**Exhibit 10.98****EXECUTION VERSION**SHARE PURCHASE AGREEMENTAMONGALLYES INFORMATION TECHNOLOGY COMPANY LIMITED,THE SELLING SHAREHOLDERS HERETOandFOCUS MEDIA HOLDING LIMITEDdated as ofFebruary 28, 2007
 

 
**Table of Contents**     ARTICLE I DEFINITIONS  2      SECTION 1.1. Certain Defined Terms  2 SECTION 1.2. Other Defined Terms  10 SECTION 1.3. Other Interpretive Provisions  12      ARTICLE II PURCHASE AND SALE OF SHARES  12      SECTION 2.1. Transfers by the Selling Shareholders and Buyer  12 SECTION 2.2. Consideration  12 SECTION 2.3. First Closing  14 SECTION 2.4. The Earnout Closing  15 SECTION 2.5. Share Splits and Other Similar Events  16      ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT SHAREHOLDERS  16      SECTION 3.1. Due Organization, Good Standing and Power  17 SECTION 3.2. Authorization, Enforceability  17 SECTION 3.3. Capitalization; Ownership and Transfer of Shares; Valid Issuance  18 SECTION 3.4. Group Companies  18 SECTION 3.5. Corporate Records  19 SECTION 3.6. Financial Statements  20 SECTION 3.7. No Approvals or Conflicts  21 SECTION 3.8. [Reserved]  22 SECTION 3.9. Licenses  22 SECTION 3.10. Litigation  22 SECTION 3.11. Absence of Certain Changes  23 SECTION 3.12. Tax Matters  24 SECTION 3.13. Dividends and Distributions  25 SECTION 3.14. Officers, Employees and Labor  26 SECTION 3.15. Loans  27 SECTION 3.16. [Reserved]  28 SECTION 3.17. Share Option and Other Plans  28 SECTION 3.18. Intellectual Property  28 SECTION 3.19. Contracts  29 SECTION 3.20. Certain Transactions  31 SECTION 3.21. Prior Acquisitions  31 SECTION 3.22. Structure Agreements  31 SECTION 3.23. Compliance with Laws  33 SECTION 3.24. Environmental Matters  34 SECTION 3.25. Insurance  35 SECTION 3.26. Personal Property Assets  35 SECTION 3.27. Real Property  35 
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     SECTION 3.28. No State Assets  36 SECTION 3.29. Brokers  36      ARTICLE III.A  37      SECTION 3A.1. Due Organization, Good Standing and Power  37 SECTION 3A.1. Due Organization, Good Standing and Power  37 SECTION 3A.2. Authorization, Enforceability  37 SECTION 3A.2. Authorization, Enforceability  37 SECTION 3A.3. Ownership and Transfer of Shares  37 SECTION 3A.4. No Approvals or Conflicts  38 SECTION 3A.4. No Approvals or Conflicts  38 SECTION 3A.5. Brokerage  38 SECTION 3A.5. Brokerage  38 SECTION 3A.6. Investment  39 SECTION 3A.7. No Public Market  39 SECTION 3A.8. Accredited Investor; Foreign Investor  39 SECTION 3A.9. No Other Representations and Warranties  39      ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER  40      SECTION 4.1. Organization  40 SECTION 4.2. Authorization, Enforceability  40 SECTION 4.3. No Approvals or Conflicts  40 SECTION 4.4. Litigation  41 SECTION 4.5. Outstanding Share Capital  41 SECTION 4.6. Validity of Share Consideration  41 SECTION 4.7. SEC Filings  42 SECTION 4.8. Absence of Certain Changes  42 SECTION 4.9. Consent to Creation of Registration Rights  43 SECTION 4.10. No Other Representations or Warranties  43      ARTICLE V COVENANTS AND AGREEMENTS  43      SECTION 5.1. Conduct of Business Prior to First Closing  43 SECTION 5.2. Filings and Consents  46 SECTION 5.3. Tax Matters; Cooperation; Preparation of Returns; Tax Elections  47 SECTION 5.4. Tax Indemnity  48 SECTION 5.5. Employees; Benefit Plans  49 SECTION 5.6. Related Party Accounts  49 SECTION 5.7. Obligations of the Group Companies  49 SECTION 5.8. Non-Violation  49 SECTION 5.9. Confidentiality  50 SECTION 5.10. Employment Agreements  50 SECTION 5.11. Further Actions  51 SECTION 5.12. Sellers’ Representative  51 SECTION 5.13. Management Independence; Group Companies Operation  52 
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     SECTION 5.14. No Transfer by Selling Shareholders  52 SECTION 5.15. 2007 Audited Financial Statements; 2007 Audited Annual Net Income  53 SECTION 5.16. No 338(g) Election  53      ARTICLE VI CONDITIONS TO THE SELLING SHAREHOLDERS’ OBLIGATIONS  53      SECTION 6.1. Representations and Warranties  53 SECTION 6.2. Performance  54 SECTION 6.3. No Material Adverse Change  54 SECTION 6.4. Officer’s Certificates  54 SECTION 6.5. Registration Rights Agreement  54 SECTION 6.6. Injunctions  54 SECTION 6.7. Adverse Market Change  54 SECTION 6.8. FM Ordinary Shares  54 SECTION 6.9. Opinions of Counsel  55      ARTICLE VII CONDITIONS TO BUYER’S OBLIGATIONS  55      SECTION 7.1. Representations and Warranties  55 SECTION 7.2. Performance  55 SECTION 7.3. No Indebtedness  56 SECTION 7.4. Officer’s Certificate  56 SECTION 7.5. Lock-up Agreements  56 SECTION 7.6. Outstanding Obligations  56 SECTION 7.7. Employment Agreements  56 SECTION 7.8. Corporate Matters  56 SECTION 7.9. Opinions of Counsel  57 SECTION 7.10. Structure Agreements  57 SECTION 7.11. Injunctions  57      ARTICLE VIII TERMINATION  57      SECTION 8.1. Termination  57 SECTION 8.2. Procedure and Effect of Termination  58      ARTICLE IX INDEMNIFICATION  59      SECTION 9.1. Indemnification  59 SECTION 9.2. Limitation on Indemnification  63 SECTION 9.3. Contribution  64 SECTION 9.4. Payment in Kind  64      ARTICLE X MISCELLANEOUS  64      SECTION 10.1. Fees and Expenses  64 SECTION 10.2. Governing Law  65 SECTION 10.3. Materiality  65 SECTION 10.4. Amendment  65 
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     SECTION 10.5. No Assignment  65 SECTION 10.6. Waiver  66 SECTION 10.7. Notices  66 SECTION 10.8. Complete Agreement  68 SECTION 10.9. Counterparts  68 SECTION 10.10. Publicity  68 SECTION 10.11. Headings  69 SECTION 10.12. Severability  69 SECTION 10.13. Third Parties  69 SECTION 10.14. Dispute Resolution  69 
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Schedules   Schedule 1.1 Selling ShareholdersSchedule 2.2 Allocation Schedule Preparation ConventionsSchedule 3.1(b)(1) Company LiabilitiesSchedule 3.1(b)(2) Company ContractsSchedule 3.3 Outstanding Share Capital of the CompanySchedule 3.4 Group Companies InformationSchedule 3.5 Corporate RecordsSchedule 3.6(a) Financial InformationSchedule 3.6(b) Latest Draft of Registration Statement on F-1Schedule 3.6(f) Schedule of Outstanding ObligationsSchedule 3.7(a) Company and Management Conflicts and necessary approvalsSchedule 3.7(b) SAFE RegistrantsSchedule 3.10 LitigationSchedule 3.11 Disclosure against representations and warrantiesregarding absence of certain changes with respect tothe BusinessSchedule 3.12 Tax matters of the Group Companies and the SubsidiariesSchedule 3.14 Labor relations and Employee benefitsSchedule 3.15 Related Party LoansSchedule 3.17 Group Company Share Option and Benefit Plans andInformationSchedule 3.19(a) Material ContractsSchedule 3.19(c) Material Contract IssuesSchedule 3.20 Related Party TransactionsSchedule 3.21(a) AcquisitionsSchedule 3.22 Structure AgreementsSchedule 3.25 InsuranceSchedule 3.27 Real property and Land Use RightsSchedule 3.29 Broker ActivitiesSchedule 3A.4 Non-Management Approvals and ConflictsSchedule 5.1 Conduct of the BusinessSchedule 5.5 Related Party AccountsSchedule 5.14 Overhead ExpensesSchedule 5.21 Earnout Allocation ScheduleSchedule 7.2 Consents, waivers and approvalsSchedule 7.7 Control Agreements
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Exhibits   Exhibit A Form of Lock-up AgreementExhibit B Form of Key Company Employee Employment AgreementsExhibit C Form of General Employment AgreementsExhibit D Form of Registration Rights AgreementExhibit E Form of Buyer Cayman Islands Counsel OpinionExhibit F Form of Seller PRC Counsel OpinionExhibit G Form of Seller Cayman Islands Counsel Opinion
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SHARE PURCHASE AGREEMENT          This SHARE PURCHASE AGREEMENT, dated as of February 28, 2007, among ALLYES INFORMATIONTECHNOLOGY COMPANY LIMITED, an exempted company limited by shares under the laws of the CaymanIslands (“Allyes” or the “Company”), holders of outstanding share capital of theCompany set forth on Schedule 1.1 hereto (the “Selling Shareholders”), and FOCUSMEDIA HOLDING LIMITED, a company organized under the laws of the Cayman Islands (“FocusMedia” or the “Buyer”).          WHEREAS, the Selling Shareholders on Schedule 1.1 as of the date of this Agreement ownapproximately 79.2% of all issued and outstanding share capital of the Company on a fully-dilutedand as-converted basis;          WHEREAS, on or prior to the First Closing Date, holders of the Company’s issued andoutstanding options and warrants as of the date of this Agreement will cancel and waive theirrights under their respective option and warrant agreements pursuant to a cancellation and waiverof rights agreement (the “Cancellation and Waiver of Rights Agreement”);          WHEREAS, the Selling Shareholders on Schedule 1.1 will, as of the First Closing Date, own allissued and outstanding ordinary shares, preferred shares and other equity interests of the Company,including without limitation, any options and warrants and convertible bonds convertible intoordinary shares of the Company (the “Shares”), representing 100% of the total issued andoutstanding share capital of the Company at the First Closing;          WHEREAS, the Company conducts the Business (as defined below) through the Group Companies (asdefined below);          WHEREAS, Selling Shareholders desire to sell, and Buyer desires to purchase, the Shares, uponthe terms and subject to the conditions set forth in this Agreement.          NOW, THEREFORE, in consideration of the premises and the representations, warranties,covenants and agreements herein contained and intending to be legally bound hereby, the partieshereto hereby agree as follows:ARTICLE IDEFINITIONS          SECTION 1.1. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:          “2007 Audited Annual Net Income” means the Company’s audited net income after tax asdefined under U.S. GAAP and calculated on a true stand-alone basis for the twelve-month periodstarting from the first day of the first full month immediately following the First Closing Dateand ending twelve months thereafter as set forth in the 2007 Audited FinancialStatements, plus the sum of all amounts deducted in arriving at such audited net income tomake provisions for any goodwill impairment or additional amortization or depreciation as a resultof or
