exv10w2w1






Exhibit 10.2.1



[Translation of Chinese original]




EQUITY TRANSFER AGREEMENT




IN CONNECTION WITH



SHANGHAI YARUN CULTURE COMMUNICATIONS CO., LTD.



By and Among



REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD.



WEIDONG ZHU



ZHENHUI WANG



And



WENHUA CAO



 









 





Table of Contents




	 	 	 	 	 	 	 
	Article 1.
	 	Definitions	 	 	1	 
	 
	Article 2.
	 	Transfer of Equity Interest	 	 	3	 
	 
	Article 3.
	 	Representations and Warranties	 	 	3	 
	 
	Article 4.
	 	Closing	 	 	4	 
	 
	Article 5.
	 	Further Covenants	 	 	6	 
	 
	Article 6.
	 	Rights of the Parties	 	 	10	 
	 
	Article 7.
	 	Confidentiality	 	 	10	 
	 
	Article 8.
	 	Notices	 	 	11	 
	 
	article 9.
	 	Liability for Breach of Contract	 	 	12	 
	 
	Article 10.
	 	Expenses and Taxes	 	 	13	 
	 
	Article 11.
	 	Dispute Resolution	 	 	13	 
	 
	Article 12.
	 	Governing Law	 	 	13	 
	 
	Article 13.
	 	Language	 	 	13	 
	 
	Article 14.
	 	Entire Agreement	 	 	13	 
	 
	Article 15.
	 	Effectiveness	 	 	13	 
	 
	Appendix 1.
	 	Particulars of the Company	 	 	2	 
	 
	Appendix 2.
	 	Conditions Precedent to Closing	 	 	3	 
	 
	Appendix 3.
	 	Representations and Warranties	 	 	5	 
	 
	Appendix 4.
	 	Intellectual Property Protection and Non-Compete Agreement	 	 	13	 
	 
	Appendix 5.
	 	Non-Disclosure Agreement	 	 	14	 
	 
	Appendix 6.
	 	Disclosure Letter	 	 	15	 
	 
	Appendix 7.
	 	Financial Reports	 	 	16	 
	 
	Appendix 8.
	 	Existing Television Programs	 	 	22	 






 









 





THIS EQUITY TRANSFER AGREEMENT (the “Agreement”) is entered into on this 8th day of
April 2008 by and among:





	(1)	 	REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD., a limited liability company duly
established and validly existing under the laws of the People’s Republic of China, with its
domicile at Suite 804, Building 2, 19 Jianguomenwai Avenue, Chaoyang District, Beijing (“Party
A”);
	 
	(2)	 	WEIDONG ZHU, a natural person and citizen of the People’s Republic of China whose ID card
number is 310110197006105018 and whose residential address is Flats 801 and 802, Building 3,
163 Puhuitang Road, Shanghai;
	 
	 	 	ZHENHUI WANG, a natural person and citizen of the People’s Republic of China whose ID card
number is 31010219690611525X and whose residential address is Flat 202, 62 Zinan Huayuan
Ercun, Zizhu Road, Minhang District, Shanghai;
	 
	 	 	WENHUA CAO, a natural person and citizen of the People’s Republic of China whose ID card
number is 330102195906230636 and whose residential address is 25-1, Phase 1, Dahua
Xiqifengqing, Wenyi West Road, Hangzhou, Zhejiang; (Weidong Zhu, Zhenhui Wang and Wenhua Cao
are hereinafter collectively referred to as “Party B”); and
	 
	(3)	 	SHANGHAI YARUN CULTURE COMMUNICATIONS CO., LTD., a limited liability company duly established
and validly existing under the laws of the People’s Republic of China, with its domicile at
D-541, 1 Huyi Road, Shanghai (the “Company”).





WHEREAS:



	(A)	 	Party B owns 100 percent of the Equity Interest in the Company (the detailed particulars of
the Company as at the execution date hereof are set forth in Appendix 1 hereto), of which
Weidong Zhu owns 40 percent of the Equity Interest, Zhenhui Wang owns 40 percent of the Equity
Interest and Wenhua Cao owns 20 percent of the Equity Interest.
	 
	(B)	 	Party A and Party B agree that Party B shall transfer 100 percent of the Equity Interest of
the Company to Party A (the “Proposed Equity Transfer”) on the terms and conditions herein,
pursuant to which Weidong Zhu shall transfer 40 percent of the Equity Interest to Party A,
Zhenhui Wang shall transfer 40 percent of the Equity Interest to Party A and Wenhua Cao shall
transfer 20 percent of the Equity Interest to Party A.




NOW, THEREFORE, following the negotiations between the Parties, the Parties agree as follows:




ARTICLE 1. DEFINITIONS





	1.1	 	Unless otherwise expressly indicated or required by the context, the following terms shall
have the meanings assigned to them as follows:




 









 






	 	 	“Equity Interest” means, unless otherwise agreed by the Parties, 100 percent of the capital
contribution to the Company owned by Party B and all title, rights and interests therein
(including the rights and interests in any retained earnings of the Company), namely the
equity interest that is the subject of the Proposed Equity Transfer.
	 
	 	 	“Closing” means the completion by the Parties of the transfer of the Equity Interest
mentioned in Article 2 hereof pursuant to Article 4.3 of this Agreement.
	 
	 	 	“Closing Date” means the date on which all of the conditions for the Proposed the Equity
Transfer set forth in Appendix 2 hereto have been fulfilled (or waived) and the Parties
confirm, in accordance with Article 4 hereof, that all of the Conditions Precedent have been
fulfilled (or waived), or such other date as agreed upon by Both Parties.
	 
	 	 	“Encumbrances” means any mortgages, claims, liens, options, pledges, encumbrances,
preemptive rights, acquisition rights, seizure rights, ownership retention, setoff rights,
counterclaims, trust arrangements and other such restrictions (including restrictions on the
right to use, vote, transfer, receive proceeds or other ownership rights);
	 
	 	 	“Due Diligence” means the comprehensive due diligence on the Company conducted by Party A
and a party or parties designated by Party A.
	 
	 	 	“Confidential Information” means all oral or written information on or relating to any of
the Parties’ business operations, business strategies, business plans, investment plans,
sales, clients, marketing, technologies, research and development, finances or otherwise,
including but not limited to all reports and records containing such information and all
copies (including electronic copies), reproductions, reprints and translations thereof. For
purposes of this Agreement, the term “Confidential Information” shall also include this
Agreement and any of the documents (including but not limited to the necessary documents
that Both Parties are required to execute for the Closing) specified or referenced herein.
	 
	 	 	“Conditions Precedent” means the conditions precedent for the Closing set forth in Appendix
2 hereto.
	 
	 	 	“Working Day” or “Business Day” means a day other than a Saturday, Sunday or statutory
public holiday in mainland China.
	 
	 	 	“Renminbi” or “RMB” means the legal currency of the PRC.
	 
	 	 	“AoA” means the articles of association of the Company (including versions thereof as
amended and supplemented from time to time).
	 
	 	 	“Registration Authority” means the competent administration for industry and commerce with
which the Company is registered.
	 
	1.2	 	Unless otherwise expressly indicated or required by the context:




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	 	1.2.1	 	any reference to a contract, agreement or document herein shall mean such
contract, agreement or document as may be amended, supplemented or novated from time to
time;
	 
	 	1.2.2	 	any reference to a person in this Agreement or another related contract,
agreement or document shall include such person’s successors and permitted assigns;
	 
	 	1.2.3	 	any reference to an Article or Appendix herein shall be deemed to apply to the
specified Article of or Appendix to this Agreement; and
	 
	 	1.2.4	 	“Party” shall refer to any of the Parties hereto, “Parties” or “Each Party”
shall refer to each Party or all of the Parties hereto and “Both Parties” shall refer
to Party A and Party B.





ARTICLE 2. TRANSFER OF EQUITY INTEREST





	2.1	 	Party B agrees to transfer the Equity Interest to Party A for the price of Renminbi Three
Million (RMB3,000,000) (the “Transfer Price”) and Party A agrees to purchase the Equity
Interest from Party B for the price of Renminbi Three Million (RMB3,000,000) in accordance
with Article 4.3 hereof. The Equity Interest shall be free of any Encumbrances.
	 
	2.2	 	The holding of the equity interest of the Company prior to the completion of the Proposed
Equity Transfer is set forth as below:






	 	 	 	 	 
	Name of shareholder	 	Capital contribution	 	Percentage
	Weidong Zhu
	 	RMB1,200,000
	 	 40%
	Zhenhui Wang
	 	RMB1,200,000
	 	 40%
	Wenhua Cao
	 	RMB600,000
	 	 20%
	Total
	 	RMB3,000,000
	 	100%







	2.3	 	The holding of the equity interest of the Company after the completion of the Proposed Equity
Transfer shall be as follows:





	 	 	 	 	 
	Name of shareholder	 	Capital contribution	 	Percentage
	Redgate Interactive Advertising
(Beijing) Co., Ltd.
	 	RMB3,000,000
	 	100%
	Total
	 	RMB3,000,000
	 	100%






ARTICLE 3. REPRESENTATIONS AND WARRANTIES





	3.1	 	Each Party represents and warrants to the other Parties as follows:
	 
	 	 	Each Party has the right, authorization and power to enter into this
Agreement and perform the obligations hereunder and if executed by the
Parties, this Agreement shall




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	 	 	constitute a lawful, valid and binding obligation of the Parties that may be enforced
pursuant to the terms hereof.
	 
	3.2	 	Party B and the Company, separately and jointly, further make the representations and
warranties set forth in Appendix 3 hereto to Party A.
	 
	3.3	 	Unless expressly indicated otherwise, each Party warrants that each representation and
warranty by that Party, as of the execution date hereof and the Closing Date, is true,
accurate, complete and not misleading.
	 
	3.4	 	If any representation or warranty given in this Agreement by a Party is false or erroneous,
or if any representation or warranty is not duly and timely performed, the Party that made
such representation or warranty shall be deemed in breach of such representation or warranty.
In addition to performing the other obligations herein, the Party in breach of the
representation or warranty shall indemnify and bear the losses, damages, expenses (including
but not limited to reasonable legal fees or litigation expenses) and liabilities incurred by
the non-breaching Parties as a result of such breach.
	 
	3.5	 	Prior to the completion of the Closing, if a Party becomes aware that any representation or
warranty made hereunder by such Party is untrue, inaccurate, incomplete or misleading to the
other Parties:






	 	3.5.1	 	the breaching Party shall promptly notify the other Parties thereof in
writing;
	 
	 	3.5.2	 	the breaching Party shall promptly take all necessary measures to cure such
breach. If such Party fails to cure the breach within thirty (30) days from the date
of giving the written notice specified in Article 3.5.1, the Parties shall negotiate in
good faith so as to reach a resolution acceptable to all the Parties; and
	 
	 	3.5.3	 	if the breach of the representation or warranty remains uncured within thirty
(30) days from the commencement of the good faith negotiations mentioned in Article
3.5.2 and Both Parties are unable to reach a resolution, the non-breaching Party may
select to proceed with the Closing or unilaterally terminate this Agreement without
taking any liability. Unless agreed in writing by all of the non-breaching Parties,
under no circumstances shall the breaching Party be deemed to have been released from
its liability for breach of contract under Article 3.4. The termination hereof shall
not affect the rights and obligations that have arisen prior to the termination.





ARTICLE 4. CLOSING





	4.1	 	The Closing is conditioned to the fulfillment of the Conditions set forth in Appendix 2.
	 
	4.2	 	Both Parties shall respectively have the right to notify the other Party in writing that said
Party is waiving part or all of the Conditions Precedent that the other Party is required to
fulfill. The Parties agree that, within three (3) Business Days after all of the Conditions
Precedent have been fulfilled (or waived), Party B shall provide the relevant supporting
documentation to Party A and give Party A a written notification.




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	 	 	The Parties shall jointly confirm in writing whether the Conditions Precedent have been
fulfilled within three (3) Business Days from the date on which the notice is given or on
such other date as may be agreed by the Parties.
	 
	4.3	 	The Closing of the Proposed Equity Transfer shall take place in Shanghai on the Closing Date.
At the time of the Closing, Party B shall submit to Party A written documentation evidencing
that the Conditions Precedent have been fulfilled (including but not limited to all
documentation amended by the Registration Authority which identifies Party A as the
shareholder of the Company, such as the Company’s register of shareholders, the AoA and the
new business license which reflect the business registration change and the business
registration documents that evidence the change in registration of the Company’s directors to
those persons appointed by Party A). The Parties shall confirm in writing whether all of the
Conditions Precedent specified in Article 4.1 hereof have been fulfilled. Subject to the
completion of the undertakings specified in Article 5 hereof, Party A shall, within one (1)
year from the Closing Date, pay the Transfer Price specified in Article 2.1 hereof to the
account designated by Party B.
	 
	4.4	 	Both Parties shall use all reasonable efforts to procure the fulfillment of all of the
Conditions Precedent. If any Condition Precedent is not fulfilled within thirty (30) days
from the execution date hereof, Both Parties shall promptly negotiate to seek a mutually
acceptable solution. If Both Parties fail to reach agreement within sixty (60) days from the
commencement of consultations:






	 	4.4.1	 	this Agreement shall terminate automatically upon the expiry of such sixty
(60)-day period, unless Both Parties agree otherwise in writing. Unless otherwise
provided herein, such termination shall not affect Both Parties’ rights and obligations
that may have arisen by the time of the termination hereof; and
	 
	 	4.4.2	 	after the termination hereof, each Party shall take all necessary actions to
restore this Agreement to a state identical to that prior to the execution, including
but not limited to making applications to the competent government authorities to
cancel, withdraw or amend any applications, registrations, filings or any other
relevant procedures that have been made or are in the process of being made in
connection with the transactions specified herein.






