managers of the IPO of Redgate Media
Group .




D = 60% (subject to the adjustments stated in Section 2.7)




F = the Audit fee for years 2005 to 2008 historical financial report auditing.




The final amount shall be decided by the auditing firm’s working hours
allocation. The audit fee should be less than USD 100,000. USD-RMB exchange rate
should use closing USD-RMB exchange rate on August 4th, 2009.




provided that, the Company may elect at its sole discretion to pay cash
or procure the payment of cash to the Allottee in lieu of all or part of the
Tranche C Shares issuable to the Allottee under this Section 2.2(a)(iii), in
which case, the amount of cash payable in lieu of Tranche C Shares shall be equal
to the number of Tranche C Shares for which the Company has elected to pay cash
(in lieu of issuance of Tranche C Shares) under this Section 2.2(a)(iii)
multiplied by B;




(b) if an IPO occurs after 31st December 2009 and before
31st December 2010 then the Allottee shall be entitled to receive:




(i) the following amount of Tranche A Cash Payment:




Y = 7 x A x 30%




Where:



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Y = the amount of Tranche A Cash Payment




A = the Dianguang 2008 Net Profits




The Company will pay an amount equivalent to RMB 1,800,000 (“Payment of RMB
1,800,000”) as part of Tranche A Cash Payment into the bank account(s) designated
by the Allottees within seven (7) days after the completion of the Audit on
Dianguang for the Year 2008 as set forth in Section 2.4(a) provided that
conditions precedent to the Tranche A Completion under Section 2.4 of this
Agreement are satisfied or waived by the Company,.




If the Tranche A Cash Payment is more than RMB 1,800,000, then the rest amount of
Tranche A Cash Payment will be paid to the Allottes in 4th quarter of 2009
provided that conditions precedent to the Tranche A Completion under Section 2.4
of this Agreement are satisfied or waived by the Company. But the Company will
try its best to pay the Tranche A Cash Payment before November 30th of
2009.




If the Tranche A Cash Payment is less than RMB 1,800,000, then the Payment of RMB
1,800,000 will be deemed as the full completion of Tranche A Cash Payment.




(ii) the following amount of Tranche B Cash Payment on the Tranche B Completion
Date:




(1) if the Dianguang 2009 Net Profits are more than zero, then the Allottee shall
receive the Tranche B Cash Payment calculated as follows:




Y = 7 x A x 30% - ( F+Dianguang Equity Transfer Consideration) x 1/2




Where:




Y = the amount of Tranche B Cash Payment




A = the Dianguang 2009 Net Profits




F = the Audit fee for years 2005 to 2008 historical financial report auditing.The
final amount shall be decided by the auditing firm’s working hours allocation.
The audit fee should be less than USD 100,000. USD-RMB exchange rate should use
closing USD-RMB exchange rate on August 4th, 2009.




(2) if the Dianguang 2009 Net Profits are zero or less than zero, then the
Allottee shall receive USD8,000 as the Tranche B Cash Payment;




(iii) the following number of Tranche C Shares on the Tranche C Completion Date:



	 	 	 	 
	X =

	 	A x C x 40% x D - ( F+Dianguang Equity Transfer Consideration)x 1/2
	 	 
	 	B






7









 







Where:




X = the number of the Tranche C Shares




A = Dianguang 2010 Net Profits




B = the average of the closing price per Share for the ten (10) trading days
after the announcement of Listco’s audited accounts for the financial year ended
31st December 2010




C = P/E multiple used for IPO share pricing




     The P/E will be Non GAAP P/E set out in the first research reports to be
issued by each of the bookrunners and co-managers of the IPO of Redgate Media
Group.




D = 60% (subject to the adjustments stated in Section 2.7)




F = the Audit fee for years 2005 to 2008 historical financial report auditing.
The final amount shall be decided by the auditing firm’s working hours
allocation. The audit fee should be less than USD 100,000. USD-RMB exchange rate
should use closing USD-RMB exchange rate on August 4th, 2009.




provided that, the Company may elect at its sole discretion to pay cash
or procure the payment of cash to the Allottee in lieu of all or part of the
Tranche C Shares issuable to the Allottee under this Section 2.2(b)(iii), in
which case, the amount of cash payable in lieu of Tranche C Shares shall be equal
to the number of Tranche C Shares for which the Company has elected to pay cash
(in lieu of issuance of Tranche C Shares) under this Section 2.2(b)(iii)
multiplied by B;




(c) if the IPO does not occur on or before 31st December 2010 then the
Allottee shall be entitled to receive:




(i) the following amount of Tranche A Cash Payment:




Y = 7 x A x 30%




Where:




Y = the amount of Tranche A Cash Payment


A = the Dianguang 2008 Net Profits




The Company will pay an amount equivalent to RMB 1,800,000 (“Payment of RMB
1,800,000”) as part of Tranche A Cash Payment into the bank account(s) designated
by the Allottees within seven (7) days after the completion of the Audit on
Dianguang for the Year 2008 as set forth in Section 2.4(a) provided that
conditions precedent to the Tranche A Completion under Section 2.4 of this
Agreement are satisfied or waived by the Company,.