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in connection with the transactions contemplated hereby or in the Ancillary Documents, anystock-based compensation related charges or expenses and any auditing or accounting fees andexpenses in excess of US$100,000 charged to the Company for the period covered by the 2007 AuditedFinancial Statements, including without duplication auditing and accounting related fees andexpenses charged to the Company that are incurred in connection with the preparation of any annualor interim consolidated financial statements of Buyer during the period covered by the 2007 AuditedFinancial Statements.          “2007 Audited Financial Statements” means the audited financial statements of theCompany and its consolidated entities for the twelve-month period starting from the first day ofthe first full month immediately following the First Closing Date and ending twelve monthsthereafter, prepared in accordance with U.S. GAAP.          “ADSs” means the American depositary shares of Buyer as listed on the Nasdaq GlobalMarket.          “Affiliate” means, with respect to any specified Person, any other Person thatdirectly, or indirectly through one or more intermediaries, controls, is controlled by, or is undercommon control with, such specified Person.          “Affiliated Company” means any Group Company and its Affiliates in respect of which amajority of the equity is not directly held but controlled by the Company, provided, for theavoidance of doubt, Oak and IDG shall not constitute Affiliated Companies.          “Aggregate Consideration” means the sum of (a) the Initial Cash Consideration, (b) theInitial Share Value Amount and (c) the Remaining Consideration.          “Agreement” means this Share Purchase Agreement among the parties hereto, as amended,modified or supplemented from time to time.          “Ancillary Documents” means all other agreements, documents and instruments requiredto be delivered by any party pursuant to this Agreement, and any other agreements, documents orinstruments entered into at or prior to the First Closing in connection with this Agreement or thetransactions contemplated hereby.          “Business” means Internet marketing agency services, Internet advertising servingtechnologies and performance-based advertising serving services of the Group Companies, ascurrently operated or proposed to be operated.          “Business Day” means any day that is not a Saturday, a Sunday or other day on whichbanks are required or authorized by law to be closed in Beijing, PRC, Hong Kong S.A.R., or New YorkCity, U.S.A.          “Cause” means: (i) an employee’s gross negligence in the performance of his or herduties to the Group Companies;
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 (ii) an employee’s misappropriation of assets of, or embezzlementfrom, the Group Companies;  (iii) willful breach by an employee of such employee’s materialobligations under the relevant employment agreement entered into by theemployee;  (iv) a material breach by the employee of this Agreement or anyEmployment Agreement to which the employee is party, which breach is not curedwithin ten (10) days after delivery of written notice thereof to the employee;or  (v) fraud, malfeasance, willful violation of Buyer’s Code of Ethicsor other written policies.          “Change in Control” means an event where any Person or Persons other than Buyer or itscurrent Affiliates is or becomes the beneficial owner, directly or indirectly, of more than 50% ofthe total voting power of all FM Ordinary Shares then outstanding and normally entitled to vote inthe election of directors without regard to the occurrence of any contingency (the “VotingShares”). For the purposes of this definition, a Person shall be deemed to beneficially ownany Voting Shares of an entity held by any other entity (the “Intermediary Entity”), ifsuch Person is the beneficial owner, directly or indirectly, of more than 50% of the voting powerof the Voting Shares of the Intermediary Entity.          “Closing” means either the First Closing or the Earnout Closing.          “Closing Date” means either the First Closing Date or the Earnout Closing Date.          “Competing Business” means (i) any business or activity which is involved in the saleor placement of advertising on or by means of (A) flat-panel television displays deployed inelevators, elevator lobbies, any retail stores including convenience stores, super markets or hypermarkets, (B) frames deployed in elevators, elevator lobbies, any retail stores includingconvenience stores, super markets or hyper markets, (C) mobile phones and other streaming mediadevices, (D) light emitting diode displays deployed in out-of-home markets or (E) movie theatrescreens, or (ii) the Business; *excluding*any Excluded Business.          “Contract” means any contract, agreement, arrangement or understanding, whetherwritten or oral and whether express or implied, including without limitation, the StructureAgreements.          “control” (including the terms “controlled by” and “under common control with”), withrespect to the relationship between or among two or more Persons, means the possession, directly orindirectly, of the power to direct or cause the direction of the affairs or management of a Person,whether through the ownership of voting securities, by Contract or otherwise, including theownership, directly or indirectly, of securities having the power to elect a majority of the boardof directors or similar body governing the affairs of such Person.
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          “Earnout Closing Allocation Schedule” means a schedule setting forth the allocation ofthe Remaining Consideration among the Selling Shareholders on the Earnout Closing Date.          “Employment Agreements” means, collectively, the Key Company Employee EmploymentAgreements and the General Employment Agreements.          “Encumbrance” means any security interest, pledge, mortgage, lien, charge, limitation,condition, equitable interest, option, easement, encroachment, right of first refusal, adverseclaim or restriction of any kind, including any restriction on transfer or other assignment, assecurity or otherwise, of or relating to use, quiet enjoyment, voting, receipt of income orexercise of any other attribute of ownership. For the avoidance of doubt, software licensesentered into in the ordinary course of business shall not constitute Encumbrances.          “Environmental Claim” means any written notice, claim, demand, action, suit,complaint, or proceeding by any person alleging liability or potential liability (includingliability or potential liability for investigatory costs, cleanup costs, governmental responsecosts, natural resource damages, fines or penalties) under any Environmental Laws.          “Environmental Laws” means all Laws in effect at the date of this Agreement relatingto protection of the environment.          “Exchange Act” means the United States Securities Exchange Act of 1934, as amended,and the rules and regulations promulgated thereunder.          “Excluded Business” means any business other than that specifically constituting aCompeting Business and shall also include any business conducted on or through the Internet(including any web site or portal) provided that in the case of any Person restricted from engagingin a Competing Business, such person shall not perform or supervise the performance of functionsequivalent to those constituting a Competing Business.          “FM Ordinary Shares” means the ordinary shares, US$0.00005 par value per share, ofFocus Media.          “FMCN Share Price” means US$7.762 per FM Ordinary Share.          “Financing Lease” means (i) any lease of property, real or personal, the obligationsunder which are capitalized on the balance sheet of the Company and (ii) any other such lease tothe extent that the then present value of the minimum rental commitment thereunder should, inaccordance with U.S. GAAP, be capitalized on a balance sheet of the Company.          “First Closing Allocation Schedule” means a schedule setting forth the allocation ofthe Initial Cash Consideration and the Initial Share Consideration among the Selling Shareholderson the First Closing Date.          “Government Official” means any official, director, politician, employee or othersimilar Persons with a position at a Governmental Authority.
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          “Governmental Authority” means any government or governmental or regulatory bodythereof, or political subdivision thereof, whether federal, state, municipal, local or foreign, orany agency, instrumentality or authority thereof, or any court or arbitrator (public or private).          “Governmental Order” means any order, writ, injunction, decree, stipulation,determination or award entered by or with any Governmental Authority.          “Group Companies” means the Company, the Subsidiaries, the Affiliated Companies andany Person that is not a natural person and that is controlled by a Group Company.          “Hazardous Materials” means all materials defined as “hazardous substances” or“hazardous wastes,” toxic, pollutant, contaminant or words of similar meaning or effect, or anyother term of similar import under any Environmental Law, including petroleum, asbestos, andpolychlorinated biphenyls.          “IDG” means IDG Technology Venture Investments, LP, IDG-Accel China Growth Fund-AL.P., IDG-Accel China Growth Fund L.P. and IDG-Accel China Investors L.P.          “Indebtedness” of a Person, at a particular date, means the sum (without duplication)at such date of (i) indebtedness for borrowed money or for the deferred purchase price of propertyor services in respect of which such Person is liable as obligor, (ii) indebtedness secured by anylien on any property or asset owned or held by such Person regardless of whether the indebtednesssecured thereby shall have been assumed by or is a primary liability of such Person, (iii)obligations of such Person under Financing Leases, (iv) the face amount of all letters of creditissued for the account of such person and, without duplication, the unreimbursed amount of alldrafts drawn thereunder and (v) obligations (in the nature of principal or interest) of such Personin respect of acceptances or similar obligations issued or created for the account of such Person.          “Intellectual Property” means all rights under patent, copyright, trademark or tradesecret Law or any other statutory provision or common law doctrine, including design rights.          “Judgments” means any and all judgments, orders, writs, directives, rulings,decisions, injunctions (preliminary or permanent), decrees, assessments, settlement agreements orawards of any Governmental Authority or arbitrator.          “Key Company Employees” means David Zhu, Wang Jiangang, Yang Jiongwei and Yao Xiaojie.          “Key Management Dismissal Event” means the dismissal of any of the Key CompanyEmployees by Buyer, directly or indirectly, without Cause.          “Knowledge of Buyer” means the actual knowledge of the individuals set forth onSchedule 1.1(a).          “Knowledge of Management Shareholders” means the actual knowledge of the individualsset forth on Schedule 1.1(b).