	4.5	 	Except as otherwise provided in Article 4.4 hereof, if the Closing cannot be carried out due
to a force majeure event (despite of the fulfillment of all of the other Conditions
Precedent), the Parties shall promptly hold negotiations to seek a mutually acceptable
solution. If the Parties fail to reach a solution within fifteen (15) Working Days from the
fulfillment of all of the Conditions Precedent:






	 	4.5.1	 	this Agreement shall terminate automatically on the expiry of such fifteen
(15)-Working-Day period, unless the Parties agree otherwise in writing. Unless
otherwise provided herein, such termination shall not affect the Parties’ rights and
obligations that may have arisen by the time of the termination hereof; and
	 
	 	4.5.2	 	after the termination hereof, each Party shall take all necessary actions to
restore this Agreement to a state identical to that prior to the execution,




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	 	 	 	including but not limited to making applications to the competent government
authorities to withdraw, cancel or amend any applications, registrations, filings or
any other relevant procedures that have been made or are in the process of being
made in connection with the transactions specified herein.






	4.6	 	Both Parties agree that the non-breaching Party may require the breaching Party to indemnify
all claims, expenses, costs, losses and liabilities (including tax liabilities) incurred or
arising in connection with the breach, whether directly or indirectly, if:






	 	4.6.1	 	Party B fails to perform or to punctually complete the performance of its
obligations under Article 4.1 hereof, thereby making the Closing of the Proposed Equity
Transfer impossible; or
	 
	 	4.6.2	 	Party A fails to pay to Party B the Transfer Price in full pursuant to Article
4.3 hereof.





ARTICLE 5. FURTHER COVENANTS





	5.1	 	The Parties agree that they shall each execute all of the documents and make in accordance
with the law all the acts required for the full implementation of this Agreement. With a view
to ensuring the continuous and stable operations of the Company, Party A agrees that, unless
it is required to make an adjustment due to its or its affiliate’s listing on a stock exchange
or due to another reason specified in the law, it shall appoint Weidong Zhu to continue to
serve as the legal representative of the Company until it has commenced the payment of the
Transfer Price. Party A shall have the right to replace the Company’s legal representative
with any third party designated by it within five (5) days after completing the payment of the
Transfer Price and Weidong Zhu shall take all actions to cooperate with Party A in carrying
out the business registration procedures for the change of the Company’s legal representative.
	 
	5.2	 	Party B, as the existing shareholders of the Company, shall not do, and shall not permit the
Company to do, anything during the period between the execution date hereof and the Closing
Date that could have a material adverse effect on the Equity Interest and/or the Company. For
this purpose, Party B and/or the Company undertake(s) that during the period between the
execution date hereof and the Closing Date, unless otherwise agreed in advance in writing by
Party A:






	 	5.2.1	 	the Company shall not be permitted to pay (nor shall it agree to pay) any
amounts other than amounts it is required to pay in the ordinary course of business;
notwithstanding the foregoing, the Company shall not incur (or agree to incur) any
single cash payments exceeding Renminbi Fifty Thousand (RMB50,000) or cash payments
that in the aggregate exceed Renminbi One Hundred and Fifty Thousand (RMB150,000)
regardless of whether the same is incurred in the ordinary course of business;
	 
	 	5.2.2	 	(i) the Company shall not be permitted to sell, mortgage, pledge, lease,
assign or otherwise dispose of assets that are not set forth in its scope of business
where the total transaction value exceeds Renminbi Ten Thousand (RMB10,000);




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	 	(ii)	 	other than in the ordinary course of business, the Company
shall not be permitted to dispose of any fixed assets or approve of the
disposal or acquisition of the Company’s fixed assets, relinquish any rights in
any of the Company’s assets or enter into any contract that could result in the
running-off of any fixed assets or cause the Company to incur any other
liabilities; and
	 
	 	(iii)	 	the Company shall not make any expenditures that are not set
forth in its scope of business where the total amount exceeds Renminbi Ten
Thousand (RMB10,000) or purchase any tangible or intangible assets (including
equity investment in any companies) that are not set forth in its scope of
business whose value exceeds Renminbi Ten Thousand (RMB10,000);






	 	5.2.3	 	Party B and/or the Company shall not be permitted to enter into any
transaction or take any action other than in the ordinary course of business;
	 
	 	5.2.4	 	Party B and/or the Company shall not be permitted to commit any act or
omission that constitutes or could constitute a breach of the representations and
warranties given by Party B and/or the Company hereunder;
	 
	 	5.2.5	 	the Company shall not be permitted to declare a distribution or make a payment
or make preparations for the declaration, payment or distribution of any dividends or
bonuses or make any other profit distribution;
	 
	 	5.2.6	 	the Company shall not be permitted to make or agree to make a capital
increase, capital reduction or any other such change in its capital;
	 
	 	5.2.7	 	other than the loans disclosed to Party A by the Company prior to the
execution date hereof, the Company shall not be permitted to make or extend loans or
provide any other such form of financial assistance to any third party;
	 
	 	5.2.8	 	unless otherwise provided in the laws, statutes, rules or regulations, the
Company shall not be permitted to pay a bonus to any manager, director, employee, sales
representative, agent or advisor, increase the said persons’ income in any manner or
change the remuneration or benefits of such persons in any manner whatsoever;
	 
	 	5.2.9	 	the Company shall not be permitted to provide security or guarantees to Party
B or any third party or create any mortgage, pledge or other form of Encumbrances on
its assets;
	 
	 	5.2.10	 	the Company shall not be permitted to prepay debts, release any third party from the
Company’s claims on such party or waive any right of recourse;
	 
	 	5.2.11	 	any contracts or agreements into which the Company has entered shall not be permitted
to be amended;
	 
	 	5.2.12	 	the Company’s accounting methods, policies or principles, or financial and accounting
rules and regulations shall not be permitted to be revised;




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	 	5.2.13	 	any of the Company’s sales practices or accounting methods shall not be permitted to
be materially revised or altered, or the Company’s employment policies, rules or
regulations shall not be permitted to be materially changed;
	 
	 	5.2.14	 	other than resolutions adopted for the purpose of performing this Agreement, any
shareholders’ resolution or board resolution that runs counter to the conventional
matters discussed and adopted at annual shareholders’ meetings of the Company shall not
be permitted to be adopted;
	 
	 	5.2.15	 	Party B and/or the Company shall not be permitted to take any actions that are
inconsistent with the provisions hereof or the transactions contemplated hereunder;
	 
	 	5.2.16	 	the Company shall not be permitted to restructure its capital structure, amend its
AoA or otherwise amend its registered business particulars (e.g. its name, address or
such other basic particulars);
	 
	 	5.2.17	 	the Company shall not be permitted to enter into agreements involving intellectual
property with a third party, regardless of whether the title to intellectual property
owned by the Company changes, including but not limited to change by transfer, gifting,
etc., or intellectual property owned by the Company is licensed to a third party or the
Company has use of a third party’s intellectual property pursuant to such agreement;
and
	 
	 	5.2.18	 	anything that could lead to any of the aforementioned circumstances shall not be
permitted.






	5.3	 	If the facts on which Party B and/or the Company relied in making its and/or their
representations and warranties herein change, potentially causing a material adverse effect on
the transactions hereunder, Party B and/or the Company shall promptly disclose such facts to
Party A.
	 
	5.4	 	The Company shall take all reasonable actions to safeguard its assets, use its best efforts
to retain its existing management and core technical personnel and maintain its relationships
with its clients, suppliers and other such third parties that have an association with the
Company’s business so as not to harm its reputation or its prospects as a going concern.
	 
	5.5	 	Subject to a prior written notice, Party A shall have the right, during normal working hours,
to request that the Company provide its financial statements and all other such documents
relating to its business for Party A’s review and the right to make copies or summaries
thereof.
	 
	5.6	 	The Parties hereby agree and confirm that the equity acquisition and payment of the Transfer
Price by Party A pursuant hereto are reliant on the Company’s net equity value as confirmed in
the financial information disclosed or provided by Party B during the audit of the Company.
Accordingly, if, after the completion of the Proposed Equity Transfer, Party A discovers that
the Company has any unpaid debts that are not disclosed during the audit (a “Default Amount”),
each of the parties comprising of Party B undertakes that it shall bear the joint and several
liability in respect of such Default Amount in proportion to its capital contribution to the




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	 	 	Company prior to the Proposed Equity Transfer. Party A shall have the option, at its own
discretion, to either deduct the Default Amount from the Transfer Price (if it has not been
paid) or demand that Party B otherwise pay the Default Amount to the Company.
	 
	5.7	 	The Parties agree that Party B and the Company shall, within ninety (90) days from the
execution date hereof, procure that the Company sells the 70 percent equity interest it holds
in Shanghai Hongjiu Business Consulting Co., Ltd. (“Hongjiu”) for a price of no less than
Renminbi One Million (RMB1,000,000). Party B shall be responsible for carrying out the
procedures relating to the aforementioned equity transfer, bearing all of the costs,
expenditures and taxes (if any) incurred by the Company in connection with the equity transfer
and ensuring that the Company does not bear any legal liability, loss or debts in connection
with the transfer of equity interest and ensuring that Hongjiu has no outstanding debts or
liabilities.
	 
	5.8	 	The Parties agree that from the execution date hereof, the Company shall take all necessary
actions to terminate its business relationship and any other connected relationship with
Shanghai Yingji Culture Communication Co., Ltd. (“Yingji”), and may not conduct any business
or handle any matters in the name of Yingji.
	 
	5.9	 	Party B, as management personnel of the Company, agrees to take all necessary actions after
the completion of the Closing:






	 	5.9.1	 	to secure, upon the expiration of each relevant contract, the renewal by the
Company of the exclusive advertising agency contracts for the television channels set
forth in Appendix 8 hereto (“Existing Television Channels”). Pursuant to such renewed
contracts, the Company shall at least have no less than one (1) year of exclusive
advertising agency rights for the Existing Television Channels; or
	 
	 	5.9.2	 	to procure the execution by the Company of exclusive advertising sales agency
agreements with other television channels so as to ensure that under any circumstance,
the Company is the sole exclusive advertising agency for at least four television
channels (such television channels shall be subject to the consent and approval of
Party A), and the provisions, terms and conditions of such exclusive advertising sales
agency agreements shall be substantially identical to those of the exclusive
advertising sales agency agreements set forth in Schedule 3 of Appendix 3 hereto and
shall be subject to the consent and approval of Party A.






	5.10	 	Party A agrees that after the completion of the Closing, it shall appoint Zhenhui Wang as the
Company’s first post-Closing general manager, and shall expressly specify the general
manager’s functions and powers in the Company’s AoA, which, in general, shall include the
following:






	 	5.10.1	 	directing the Company’s production, operations and management, and arranging for the
implementation of the board’s resolutions;
	 
	 	5.10.2	 	arranging for the implementation of the Company’s annual business plans and
investment plans;




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	 	5.10.3	 	drafting the plan for the establishment of the Company’s internal management
organizations;
	 
	 	5.10.4	 	drafting the basic rules and regulations of the Company;
	 
	 	5.10.5	 	drafting the specific rules and regulations of the Company;
	 
	 	5.10.6	 	submitting for approval the appointment or dismissal of the Company’s deputy general
manager and financial controller;
	 
	 	5.10.7	 	submitting for approval the appointment or dismissal of management personnel other
than those who are subject to the appointment or dismissal by the Company’s shareholder
and board; and
	 
	 	5.10.8	 	attending board meetings in a non-voting capacity.





ARTICLE 6. RIGHTS OF THE PARTIES





	6.1	 	The Parties agree that if any of the following facts, matters or events exists prior to the
Closing, Party A may terminate this Agreement without taking any liability by so notifying
Party B and/or the Company in writing. Additionally, it may demand that the breaching Party
bear the liability for breach of contract specified in Article 9:






	 	6.1.1	 	any act of Party B and/or the Company that constitutes a fundamental breach
hereof, making it impossible for Party A to complete the acquisition of the Equity
Interest;
	 
	 	6.1.2	 	any breach by Party B and/or the Company of any representation or warranty and
such breach has a material adverse effect on the Company and the transactions
hereunder; or
	 
	 	6.1.3	 	an event that has or may have a material adverse effect on the Company’s
business, financial condition or prospects.






	6.2	 	The Parties agree that if any of the following facts, matters or events exists prior to the
Closing, Party B may terminate this Agreement without taking any liability by so notifying
Party A in writing. Additionally, Party B may demand that the breaching Party bear the
liability for breach of contract under Article 9:






	 	6.2.1	 	an act of Party A that constitutes a fundamental breach hereof, making it
impossible for Party B to receive the Transfer Price; or
	 
	 	6.2.2	 	an event that has or may have a material adverse effect on the transactions
hereunder that arises due to the willful misconduct or gross negligence on the part of
Party A.