If the Tranche A Cash Payment is more than RMB 1,800,000, then the rest amount of
Tranche A Cash Payment will be paid to the Allottes in 4th



8









 







quarter of 2009 provided that conditions precedent to the Tranche A Completion
under Section 2.4 of this Agreement are satisfied or waived by the Company. But
Company will try it best to pay Tranche A Cash Payment before November
30th of 2009.




If the Tranche A Cash Payment is less than RMB 1,800,000, then the Payment of RMB
1,800,000 will be deemed as the full completion of Tranche A Cash Payment.




(ii) the following amount of Tranche B Cash Payment on Tranche B Completion Date:




(1) if the Dianguang 2009 Net Profits are more than zero, then the Allottee shall
receive the Tranche B Cash Payment calculated as follows:




Y = 7 x A x 30% - ( F+Dianguang Equity Transfer Consideration)
x 1/2




Where:




Y = the amount of Tranche B Cash Payment




A = the Dianguang 2009 Net Profits




F = the Audit fee for years 2005 to 2008 historical financial report auditing.
The final amount shall be decided by the auditing firm’s working hours
allocation. The audit fee should be less than USD 100,000. USD-RMB exchange rate
should use closing USD-RMB exchange rate on August 4th, 2009.




(2) if the Dianguang 2009 Net Profits are zero or less than zero, then the
Allottee shall receive USD8,000 as the Tranche B Cash Payment;




(iii) the following amount of Tranche C Cash Payment on Tranche C Completion
Date:




(1) if the Dianguang 2010 Net Profits are more than zero, then the Allottee shall
receive the Tranche C Cash Payment calculated as follows:




Y = 7 x A x 40% - (F+Dianguang Equity Transfer Consideration) x 1/2




Where:




Y = the amount of Tranche C Cash Payment




A = the Dianguang 2010 Net Profits




F = the Audit fee for years 2005 to 2008 historical financial report auditing.
The final amount shall be decided by the auditing firm’s working hours
allocation. The audit fee should be less than USD 100,000. USD-RMB exchange rate
should use closing USD-RMB exchange rate on August 4th, 2009.



9









 






(2) if the Dianguang 2010 Net Profits are zero or less than zero, then the
Allottee shall receive USD4,000 as the Tranche C Cash Payment.




	 	3.2.4	 	Paragraph two and three of Section 2.7 of the SIA shall be
replaced with the following clauses and the other contents of Section 2.7 shall
remain the same:






Section 2.7 Adjustment of Consideration




......




The denominator of which is the amount of audited net profits for the preceding
year, provided that the amount of “C” multiplied by “D” in Sections
2.2(a)(ii), 2.2(a)(iii) and 2.2(b)(iii) above shall not exceed 18.




If Dianguang’s audited net profits for year 2010 and 2009 divided by Dianguang’s
audited net profits for the previous year exceeds 1.4, then the amount of “C”
multiplied by “D” in Sections 2.2(a)(iii) and 2.2(b)(iii) shall not exceed 19.




......




	 	3.2.5	 	The following clauses shall be inserted as Section 2.9 of the SIA:






Section 2.9 Bonus to the Allottees




If the Dianguang 2009 Net Profits is increased by 20% or more as compared
with the Dianguang 2008 Net Profits and the Dianguang 2010 Net Profits is also
increased by more than 20% and less than 40% as compared with the Dianguang 2009
Net Profits provided that such profits are gained through operation using only
Dianguang’s own capital without any loans or financings in any other forms, the
Allottees shall be entitled to receive a bonus in the amount of two times of the
increased net profits from 2008 to 2010 on Tranche C Completion Date. The Company
may elect at its sole discretion to pay such bonus in cash or by Shares of the
Listco if an IPO has already occurred.




If the Dianguang 2009 Net Profits is increased by 40% or more as compared
with the Dianguang 2008 Net Profits and the Dianguang 2010 Net Profits is also
increased by 40% or more as compared with the Dianguang 2009 Net Profits provided
that such profits are gained through operation using only Dianguan’s own capital
without any loans or financings in any other forms, the Allottees shall be
entitled to receive a bonus in the amount of three times of the increased net
profits from 2008 to 2010 on Tranche C Completion Date. The Company may elect at
its sole discretion to pay such bonus in cash or by Shares of the Listco if an
IPO has already occurred.



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	 	3.2.6	 	Section 2.4 (a) of the SIA shall be replaced with the
following clause:






	 	(a)	 	(Audit on Dianguang for the Year 2008) the financial
statements of Dianguang for year 2008 have been audited in accordance with
the US GAAP by an accounting firm designated by the Company, provided that
such audit shall occur and be completed within the first eight (8) calendar
months of year 2009.