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          “Law” means any statute, code, law, ordinance, regulation or rule or other legallybinding requirement of any Governmental Authority.          “Legal Requirements” means any and all applicable (i) federal, territorial, state,municipal, local and foreign laws, ordinances and regulations, (ii) codes, standards, rules,regulations, requirements, orders, interpretations and criteria issued under any federal,territorial, state, local or foreign laws, ordinances or regulations, or by any Self-RegulatoryOrganization and (iii) Judgments.          “Lock-up Agreement” means the Lock-up Agreement in the form set forth in Exhibit Bhereto, setting forth the terms and conditions concerning the restriction of any sale, transfer orencumbrance of FM Ordinary Shares issued as part of the Initial Share Consideration.          “Management Shareholders” means the individuals set forth on Schedule 1.1(c) and theentities controlled by them (including Techware Holding Company Ltd., Sea Dragon Holding CompanyLtd., Premacy Co., Ltd., KingHill International Holding Co., Ltd., Latitude Holdings GroupLimited).          “Material Adverse Effect” or “Material Adverse Change” means any effect orchange that would be or would reasonably be expected to be materially adverse (i) to the business,assets, condition (financial or otherwise), operating results, or operations of such entity and itssubsidiaries and affiliated entities, taken as a whole, except (a) effects or changes (includinggeneral economic and political conditions) that do not have a materially disproportionate effect(relative to other industry participants) on such entity and generally affect the industry in whichsuch entity operates; (b) effects or changes relating to loss of employees, suppliers, vendors,agents, customers or other business partners (including web sites and portals) resulting primarilyfrom the announcement or pendency of the transactions contemplated by this Agreement; and (c) anychange or effect that results from any action taken at the request of Buyer or as required by theterms of this Agreement or the Ancillary Documents by the Company or the Selling Shareholders or(ii) to the ability of the Buyer or any of the Selling Shareholders, as applicable, to timelyconsummate the transactions contemplated by this Agreement or by any of the Ancillary Documents.          “Non-Management Shareholders” means Seller Shareholders which are not ManagementShareholders.          “Oak” means Oak Investment Partners XI, Limited Partnership, a Delaware limitedpartnership.          “Permitted Encumbrances” means (i) Encumbrances for Taxes not yet payable or beingcontested in good faith, (ii) Encumbrances in respect of property or assets imposed by Law thatwere incurred in the ordinary course of business, such as carriers’, warehousemen’s, materialmen’sand mechanics’ liens and other similar liens, (iii) pledges or deposits made in the ordinary courseof business to secure obligations under workers’ compensation laws or similar legislation or tosecure public or statutory obligations and (iv) survey exceptions, reciprocal easement agreementsand other customary encumbrances on title to real property.
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          “Person” means any individual, partnership, firm, corporation, association, trust,unincorporated organization, joint venture, limited liability company or other entity.          “PRC” means the People’s Republic of China.          “Prospective Event of Change in Control” means any potential event, including anytransaction of which Buyer is aware, and which Buyer considers reasonably likely to result in aChange in Control in thirty (30) calendar days or less.          “PRC Opco” means New Allyes Information Technology (Shanghai) Co., Ltd.          “Related Party” means an Affiliate of the Company, any Selling Shareholder or anAffiliate of a Selling Shareholder.          “Release” has the meaning provided in 42 U.S.C. Section 9601(22).          “Required Majority” means the vote or consent of the holders of at least (i) 100% ofAllyes’s Preferred Shares as of the date hereof and (ii) 75% of Allyes’s outstanding common shares(voting as separate class).          “Securities Act” means the United States Securities Act of 1933, as amended, and therules and regulations promulgated thereunder.          “Self-Regulatory Organization” means any U.S. or foreign securities or commoditiesexchange, association, clearing agency or similar organization of which the relevant party is amember or that otherwise has jurisdiction over the activities of such party.          “Structure Agreements” means, collectively, the agreements, contracts and instruments,a list of which is attached hereto as Schedule 3.20, which enable the Company to control andconsolidate with its financial statements each Affiliated Company.          “Subsidiaries” means any and all corporations, partnerships, limited liabilitycompanies and other entities with respect to which the Company, directly or indirectly, owns morethan 50% of the securities having the power to elect members of the board of directors or similarbody governing the affairs of such entity.          “subsidiaries” means, with respect to any Person, any other Person 50% or more of thevoting equity of which is owned, directly or indirectly, by such first Person.          “Tax” or “Taxes” means any taxes of any kind, including but not limited to those on ormeasured by or referred to as income, gross receipts, capital, sales, use, *ad valorem*, franchise,profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium,value added, property or windfall profits taxes, customs, duties or similar fees, assessments orcharges of the same or similar nature, together with any interest, penalties or other additions totax that may become payable in respect thereof, imposed by any Taxing Authority in accordance withapplicable Law.
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          “Tax Return” means any return, report or statement required by applicable Law to befiled by any Group Company with any Taxing Authority, showing Taxes or used to pay Taxes, includingany schedules or attachments thereto or amendment thereof.          “Taxing Authority” means, with respect to any Tax, the government entity or politicalsubdivision thereof that imposes such Tax and the agency (if any) charged with the collection ofsuch Tax for such entity or subdivision.          “U.S. GAAP” means United States generally accepted accounting principles and practicesas in effect from time to time.          “Value” in respect of the Aggregate Consideration means, subject to the provisions ofSection 9.4 hereof, in the case of cash consideration, the cash value of the Initial CashConsideration, and, in the case of consideration payable in FM Ordinary Shares, the cash value ofsuch Ordinary Shares calculated based on the FMCN Share Price.          SECTION 1.2. Other Defined Terms. The following terms shall have the meanings defined for such terms in the Sections setforth below:   Term SectionRegistration Rights Agreement 4.9Balance Sheet 3.6(a)Balance Sheet Date 3.6(a)Buyer PreambleBuyer Indemnified Persons 9.1(a)Buyer Options 2.2(c)Buyer SEC Documents 4.7(a)Cash Consideration 2.2(a)(i)Confidential Information 5.9Contributing Shareholder 9.3Currently Realizable 9.1(e)Earnout Closing 2.4(a)Earnout Closing Date 2.4(a)Financial Statements 3.6(a)First Closing 2.3(a)First Closing Date 2.3(a)Key Company Employee Employment Agreements 5.10(a)General Employment Agreements 5.10(b)Income Taxes 5.6(a)Indemnifying Party 9.1(e)Indemnity Claim 9.1(d)Indemnity Period 9.1(a)(i)Initial Cash Consideration 2.2(a)((i)Initial Share Value Amount 2.2(a)(ii)Initial Share Consideration 2.2(a)(ii)Intellectual Property 3.14Land Use Rights 3.25(b)
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   Term SectionLosses 9.1(a)(i)Material 10.3Material Contracts 3.18(a)Other Company Employees 5.10(b)Other Taxes 5.4Related Party Accounts 5.8Remaining Consideration 2.2(b)Remaining Share Consideration 2.2(b)Remaining Share Value Amount 2.2(b)SAFE 3.7(b)Schedule of Outstanding Obligations 3.6(f)SEC 3.6(b)Seller Indemnified Persons 9.1(b)Selling Shareholders PreambleSellers Representative 5.12Shares RecitalsStraddle Period 5.3(b)Tax Benefit 9.1(d)          SECTION 1.3. Other Interpretive Provisions. The words “hereof,” “herein” and “hereunder” and words of similar import when used in thisAgreement shall refer to this Agreement as a whole and not to any particular provision of thisAgreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwisespecified. The words “include,” “includes” and “including” shall be deemed to be followed by thephrase “without limitation.” The meanings given to terms defined herein shall be equallyapplicable to both the singular and plural forms of such terms.ARTICLE IIPURCHASE AND SALE OF SHARES          SECTION 2.1. Transfers by the Selling Shareholders and Buyer. (a) Subject to the terms and conditions set forth in this Agreement, (i) on the FirstClosing Date (as defined below), each of the Selling Shareholders shall sell, assign and transferto Buyer, all of such Selling Shareholder’s right, title and interest in and to the Shares owned bysuch Selling Shareholder (as set forth opposite their respective names in Schedule 1.1 hereto) freeand clear of all Encumbrances and (ii) on the First Closing Date (as defined below), Buyer shallpay the Initial Cash Consideration to the Selling Shareholders, and provide evidence to theSellers’ Representative that Buyer has irrevocably instructed the issue and transfer to the SellingShareholders all of Buyer’s right, title and interest in and to the Initial Share Consideration,free and clear of all Encumbrances (other than pursuant to the terms of the Lock-up Agreements), asset forth opposite their respective names in the First Closing Allocation Schedule. The purchaseand
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sale of the Shares pursuant to this Agreement shall be effective as of the close of business onthe First Closing Date.          (b) On the Earnout Closing Date (as defined below) and subject to the terms and conditionsset forth in this Agreement, Buyer shall issue and transfer to the Selling Shareholders all ofBuyer’s right, title and interest in and to the Remaining Share Consideration (if any), free andclear of all Encumbrances, as set forth opposite their respective names in the Earnout ClosingAllocation Schedule to be delivered by the Sellers’ Representative to the Buyer.          SECTION 2.2. Consideration. The Aggregate Consideration shall be paid as follows:               (a) Subject to the terms and conditions set forth in this Agreement, in reliance on therepresentations, warranties, covenants and agreements of the parties contained herein and in theAncillary Documents and in consideration of the sale, assignment and transfer of the Shares, theBuyer shall on the First Closing Date: (i) pay to the Selling Shareholders as set forth opposite theirrespective names in the First Closing Allocation Schedule a total amount equalto US$70,000,000 in cash (such amount, the “Initial CashConsideration”); and  (ii) provide evidence to the Sellers’ Representative that Buyer hasirrevocably instructed the issue to the Selling Shareholders as set forthopposite their respective names in the First Closing Allocation Schedule anaggregate 19,969,080 FM Ordinary Shares (such aggregate number of FM OrdinaryShares issued, the “Initial Share Consideration”), which represents thequotient of US$155,000,000 (the “Initial Share Value Amount”) *dividedby*the FMCN Share Price. The Sellers’ Representative shall deliver the FirstClosing Allocation Schedule to the Buyer on or immediately prior to the FirstClosing Date.               (b) Buyer shall within five (5) Business Days following the date on which the 2007 AuditedFinancial Statements are delivered to Buyer to its reasonable satisfaction, if the 2007 AuditedAnnual Net Income is greater than US$9,000,000, issue to the Selling Shareholders additionalconsideration equal to the difference between (i) 25 times the 2007 Audited Annual Net Income *less*(ii) US$225,000,000 (such difference, the “Remaining Consideration”); *provided that*theRemaining Consideration shall in no event exceed US$75,000,000 or be less than US$0.00. TheRemaining Consideration shall be paid by delivery of a number of FM Ordinary Shares equal to theRemaining Consideration *divided by*(y) the FMCN Share Price (such aggregate number of FM OrdinaryShares issued, the “Remaining Share Consideration”). The Remaining Share Consideration (ifany) shall be issued, to the Selling Shareholders as set forth opposite theirrespective names in the Earnout Closing Allocation Schedule to be delivered by the Sellers’Representative to the Buyer five (5) Business Days before the Earnout Closing Date.               (c) The Company, the Selling Shareholders, holders of warrants to purchase ordinary shares ofthe Company set forth on Schedule 3.3 of this Agreement and holders of options