ARTICLE 7. CONFIDENTIALITY





	7.1	 	A Party (the “Receiving Party”) that becomes aware of or receives Confidential Information
from a Party hereto (the “Disclosing Party”) shall keep such information confidential, may not
use such Confidential Information for any purpose other than for the purposes contemplated by
this Agreement and may not disclose the




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	 	 	Confidential Information to any party other than Party A or Party B (or a company appointed
by Party A or Party B (such company shall bear the confidentiality obligations hereunder,
and Party A or Party B shall bear the legal liability arising from a breach of the
confidentiality obligations hereunder committed by any company appointed by said Party))
without the prior written consent of the other Parties. Notwithstanding the foregoing
restrictions, the confidentiality obligations set forth in this Article 7 shall not apply
to:






	 	7.1.1	 	information that has entered the public domain other than as a result of the
wrongful conduct of the Receiving Party or its representatives, agents, suppliers or
subcontractors;
	 
	 	7.1.2	 	information legitimately and legally obtained by the Receiving Party from a
third party, provided that at the time of obtaining such information, it is not subject
to confidentiality obligations or other restrictions on use; or
	 
	 	7.1.3	 	information in written form owned by the Receiving Party, which is not subject
to any restrictions on use or disclosure and is not obtained for the purpose of
executing or performing this Agreement.






	7.2	 	Notwithstanding Article 7.1, the Receiving Party may disclose Confidential Information to its
employees, directors and professional advisors that is reasonably necessary for the purposes
of this Agreement, provided that the Receiving Party ensures that such employees, directors
and professional advisors are aware of and comply with the confidentiality obligations set
forth in this Article. If the disclosure of the relevant Confidential Information is required
by law or requested by a competent court, regulatory authority or any other such competent
government agency, the Receiving Party may disclose such Confidential Information, provided
that the Receiving Party shall, to the extent permitted by relevant laws and statutes, take
all necessary actions to ensure that the Confidential Information is treated as confidential.
	 
	7.3	 	The Receiving Party shall not reproduce any Confidential Information in any manner whatsoever
without the prior written consent of the Disclosing Party.





ARTICLE 8. NOTICES





	8.1	 	Any notice hereunder shall be made in writing and dispatched by fax or registered mail to the
recipient’s designated number or address. Notices dispatched by the aforementioned means
shall be deemed received:






	 	8.1.1	 	the twelfth (12th) hour after transmission, if dispatched by fax; and
	 
	 	8.1.2	 	the third (3rd) day after consignment to the post office, if dispatched by
registered mail.






	8.2	 	If Party A dispatches a written notice to Party B pursuant to Article 8.1 hereof, it shall
dispatch the same to Party B at the following fax numbers or correspondence addresses:




11









 






	 	 	Weidong Zhu
	 
	 	 	Fax number: 021-64383327
	 
	 	 	Correspondence address: Suite 403, ShengAi Tower, 88 Caoxi North Road, Shanghai
	 
	 	 	Attn.: Weidong Zhu
	 
	 	 	Zhenhui Wang
	 
	 	 	Fax number: 021-64383327
	 
	 	 	Correspondence address: Suite 403, ShengAi Tower, 88 Caoxi North Road, Shanghai
	 
	 	 	Attn.: Weidong Zhu
	 
	 	 	Wenhua Cao
	 
	 	 	Fax number: 021-64383327
	 
	 	 	Correspondence address: Suite 403, ShengAi Tower, 88 Caoxi North Road, Shanghai
	 
	 	 	Attn.: Weidong Zhu
	 
	8.3	 	If Party B dispatches a written notice to Party A pursuant to Article 8.1 hereof, it shall
dispatch the same to Party A at the following fax number or correspondence address:
	 
	 	 	Fax number: 010-85263129
	 
	 	 	Correspondence address: Suite 804, Building 2, 19 Jianguomenwai Avenue, Chaoyang District,
Beijing
	 
	 	 	Attn.: Ying Zhu





ARTICLE 9. LIABILITY FOR BREACH OF CONTRACT





	9.1	 	If a Party breaches any of the provisions hereof, it shall compensate the non-breaching
Parties for all claims, expenses, costs, losses and liabilities incurred or arising in
connection with such breach, whether directly or indirectly. If the breaching Party is one of
the parties comprising of Party B and/or the Company, Party B shall jointly and severally bear
the liabilities in respect of the compensation for such breach.
	 
	9.2	 	Without prejudice to any of the other provisions of this Article 9, if a Party fails to
perform any of its obligations hereunder, the non-breaching Parties shall, in addition to
exercising any other rights and remedies available hereunder, be entitled to demand that the
breaching Party perform the relevant obligation and the Parties expressly waive the defense of
sufficiency of damages.
	 
	9.3	 	Without prejudice to any of the other provisions of this Article 9, if a party comprising of
Party B fails to fully transfer the Equity Interest to Party A on the terms and conditions
hereof, Party A shall have the right to demand in writing that Party B perform its obligations
as specified herein and transfer the Equity Interest to Party A.




12









 






	 	 	If Party B does not complete the procedures for amending the business registration for the
Proposed Equity Transfer within seven (7) Working Days after receipt of the written notice
from Party A, Party A shall be entitled to unilaterally terminate this Agreement on the
basis of such material breach and demand that the breaching Party compensate for the losses,
damages and costs (including but not limited to reasonable legal fees and litigation
expenses) incurred in connection with the Proposed Equity Transfer by Party A as a result
thereof.
	 
	ARTICLE 10. EXPENSES AND TAXES
	 
	10.1	 	Both Parties shall each bear its own expenses (including but not limited to legal,
accounting, financial, consulting, advisory and other related expenses) in connection with all
the negotiations and the implementation of the final agreement (e.g., this Agreement
(including the Appendices)) and the acquisition.
	 
	10.2	 	Both Parties shall each pay any taxes it may be required to pay in connection with the
Proposed Equity Transfer hereunder. Both Parties shall each be responsible for paying the
stamp duty in respect of the original of this Agreement it holds.





ARTICLE 11. DISPUTE RESOLUTION



Any dispute arising from or in connection with this Agreement, including disputes over the validity
or existence of this Agreement, shall be resolved by Both Parties through good faith negotiations.
If the dispute is not resolved within thirty (30) days after a Party gives notice requesting such
negotiations, any Party shall have the right to submit the dispute to the Shanghai Arbitration
Commission for arbitration in Beijing in accordance with its arbitration rules then in effect. The
arbitration award shall be final and binding on Both Parties.




ARTICLE 12. GOVERNING LAW



This Agreement shall be governed by, and construed in accordance with, the laws of the People’s
Republic of China.




ARTICLE 13. LANGUAGE



This Agreement is made in Chinese in six (6) counterparts, of which Party A shall hold one
original, each party comprising of Party B shall hold one original and the remaining originals
shall be used to carry out the relevant registration procedures.




ARTICLE 14. ENTIRE AGREEMENT



This Agreement, including the attached Annexes, Appendices and Schedules, supersedes all prior
written or oral agreements on the matters provided for herein reached by the Parties and
constitutes the entire agreement between Both Parties.




ARTICLE 15. EFFECTIVENESS



This Agreement shall enter into effect on the date that it is signed/sealed by the Parties or their
authorized representatives.







13









 







IN WITNESS WHEREOF, this Agreement is duly executed by the Parties on the date first set forth
above.









14









 








Execution Page




	 	 	 	 
	 	Party A:




REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD. [company seal]

 	 
	 	By:  	/s/ Ying Zhu
 	 
	 	 	Name of Legal Representative:  	Ying Zhu 	 
	 	 	 	 
	 	Party B:



WEIDONG ZHU

 	 
	 	Signature:  	/s/ Weidong Zhu
 	 
	 	 	 	 
	 	
ZHENHUI WANG

 	 
	 	Signature:  	/s/ Zhenhui Wang
 	 
	 	 	 	 
	 	WENHUA CAO

 	 
	 	Signature:  	/s/ Wenhua Cao
 	 
	 	 	 	 
	 	 	 	 
	 	SHANGHAI YARUN CULTURE COMMUNICATIONS CO., LTD. [company seal]

 	 
	 	By:  	/s/ Weidong Zhu
 	 
	 	 	Name of Legal Representative:  	Weidong Zhu 	 
	 	 	 	 
	 
















 





APPENDIX 1.




PARTICULARS OF THE COMPANY


A. Particulars of the Company




	 	 	 	 	 	 	 
	1.

	 	Name of the Company
	 	:
	 	Shanghai Yarun Culture Communications Co., Ltd.
	 
	 	 	 	 	 	 
	2.

	 	Legal address
	 	:
	 	D-541, 1 Huyi Road, Shanghai
	 
	 	 	 	 	 	 
	3.

	 	Establishment date
	 	:
	 	December 14, 2005
	 
	 	 	 	 	 	 
	4.

	 	Place of establishment
	 	:
	 	Shanghai
	 
	 	 	 	 	 	 
	5.

	 	Scope of business
	 	:
	 	Culture and art planning; design, production,
acting as an agent for, and publication of
various types of advertising; sale of video
equipment, cultural, recreational and office
supplies, handicrafts, computers and their
parts and components, and advertising
apparatus and materials (Items subject to
administrative permits will be dealt with on
the strength of such permits).
	 
	 	 	 	 	 	 
	6.

	 	Legal representative
	 	:
	 	Weidong Zhu
	 
	 	 	 	 	 	 
	7.

	 	Executive director
	 	:
	 	Weidong Zhu
	 
	 	 	 	 	 	 
	8.

	 	Registered capital
	 	:
	 	Renminbi Three Million (RMB3,000,000)
	 
	 	 	 	 	 	 
	9.

	 	Shareholders
	 	:
	 	Capital contribution by Weidong Zhu:
RMB1,200,000, accounting for 40% of the
registered capital; 
	 

	 	 	 	 	 	Capital contribution by Zhenhui Wang: RMB1,200,000, accounting for 40% of the
registered capital;

	 

	 	 	 	 	 	Capital contribution by Wenhua Cao: RMB600,000, accounting for 20% of the
registered capital
	 
	 	 	 	 	 	 
	10.

	 	Auditor
	 	:
	 	None
	 
	 	 	 	 	 	 
	11.

	 	Business term
	 	:
	 	10 years (from December 14, 2005 to December
13, 2015)
	 
	 	 	 	 	 	 
	12.

	 	Subsidiaries
	 	:
	 	Shanghai Hongjiu Business Consulting Co., Ltd.






2









 






APPENDIX 2.




CONDITIONS PRECEDENT TO CLOSING


The Closing of the Proposed Equity Transfer is conditioned on the fulfillment of all of the
following conditions (or the waiver thereof in writing by the interested Party):





	 	1.1	 	Party A shall be responsible for:
	 
	 	 	 	executing all legal documents that Party A is required to execute in order to
complete the Proposed Equity Transfer (including but not limited to the equity
transfer documents that the competent administration for industry and commerce may
require to be executed).
	 
	 	1.2	 	Party B and the Company shall ensure that:






	 	(1)	 	the Company has secured all permits, approvals, licenses,
authorizations, etc. that are required by the law to conduct its business;
	 
	 	(2)	 	Weidong Zhu, Zhenhui Wang and all of the management personnel
or core technical personnel specified in Schedule 2 of Appendix 3 have executed
with the Company the Intellectual Property Protection and Non-Compete Agreement
as set forth in Appendix 4 and the Non-Disclosure Agreement as set forth in
Appendix 5;
	 
	 	(3)	 	the Company has executed employment contracts that are in
compliance with the legal requirements with all of its employees, and has
provided insurance coverage and other benefits required by relevant laws,
including but not limited to pension insurance, basic medical insurance
premiums and unemployment insurance premiums, to all of its employees;
	 
	 	(4)	 	Party A has completed the Due Diligence on the Company, Party B
and the Company have provided all the documents relating to the Due Diligence
as required by Party A, including but not limited to financial statements of
the Company as at December 31, 2007 for the most recent three years prepared by
June 30, 2008 by a qualified accounting firm in accordance with the current and
valid generally accepted accounting standards of the PRC or generally accepted
international accounting standards, and the results of the Due Diligence are
satisfactory to Party A;
	 
	 	(5)	 	resolutions approving the Proposed Equity Transfer and the
corresponding amendments to the AoA have been adopted at a meeting of the
Company’s shareholders, and Party B has waived said Party’s right of first
refusal over the Equity Interest to be transferred;
	 
	 	(6)	 	all other legal documents required to be executed by this
Agreement or required to be executed in order to complete the Proposed Equity
Transfer have been duly executed;




3









 












	 	(7)	 	the procedures for the amendment of business registration in
respect of the transfer of the Company’s Equity Interest and other relevant
changes have been completed with the Registration Authority;
	 
	 	(8)	 	the Company’s directors originally appointed by Party B have
resigned from their positions in the Company and confirmed in writing that they
have waived any claim of right to severance pay and any other related issues
they may have against the Company;
	 
	 	(9)	 	the registration or filing procedures for the directors
appointed by Party A have been made with the Registration Authority;
	 
	 	(10)	 	the Company has, in accordance with applicable laws and
regulations, established a branch at its actual business address (Suite 403, 88
Caoxi North Road, Xuhui District), or has, to the satisfaction of Party A,
resolved the issue of the discrepancy between the Company’s actual business
address and registered address;
	 
	 	(11)	 	the Company has, in accordance with the law, applied for and
been issued with the Statistics Registration Certificate;
	 
	 	(12)	 	the Company has completed, in accordance with applicable laws
and as required by the competent government authorities, the procedures for the
registration of the establishment of a representative office (if required) in
the area that it actually carries out representational activities for its
business;
	 
	 	(13)	 	the Company has disclosed to Party A all information relating
to those contracts (currently in the course of being performed) which had been
executed by Yingji, but were actually performed by the Company (the “Pending
Contracts”) and has, as requested by Party A, provided to Party A all such
Pending Contracts;
	 
	 	 	 	the Company has executed supplemental agreements with all of the relevant
parties to the Pending Contracts to change the party performing the
contracts to the Company and amend the relevant provisions of the said
Pending Contracts accordingly or, in respect of the Pending Contract
matters, to clarify with Yingji in writing the rights and interests of both
parties;
	 
	 	 	 	the Company has taken all necessary actions to lawfully resolve to the
satisfaction of Party A the financial and legal issues (e.g., financial
accounting matters, issuance of invoices) arising from the aforementioned
Pending Contracts due to the discrepancy in the entities performing the
contracts and the parties that signed the contracts.