	 	3.2.7	 	The following clauses shall be inserted as Section 2.4(k) and
2.4(l) of the SIA:






	 	(k)	 	(Account Receivable for the Year 2008) no less than 90%
of the accounts receivable of Dianguang for year 2008 have been collected by
Dianguang before the completion of the audit on Dianguang for the Year 2008
as stipulated in Section 2.4(a).
	 
	 	(l)	 	(Account Receivable Income Statement Treatment) in case
Dianguang is unable to collect 100% of its prior year’s accounts receivable
before the end of the current year, the uncollected portion of accounts
receivable can only be recorded into the Income Statement after it has been
collected.






	 	3.2.8	 	The following clauses shall be inserted as Section 2.5(j),
2.5(k) and 2.5(l) of the SIA:






	 	(j)	 	(Account Receivable for the Year 2008) all the accounts
receivable of Dianguang for year 2008 have been collected by Dianguang
before the end of year 2009.
	 
	 	(k)	 	(Account Receivable for the Year 2009) no less than 90%
of the accounts receivable of Dianguang for year 2009 have been collected by
Dianguang before the completion of the audit on Dianguang for the Year 2009
as stipulated in Section 2.5 (a).
	 
	 	(l)	 	(Account Receivable Income Statement Treatment) in case
Dianguang is unable to collect 100% of its prior year’s accounts receivable,
the uncollected portion of accounts receivable can only be recorded into the
Income Statement after it has been collected.






	 	3.2.9	 	The following clauses shall be inserted as Section 2.6(j),
2.6(k) and 2.6(l)of the SIA:






	 	(j)	 	(Account Receivable for the Year 2009) all the accounts
receivable of Dianguang for year 2009 have been collected by Dianguang
before the end of year 2010.
	 
	 	(k)	 	(Account Receivable for the Year 2010) no less than 90%
of the accounts receivable of Dianguang for year 2010 have been collected by
Dianguang before the completion of the audit on Dianguang for the Year 2010
as stipulated in Section 2.6(a).
	 
	 	(l)	 	(Account Receivable Income Statement Treatment) in case




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	 	 	 	Dianguang is unable to collect 100% of its prior year’s accounts receivable,
the uncollected portion of accounts receivable can only be recorded into the
Income Statement after it has been collected.






	4	 	GOVERNING LAW AND DISPUTE RESOLUTION






	 	4.1	 	Governing Law
	 
	 	 	 	This Amendment is governed by the laws of Hong Kong, without regard to
principles of conflicts of law thereunder.






	 	4.2	 	Dispute Resolution






	 	(a)	 	Any dispute, controversy or claim arising out of or relating
to this Amendment, or the interpretation, breach, termination or
validity hereof, shall first be subject to resolution through consultation of
the Parties to such dispute, controversy or claim. Such consultation shall
begin within seven (7) days after one Party hereto has delivered to each of
the other Parties hereto a written request for such consultation. If such
consultation can not resolve the dispute or claim within thirty (30) days
following the commencement of such consultation (“Consultation Period”), then
the Parties or their representatives, as the case may be, shall, within thirty
(30) days after the expiry of the Consultation Period to meet in person and
attempt to resolve the dispute or claim in good faith. If within thirty (30)
days following the commencement of such meeting the dispute cannot be
resolved, the dispute shall be submitted to arbitration upon the request of
any Party with notice to the others.
	 
	 	(b)	 	The arbitration shall be conducted in Hong Kong under the
auspices of the Hong Kong International Arbitration Centre (the “Centre”).
There shall be a single arbitrator who shall be agreed upon by the parties or,
failing which, who shall be selected by the then President of the Centre.
	 
	 	(c)	 	The arbitration proceedings shall be conducted in English.
The arbitration tribunal shall apply the UNCITRAL Arbitration Rules then in
force as administrated by the Centre in effect at the time of the arbitration.






	5	 	LANGUAGE




This Amendment is made out in Chinese and English language and it is acknowledged by the Parties
that both versions are consistent in all material respects and are equally authentic.





	6	 	COUNTERPARTS




This Amendment may be executed in any number of counterparts, each signed by the
Parties to this Amendment. Each of the signed copies so executed shall be an original,
but all of which shall together constitute one and the same instrument.









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IN WITNESS WHEREOF, this Amendment has been signed on behalf of each of the Parties hereto as of
the date first written above.




	 	 	 	 	 
	Redgate Media Group

 	 	 
	By  	/s/ Zhu Ying
 	 	 
	 	Name:  	Zhu Ying 	 	 
	 	Title:  	President 	 	 
	 


Redgate Interactive Advertising (Beijing) Co., Ltd. (  )




	 	 	 	 	 
	 	 	 
	By  	/s/ Zhu Ying
 	 	 
	 	Name:  	Zhu Ying 	 	 
	 	Title:  	Board Chairman 	 	 
	 
	Allottees:

 	 	 
	Jinyu Fan ()
 	 	 
	 
	By  	/s/ Jinyu Fan  	 	 
	 	 	 
	 
	 	 	 
	Juanjuan Tang ()
 	 	 
	 
	By  	/s/ Juanjuan Tang