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to purchase a totalof 36,002,315 ordinary shares of the Company agree that the First Closing Allocation Schedule andthe Earnout Closing Allocation Schedule shall be prepared based on the principles set forth in theAllocation Schedule Preparation Conventions attached hereto as Schedule 2.2..          SECTION 2.3. First Closing.               (a) Subject to the terms and conditions set forth in this Agreement, the closing of thetransactions contemplated by Section 2.1(a) of this Agreement (the “First Closing”) shalltake place on March 28, 2007 at the offices of Simpson Thacher & Bartlett LLP in Hong Kong SAR,China, with an effective closing date for accounting purposes of March 31, 2007 (or at such otherplace and on such other day and effective date as mutually agreed to by the parties hereto, the“First Closing Date”) as specified by Buyer in a notice to the Selling Shareholders dulysigned and delivered by Buyer as promptly as practicable but in any event within five (5) BusinessDays following the date of the satisfaction or waiver of all of the conditions set forth inArticles VI and VII hereof.               (b) The Sellers’ Representative shall deliver the First Closing Allocation Schedule to theBuyer on or prior to the First Closing Date.               (c) At or prior to the First Closing, each of the Selling Shareholders shall deliver to Buyerthe following: (i) all necessary documents, duly executed where so required, toenable title in all the Shares owned by such Selling Shareholder to pass fullyand effectively into the name of Buyer;  (ii) share certificates (or local legal equivalent) evidencing theShares to be sold by such Selling Shareholder duly endorsed in blank, oraccompanied by stock powers duly executed in blank and with any required stocktransfer tax stamps affixed;  (iii) all other previously undelivered documents required by thisAgreement and the Ancillary Documents to be delivered by such SellingShareholder to Buyer at or prior to the First Closing Date in connection withthe transactions contemplated hereby and thereby; and  (iv) in respect of each Group Company, the certificates ofincorporation, common seal (if it exists), share register and share certificatebook (with any unissued share certificates) and all minute books and otherstatutory books or such equivalent items in the relevant jurisdiction as arekept by therelevant Group Company or are required by the Law of the jurisdiction wheresuch Group Company is incorporated to be kept by such Group Company.               (d) At the First Closing, Buyer shall deliver to the Sellers’ Representative for the benefitof the Selling Shareholders (i) the Initial Cash Consideration and (ii) evidence that Buyer hasirrevocably instructed the transfer to the Selling Shareholders and registration in the name of
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theSelling Shareholders in respect of the Initial Share Consideration as set forth opposite theirrespective names in the First Closing Allocation Schedule, and, as soon as reasonably possiblefollowing the First Closing, to provide to the Seller’s Representative true copies of the registerof member of Buyer reflecting such transfer and register.          SECTION 2.4. The Earnout Closing.               (a) Subject to the terms and conditions set forth in this Agreement, the closing of thetransactions contemplated by Section 2.1(b) of this Agreement (the “Earnout Closing”) shalltake place at the place and on the date (the “Earnout Closing Date”) as specified by Buyerin a notice to the Selling Shareholders duly signed and delivered by Buyer as promptly aspracticable but in any event within five (5) Business Days following the delivery of the 2007Audited Financial Statements to Buyer.               (b) Upon the occurrence of a Prospective Event of Change in Control after the First ClosingDate and before the Earnout Closing Date, Buyer shall notify the Sellers’ Representative withinthree (3) Business Days of the occurrence of such Prospective Event of Change in Control, and theEarnout Closing shall take place on an accelerated basis. Notwithstanding otherwise provided inthis Agreement, (i) the Earnout Closing shall take place immediately prior to the closing of suchProspective Event of Change in Control and (ii) the Remaining Share Consideration shall be anaggregate of 9,662,458 FM Ordinary Shares equal to the quotient of (x) US$75,000,000 *divided by*(y)the FMCN Share Price.               (c) Upon the occurrence of a Key Management Dismissal Event after the First Closing Date andbefore the Earnout Closing Date, the Earnout Closing shall take place on an accelerated basis.Notwithstanding any other provision of this Agreement to the contrary, (i) the Earnout Closingshall take place within seven (7) Business Days of the occurrence of the Key Management DismissalEvent and (ii) the Remaining Share Consideration shall be an aggregate of 9,662,458 FM OrdinaryShares equal to the quotient of (x) US$75,000,000 *divided by*(y) the FMCN Share Price.               (d) The Sellers’ Representative shall deliver the Earnout Closing Allocation Schedule to theBuyer no later than five (5) Business Days prior to the Earnout Closing Date.               (e) At or prior to the Earnout Closing, Buyer shall deliver to the Sellers’ Representative forthe benefit of the Selling Shareholders true copies of the register of members of Buyer indicatingthe transfer to the Selling Shareholders and registration in the name of the Selling Shareholdersin respect of the Remaining Share Consideration, if any, as set forth opposite their respectivenames in the Earnout Closing Allocation Schedule.          SECTION 2.5. Share Splits and Other Similar Events. Any number of shares to be delivered pursuant to or price per share referenced in thisArticle II shall be equitably adjusted in the event of any stock split, stock dividend,recapitalization or reorganization after the date hereof (for the avoidance of doubt no adjustmentshall be made to account for additional issuances of shares by Buyer in connection with any capitalraising transaction or acquisitions by Buyer).
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ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT SHAREHOLDERS          The Management Shareholders, jointly and severally, hereby represent and warrant to Buyer, asof the date hereof and as of the First Closing Date (except as otherwise provided and except thatthe portions of the representations and warranties in Sections 3.2, 3.3 and 3.7 that relate solelyto particular Management Shareholders are given severally and not jointly by the relevantManagement Shareholders), that each of the following representations and warranties including thoseas otherwise qualified or excepted as set forth in the Schedules attached hereto is true andcorrect.          SECTION 3.1. Due Organization, Good Standing and Power.               (a) The Company is a company duly organized, validly existing and in good standing under thelaws of the Cayman Islands. The Company (i) has the requisite power and authority (corporate andother) to own, lease and operate its assets and to conduct the business now being conducted by itand (ii) is duly qualified as a foreign corporation for the transaction of business and is in goodstanding under the laws of each other jurisdiction in which it owns or leases properties orconducts any business so as to require such qualification, except in the case of clause (ii) forsuch failure as would not reasonably be expected to have a Material Adverse Effect on the Company.The Company has all requisite power and authority to enter into this Agreement and the AncillaryDocuments to which it is a party and to perform its obligations hereunder and thereunder.               (b) The Company is a holding company and has no business activities other than its 100%ownership of Allyes (China) Holding Company Limited, which is the 100% registered owner of PRCOpco. Except as set forth on Schedule 3.1(b)(1), the Company has no Liabilities or obligations andis not party to any Contract, other than (i) this Agreement, the Ancillary Documents to which it isa party and such Contracts as are described in Schedule 3.1(b)(2), and (ii) any Liabilities orobligations relating solely to the transactions contemplated by this Agreement, by the AncillaryDocuments or the Contracts described in Schedule 3.1(b)(2).          SECTION 3.2. Authorization, Enforceability. Each of the Management Shareholders that is not a natural person has been duly organized,is validly existing, and is in good standing in its jurisdiction of organization. Each ofthe Management Shareholders that is not natural person is in good standing in its jurisdictionof incorporation and has the corporate power and authority to execute and deliver this Agreementand the Ancillary Documents to which it is a party and perform its obligations hereunder andthereunder. The execution and delivery of this Agreement and the Ancillary Documents to which itis a party by each of the Management Shareholders and the performance by each of them of theirrespective obligations hereunder and thereunder have been duly authorized by all necessarycorporate action on the part of each such party. Each of this Agreement and the AncillaryDocuments to which it is a party has been duly executed and delivered by each of the ManagementShareholders and, assuming due authorization, execution and delivery by the other party/partiesthereto, constitutes a valid and binding agreement of each of the Management Shareholders,enforceable against each of them in accordance with its
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terms, subject to the effects ofbankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Lawsrelating to or affecting creditors’ rights generally and general equitable principles (whetherconsidered in a proceeding in equity or at Law) and subject to the effect of public policy on theenforceability of the indemnification provisions set forth in the Registration Rights Agreement.          SECTION 3.3. Capitalization; Ownership and Transfer of Shares; Valid Issuance.               (a) Schedule 3.3 hereto sets forth all outstanding ordinary shares, preferred shares and otherequity interests of the Company, including without limitation, any options and warrants andconvertible bonds convertible into ordinary shares of the Company, representing 100% of theCompany’s share capital. All of the Shares were duly authorized for issuance and are validlyissued, fully paid (except as otherwise set forth in Schedule 3.3(a)) and non-assessable.               (b) Such Management Shareholder or the entity identified with such Management Shareholder onSchedule 1.1(c) is the only record and beneficial owner of the Shares set forth opposite its namein Schedule 3.3 and has good and marketable title to such Shares, free and clear of any and allEncumbrances. Such Management Shareholder that is not an individual has the corporate or otherapplicable organizational power and authority to sell, transfer, assign and deliver such Sharesowned by it as provided in this Agreement free and clear of any and all Encumbrances.               (c) As of the date of this Agreement, the Selling Shareholders set forth on Schedule 1.1 ownapproximately 79.2%, and as of the First Closing Date will own 100%, of all issued and outstandingshare capital of the Company on a fully-diluted and as-converted basis.          SECTION 3.4. Group Companies.          (a) Schedule 3.4 sets forth for each of the Group Companies (other than the Company) (i) itsjurisdiction of incorporation, formation or organization, as applicable, and (ii) the number ofauthorized, issued and outstanding shares of each class of its capital stock or other authorized,issued and outstanding equity interests, as applicable, the names of the holders thereof, and thenumber of shares or percentage interests, as applicable, held by each such holder, in each caserepresenting 100% of such Group Company’s equity capital. Each of the Group Companies(other than the Company) is duly incorporated or formed, as applicable, validly existing and,in good standing under the Laws of its jurisdiction of incorporation or formation, as applicable,has the requisite corporate or similar power and authority (corporate and other) to own, lease andoperate its assets and to carry on its business now being conducted by it, and is duly qualified asa foreign corporation for the transaction of business and is in good standing under the laws ofeach other jurisdiction in which it owns or leases properties or conducts any business so as torequire such qualification, except for such failure as would not reasonably be expected to have aMaterial Adverse Effect on the Group Companies. All the issued and outstanding shares of capitalstock or other equity interests of such Group Companies are owned of record, free and clear of anyEncumbrances except as set forth in Schedule 3.4. All of such issued and outstanding shares of theGroup Companies (other than the Company) have been validly issued, are fully paid and nonassessableand have not been issued in violation of any preemptive or similar rights. Except as set forth onSchedule 3.4, there is no existing option, warrant, call, right, commitment or other
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agreement ofany character to which such Group Company is a party requiring, and there are no securities of anysuch Group Company outstanding which upon conversion or exchange would require, the issuance, saleor transfer or repurchase or redemption or otherwise acquisition of any additional shares ofcapital stock, issued or unissued, or other equity securities of such Group Company or othersecurities convertible into, exchangeable for or evidencing the right to subscribe for or purchaseshares of capital stock or other equity securities of such Group Company or relating to dividendsor voting rights. Except as set forth on Schedule 3.4, none of the Group Companies is a party toany voting trust, other voting agreement or Contract with respect to any of the Shares or to anyagreement relating to the issuance, sale, redemption, transfer or other disposition of the capitalstock of any of the Group Companies (other than the Company).               (b) No shares of capital stock or other equity or ownership interests of any Group Companyhave been issued in violation of any rights, agreements, arrangements or commitments under anyprovision of applicable Law, the certificate of incorporation or bylaws or comparableorganizational documents of any Group Company or any Contract to which the Group Company is a partyor by which the Group Company is bound.          SECTION 3.5. Corporate Records. The Company has made available to Buyer true, correct and complete copies of thecertificates of incorporation, by-laws or comparable organizational documents and business licensesof each Group Company. Such certificates of incorporation, by-laws, or comparable organizationaldocuments and business licenses are in full force and effect. None of the Group Companies is inviolation of any of the provisions of its certificate of incorporation, bylaws or comparableorganizational documents. The transfer books and minute books of each Group Company that have beenmade available for inspection by Buyer prior to the date hereof are true and complete.          SECTION 3.6. Financial Statements.               (a) Attached hereto as Schedule 3.6(a) are copies of the (i) unaudited combined financialstatements of the Company and the Group Companies (and the notes and schedulesthereto) as of and for the years ended December 31, 2004 and 2005 and (ii) unaudited combinedfinancial statements of the Company and the Group Companies for the six months ended June 30, 2006.Such financial statements are collectively referred to herein as the “FinancialStatements.” The Financial Statements (i) are true, correct and complete and have beenprepared in accordance with the books and records of the Company and the Group Companies, (ii) havebeen prepared in accordance with U.S. GAAP, applied on a consistent basis throughout the periodsindicated therein, and (iii) fairly present, in all material respects, the financial condition andresults of operations and cash flows of the business as of the Company and the Group Companies, asof and for the periods to which they relate, subject to normal adjustments in connection withaudit, which will not be material in amount or significance in the aggregate. For the purposeshereof, the unaudited consolidated balance sheet of the Business, which is included in theFinancial Statements, as of June 30, 2006, is referred to as the “Balance Sheet” and June30, 2006 is referred to as the “Balance Sheet Date”. The books of account and financialrecords of each Group Company are true and correct in all material respects and have been preparedand are maintained in accordance with sound accounting practice. None of the Group Companies hasmade any material changes in its accounting methods or practices since the Balance Sheet Date.