4









 











APPENDIX 3.




REPRESENTATIONS AND WARRANTIES


In addition to the matters expressly disclosed in Disclosure Letter attached as Appendix 6, Party B
and the Company give to Party A on the execution date hereof and the Closing Date the
representations and warranties set forth below in respect of the following matters; each
representation or warranty shall be deemed an independent representation or warranty and shall not
(unless otherwise expressly indicated) be limited or constrained by any other representation or
warranty or any other provisions of this Agreement:





	1.	 	Authorizations: Party B and the Company have secured the full and necessary
authorizations to execute this Agreement, perform all of the obligations under this Agreement
and complete the transactions under this Agreement. Once executed, this Agreement shall be
legally binding on Party B and the Company.
	 
	2.	 	No conflict: The execution and performance of this Agreement by Party B and the
Company shall not breach or conflict with any of the provisions of the Company’s AoA or other
organizational documents of the Company or violate any mandatory laws or regulations of the
PRC. Party B and the Company have secured all third party approvals or authorizations
required for the transactions contemplated by this Agreement (including those of competent
government authorities).
	 
	3.	 	Valid existence of the Company and Party B’s Equity: The Company is a duly
established and validly existing limited liability company and its registered capital has been
paid in full. Party B is the lawful owner of the Company’s Equity Interest, is entitled to
the rights attaching to the Equity Interest and undertake the corresponding obligations.
Other than those disclosed by Party B and the Company in the Disclosure Letter, no transfer,
nomination, trust, pledge or any other manner of Encumbrances of or on the Equity Interest
exists in respect of the Equity Interest.
	 
	4.	 	Investments: The Company has no investment or subsidiary commercial organization
(including but not limited to subsidiaries, branches, offices or establishments; as well any
other entities directly or indirectly controlled by or in which the Company has an equity
interest, or any other entities in which the Company has an equity interest) other than the
investments and subsidiary commercial organizations that are disclosed in the Disclosure
Letter.
	 
	5.	 	Information Disclosure: All of the information contained in this Agreement, and all
other information given or provided by the Company and Party B to Party A or any of its
representatives, employees or professional advisors during the negotiations for this Agreement
or any background check or other investigation conducted by Party A (or its representatives)
prior to the execution hereof is, at the time of provision, and continues to be true,
complete, accurate and not misleading in all respects. There are no facts, things or matters
that would make any such information untrue, inaccurate or misleading that have not been
disclosed to Party A, and there are no facts, things or matters that are once disclosed would
reasonably affect Party A’s intent to purchase the Equity Interest or affect the provisions on
which Party A’s intent to purchase the Equity Interest is based.




5









 












	6.	 	Financial Report: The Company’s financial report as at December 31, 2007 (the
“Balance Sheet Date”) set forth in Appendix 7 truthfully, completely and accurately reflects
the Company’s operations and financial position for the relevant periods or on the relevant
reference dates. All of the Company’s audited accounts and unaudited accounts have been
prepared pursuant to the financial and accounting systems specified in the relevant laws of
the PRC with the consideration of the Company’s actual circumstances, and truthfully and
fairly reflect the Company’s financial and operational conditions as at the relevant
accounting dates. The Company’s financial records and information comply with the
requirements of the PRC laws and statutes and satisfy the PRC accounting standards.
	 
	7.	 	Undisclosed debts: Other than the debts set forth below, the Company does not have
any debts that are not recorded on its balance sheets: (1) debts disclosed in the Disclosure
Letter; and (2) debts incurred in the ordinary course of business after the Balance Sheet
Date, that are not prohibited by this Agreement and shall not have a material adverse effect
on any shareholder of the Company or the Company itself. Other than those disclosed to Party
A in the Disclosure Letter, the Company has never been required to assume any debts as a
result of its equity interest in Hongjiu, nor ever assumed any obligation in respect of a
guarantee, mortgage, pledge or any form of security provided to a third party nor ever created
a mortgage, pledge or other security interest on its property.
	 
	8.	 	Insurance Coverage:






	 	8.1	 	The Company has insured all of its insurable assets for their entire
replacement value pursuant to the type(s) of insurance that are commonly taken out by
companies that engage in similar business or own similar assets. The insurance taken
out by the Company includes casualty insurance, personal injury and death insurance,
third party liability insurance and other types of insurance commonly taken out by such
companies.
	 
	 	8.2	 	With respect to all such insurance:






	 	(i)	 	to date, the Company has punctually paid all premiums;
	 
	 	(ii)	 	the insurance taken out by the Company on leased immovable
assets is presently valid, and if the Company is responsible for renewing such
insurance, such insurance policies satisfy the requirements in respect of the
lease of any immovable assets in all respects;
	 
	 	(iii)	 	all insurance policies are fully valid; neither the Company
nor the Company’s representative has committed any act or omission, made an
erroneous representation or failed to disclose an event that could render such
insurance policies revocable, or undertaken any action that could render such
insurance polices invalid or unenforceable due to a violation of the law or
other reason, or undertaken any action that breaches the terms, conditions or
warranties of any insurance policy thereby giving an insurance company the
right to refuse to pay all or part of any claim under such policy;




6









 












	 	(iv)	 	with respect to each insurance policy, there are no special or
unusual limitations, terms, exceptions or restrictions, the premiums payable do
not exceed the normal premium rates and there are no circumstances existing
that could cause an increase in the premiums; and
	 
	 	(v)	 	the Company does not have any outstanding claims, and no
circumstances exist that could give rise to any claim.






	9.	 	Capital structure: The Company’s AoA and AoA amendments registered with the
Registration Authority are consistent with the Company’s AoA and AoA amendments provided to
Party A by Party B, and accurately and completely reflect the Company’s capital structure
prior to the Closing. The Company has never in any manner whatsoever undertaken to issue or
actually issued to any third party any of the Company’s equity interest, shares, bonds,
options or rights or interests of identical or similar nature other than the Equity Interest.
The Company’s particulars as set forth in Appendix 1 are true, accurate, complete and not
misleading.
	 
	10.	 	No change: During the period between the Balance Sheet Date and the date of execution
of this Agreement, the Company has not carried out any of the following acts, unless otherwise
provided herein or disclosed by Party B and the Company to Party A in the Disclosure Letter
and approved in writing by Party A:






	 	10.1	 	prepaid any debt;
	 
	 	10.2	 	provided security to a third party in the form of a guarantee or created a
mortgage, pledge or any other form of Encumbrances on its property;
	 
	 	10.3	 	released any third party from a debt to the Company or waived any right of
recourse;
	 
	 	10.4	 	amended any existing contract or agreement;
	 
	 	10.5	 	paid a bonus to any management officers, directors, employees, sales
representatives, agents or advisors of the Company or increased their income in any
manner, or changed their remuneration or benefits in any manner;
	 
	 	10.6	 	incurred any loss (insured or not) or experienced any change in the
relationship with any supplier, client or employee whereby such loss or change would
have a material adverse effect on the Company;
	 
	 	10.7	 	revised the Company’s accounting methods, policies or principles, or financial
and accounting rules and systems;
	 
	 	10.8	 	transferred or licensed any of the Company’s intellectual property rights to
any third party(ies) other than in the ordinary course of business;
	 
	 	10.9	 	made a material revision or alteration to the Company’s sales practice or
accounting method, or a material change in the Company’s employment policies, rules or
regulations;




7









 












	 	10.10	 	experienced any material adverse change in the Company’s financial position or
sustained any liability arising from a transaction conducted other than in the ordinary
course of business;
	 
	 	10.11	 	adopted any shareholders’ resolution or board resolution different from those
relating to conventional matters discussed and adopted at annual shareholders’ meetings
of the Company, other than resolutions adopted for the purpose of performing this
Agreement;
	 
	 	10.12	 	declared, paid, distributed or committed to, or be in the process of
declaring, paying or distributing or committing to any dividends, bonuses or other
forms of shareholder distribution;
	 
	 	10.13	 	(i) undertaken any asset sale, mortgage, pledge, lease, assignment or other
disposal other than in the ordinary course of business whereby the total transaction
amount exceeds Renminbi Ten Thousand (RMB10,000); (ii) disposed of any fixed assets or
approved the disposal or acquisition of any fixed assets of the Company other than in
the ordinary course of business, relinquished any rights in any of the assets owned by
the Company, entered into any contract that resulted in the alienation of any fixed
assets or gave rise to any other liabilities; (iii) made any expenditure exceeding
Renminbi Ten Thousand (RMB10,000) in total or any purchase of tangible or intangible
assets (including equity investment in any company) other than in the ordinary course
of business the value of which exceeds Renminbi Ten Thousand (RMB10,000);
	 
	 	10.14	 	undertaken any transaction or act other than in the ordinary course of
business; or
	 
	 	10.15	 	committed any act or omission that could lead to any of the aforementioned
circumstances.






	11.	 	Taxation: The Company has punctually paid all taxes and government charges, made all
filings, issued all notices and provided all other information that it is required to provide
to any taxation authority or other government agency by the deadlines specified in the
relevant laws. All such information is complete and accurate in all material respects; and
all filings and notices are complete and accurate in all material respects and are made and
issued on the appropriate basis. The Company is not required to pay any taxes in arrears, pay
surtaxes or accept other tax investigations, there are no facts that could trigger such an
investigation, it has not received or no notice has been issued for the recovery taxes from
the Company by any third party or of a dispute concerning any tax break provided to the
Company. The Company is not or has ever been liable to pay interest on outstanding taxes.
	 
	12.	 	Assets:






	 	12.1	 	A specific breakdown of all of the fixed and intangible assets lawfully owned
and used by the Company is set forth in item 12 of the Disclosure Letter.




8









 












	 	12.2	 	All of the Company’s assets are entirely the Company’s property as at the
Balance Sheet Date. Other than those that will be disposed of or repaid in the normal
course of business in future, all such assets as well as all assets and liabilities
acquired or arising in the future are or will be entirely the Company’s property, are
not the subject of any transfer or Encumbrance (other than liens legally arising in the
ordinary course of business) and are not the subject of any installment payment,
conditional sale or credit sale agreement.
	 
	 	12.3	 	All such assets are occupied (if they can be so occupied) by the Company or
under the Company’s control, or the Company has the right to occupy or control the
same. All such assets are located in the PRC.
	 
	 	12.4	 	The assets owned or leased by the Company constitute all of the property,
rights and assets required by it to fully and effectively carry on its existing
business or to facilitate its engagement in business.






	13.	 	Immovable assets: The Company does not have any real estate or related rights,
interests or obligations. However, it does have valid and binding lease interests; such lease
interests are intact and free and clear of any Encumbrances and no third party has asserted
that it has rights or interests of senior priority in such lease interests. With respect to
the property or assets leased by the Company that have a substantive connection with its
operations, the Company is in compliance with the lease terms therefor, has valid lease
interests in such assets, and they are free and clear of any liens, Encumbrances or security
interests or of claims by any third party other than the lessor of such property or assets.
	 
	14.	 	Contracts:






	 	14.1	 	Party B and the Company have, as required by Party A, provided to Party A or
third parties designated by it photocopies, that are true to the originals, of all of
the Company’s existing and valid written contracts and warrant that all such contracts
are valid and enforceable by law.
	 
	 	14.2	 	None of the business contracts entered into by the Company has become invalid,
been rescinded or granted the counterparty the right to unilaterally terminate the same
pursuant to the provision of any laws and to the knowledge of Party B and Company,
currently and until the Closing Date, there is no possibility for such risk to arise.
	 
	 	14.3	 	The Company is not and has never been a party to a contract, agreement,
undertaking or arrangement as set forth below:






	 	(i)	 	a contract, arrangement or undertaking outside the ordinary
course of business;
	 
	 	(ii)	 	a contract, arrangement or undertaking not entirely reached on
an equitable and commercial basis;
	 
	 	(iii)	 	a loss-making contract, arrangement or undertaking (i.e. one
that is known to potentially result in a loss once performed);




9









 












	 	(iv)	 	a contract, arrangement or undertaking that would be impossible
without any difficulties to complete or perform on schedule without the
commitment of particularly large or unusual expenditures or efforts;
	 
	 	(v)	 	a contract, arrangement or undertaking not signed by the
Company as a party but that is, in fact, being performed by the Company; or
	 
	 	(vi)	 	other than as disclosed to Party B in the Disclosure Letter, a
consent to become a member of any joint venture, consortium, partnership or
other unincorporated organization (other than a recognized industry
association).