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               (b) Attached hereto as Schedule 3.6(b) are copies of the latest draft of the RegistrationStatement on Form F-1.               (c) Since the Balance Sheet Date, there has been no event the occurrence of which had aMaterial Adverse Effect on the Company or would reasonably be expected to have a Material AdverseEffect on the Company.               (d) The Company maintains a system of internal accounting controls sufficient to providereasonable assurance that: (i) transactions are executed in accordance with management’s generalor specific authorizations; (ii) transactions are recorded as necessary to permit preparation offinancial statements in conformity with U.S. GAAP; (iii) access to assets is permitted only inaccordance with management’s general or specific authorization; (iv) the recorded accountabilityfor assets is compared with existing assets at reasonable intervals and appropriate actions aretaken with respect to any differences; and (v) each of the Group Companies has made and kept books,records and accounts which, in reasonable detail, accurately and fairly reflect the transactionsand dispositions of assets of such entity and provide a sufficient basis for the preparation offinancial statements in accordance with U.S. GAAP.               (e) The Group Companies have no liabilities of any kind whatsoever (whether absolute, accrued,contingent or otherwise, and whether due or to become due) that would be required to be reflectedin, or disclosed in the notes to, financial statements prepared in accordance with U.S. GAAP, otherthan liabilities and obligations (i) reflected or reserved against the Balance Sheet or disclosedin the notes thereto, (ii) disclosed on Schedule 3.6(a) or (iii) in excess of US$25,000individually or US$250,000 in the aggregate not disclosed pursuant to clause (i) or (ii).               (f) As of the First Closing Date, the aggregate cash balances of the Company will exceed theaggregate amount of all Indebtedness of the Company on a consolidated basis.               (g) None of the Group Companies is engaged in any trading activities involving commoditycontracts or other trading contracts which are not currently traded on a securities or commoditiesexchange and for which the market value cannot be determined.          SECTION 3.7. No Approvals or Conflicts.               (a) Except as set forth in Schedule 3.7(a), the execution, delivery and performance by each ofthe Management Shareholders and the Company of this Agreement and the Ancillary Documents to whichthey are parties and the consummation by such Management Shareholders and the Company of thetransactions contemplated hereby and thereby do not and will not (i) violate, conflict with orresult in a breach by any of the Group Company’s or any such Management Shareholder (if applicable)of the organizational documents of such Management Shareholder or of the Group Companies, (ii)violate, conflict with or result in a breach of, or constitute a default by such ManagementShareholder or any of the Group Companies (or create an event which, with notice or lapse of timeor both, would constitute a default) or give rise to any right of termination, cancellation oracceleration under, or result in the creation of any Encumbrance upon any of the properties of orthe Group Companies or on the Shares owned by such Management Shareholder) under, any note, bond,mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, agreement or otherinstrument to which or the Group Companies
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or any of their respective properties may be bound,(iii) violate or result in a breach of any Governmental Order or Law applicable to the GroupCompanies or any of their respective properties or (iv) require any order, consent, approval orauthorization of, or notice to, or declaration, filing, application, qualification or registrationby such Management Shareholder with, any Governmental Authority, except in the case of clauses(ii), (iii) and (iv) such violation, conflict, breach, default, termination, acceleration,cancellation or failure to give notice, register or obtain approval would not reasonably beexpected have a Material Adverse Effect on the Company. No Governmental Authorizations arerequired for the execution, delivery and performance by the Group Companies of this Agreement andthe Ancillary Documents and the consummation by the Management Shareholders of the transactionscontemplated hereby and thereby.               (b) Schedule 3.7(b) sets forth the Selling Shareholders who are individuals resident in thePRC and who are required to complete all necessary filings or registrations, or obtained allnecessary approvals, required to comply with any rules or regulations of the State Administrationof Foreign Exchange (“SAFE”).          SECTION 3.8. [Reserved].          SECTION 3.9. Licenses. Each of the Group Companies has obtained all licenses, franchises, concessions, consents,authorizations, approvals, orders, certificates and permits of and from, and has made alldeclarations and filings with, all Governmental Authorities necessary to own, lease, license anduse its properties, assets and conduct its business in the manner and such licenses, consents,authorizations, approvals, orders, certificates or permits contain no materially burdensomerestrictions or conditions. To the Knowledge of the Management Shareholders, no regulatory body isconsidering modifying, suspending or revoking any such licenses, consents, authorizations,approvals, orders, certificates or permits and each of the Group Companies is in materialcompliance with the provisions of all such licenses, consents, authorizations, approvals, orders,certificates or permits.          SECTION 3.10. Litigation. There are no suits, actions, arbitrations, proceedings or investigations pending or, to theKnowledge of Management Shareholders, threatened against any of the Group Companies.          SECTION 3.11. Absence of Certain Changes. Except as set forth in Schedule 3.11 or as contemplated by this Agreement or any of theAncillary Agreements, since June 30, 2006 through the date of this Agreement, the business of theGroup Companies has been conducted in the ordinary course consistent with past practice in allmaterial respects. Without limiting the generality of the foregoing, except as set forth inSchedule 3.11 and as otherwise contemplated by this Agreement or any of the Ancillary Agreements,since June 30, 2006 through the date of this Agreement, there has not been:               (a) any damage, destruction or loss (whether or not covered by insurance), materiallyaffecting the business or assets of the Group Companies;               (b) any sale, purchase, option, subscription, warrant, call, commitment or agreement of anycharacter granted or made by any of the Group Companies in respect of its
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capital stock or otherequity interests (other than the issuance of Shares pursuant to outstanding options or warrants);               (c) any declaration, setting aside or payment of any dividend or other distribution in respectof any shares of capital stock of any Group Company or any repurchase, redemption or otheracquisition by any Group Company of any outstanding shares of capital stock or other securities of,or other ownership interest in, any Group Company;               (d) any material loans, advances or capital contributions to, or investments in, any Person orpayment of any fees or expenses to any Affiliate of the Company, any Selling Shareholder or anyAffiliate of any Selling Shareholder, except pursuant to the Structure Agreements;               (e) any acquisition of assets or other disposition of assets by any of the Group Companies ,excluding acquisitions of assets in the ordinary course of business and capital expenditures;               (f) any merger or consolidation by any of the Group Companies with any Person;               (g) capital expenditures by any of the Group Companies which in the aggregate exceedRMB2,000,000;               (h) any incurrence, assumption or guarantee of any indebtedness for borrowed money by any ofthe Group Companies except as provided in the Structure Agreements, and except as otherwisedisclosed in the Schedules attached hereto;               (i) any Encumbrance of assets of any of the Group Companies, other than PermittedEncumbrances;               (j) any increase in the compensation of employees of any of the Group Companies other than inthe ordinary course of business;               (k) any loan made by any of the Group Companies to any director, officer or other member ofsenior management of any of the Group Companies, except as otherwise disclosed in the Schedule3.10(k) attached hereto;               (l) any material change in the accounting methods or practices followed by any of the GroupCompanies (other than such changes that have been required by Law or U.S. GAAP); or               (m) any agreement or commitment by any of the Group Companies to do any of the foregoing.          SECTION 3.12. Tax Matters. Except as set forth on Schedule 3.12:               (a) (i) All Tax Returns required to be filed by or on behalf of any Group Company have beenaccurately prepared in all material respects and filed in a timely manner
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(within any applicableextension periods) and are true, correct and complete in all material respects, (ii) all Taxes ofthe Group Companies have been timely paid in full or will be timely paid in full by the due datethereof if due prior to the First Closing Date, and the Group Companies have adequately providedfor all Taxes in the Financial Statements for which they are required to provide, (iii) none of theGroup Companies has liability for Taxes in excess of the accruals for Taxes reflected on theFinancial Statements to the extent such Taxes are required to be accrued under U.S. GAAP and (iv)no unresolved claims have been asserted in writing by a Taxing Authority with respect to any Taxesof any of the Group Companies;               (b) Each of the Group Companies is and has been in compliance with all applicable Lawsrelating to the payment, withholding and exemptions of Taxes and has duly and timely withheld fromemployee salaries, wages and other compensation and has paid over to the appropriate TaxingAuthorities all amounts required to be so withheld and paid over for all periods prior to the FirstClosing Date under all applicable Laws;               (c) The Company has made available to Buyer complete copies of (i) all Tax Returns of theGroup Companies relating to the taxable periods ending after January 1, 2002, (ii) the portions ofany written audit report issued by a Taxing Authority within the last five (5) years relating toany adjustments of any Group Company and (iii) all applications to qualify for Tax exemptions.               (d) No submissions made to any Taxing Authority in connection with obtaining Tax exemptions,Tax holidays or reduced Tax rates contained any material misstatement or omission that would haveaffected the granting of such Tax exemptions, Tax holidays or reduced Tax rates;               (e) No written claim has been made by any Taxing Authority in any jurisdiction where a GroupCompany does not file Tax Returns that it is or may be subject to Tax by that jurisdiction. Noextensions or waivers of statutes of limitations with respect to any Tax Returns have been given byor requested from any Group Company. There are no audits or investigations by any Taxing Authorityof any of the Group Companies in progress or that have been proposed in writing nor, to theKnowledge of Management Shareholders, does any Group Company have knowledge of any pending orthreatened audit or investigation by any Taxing Authority;               (f) All deficiencies asserted or assessments made against any Group Company as a result of anyexaminations by any Taxing Authority have been fully paid in accordance with their stipulated duedate;               (g) No Group Company is a party to any tax indemnity, tax allocation or tax sharing or similaragreement or arrangement (whether or not written) pursuant to which it could have any obligation tomake any payments after the First Closing; and               (h) Other than in respect of Taxes not yet due and payable, there are no Encumbrances forTaxes upon the assets of any Group Company.          SECTION 3.13. Dividends and Distributions.
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               (a) All dividends declared and payable on the equity interest of PRC Opco out of its availableretained earnings computed in accordance with PRC GAAP and subject to all adjustments relatedthereto may under the laws and regulations of the PRC as in effect on the date of this Agreementmay be converted into U.S. dollars and freely transferred out of the PRC for payment to theCompany, and as of the date of this Agreement all such dividends and other distributions will notbe subject to withholding or other taxes under the laws and regulations of the PRC and areotherwise free and clear of any other tax, withholding or deduction in the PRC, and as of the dateof this Agreement without the necessity of obtaining any Governmental Order in the PRC, providedthe PRC Opco complies with all PRC foreign exchange control formalities and all according to PRCLaw promulgated prior to the execution of this Agreement.               (b) All contractual and other payments by the Group Companies other than PRC Opco may underthe current laws and regulations of the PRC be made to PRC Opco and no such payments will besubject to withholding taxes under the laws and regulations of the PRC and are otherwise free andclear of any withholding tax in the PRC, and without the necessity of obtaining any GovernmentalOrder in the PRC all according to PRC Law promulgated prior to the execution of this Agreement.          SECTION 3.14. Officers, Employees and Labor.               (a) Each of the Group Companies has complied in all material aspects with all applicable Lawsrelating to the employment of labor, including provisions thereof relating to wages, hours, socialwelfare, equal opportunity and collective bargaining. There is no organized labor strike, dispute,slowdown or claim pending, or to the Knowledge of Management Shareholders threatened, against oraffecting any of the Group Companies. None of the Group Companies has any Contract with any laborunion.               (b) Schedule 3.14(b) sets forth a list of all officers of the Group Companies and all otheremployees and consultants whose current annual salary or rate of compensation (including bonuses,commissions and inventive compensation) is in excess of RMB750,000 (or equivalent in a differentcurrency), together with their current job titles or relationship to the Group Companies.               (c) None of the employees of the Group Companies is obligated under any Contract to which anyGroup Company is a party, or subject to any Governmental Order to which any Group Company issubject, that would interfere with the use of his or her best efforts to promote the interests ofthe Group Companies, that would conflict with the Business as currently conducted or that wouldprevent such officers, employees or consultants from assigning to a Group Company inventionsconceived or reduced to practice or copyrights for materials developed in connection with servicesrendered to the Group Company.               (d) None of the execution, delivery and performance of any of this Agreement and the AncillaryDocuments will (either alone or upon the occurrence of any additional or subsequent event)constitute an event under any benefit plan or individual agreement to which the Company is a partythat will or may result in any payment (whether of severance pay or otherwise), acceleration,vesting or increase in material benefits with respect to any employee, former employee, consultant,agent or director of the Group Companies.
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               (e) Except as required by applicable Laws, none of the Group Companies has any obligation toprovide retirement, death or disability benefits to any of the present or past employees of theGroup Companies, or to any other person.               (f) To the Knowledge of Management Shareholders, (i) no material labor dispute, work stoppage,slow down, strike or other conflict with the employees of any of the Group Companies exists or isthreatened or contemplated, (ii) none of the Group Companies is engaged in any unfair laborpractice, (iii) there is no unfair labor practice complaint pending or threatened against any ofthe Group Companies before any competent Governmental Authorities, and no grievance or arbitrationproceeding arising out of or under collective bargaining agreements is pending or threatened, and(iv) there has been no violation of any laws, regulations, rules, orders, decrees, guidelines,judicial interpretations, notices or other legislation of the Cayman Islands, the British VirginIslands, the PRC, Hong Kong, the United States or any other jurisdiction applicable to any of theGroup Companies relating to discrimination in the hiring of employees, social welfare benefits,equal opportunity, collective bargaining, promotion or pay of employees, applicable wage or hourlaws, the payment or withholding of payroll or similar taxes for employees, or any other applicablelaw or regulation concerning the employees of the GroupCompanies, except, in the case of (iv) above, where any such violation would not reasonably beexpected to have a Material Adverse Effect on the Group Companies;          SECTION 3.15. Loans. Except as described in the Structure Agreements or as otherwise set forth in Schedule 3.15,none of the Group Companies has, directly or indirectly: (A) extended credit, arranged to extendcredit, or renewed any extension of credit, in the form of a personal loan, to or for any directoror executive officer of the Group Companies, or to or for any family member or Affiliate of anydirector or executive officer of the Selling Shareholders or the Group Companies; or (B) made anymaterial modification, including any renewal thereof, to any term of any personal loan to anydirector or executive officer of the Selling Shareholders or the Group Companies, or any familymember or Affiliate of any such director or executive officer, which loan was outstanding as of thedate hereof.          SECTION 3.16. [Reserved].          SECTION 3.17. Share Option and Other Plans.               (a) Except as set forth on Schedule 3.17, none of the Group Companies has any pension, profitsharing, stock option, employee stock purchase or other plan providing for incentives or othercompensation to employees (aside from any salary payable in thereto in the ordinary course), or anyother employee benefit plan. The Company has made available to Buyer true, correct and completecopies of all documents, summary plan descriptions, insurance Contracts, third party administrationContracts and all other documentation of the Group Companies created to embody all benefit plans,plus descriptions of any benefit plans that have not been reduced to writing. Except for requiredcontributions or benefit accruals for the current plan year, no material liability has been or isexpected to be incurred by any of the Group Companies under or pursuant to any applicable Lawrelating to benefit plans and, to the Knowledge of Management Shareholders, no event, transactionor condition has occurred or exists that could result in any such liability to any of the GroupCompanies. Each of the benefit plans listed in
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Schedule 3.17 is and has at all times been incompliance in all material respects with all applicable provisions of applicable Law.               (b) As of the First Closing, all options and warrants of the Company shall have beencancelled.          SECTION 3.18. Intellectual Property.               (a) The Group Companies exclusively own or have a valid right to use any and all materialIntellectual Property used in the Business. Intellectual Property owned or validly used by eachGroup Company includes all of the material software and Intellectual Property necessaryto enable such Group Company to conduct its business in the manner in which such business iscurrently being conducted.               (b) None of the Group Companies has taken any action or failed to take any action that couldreasonably be expected to result in the abandonment, cancellation, forfeiture, relinquishment,invalidation or unenforceability of any of the registered Intellectual Property owned by the GroupCompanies and material to the Businesses (including the failure to pay any filing, examination,issuance, post registration and maintenance fees, annuities and the like and the failure todisclose any known material prior art in connection with the prosecution of patent applications).Each Group Company has taken all reasonable steps in accordance with standard industry practices toprotect its rights in its Intellectual Property and at all times has maintained the confidentialityof all information that constitutes or constituted a trade secret of each Group Company.               (c) All material licenses licensed to any Group Company by a third party licensor are in fullforce and effect, and none of the Group Companies is in default under any of such licenses, and noPerson who is a party to any of such licenses has exercised any termination rights with respectthereto.               (d) (i) No Group Company is a party to any pending legal proceedings which involve a claim ofinfringement, unauthorized use, or violation of any intellectual property right by any Personagainst such Group Company or challenging the ownership, use, validity or enforceability of, anymaterial Intellectual Property owned by or exclusively licensed to such Group Company, and (ii) noGroup Company has received any notice or claim challenging a Group Company ownership of any of theIntellectual Property owned (in whole or in part), nor to the Knowledge of Management Shareholdersis there a reasonable basis for any claim that a Group Company does not so own any of suchIntellectual Property. All of each Group Company’s rights in and to material Intellectual Propertyowned by such Group Company are valid and enforceable. No Intellectual Property owned by or to theKnowledge of Management Shareholders licensed to the Group Companies is subject to any outstandingorder, judgment, decree, stipulation or agreement restricting the use or licensing thereof by theGroup Companies.               (e) To the Knowledge of Management Shareholders, no Person is infringing, violating, misusingor misappropriating any material Intellectual Property owned by any Group Company, and no writtenclaims have been made against any Person by any Group Company.