	 	14.4	 	The Company is not in breach of any of the terms or obligations under any
contract, agreement or document to which the Company is a party or which is binding on
the Company.
	 
	 	14.5	 	All of the exclusive advertising sales agency contracts entered into by the
Company with the relevant television channels as set forth in Schedule 3 of Appendix 3
are valid and legally enforceable.






	15.	 	Intellectual property: Other than those that have been disclosed to Party A in the
Disclosure Letter, the Company has the lawful ownership of or the right to use all of the
intellectual property (including but not limited to patents, trademarks, copyrights,
proprietary technologies, domain names and trade secrets, etc.) that it currently uses, and
the Company has secured all necessary authorizations and licenses for the intellectual
property rights (including but not limited to copyright licenses for the value added services
that it provides) used in its business activities, but owned by third parties. The Company
has not infringed any intellectual property, trade secrets, proprietary information or other
similar rights of third parties and there are no pending or threatening claims for damages,
disputes or legal proceedings in respect of the Company’s infringement of the intellectual
property, trade secrets, proprietary information or other similar rights of any third parties.
The trademarks, patents, software copyrights and domain names owned by the Company have been
duly registered in accordance with the law. The information regarding the intellectual
property that the Company owns or has the right to use as set forth in Schedule 1 of Appendix
3 is true, accurate, complete and not misleading.
	 
	16.	 	Litigation: None of the circumstances set forth below that could have a material
adverse effect on the Company or the formation, validity and enforceability of this Agreement
or the Proposed Equity Transfer under this Agreement exists (regardless whether it is
completed, pending or threatening or not):






	 	16.1	 	sanctions or restrictions imposed on the Company by a radio station, television
station or any organization that has the capacity to restrict or materially affect the
Company’s business;
	 
	 	16.2	 	a penalty, injunction or order against the Company by a competent government
authority; or




10









 












	 	16.3	 	a civil, criminal or administrative action, arbitration or other similar
proceeding or dispute against or with the Company.






	17.	 	Legal Compliance: Other than those that have been disclosed by the Company in the
Disclosure Letter, the business currently engaged in by the Company complies with the current
and valid laws, statutes, regulations and other administrative regulations issued by competent
state government authorities (hereinafter collectively referred to as “Statutes”), and the
Company has not violated any Statutes, such as would lead to a material adverse effect on the
business or assets operated by the Company.
	 
	18.	 	Employees: The Disclosure Letter sets forth the basic particulars of all of the
Company’s employees (including but not limited to the name, age, position, employment contract
term, salary or wage level, details on the payment of social insurance, etc.) and, in
particular, sets forth further information on employees who have executed an employment
contract with the Company (including but not limited to identifying the entity with whom the
actual employment relationship is maintained, and the status of such employment (i.e., through
a staffing/placement agency, currently in retirement or under a contractual arrangement
whereby social insurance is being maintained)). Other than as disclosed to Party A in the
Disclosure Letter:






	 	18.1	 	the employment of staff by the Company has complied with the applicable labor
laws and regulations;
	 
	 	18.2	 	there are no labor disputes or controversies or potential labor disputes or
controversies existing between the Company and its current or former employees;
	 
	 	18.3	 	the Company does not have any severance pay outstanding and owing due to the
termination of the employment with an employee and is not under obligation to pay
similar compensation or damages in connection with the employment with an employee; and
	 
	 	18.4	 	the Company has paid in full and/or withheld in accordance with relevant laws
and statutes pension, housing, medical, unemployment and all other social insurance
premiums and allowances or employee benefits payable for its employees as specified in
relevant laws or agreements, and no existing or potential dispute exists in respect of
such social insurance premiums and allowances or employee benefits.






	19.	 	Other establishments: Other than those that have been disclosed by the Company in the
Disclosure Letter, the Company does not have any branches or offices nor does it have any
long-term investments, such as holding equity, etc., in any other company or enterprise.
	 
	20.	 	Competing Business:






	 	20.1	 	None of the parties comprising of Party B directly or indirectly holds any
interests in any entity or sector that competes with or is similar to the Company or in
any sector that could be in competition with the business of the Company.




11









 












	 	20.2	 	Except as disclosed in the Disclosure Letter, Yingji has never conducted or
engaged in business that competes with, or is similar to, that of the Company.






	21.	 	Special representations and warranties of Party B and the Company: In addition to the
foregoing general representations and warranties, Party B and the Company jointly make the
following representations and warranties:






	 	21.1	 	all of the Company’s documents, including books of account, records of change
in the Equity Interest, financial statements and all other records of the Company, are
kept in accordance with the standard commercial practice and are entirely in the
possession and control of the Company, and the Company has accurately and compliantly
recorded all information on the major transactions relating to its business;
	 
	 	21.2	 	as at the Closing Date, all of the Company’s documents, including minutes of
board and shareholders’ meetings and the register of shareholders, have been
consistently and duly maintained, and completely and accurately record all matters that
ought to be recorded in such documents;
	 
	 	21.3	 	since the Balance Sheet Date: (i) other than in the ordinary course of
business, no event that could trigger the calling of the Company’s debts has occurred;
(ii) other than in the ordinary course of business, none of the Company’s property has
been disposed of or removed from the Company’s possession and the Company has not
executed any agreements that could result in any financial expenditures not in the
ordinary course of business or give rise to any liabilities not in the ordinary course
of business;
	 
	 	21.4	 	the Company has, as required, submitted all necessary information to the
competent taxation authorities; no dispute over the Company’s tax obligations,
potential tax obligations or tax breaks exists between the Company and the taxation
authorities;
	 
	 	21.5	 	the Company has duly retained all financial information used in normal tax
records and tax payments, as well as all information on any tax breaks the granting of
which has been approved by the competent government authorities; and
	 
	 	21.6.	 	other than the employee benefits, and social and pension security required by
the Labor Law of the People’s Republic of China, the Law of the People’s Republic of
China on Employment Contracts and other related regulations, the Company does not have
any employment, retirement or pension benefit or security systems or measures for its
employees.




12









 











APPENDIX 3




Schedule 1. Intellectual Property



	 	 	 
	A

	 	Intellectual property owned by the Company
	 
	 	 
	B

	 	Intellectual property licensed to the Company






[None]






13









 








APPENDIX 3




Schedule 2. List of Senior Management Personnel



14









 





Name List of Senior Management Personnel




Weidong Zhu



Managing Director; previously worked in the media department of such international advertising
companies as JWT and Grey; provided services for such famous international companies as P&G; worked
on TV media projects of Oriental TV, Shanghai TV, Shang Education TV and local television stations
in Zhejiang, Henan, Hubei and Sichuan.




Zhenhui Wang



Deputy General Manager; previously worked in the media department of such international advertising
companies as McCann and Dentsu; provided services for such famous international companies as
Johnson; worked on the sports programs of Shanghai TV, Documentary Channel of Shanghai TV and other
TV media projects.




Shengyang Zhu



Administration Director; former Director of Advertisement Department, Shanghai Cable TV,
contributing to the break-though development of Shanghai Cable TV in advertising business;
maintaining long-term close relationship with chiefs of several Chinese TV media; worked on TV
media projects in Shanghai, Fujian, etc.









15









 








APPENDIX 3




Schedule 3. Exclusive Advertising Sales Agency Contracts



16









 





Ad-Agency Contract



Party A (Board Owner): Wuhan Broadcasting & TV Station Advertising Department



Party B (Board Buyer): Shanghai Yarun Media Culture Co., Ltd.



The Contract is made by and between the Parties through sufficient negotiation concerning Party B’s
successful bid for the advertising slot on Party A’s WHTV-5, on the principles of good
faith, equality and mutual benefit in accordance with the Contract Law of the People’s Republic of
China, the Advertising Law of the People’s Republic of China, the Instructions on Advertising Bids
2008 of Wuhan Broadcasting & TV Station and other pertinent regulations.



1. The agency period shall be from January 1, 2008 to December 31, 2009. The
detailed advertising slots and boards are as follows:



Daytime and evening advertising slots on WHTV-5, and naming right of sports games advertisements on
sports columns on the channel. Art column on the channel, advertising slots and resources in
connection with important entertainment evenings and large-scale activities arranged by the
Broadcasting & TV Bureau shall not be the subject matter of the Contract. The total advertising
time shall be subject to pertinent regulations of the State Administration of Radio Film and
Television, but in no case may exceed 20% of the duration of the program. In case of adjustment of
the advertising slots due to channel revision, the adjusted schedule shall prevail.



2. The total amount of the accepted advertising fee is RMB eleven million one hundred and
seventy thousand only in 2008 and RMB twelve million two hundred and eighty-seven thousand
only in 2009.



3. Party B shall submit the proposed advertisement video tapes to Party A for examination and
confirmation at least five (5) working days in advance. Advertisement broadcasting shall abide by
national and local advertising laws and regulations; otherwise, Party A shall have the right to
refuse broadcasting or even terminate the Contract in case of serious default.



4. Party B’s advertisements may not go beyond the agreed time and standards; otherwise, Party A
shall have the right to refuse broadcasting.



5. Advertisement production and release shall comply with Party A’s regulations.



6. No compensations shall be made for any change in the original advertising slots as a result of
force majeure, act of government or revision of channels. In case of long-term revision, the
Parties may negotiate about resolutions in light of actual circumstances.



7. Payment Method



1) Party B shall, within three (3) days after winning the bid, pay the performance bond at 20% of
the accepted bid price (the bid bond paid at the time of registration shall be converted
automatically to the performance bond), namely, RMB two million two hundred and thirty-four
thousand only. Failure to make payment within the specified period shall constitute Party B’s
waiver.



2) Party A shall refund the performance bond within seven (7) working days after Party B has
fulfilled the Ad-Agency Contract. Party B’s failure to perform the Contract in all aspects shall
result that the performance bond will not be refunded.



3) Party B must make payment ten (10) days in advance on a monthly basis, namely, adverting fee for
January, 2008 shall be paid prior to December 21, 2007, advertising fee




17









 





for February, 2008 prior to January 21, 2008 and so on. Failure to pay in full amount the
advertising fee on schedule and unauthorized transfer of the bid (subcontract) shall constitute
Party B’s breach of contract. In case Party B breaches the Contract during the performance of the
Contract, the performance bond shall not be refunded and the advertising slots concerned shall be
withdrawn by Wuhan Broadcasting & TV Station Advertising Department, without any further notice.



8. In case of errors or omissions due to any reason attributable to Party A, remedies shall be
taken on the principle of “once for each error” and “twice for each omission”.



9. Party A may not insert any content (whether advertisements or not) in any way during the slots
to which Party B has the exclusive right unless Party B’s consent is obtained and Party A makes
compensations to Party B by means of another slot with equivalent value. Where Party A inserts any
content without Party B’s consent, Party A shall pay the advertising fee to Party B on the basis of
the executive price.



10. Where Party A intends to insert public service advertisements and political advertisements
during the slots to which Party B has the exclusive right, Party B’s prior consent shall be
obtained. Any matter uncovered herein may be specified in writing through negotiation between the
Parties as the supplementation to the Contract. Such supplementations shall have the same legal
force with the Contract.



11. Any and all disputes arising from the performance of the Contract shall be settled through
amiable negotiation; where negotiation fails, the dispute concerned shall be submitted to Wuhan
Arbitration Committee for arbitration.



12. The Contract shall be binding upon the Parties once signed. Each party shall perform the terms
of the Contract strictly and may not terminate the Contract at will. The first breaching party
shall assume all liabilities for breach of contract other than attributable to force majeure
(including national and government policies).



13. Wuhan Broadcasting & TV Station Advertising Department reserves the right to interpret the
Contract.



14. The Contract shall be made in four copies, two for each party. The Contract shall take effect
with signatures and seals and remains effective for two years.



15. Appendices to the Contract: relevant valid certificates




	 	 	 
	Party A: Wuhan Broadcasting & TV Station
Advertising Department

	 	Party B: Shanghai Yarun Media
Culture Co., Ltd.
	(seal)

	 	(seal)
	Representative (signature):

	 	Representative (signature):
	Date: December 24, 2007

	 	Date:
	Add.:
No. 620 Jianshe Avenue, Hankou, 430015

	 	Add.: Room 403, Sheng’ai
Plaza, No. 88 Caoxi N. Road, Shanghai, 200030
	Tel: 027-85722373

	 	Tel: 021-64381260
	Fax: 027-85766597

	 	Fax: 021-64383327






18









 





Exclusive Agency Contract

for

Advertisements on Tianjin TV Station Sports Channel




Party A:
[Tianjin TV Station Advertising Department]




Agent:                     




Add.: 3/F, Tianyu Hotel, No.19 Diantai Dao, Heping District, Tianjin, China




Party B: Shanghai Yarun Media Culture Co., Ltd.




Agent: Weidong Zhu




Add.:                     



The Contract (“Contract”) is made by and between the Parties through amiable negotiation concerning
Party B’s exclusive right to advertisements on Tianjin TV Station Sports Channel and in
accordance with the Contract Law of the People’s Republic of China, the Advertising Law of the
People’s Republic of China and other pertinent regulations.




Article 1 Grant of Ad-Agency Right



1.1 According to the terms and conditions of the Contract, Party A agrees to grant Party B the
exclusive right to advertisements on Tianjin TV Station Sports Channel from March 1, 2006 to
February 28, 2009, particularly from power on at 7:00 every day to power off at about 2:00 before
dawn of the next day, as well as during games transmission before dawn.



1.2 The advertising patterns to the extent of the exclusive right to Party B include brand ads,
special ads, programme naming, background panel, table-edge board and corner mark. However, the
implementation of such advertising patterns shall be subject to pertinent rules of Tianjin TV
Station and may not affect the programme quality, and Party A has the right to decide on the
advertising means and contents.



1.3 The film advertisements of the programmes on Party A’s Sports Channel shall not be in the
agency scope of Party B. However, film advertisements must be provided by film operators and
broadcast together with the programmes, and separation or removal is prohibited.



1.4 The Parties agree that Party B shall act as the exclusive ad-agent of the Channel and perform
the duties including, but not limited to, obtaining local qualifications for ad-agency, inviting
investment in advertisements on Tianjin TV Station Sports Channel and promotion of relevant
programmes, obtaining all licenses and permits necessary for advertisement broadcasting, submitting
advertisement materials for examination and approval. Party B shall complete all such duties at its
own cost and shall make payment to Party A on schedule.




Article 2 Rights and Obligations of the Parties



2.1 Party A’s rights and obligations



1) Party A shall coordinate with Tianjin TV Station Sports Channel to ensure the relative stability
of the programmes and advertising slots on the channel as far as possible. However, Tianjin TV
Station Sports Channel shall have the right to adjust reasonably the programmes on the channel
according to the overall programme arrangement of Tianjin






1









 







TV Station. Within the term of the Contract, the programme arrangement of Tianjin TV Station Sports
Channel shall be subject to the programme schedule provided by the Channel in the current year.
Party A shall have the right to adjust reasonably the prevailing programme schedule according to
the demands for games transmission.



2) Party A shall coordinate with Tianjin TV Station Sports Channel to ensure transmission
(including, but not limited to, live, recorded broadcast and broadcast delay) of regular games in
years past on the Channel as far as possible. As to FIFA World Cup 2006, Beijing Olympic Games2008
and other international major sports games, Tianjin TV Station Sports Channel shall do its utmost
to make coordination to transmit and report such games as far as possible. Failure to transmit
certain games due to reasons not attributable to Tianjin TV Station Sports Channel shall not
constitute Party A’s default; however, Party A shall inform Party B in advance.



3) Party A shall be responsible for final examination and broadcasting of the advertisement
contents and patterns. The advertisements released by Party B in various patterns and of various
kinds must conform to the Advertising Law of the People’s Republic of China and the relevant rules
of Tianjin TV Station on advertising patterns and contents, supported by valid documents and
relevant approvals and shall be examined and approved by the relevant competent authorities. Party
A shall have the right to refuse to broadcast the advertisements which are not examined, in which
case Party B shall assume relevant liabilities arising therefrom.



4) Party A shall ensure that the advertising time of Tianjin TV Station Sports Channel will conform
to the provisions of the State Administration of Radio Film and Television.



5) Party A shall have the right to adjust the programmes on Tianjin TV Station Sports Channel as
required for significant publicity tasks of the Country and Tianjin Municipality, provided that
Party A shall inform Party B of the adjustment information in advance.



6) Party A shall arrange and broadcast advertisements strictly according to the release sheets and
orders provided by Party B and timely provide Party B with the broadcasting certifications issued
by Tianjin Sanhe Investigation Co., Ltd.



7) Except for film advertisements and propaganda films concerning channels and columns according to
Article 1.3 hereof, Party A may not broadcast any paid advertisement in any form. Where the volume
of the advertisements solicited by Party B fails to reach the maximum capability of Tianjin TV
Station Sports Channel, Party A shall have the right to broadcast various propaganda films of
Tianjin TV Station. Any and all renewal contracts and other contracts executed prior to the date of
the Contract in connection with advertisement release on Tianjin TV Station Sports Channel after
March 1, 2006 shall be calculated into the total contracting volume of Party B.



8) Party A shall coordinate with Tianjin TV Station Sports Channel to broadcast more games and
improve programme quality as far as possible and do its utmost to ensure that the Channel can
obtain more satisfactory results in audience rating in 2006, 2007 and 2008.



9) Party A shall release the programme introduction and advertising information of Tianjin TV
Station Sports Channel on relevant pages of the websites of Tianjin TV Station. In case of any
change, Party A shall do its utmost to correct relevant information on the websites in time.



10) The Parties may negotiate to purchase jointly high-quality programs and games transmission
copyrights in order to promote the sound development of Tianjin TV Station Sports Channel. Detailed
matters such as the proportion of cost apportionment shall be negotiated otherwise and specified a
supplementary agreement.








2









 







11) Party A shall do its utmost to help Tianjin TV Station Sports Channel take part in the
promotion activities organized by Party A.



12) Party A shall actively improve the quality of its own programmes on Tianjin TV Station Sports
Channel and broadcast relevant popular sports programmes.



13) Party A shall have the right to fix the advertising price of Tianjin TV Station Sports Channel
in 2006, 2007 and 2008 for the purpose of unifying the advertising rates of all channels of Tianjin
TV Station.



14) Where a client has to remit the advertising fee directly to “Tianjin TV Station Advertising
Department Account” for special reasons and requests for an invoice issued by Tianjin TV Station,
Party A shall render active cooperation, check accounts with Party B’s financial personnel on a
monthly basis and offset the amount against the advertising fee payable by Party B to Party A.



15) Party A shall issue to Party B certain certification documents such as “Exclusive Agency
Qualification for Advertisements on Tianjin TV Station Sports Channel”.



2.2 Party B’s rights and obligations



1) Party B may exercise its exclusive agency rights to programs on Tianjin TV Station Sports
Channel on the principle of self-promotion and self-operation.



2) Party B shall own all incomes earned from all advertisements under its exclusive agency right.
Advertising rights and interests concerning competitions and interaction sections (including, but
not limited to, short message, telephone and voice calls) of various programmes on Tianjin TV
Station Sports Channel, as well as relevant incomes, shall be distributed to the Parties according
to the agreed proportion; such incomes shall not be reckoned in the total amount of exclusive
ad-agency in any year and shall be specified in the supplementary agreements.



3) Party B shall ensure to make payment to Party A on schedule according to the payment methods as
mentioned herein.



4) The advertisements released by Party B shall conform to the provisions of the Advertising Law of
the People’s Republic of China.



5) During the performance of the Contract, Party B may promote Party A’s “programmes and
advertising business on Tianjin TV Station Sports Channel” to which Party B has the operation right
on Internet in its own name, and network construction fee, webpage design fee and operation cost
shall be for the account of Party B.



6) During the performance of the Contract, Party B may hold client seminars regularly, solicit
market information and collect market data in connection with invitation for advertising investment
on Tianjin TV Station Sports Channel.



7) Party B shall have the right to invite foreign investment in the name of “Exclusive Advertising
Agency of Tianjin TV Station Sports Channel”.



8) With respect to various advertisements (including, but not limited to, brand ads, special ads,
title naming, sponsor billboard, corner mark, background panel and table board) which are designed,
shot and produced by Party A at Party B’s requests, Party A will charge the fee from Party B
according to the charge standards of Tianjin TV Station for advertisement production.




Article 3 Exclusive Agency Period (namely, term of the Contract)



The exclusive agency period is from March 1, 2006 to February 28, 2009.




Article 4 Performance Bond and Payment Method









3









 







4.1 The total amount of exclusive agency fee for the advertisements on Tianjin TV Station Sports
Channel is RMB25,000,000 in the first contract year (from March 1, 2006 to February 28, 2007),
RMB30,000,000 in the second contract year (from March 1, 2007 to February 29, 2008) and
RMB35,000,000 in the third contract year (from March 1, 2008 to February 28, 2009).



4.2 Party B shall pay RMB2,500,000 to Party A as the performance bond (hereinafter referred to
“Bond”) for the first contract year after execution of the Contract but prior to December 15, 2005,
and pay RMB2,500,000 to Party A prior to December 31, 2005. Party B’s failure to pay the Bond on
schedule shall constitute a breach of contract and entitle Party A to terminate the Contract
immediately.



4.3 The Parties agree that payment shall be made according to the following schedule:



1) Party B agrees to pay to Party A the “total amount of exclusive agency fee for advertisements on
Tianjin TV Station Sports Channel in the first year” as follows:



Prior to December 15, 2005, Party B shall pay to Party A RMB2,500,000 as the Bond of the first
year;



Party A shall, on February 25, 2006, use RMB2,050,000 out of the second payment of RMB2,500,000
paid by Party B prior to December 31, 2005 to offset the advertisement broadcasting fee;



Party A shall, on March 25, 2006, use RMB450,000 out of the second payment of RMB2,500,000 paid by
Party B prior to December 31, 2005 to offset the advertisement broadcasting fee, and Party B shall
pay to Party A RMB1,600,000 prior to March 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to April 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to May 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to June 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to July 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to August 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to September 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to October 25, 2006;



Party B shall pay to Party A RMB2,050,000 prior to November 25, 2006;



Party B shall pay to Party A RMB2,000,000 prior to December 25, 2006;



After Party B pays to Party A RMB3,000,000 as the Bond of the second year (March 1, 2007 to
February 29, 2008) on or prior to January 25, 2007, Party A may use RMB2,500,000 paid by Party B
prior to December 15, 2005 to offset the advertisement broadcasting fee on January 25, 2007.



2) Party B agrees to pay to Party A the “total amount of exclusive agency fee for advertisements on
Tianjin TV Station Sports Channel in the second year” as follows:



Prior to January 25, 2007, Party B shall pay to Party A RMB3,000,000 as the Bond of the second
year;



And, Party B shall pay to Party A RMB2,450,000 prior to February 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to March 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to April 25, 2007;








4









 







Party B shall pay to Party A RMB2,450,000 prior to May 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to June 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to July 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to August 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to September 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to October 25, 2007;



Party B shall pay to Party A RMB2,450,000 prior to November 25, 2007;



Party B shall pay to Party A RMB2,500,000 prior to December 25, 2007;



After Party B pays to Party A RMB3,500,000 as the Bond of the third year (March 1, 2008 to February
28, 2009) on or prior to January 25, 2008, Party A may use RMB3,000,000 paid by Party B as the Bond
of the second year prior to January 15, 2008 to offset the advertisement broadcasting fee of that
year on January 25, 2008.



3) Party B agrees to pay to Party A the “total amount of exclusive agency fee for advertisements on
Tianjin TV Station Sports Channel in the third year” as follows:



Prior to January 25, 2008, Party B shall pay to Party A RMB3,500,000 as the Bond of the third year;



Party B shall pay to Party A RMB2,860,000 prior to February 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to March 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to April 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to May 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to June 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to July 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to August 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to September 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to October 25, 2008;



Party B shall pay to Party A RMB2,860,000 prior to November 25, 2008;



Party B shall pay to Party A RMB2,900,000 prior to December 25, 2008;



Party A may use RMB3,500,000 paid by Party B as the Bond of the third year to offset the
advertisement broadcasting fee of that year on January 25, 2008.




Article 5 Independent Contracting Party



The Parties shall be independent contracting parties to each other. No joint venture, partnership
or employment relationship has been established between the Parties. Neither party nor its
employees or agents may engage in, or attempt to engage in, operation activities in the name of the
other party’s partner, representative or employee, or make express or implied representations.




Article 6 Rescission of the Contract









5









 







Either party hereto that intends to rescind the Contract must issue a notice to the other party
sixty (60) days in advance, and may not rescind the Contract without the consent of the other
party.




Article 7 Liability for Breach of Contract



7.1 In case of any errors in or omissions of the advertisements arranged by Party B due to Party
A’s negligence, Party A shall compensate Party B at the original slots on the principles of “twice
for each omission and once for each error”.



7.2 The Parties shall negotiate about solutions in case of losses arising from interruption of all
programmes of Tianjin TV Station Sports Channel or long-term suspension of the programmes as a
result of natural non-natural disasters.



7.3 Party B’s failure to make payment to Party A within the periods as specified in Articles 4.2
and 4.3 hereof shall constitute a breach of contract and entitle Party A to immediately cease
broadcasting various advertisements arranged by Party B and withhold the bond of the current year
paid by Party B.



7.4 Either party hereto that terminates the Contract without justified reasons or in violation of
the terms of the Contract shall pay the penalty to the other party at the rate of 10% of the total
amount of annual exclusive agency.



7.5 The Parties shall strictly perform the Contract as of the effective day and ensure that all
terms of the Contract can be observed and performed completely. Where either party violates the
Contract and thus causes economic losses to the other party, it shall make compensations to the
other party at the amount equivalent to to the losses arising therefrom. Where both the Parties
breaches the Contract, the Parties shall share the relevant liabilities for breach of contract
according to their actual faults. This clause shall not affect or limit other liabilities for
breach of the Contract.