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               (f) The consummation of the transactions contemplated hereby and thereby will not result inthe loss or impairment of Buyer’s right to own or use any of the material Intellectual Propertyowned by any Group Company.          SECTION 3.19. Contracts.               (a) Except as set forth on Schedule 3.19(a) or in the Structure Agreements, none of the GroupCompanies is as of the date of this Agreement bound by (i) any Contract which contains restrictionswith respect to payment of dividends or any other distribution in respect of its capital stock,partnership interests or membership interests, (ii) any Contract requiring theapplicable Group Company to make future capital expenditures in excess of RMB500,000 (eitherindividually or in the aggregate), (iii) any Contract relating to indebtedness of the applicableGroup Company in excess of RMB500,000, (iv) any loan or advance by a Group Company to, orinvestment by a Group Company in, any Person, in each case, which involves an amount in excess ofRMB500,000, or any agreement, contract or commitment relating to the making of any such loan,advance or investment, (v) any Contract with a Group Company, or any management, service,consulting or any other similar type of Contract requiring payment of fees in excess of RMB500,000per year, (vi) any Contract limiting in any material respect the ability of any Group Company toengage in any line of business or to compete with any Person, (vii) any material warranty, guarantyor similar undertaking with respect to contractual performance extended by any Group Company otherthan in the ordinary course of business, (viii) any Contract requiring any payment to or by anyGroup Company having a value in excess of RMB500,000 that cannot be terminated by the relevantGroup Company without liability upon less than ninety (90) days notice, (ix) any collectivebargaining agreement with any labor union or other representative of employees, (x) any Contractthat governs any joint venture, partnership or other cooperative arrangement or any otherrelationship involving a sharing of profits, (x) any Contract that would result in the merger withor into or consolidation into another Person, (xi) any Contract for the sale of any of the assetsof any Group Company or for the grant to any Person of any preferential rights to purchase any ofits assets for an amount in excess of RMB500,000, (xii) any Contract that requires a consent to orotherwise contains a provision relating to a “change of control”, or that would prohibit or delaythe consummation of the transactions contemplated by this Agreement or the Ancillary Documents, or(xiii) any material amendment, modification or supplement in respect of any of the foregoing (eachof (i)-(xiii), a “Material Contract”).               (b) True and correct copies (or, if oral, written summaries) of each of the Material Contractshave been made available to the Buyer.               (c) Except as set forth in Schedule 3.19(c), each Material Contract is in full force andeffect, and is a valid and binding agreement of the relevant Group Company and to Knowledge ofManagement Shareholders each of the other parties thereto, enforceable against the Group Company inaccordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,reorganization, moratorium and other similar Laws relating to or affecting creditors’ rightsgenerally, general equitable principles (whether considered in a proceeding in equity or at Law)and an implied covenant of good faith and fair dealing. Except as set forth on Schedule 3.19(c),no condition exists or event has occurred that (whether with or without notice or lapse of time orboth) would constitute a default by (x) any of the Group Companies under any
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Material Contract or(y) to the Knowledge of Management Shareholders, any other party to any Material Contract.          SECTION 3.20. Certain Transactions. Except as otherwise set forth in Schedule 3.20 or in the Structure Agreements, (i) none ofthe Group Companies is indebted, either directly or indirectly, to any Related Party in any amountwhatsoever, other than for payment of salary for services rendered and reasonable expenses, (ii) noRelated Party is indebted to any of the Group Companies or has any direct or indirect ownershipinterest (other than as a result of any ownership interest held in the Company) in any of the GroupCompanies, (iii) no Related Party has any direct or indirect ownership interest,or contractual relationship, with any Person with which any of Group Companies has a businessrelationship or any Person which, directly or indirectly, competes with any of the Group Companies,and (iv) no Related Party is, directly or indirectly, a party to or otherwise an interested partywith respect to any Contract (or, to the Knowledge of Management Shareholder, any oral Contract)with any Group Company.          SECTION 3.21. Prior Acquisitions. (a) Schedule 3.21 sets forth a list all of the companies, entities and businessesacquired by the Group Companies in the last 2 years involving the payment by the Group Companies ofmore than US$1,000,000 (in stock and/or cash). The Company has made available to the Buyer theagreements, Contracts and instruments entered into by the Group Companies in connection with suchacquisitions (the “Previous Acquisition Agreements”). Except as described on Schedule 3.21, thepayments required to be made by the Group Companies under the terms of the Previous AcquisitionAgreements or any other acquisitions made by the Group Companies without regard to when suchacquisitions were made (the “Residual Payments”) do not exceed US$500,000.          SECTION 3.22. Structure Agreements.               (a) Schedule 3.22 sets forth all of the Structure Agreements, which constitute all of theagreements, contracts and instruments enabling the Company to control and consolidate with itsfinancial statements each Affiliated Company. Each of the Group Companies has the legal right,power and authority (corporate and other) to enter into and perform its obligations under each ofthe Structure Agreements to which it is a party and has taken all necessary corporate action toauthorize the execution, delivery and performance of, and has authorized, executed and delivered,each of the Structure Agreements to which it is a party; and each of the Structure Agreements towhich each of the Group Companies, as applicable, is a party constitutes a valid and legallybinding obligation of each of them enforceable in accordance with its terms, subject, as toenforceability, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium andsimilar laws of general applicability relating to or affecting creditors’ rights and to generalequity principles.               (b) Each of the Structure Agreements has been executed and delivered by the parties namedtherein; and each of the Structure Agreements constitutes a valid and legally binding obligation ofthe parties named therein enforceable in accordance with its terms, subject as to enforceability tobankruptcy, insolvency, reorganization and similar laws of general applicability relating to oraffecting creditors’ rights and to general equity principles.
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               (c) Each of the Structure Agreements is in proper legal form under the laws and regulations ofthe PRC for the enforcement thereof against each of the parties thereto in the PRC without furtheraction by any of them; and to ensure the legality, validity, enforceability or admissibility inevidence of each of the Structure Agreements in the PRC, it is not necessary that any such documentbe filed or recorded with any court or other authority in the PRC or that any stamp or similar taxbe paid on or in respect of any of the Structure Agreements.               (d) The execution and delivery by each of the Group Companies, if applicable, of, and theperformance by each of them of its respective obligations under, each of the Structure Agreementsto which it is a party and the consummation by them of the transactions contemplated therein willnot conflict with or result in a breach or violation of any of the terms or provisions of, orconstitute a default under, any indenture, mortgage, deed of trust, loan agreement or otheragreement or instrument to which any of the Group Company, as applicable, is bound or to which anyof their properties or assets is bound or subject, except where any such conflict, breach,violation or default.               (e) The execution and delivery by each party named in each of the Structure Agreements, andthe performance by such party of its obligations under such agreement and the consummation by it ofthe transactions contemplated therein will not: (A) conflict with or result in a breach orviolation of any of the terms or provisions of, or constitute a default under, any indenture,mortgage, deed of trust, loan agreement or other agreement or instrument to which he is a party orby which he is bound or to which any of the properties or assets of his is bound or subject; or (B)result in any violation of or penalty under any laws, regulations, rules, orders, decrees,guidelines, judicial interpretations, notices or other legislation of the PRC;               (f) All consents, approvals, authorizations, orders, registrations and qualifications requiredin connection with the Structure Agreements have been made or unconditionally obtained in writing,and no such consent, approval, authorization, order, registration or qualification has beenwithdrawn or is subject to any condition precedent which has not been fulfilled or performed.          SECTION 3.23. Compliance with Laws.               (a) Each of the Group Companies is, and at all times since January 1, 2003 has been, incompliance in all material aspects with applicable Laws.               (b) No event has occurred or circumstance exists that (with or without notice or lapse oftime) may constitute or result in a material violation by any of the Group Companies of, or amaterial failure on the part thereof to comply with, any applicable Law. None of the GroupCompanies has received any notice or other written communication from any Governmental Authorityregarding (A) any actual, alleged, possible, or potential material violation of, or failure tocomply with, any applicable Law, or (B) any actual, alleged, or potential obligation on the part ofany Group Company to undertake, or to bear all or any portion of the cost of, any remedial actionof any nature.               (c) None of the Group Companies or any director, officer, agent, employee, or any otherPerson associated with or acting for or on behalf of the foregoing, has offered, paid,
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promised topay, or authorized the payment of any money, or offered, given a promise to give, or authorized thegiving of anything of value, to any Government Official, to any political party or official thereofor to any candidate for political office (or to any Person where such Group Company, director,officer, agent, employee or other Person knew or was aware of a high probability that all or aportion of such money or thing of value would be offered, given orpromised, directly or indirectly, to any Government Official, political party, party official,or candidate for political office) for the purposes of:          (i) (x) influencing any act or decision of such Government Official, politicalparty, party official, or candidate in his or its official capacity, (y) inducingsuch Government Official, political party, party official or candidate to do or omitto do any act in violation of the lawful duty of such Government Official, politicalparty, party official or candidate, or (z) securing any improper advantage, or          (ii) inducing such Government Official, political party, party official, orcandidate to use his or its influence with any Government Authority to affect orinfluence any act or decision of such Government Authority, in order to assist suchGroup Company in obtaining or retaining business for or with, or directing businessto any Group Company.               (d) None of the Group Companies or any of the respective officers, employees, directors,representatives, or agents of the foregoing has, within the past five years, (i) taken any actionin furtherance of any boycott not sanctioned by the United States; (ii) engaged in transactionswith any Governmental Authority, agent, representative or resident of, or any entity based orresident in, any of the following countries: North Korea, Iraq, Libya, Cuba, Iran, Myanmar orSudan; or (iii) otherwise engaged in transactions with any entity or person that is the target ofU.S. economic sanctions, as designated by the U.S. Treasury Department Office of Foreign AssetsControl on its list of Specially Designated Nationals and Blocked Persons; or (iv) receivedunlicensed donations or engaged in financial transactions with respect to which any of the GroupCompanies knows or has reasonable cause to believe that the financial transaction poses a risk offurthering terrorist attacks anywhere in the world.               (e) To the Knowledge of Management Shareholders, none of the beneficial owners of any interestin any Group Company is a Government Official, official of any political party or candidate forpolitical office.          SECTION 3.24. Environmental Matters.               (a) Each of the Group Companies is in material compliance with all Environmental Laws;               (b) None of the Group Companies has received any Environmental Claim or notice of anythreatened Environmental Claim;               (c) None of the Group Companies has entered into, has agreed to, or is subject to, any decreeor order or other similar requirement of any Governmental Authority under any Environmental Laws;and