7.6 Unless otherwise specified expressly in the Contract, the non-breaching party shall have the
right to terminate the Contract with a notice to the breaching party in any of the following
circumstances:



1) Where either party (breaching party) is bankrupted, or carries out voluntary or involuntary
bankruptcy procedures in accordance with the Bankruptcy Law or other regulations on insolvency, or
makes arrangements with its creditors, or conducts reorganization or is taken over or dissolved;



2) Where the breaching party fails to correct any material breach of the Contract within fifteen
(15) days after receiving a written notice from the Non-breaching Party, it shall be deemed as a
breach of the Contract and shall be subject to the breach clause.




Article 8 Applicable Law and Dispute Settlement



8.1 The execution, effectiveness, performance and interpretation of the Contract shall be governed
by Chinese laws and regulations.



8.2 Any and all disputes arising from or relating to the Contract shall be settled through amiable
negotiation; where negotiation fails, the dispute concerned shall be submitted to the People’s
Court with jurisdiction at the place where Party A is located.



8.3 During the settlement of disputes, the Parties shall continually perform the Contract, except
for those in dispute.




Article 9 Miscellaneous



9.1 Neither party shall be responsible for its delay in performing the Contract or failure to
perform its obligations hereunder as a result of force majeure within the term of the Contract,
provided that the affected party shall take necessary, proper and reasonable






6









 







measures in time to minimize the losses arising therefrom. The Parties may decide through
negotiation in good faith whether to rescind the Contract, to release part of obligations hereunder
or extend the performance period according to the impacts upon the Contract due to force majeure.



The affected party shall inform the other party of the force majeure event in writing within two
(2) days upon occurrence of the event, and, within fifteen (15) days upon occurrence of the event,
provide the details about the force majeure event and relevant valid certifications and documents,
proving that the Agreement cannot be performed completely or partially or needs be extended.



Force majeure means 1) natural disaster which cannot be overcome; 2) war, fire and explosion; 3)
other events which cannot be foreseen, prevented or avoided.



9.2 Neither party may transfer the Contract or any of its rights or obligations hereunder without
the other party’s prior written consent.



9.3 The Contract constitutes the entire contract between the Parties concerning the subject matter
hereof and substitutes all prior written or oral summaries, memos, contracts and agreements between
the Parties.



9.4 The Contract shall be written in Chinese in four copies with equal legal force, two for each
party.



9.5 The Contract shall become effective immediately with signatures and seals of the Parties.




Party A:
Tianjin TV Station Advertising Department         Party B: Shanghai Yarun MediaCulture Co., Ltd.



Representative:  
                  
                  
                  
            
Representative:



Date: December 7, 2005       
                  
                  
               Date: December 7, 2005



















7









 





Ad-Agency Agreement

for

Nanjing Broadcasting Group 2008



Party A: Living Channel and Entertainment Channel of Nanjing Broadcasting Group



Party B: Shanghai Yarun Media Culture Co., Ltd.



The Agreement is made by and between the Parties through sufficient and amiable negotiation
concerning Party B’s agency right to advertisements on “Living Channel and Entertainment Channel of
Nanjing Broadcasting Group” in accordance with the Contract Law of the People’s Republic of China
and pertinent laws and regulations on advertising .




I. Agency Amount and Period



1.1 Party A shall grant Party B the exclusive right to Party A’s advertising operation business in
2008, and Party B shall accomplish the agency amount of RMB27,000,000 (including RMB14,500,000 of
Living Channel and RMB12,500,000 of Entertainment Channel. The exclusive right shall be valid from
January 1, 2008 to December 31, 2008.



1.2 RMB5,000,000 in the target amount shall be accomplished by the Parties. Where such amount
cannot be accomplished by the end of the year, Party B shall be responsible for the insufficient
amount.




II. Terms on 4A Advertisements



2.1 Party A agrees that advertisements released by such five 4A companies as GroupM, Borui,
Haoteng, Diantong and Kailuo may be reckoned in the shares of such companies in Nanjing TV Station.



2.2 The Parties agrees through amiable negotiation that the total amount of the advertisements
released by the five 4A companies on Nanjing TV Station shall not be more than RMB22,600,000, and
the detailed limits are as follows: GroupM: RMB8,600,000; Borui: RMB6,500,000; Haoteng:
RMB5,000,000; Diantong: RMB1,000,000; and Kailuo: RMB1,500,000.



2.3 In consideration of the unpredictability of the advertising business of each company, Party A
agrees that Party B has the right to adjust the advertising amount of the five companies upward by
20% in order to balance the total advertising amount of RMB22,600,000. In any case the Parties
shall verify the maximum amount to the extent of the total amount.



2.4 The Parties agree that, with respect to the advertisements of 4A companies to be handled by the
designated service companies or the pairing-service channels, the 4A companies shall place orders
with Party B via the designated service companies or the pairing-service channels, then Party B
shall enter into agreements with the designated service companies or the pairing-service channels
and pay release fee and settle bonus. The relevant agreements shall be submitted to Party A for
record filing. However, Party A shall not be responsible for any debt dispute between Party B and
such service companies.








8









 







2.5 Party A shall ensure that its higher authority, Nanjing Broadcasting Group, will notify
expressly the five 4A companies or their respective service companies of the clauses and make
proper written representations in relevant advertising release contracts.




III. Terms on Party A’s Operation



3.1 Party A has the right to operate land activities and special advertisements (by means of column
naming, special broadcasting and corner marks). The contract price shall be remitted directly to
the account designated by Party A, and all incomes earned therefrom shall belong to Party A. Such
contracts must be provided to Party B for record filing prior to advertisement broadcasting.



3.2 If Party B discovers via a third person detecting system that Party A has broadcast on Living
or Entertainment Channel certain advertisements other than those ordered by Party B, Party B shall
have the right to claim against Party A for compensation at the rate of 100% of the advertising
quotations; such compensation may be deducted directly from the amount payable by Party B.



3.3 Party A shall be obliged to protect Party B’s advertising clients. Party A’s programmes for
supervision by public opinion shall protect the Parties’ key clients in all aspects. Party A shall
provide certain value-added services, such as enterprise activities, positive reports and
protection against adverse exposure.




IV. Appraisal of Audience Rating



4.1 Party A shall be obliged to improve the quality of the programmes on the channels and ensure
the realization of audience rating. The Parties agree that the audience rating in 2008 shall be the
Average Minute Audience Rating Report issued by CSM. The appraisal period shall be 17:00—24:00.
The average audience rating index shall not be less than 0.88% for Living Channel and 0.61% for
Entertainment Channel.



4.2 Appraisal unit will be half a year. If the audience rating in the first half of a year is less
than the required amount, the balance shall be made up in the second half of the year. If the
audience rating in a year is less than the required amount, the balance shall be made up as far as
possible in that year. In consideration of factors for making up the balance within the year, the
average audience rating of the first three quarters may be deemed as the audience rating of the
fourth quarter, and compensations shall be calculated thereon.



4.3 Compensation method: If the said audience rating fails to be accomplished, the compensations
shall be calculated according to the formula: discrepancy * operation index in such period (total
target amount /number of months) /70%.




Article 5 Payment Method









9









 







5.1 Bond: Party B shall pay RMB2,200,000 as the bond (RMB1,200,000 for Living Channel and
RMB1,000,000 for Entertainment Channel) within three (3) working days from the date of the
Agreement. Party A shall have the right to rescind the Agreement without refunding the bond where
Party B fails to accomplish the operation index or to make payment in full amount according to the
following schedule.



5.2 Party B shall pay the remaining advertising fee in advance once every two months. The detailed
schedule and amount are as follows:



RMB3,600,000 (RMB1,950,000 for Living Channel and RMB1,650,000 for Entertainment Channel) to be
paid prior to the 28th day of December, 2007, prior to the 28th day of
February, 2008 and prior to the 28th day of April, 2008 respectively;



RMB3,000,000 (RMB1,650,000 for Living Channel and RMB1,350,000 for Entertainment Channel) to be
paid prior to the 28th day of June, August and October 2008 respectively;



5.3 Party B shall pay the remaining advertising fee, namely, RMB5,000,000, according to the
following schedule:



RMB3,000,000 (RMB1,500,000 for Living Channel and Entertainment Channel respectively) to be paid
prior to June 30, 2008;



RMB1,000,000 (RMB500,000 for for Living Channel and Entertainment Channel respectively) to be paid
prior to August 31, 2008;



RMB1,000,000 (RMB500,000 for for Living Channel and Entertainment Channel respectively) to be paid
prior to October 31, 2008.



5.4 Party B shall remit the aforesaid payments in full amount to the account designated by Party A,
and Party A shall issue to Party B the advertising invoices covering relevant amounts.




VI. Advertising Release



6.1 Party B shall, two working days in advance, issue the advertising release order and relevant
schedule to Party A in written form, and Party A shall make written confirmation in writing.



6.2 BETA demo tapes provided by Party B shall be applied for advertising release. Party A may not
change the demo tapes without Party B’s consent.



6.3 Party A shall have the right to examine the advertisement contents and performance pattern.
Party A shall demand Party B to correct the advertisements of which contents or performance pattern
cannot meet the provisions of laws and regulations. Party A shall have the right to refuse
broadcasting before Party B makes correction.








10









 







6.4 Party A shall issue a broadcasting certification of the previous month to Party B within five
(5) working days at the beginning of each month. Party B shall make a written confirmation to Party
A within three (3) days after receiving such certification.



6.5 Party A shall ensure the ordinary broadcasting of Party B’s advertisements. In case of errors
or omissions due to artificial reasons, Party A shall take remedies in another period on the
principle of “once for each error and twice for each omission”. The time spent thereon shall not be
reckoned in the advertising period under Party B’s control hereunder.



6.6 Party A shall be obliged to appoint certain experienced pairing workers to feed back the
information received in time, transfer orders in time, issue the broadcasting certifications on
schedule, and notify major revisions about two (2) weeks in advance and small changes three (3)
days in advance.




VII. Liability for Breach of Contract



As of the effective day of the Agreement, neither party may rescind the Agreement, except for force
majeure; otherwise, the breaching party shall compensate for the losses to the non-breaching party.
In case of Party A’s breach of contract, Party A shall not only refund the amount paid by Party B
but also pay the penalty at the rate of 20% of the total contract price. In case of Party B’s
breach of contract, Party A shall not only withhold the amount paid by Party B but also claim for
the penalty (the paid bond may be taken as part of the penalty) at the rate of 20% of the total
contract price.




8. Force Majeure



8.1 Where one party cannot perform the Agreement completely or on schedule due to earthquake,
typhoon, flood, fire, war, rebellion, international or domestic traffic paralysis, infectious
disease, internal disorder, strike, national laws and regulations, policies formulated by the state
authority for Broadcasting & TV, other acts of government, or other force majeure events which
cannot be foreseen, avoided or prevented, such party shall inform the other party immediately and,
within fifteen (15) days thereafter, provide the details about force majeure event and relevant
valid certifications and documents issued by the local notarial office to prove that the Agreement
cannot be performed completely or partially or needs to be extended. The Parties may decide through
negotiation whether to rescind the Agreement, to release part of liabilities for performance of the
Agreement or to extend the performance period according to the impacts upon the Agreement. Neither
party may claim for compensation for the losses resulted from such force majeure event.



8.2 Where schedules for routine programmes are disturbed as a result of assignment by the
provincial or municipal CCA committees or governments of important publicity tasks which Party A
has to implement, or as a result of Party A’s transmission of important sports games or
performances, Party A may adjust the schedules for programmes and advertisements with a prior
notice to Party B. However, Party A shall adopt reasonable advice proposed by Party B in connection
with the arrangement of advertising slots.








11









 








9. Dispute Settlement



All disputes arising from the performance of the Agreement shall be settled through negotiation
between the Parties; where negotiation fails, the dispute concerned shall be submitted to the
People’s Court of Baixia District, Nanjing for arbitration.



10. The Agreement shall be made in six copies with equal legal force, two for Living Channel, two
for Entertainment Channel and the others for Party B. The Agreement shall take effect with
signatures and official seals by the Parties’ authorized representatives. Any matter uncovered
herein shall be specified in a supplementary agreement; In case of any conflicts between the
supplementary agreement and the Agreement, the former shall prevail.



Party A (seal): Nanjing Broadcasting Group Living Channel and Entertainment Channel



Authorized representative (signature):



Date:



Party B (seal): Shanghai Yarun Media Culture Co., Ltd.



Authorized representative (signature):



Date:











12









 








APPENDIX 4.




INTELLECTUAL PROPERTY PROTECTION AND NON-COMPETE

AGREEMENT



[None]









13









 








APPENDIX 5.




NON-DISCLOSURE AGREEMENT



[None]







14









 








APPENDIX 6.




DISCLOSURE LETTER



[None]







15









 








APPENDIX 7.




FINANCIAL REPORTS




16












 





Income Statement




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Item	 	Line No.	 	2,006.00	 	2,007.00
	I. Main Operating Income
	 	 	1	 	 	 	48,395,449.59	 	 	 	63,295,369.31	 
	Less: Main Operating Costs
	 	 	2	 	 	 	37,078,125.00	 	 	 	48,375,000.00	 
	Tax and Extra Charges on Main Business
	 	 	3	 	 	 	142,281.47	 	 	 	186,235.43	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	II. Main Operating Profits (Losses are presented by “-”)
	 	 	10	 	 	 	11,175,043.12	 	 	 	14,734,133.88	 
	Add: Other Operating Profits (Losses are presented by “-”)
	 	 	11	 	 	 	 	 	 	 	 	 
	Less: Operating Expenses
	 	 	14	 	 	 	4,871,866.20	 	 	 	4,304,741.22	 
	Administrative Expenses
	 	 	15	 	 	 	819,005.74	 	 	 	1,880,730.22	 
	Financial Expenses
	 	 	16	 	 	 	-5,296.78	 	 	 	-36,846.56	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	III. Operating Profits (Losses are presented by “-”)
	 	 	18	 	 	 	5,489,467.96	 	 	 	8,585,509.00	 
	Add: Investment Proceeds (Losses are presented by “-”)
	 	 	19	 	 	 	 	 	 	 	 	 
	Non-operating Income
	 	 	23	 	 	 	 	 	 	 	 	 
	Less: Non-operating Expenses
	 	 	25	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	V. Total Profits
	 	 	27	 	 	 	5,489,467.96	 	 	 	8,585,509.00	 
	Less: Income Tax
	 	 	28	 	 	 	299,350.89	 	 	 	1,313,988.81	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	VI. Net Profits
	 	 	30	 	 	 	5,190,117.07	 	 	 	7,271,520.19	 






17









 






Balance Sheet




					
	 
	 	December 31st, 2006
	 	Kuai Xiao Qi Di Yue Sheet 01
	 	 	 	 	 
	Name of Company:
	 	 
	 	Unit: RMB Yuan






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Opening	 	Closing
	 	 	 	 	 	 	Balance at the	 	Balance at the
	 	 	Line	 	beginning of	 	end of the
	Assets	 	Times	 	the year	 	year
	Current Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Monetary Fund
	 	 	1	 	 	 	 	 	 	 	1,568,804.19	 
	Short-term Investment
	 	 	2	 	 	 	 	 	 	 	 	 
	Notes Receivable
	 	 	3	 	 	 	 	 	 	 	 	 
	Dividends Payable
	 	 	4	 	 	 	 	 	 	 	 	 
	Accounts Receivable
	 	 	6	 	 	 	 	 	 	 	10,927,418.51	 
	Other Receivables
	 	 	7	 	 	 	 	 	 	 	 	 
	Prepayment
	 	 	8	 	 	 	 	 	 	 	 	 
	Inventories
	 	 	10	 	 	 	 	 	 	 	 	 
	Deferred Expenses
	 	 	11	 	 	 	 	 	 	 	 	 
	Long-term Bonds Investment due within a Year
	 	 	21	 	 	 	 	 	 	 	 	 
	Other Current Assets
	 	 	24	 	 	 	 	 	 	 	 	 
	Total Current Assets
	 	 	31	 	 	 	0.00	 	 	 	12,496,222.70	 
	Long-term Investment:
	 	 	 	 	 	 	 	 	 	 	 	 
	Long-term Equity Investment
	 	 	32	 	 	 	 	 	 	 	 	 
	Long-term Debt Investment
	 	 	34	 	 	 	 	 	 	 	 	 
	Total Long-term Investment
	 	 	38	 	 	 	 	 	 	 	 	 
	Fixed Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Original Value of Fixed Assets
	 	 	39	 	 	 	 	 	 	 	342,246.00	 
	Less: Accumulated Depreciation
	 	 	40	 	 	 	 	 	 	 	29,904.44	 
	Net Value of Fixed Assets
	 	 	41	 	 	 	0.00	 	 	 	312,341.56	 
	Engineering Materials
	 	 	44	 	 	 	 	 	 	 	 	 
	Construction in Process
	 	 	45	 	 	 	 	 	 	 	 	 
	Liquidation of Fixed Assets
	 	 	46	 	 	 	 	 	 	 	 	 
	Total Fixed Assets
	 	 	50	 	 	 	0.00	 	 	 	312,341.56	 
	Intangible Assets and Other Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Intangible Assets
	 	 	51	 	 	 	 	 	 	 	 	 
	Long-term Deferred Expenses
	 	 	52	 	 	 	 	 	 	 	 	 
	Other Long-term Assets
	 	 	53	 	 	 	 	 	 	 	 	 
	Total Intangible Assets and Other Assets
	 	 	60	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Assets
	 	 	65	 	 	 	0.00	 	 	 	12,808,564.26	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 






18









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Opening	 	Closing
	 	 	 	 	 	 	Balance at the	 	Balance at the
	 	 	Line	 	beginning of	 	end of the
	Liabilities and Owner’s Equity	 	Times	 	the year	 	year
	Current Liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Short-term Loans
	 	 	68	 	 	 	 	 	 	 	 	 
	Notes Payable
	 	 	69	 	 	 	 	 	 	 	 	 
	Accounts Payable
	 	 	70	 	 	 	 	 	 	 	3,410,094.03	 
	Accounts Received in Advance
	 	 	71	 	 	 	 	 	 	 	 	 
	Accrued Payroll
	 	 	72	 	 	 	 	 	 	 	 	 
	Welfare Benefits Payable
	 	 	73	 	 	 	 	 	 	 	 	 
	Profits Payable
	 	 	74	 	 	 	 	 	 	 	 	 
	Taxes Payable
	 	 	76	 	 	 	 	 	 	 	208,353.16	 
	Other Expenses Payable
	 	 	80	 	 	 	 	 	 	 	 	 
	Other Payables
	 	 	81	 	 	 	 	 	 	 	 	 
	Accrued Expenses
	 	 	82	 	 	 	 	 	 	 	 	 
	Long-term Liabilities due within a Year
	 	 	86	 	 	 	 	 	 	 	 	 
	Other Current Liabilities
	 	 	90	 	 	 	 	 	 	 	 	 
	Total Current Liabilities
	 	 	100	 	 	 	0.00	 	 	 	3,618,447.19	 
	Long-term Liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Long-term Loans
	 	 	101	 	 	 	 	 	 	 	 	 
	Long-term Payable
	 	 	103	 	 	 	 	 	 	 	 	 
	Other Long-term Liabilities
	 	 	106	 	 	 	 	 	 	 	 	 
	 
	Total Long-term Liabilities
	 	 	110	 	 	 	 	 	 	 	 	 
	 
	Total Liabilities
	 	 	114	 	 	 	0.00	 	 	 	3,618,447.19	 
	Owner’s Equity (or Shareholder’s Equity)
	 	 	 	 	 	 	 	 	 	 	 	 
	Paid-up Capital
	 	 	115	 	 	 	 	 	 	 	4,000,000.00	 
	Capital Reserves
	 	 	120	 	 	 	 	 	 	 	 	 
	Surplus Reserves
	 	 	121	 	 	 	 	 	 	 	 	 
	Including: Statutory Public Welfare Funds
	 	 	122	 	 	 	 	 	 	 	 	 
	Undistributed Profits
	 	 	123	 	 	 	 	 	 	 	5,190,117.07	 
	Total Owner’s Equity (or Shareholders Equity)
	 	 	124	 	 	 	0.00	 	 	 	9,190,117.07	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Liabilities and Owner’s Equity
	 	 	125	 	 	 	0.00	 	 	 	12,808,564.26	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 






19









 






Balance Sheet




					
	 
	 	December 31st, 2007
	 	Kuai Xiao Qi Di Yue Sheet 01
	 	 	 	 	 
	Name of Company:
	 	 
	 	Unit: RMB Yuan






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Opening	 	Closing
	 	 	 	 	 	 	Balance at the	 	Balance at
	 	 	Line	 	beginning of	 	the end of the
	Assets	 	Times	 	the year	 	year
	Current Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Monetary Fund
	 	 	1	 	 	 	1,568,804.19	 	 	 	2,209,375.76	 
	Short-term Investment
	 	 	2	 	 	 	 	 	 	 	 	 
	Notes Receivable
	 	 	3	 	 	 	 	 	 	 	 	 
	Dividends Payable
	 	 	4	 	 	 	 	 	 	 	 	 
	Accounts Receivable
	 	 	6	 	 	 	10,927,418.51	 	 	 	26,028,249.13	 
	Other Receivables
	 	 	7	 	 	 	 	 	 	 	6,707,384.73	 
	Prepayment
	 	 	8	 	 	 	 	 	 	 	 	 
	Inventories
	 	 	10	 	 	 	 	 	 	 	 	 
	Deferred Expenses
	 	 	11	 	 	 	 	 	 	 	 	 
	Long-term Bonds Investment due within a Year
	 	 	21	 	 	 	 	 	 	 	 	 
	Other Current Assets
	 	 	24	 	 	 	 	 	 	 	 	 
	Total Current Assets
	 	 	31	 	 	 	12,496,222.70	 	 	 	34,945,009.62	 
	Long-term Investment:
	 	 	 	 	 	 	 	 	 	 	 	 
	Long-term Equity Investment
	 	 	32	 	 	 	 	 	 	 	 	 
	Long-term Debt Investment
	 	 	34	 	 	 	 	 	 	 	 	 
	Total Long-term Investment
	 	 	38	 	 	 	 	 	 	 	 	 
	Fixed Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Original Value of Fixed Assets
	 	 	39	 	 	 	342,246.00	 	 	 	342,246.00	 
	Less: Accumulated Depreciation
	 	 	40	 	 	 	29,904.44	 	 	 	94,931.00	 
	Net Value of Fixed Assets
	 	 	41	 	 	 	312,341.56	 	 	 	247,315.00	 
	Engineering Materials
	 	 	44	 	 	 	 	 	 	 	 	 
	Construction in Process
	 	 	45	 	 	 	 	 	 	 	 	 
	Liquidation of Fixed Assets
	 	 	46	 	 	 	 	 	 	 	 	 
	Total Fixed Assets
	 	 	50	 	 	 	312,341.56	 	 	 	247,315.00	 
	Intangible Assets and Other Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	Intangible Assets
	 	 	51	 	 	 	 	 	 	 	 	 
	Long-term Deferred Expenses
	 	 	52	 	 	 	 	 	 	 	 	 
	Other Long-term Assets
	 	 	53	 	 	 	 	 	 	 	 	 
	Total Intangible Assets and Other Assets
	 	 	60	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total Assets
	 	 	65	 	 	 	12,808,564.26	 	 	 	35,192,324.62	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 






20









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Opening	 	Closing
	 	 	 	 	 	 	Balance at the	 	Balance at
	 	 	Line	 	beginning of	 	the end of the
	Liabilities and Owner’s Equity	 	Times	 	the year	 	year
	Current Liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Short-term Loans
	 	 	68	 	 	 	 	 	 	 	 	 
	Notes Payable
	 	 	69	 	 	 	 	 	 	 	 	 
	Accounts Payable
	 	 	70	 	 	 	3,410,094.03	 	 	 	8,208,498.82	 
	Accounts Received in Advance
	 	 	71	 	 	 	 	 	 	 	 	 
	Accrued Payroll
	 	 	72	 	 	 	 	 	 	 	 	 
	Welfare Benefits Payable
	 	 	73	 	 	 	 	 	 	 	 	 
	Profits Payable
	 	 	74	 	 	 	 	 	 	 	 	 
	Taxes Payable
	 	 	76	 	 	 	208,353.16	 	 	 	147,188.54	 
	Other Expenses Payable
	 	 	80	 	 	 	 	 	 	 	 	 
	Other Payables
	 	 	81	 	 	 	 	 	 	 	10,375,000.00	 
	Accrued Expenses
	 	 	82	 	 	 	 	 	 	 	 	 
	Long-term Liabilities due within a Year
	 	 	86	 	 	 	 	 	 	 	 	 
	Other Current Liabilities
	 	 	90	 	 	 	 	 	 	 	 	 
	Total Current Liabilities
	 	 	100	 	 	 	3,618,447.19	 	 	 	18,730,687.36	 
	Long-term Liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Long-term Loans
	 	 	101	 	 	 	 	 	 	 	 	 
	Long-term Payable
	 	 	103	 	 	 	 	 	 	 	 	 
	Other Long-term Liabilities
	 	 	106	 	 	 	 	 	 	 	 	 
	 
	Total Long-term Liabilities
	 	 	110	 	 	 	 	 	 	 	 	 
	 
	Total Liabilities
	 	 	114	 	 	 	3,618,447.19	 	 	 	18,730,687.36	 
	Owner’s Equity (or Shareholder’s Equity)
	 	 	 	 	 	 	 	 	 	 	 	 
	Paid-up Capital
	 	 	115	 	 	 	4,000,000.00	 	 	 	4,000,000.00	 
	 
	Capital Reserves
	 	 	120	 	 	 	 	 	 	 	 	 
	Surplus Reserves
	 	 	121	 	 	 	 	 	 	 	 	 
	Including: Statutory Public Welfare Funds
	 	 	122	 	 	 	 	 	 	 	 	 
	Undistributed Profits
	 	 	123	 	 	 	5,190,117.07	 	 	 	12,461,637.26	 
	Total Owner’s Equity (or Shareholders Equity)
	 	 	124	 	 	 	9,190,117.07	 	 	 	16,461,637.26	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Liabilities and Owner’s Equity
	 	 	125	 	 	 	12,808,564.26	 	 	 	35,192,324.62	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 






21









 






APPENDIX 8.




EXISTING TELEVISION CHANNELS




	1.	 	Sports Channel of Tianjin TV
	 
	2.	 	Life Channel of Nanjing Radio and Television Group
	 
	3.	 	Entertainment Channel of Nanjing Radio and Television Group
	 
	4.	 	WHTV-5






22