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               (d) None of the Group Companies has Released Hazardous Materials into the environment inviolation of Environmental Laws or in a manner that would reasonably be expected to result inmaterial liability under Environmental Laws, and to the Knowledge ofManagement Shareholders, no other Person has Released Hazardous Materials into the environmentat any property currently owned or operated by any of the Group Companies in violation ofEnvironmental Laws or in a manner that would reasonably be expected to result in material liabilityunder Environmental Laws.          SECTION 3.25. Insurance. Schedule 3.25 lists all insurance policies held in the names of the Group Companiescovering the assets, employees and operations of the Group Companies as of the date hereof. Allsuch policies are in full force and effect, all premiums due thereon have been paid and, whereapplicable, the Group Companies have complied in all material respects with the provisions of suchpolicies and have not received any notice from any of its insurance brokers or carriers that suchbroker or carrier will not be willing or able to renew their existing coverage.          SECTION 3.26. Personal Property Assets.               (a) Each of the Group Companies has good title to, or holds by valid and existing lease orlicense, all the material tangible personal property assets reflected as assets of the Company onor acquired after the Balance Sheet Date, free and clear of all Encumbrances except for PermittedEncumbrances.               (b) The Group Companies own, or have valid leasehold interests in, all material tangiblepersonal property assets necessary for the conduct of the Business as currently conducted and allsuch assets are in reasonably good maintenance, operating condition and repair, normal wear andtear excepted, other than machinery and equipment under repair or out of service in the ordinarycourse of business.          SECTION 3.27. Real Property.               (a) Leased Properties. Schedule 3.27 lists all real property leased or subleased byany of the Group Companies. The Company has made available to Buyer correct and complete copies ofthe leases and subleases covering the properties listed on Schedule 3.27. With respect to eachlease and sublease and except as otherwise specified on Schedule 3.27: (i) such lease or sublease is in full force andeffect, in all material respects;  (ii) (A) no party to the lease or sublease is inmaterial default and (B) none of the Group Companies has received anotice of default with respect to such lease or sublease; and,  (iii) no such lease or sublease has been mortgaged,deeded in trust or encumbered by the Group Companies.               (b) Land Use Rights. None of the Group Companies owns or has legal or equitable titleor other right or interest in any real property other than the land use rights (the “Land
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UseRights”) held by the Group Companies as set forth in Schedule 3.27 or as held pursuant toLease. True and complete copies of the certificates evidencing the Land Use Rights have beendelivered to Buyer or its agents or professional advisers and any land grant premium required underapplicable Law in connection with securing such Land Use Rights has been fully paid. None of theland with respect to which the Land Use Rights relate constitutes arable land that has beenconverted to other uses. The particulars of the Land Use Rights as set out in Schedule 3.27 aretrue and complete.          SECTION 3.28. No State Assets. None of the assets of the Group Companies constitute state-owned assets and, inasmuch, arenot required to undergo any form of valuation under applicable Law in the PRC governing thetransfer of state-owned assets prior to the consummation of the transactions contemplated herein orin any of the Ancillary Documents.          SECTION 3.29. Brokers. Except as set forth in Schedule 3.29, no finder, broker, agent, financial advisor or otherintermediary has acted on behalf of the Selling Shareholders, the Group Companies or any of theirrespective Affiliates in connection with the negotiation or consummation of this Agreement or theAncillary Documents, or any of the transactions contemplated hereby or thereby. All suchnegotiations or the consummation of this Agreement or the Ancillary Documents or any of thetransactions contemplated hereby or thereby will not give rise to any valid claim against any GroupCompany or Buyer for any brokerage or finder’s commission, fee or similar compensation.ARTICLE III.AREPRESENTATIONS AND WARRANTIES OF THE NON-MANAGEMENT SHAREHOLDERS          The Non-Management Shareholders, severally and not jointly, hereby represent and warrant toBuyer, as of the date hereof and as of the First Closing Date (except as otherwise provided), thateach of the following representations and warranties including those and as otherwise qualified orexcepted as set forth in the Schedules attached hereto is true and correct.          SECTION 3A.1. Due Organization, Good Standing and Power. Such Non-Management Shareholder that is not an individual is a company duly organized,validly existing and in good standing under the laws of its jurisdiction of organization orincorporation.          SECTION 3A.2. Authorization, Enforceability. Such Non-Management Shareholder that is not an individual has the corporate power andauthority to execute and deliver this Agreement and the Ancillary Documents to which it is a partyand perform its obligations hereunder and thereunder. The execution and delivery ofthis Agreement and the Ancillary Documents to which it is a party by such Non-ManagementShareholder and the performance by each of them of their respective obligations hereunder andthereunder have been duly authorized by all necessary corporate action on the part of each suchparty. Each of this Agreement and the Ancillary Documents to which it is a party has been dulyexecuted and delivered by such Non-Management Shareholder and, assuming due authorization,execution and delivery by the other party/parties thereto, constitutes a valid and bindingagreement of such Non-Management Shareholder, enforceable against each of them in accordance withits terms, subject to the effects
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of bankruptcy, insolvency, fraudulent conveyance, reorganization,moratorium and other similar Laws relating to or affecting creditors’ rights generally and generalequitable principles (whether considered in a proceeding in equity or at Law) and subject to theeffect of public policy on the enforceability of the indemnification provisions set forth in theRegistration Rights Agreement.          SECTION 3A.3. Ownership and Transfer of Shares. On the date hereof and on the First Closing Date, such Non-Management Shareholder is the onlyrecord owner of the Shares set forth opposite its name in Schedule 3.3 and has good and marketabletitle to such Shares, free and clear of any and all Encumbrances. Such Non-Management Shareholderthat is not an individual has the corporate or other applicable organizational power and authorityto sell, transfer, assign and deliver such Shares owned by it as provided in this Agreement freeand clear of any and all Encumbrances.          SECTION 3A.4. No Approvals or Conflicts. Except as set forth in Schedule 3A42, the execution, delivery and performance by suchNon-Management Shareholder of this Agreement and the Ancillary Documents to which it is a party,and the consummation by such Non-Management Shareholder of the transactions contemplated hereby andthereby do not and will not (i) violate, conflict with or result in a breach by such Non-ManagementShareholder of the organizational documents of such Non-Management Shareholder, (ii) violate,conflict with or result in a breach of, or constitute a default by such Non-Management Shareholder(or create an event which, with notice or lapse of time or both, would constitute a default) orgive rise to any right of termination, cancellation or acceleration under, or result in thecreation of any Encumbrance upon such properties of such Non-Management Shareholder or on theShares under, any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,lease, contract, agreement or other instrument to which such Non-Management Shareholder or any oftheir respective properties may be bound, (iii) violate or result in a breach of any GovernmentalOrder or Law applicable to such Non-Management Shareholder or any of their respective properties or(iv) require any order, consent, approval or authorization of, or notice to, or declaration,filing, application, qualification or registration by the Non-Management Shareholder with, anyGovernmental Authority, except in the cases of (ii), (iii) and (iv) above, where such violation,conflict, breach, default, termination, acceleration, cancellation or failure to give notice,register or obtain approval would not reasonably be expected to have a Material Adverse Effect onsuch Non-Management Shareholder. Except as set forth in Schedule 3A.4, no GovernmentalAuthorizations are required for the execution, delivery and performance by such Non-ManagementShareholder of this Agreement and the Ancillary Documents and the consummation by suchNon-Management Shareholder of the transactions contemplated hereby and thereby.          SECTION 3A.5. Brokerage. Other than this Agreement, there are no contracts, agreements or understandings betweensuch Non-Management Shareholder and any person that would give rise to a valid claim against suchNon-Management Shareholder or Buyer for a brokerage commission, finder’s fee or other like paymentin connection with the offer and sale of the Shares.          SECTION 3A.6. Investment. Other than such exceptions as are contemplated in Section 5.15 and the Lock-up Agreement tobe entered into by such Non-Management Shareholder, such Non-Management Shareholder confirms thatthe FM Ordinary Shares to be
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received by such Non-Management Shareholder will be acquired forinvestment for the account of such Non-Management Shareholder, not as a nominee or agent, and notwith a view to the sale or distribution of any part thereof, and that such Non-ManagementShareholder has no present intention of selling, granting any participation in, or otherwisedistributing any of the FM Ordinary Shares, except in a manner consistent with the RegistrationRights Agreement. By executing this Agreement, such Non-Management Shareholder further representsthat it has no contract, undertaking, agreement, or arrangement with any person to sell, transfer,or warrant participation to that person or to any third person, with respect to any of the FMOrdinary Shares.          SECTION 3A.7. No Public Market. Such Non-Management Shareholder understands and acknowledges that the issuance of the FMOrdinary Shares pursuant to this Agreement will not be registered under the Securities Act on thegrounds that the issuance of the FM Ordinary Shares contemplated by this Agreement is exempt fromregistration pursuant to Section 4(2) or Regulation S of the Securities Act, and that Buyer’sreliance upon these exemptions is predicated upon such Non-Management Shareholder’s representationsin this Agreement.          SECTION 3A.8. Accredited Investor; Foreign Investor. Such Non-Management Shareholder represents that such Non-Management Shareholder is notinvolved in a plan or scheme designed to evade the registration provisions of the Securities Actand either (a) presently qualifies, and will as of First Closing Date and the Earnout ClosingDate, qualify, as an “accredited investor” within the meaning of Regulation D of the rules andregulations promulgated under the Securities Act or (b) is not presently, and will not be as of theClosing Date, a “U.S. person” within the meaning of Regulation S of the rules and regulationspromulgated under the Securities Act.          SECTION 3A.9. No Other Representations and Warranties. Except for the representations and warranties contained in this Article III.A, theNon-Management Shareholders make no other express or implied representation or warranty to Buyer orany Affiliate thereof.ARTICLE IVREPRESENTATIONS AND WARRANTIES OF BUYER          Buyer hereby represents and warrants to the Selling Shareholders as follows:          SECTION 4.1. Organization. Buyer is a corporation duly incorporated, validly existing and in good standing under theLaws of the Cayman Islands. Buyer (i) has all requisite corporate power and authority to own itsassets and to carry on its business as now being conducted by it and (ii) is duly qualified orlicensed to do business and is in good standing in the jurisdictions in which the ownership of itsproperty or the conduct of its business requires such qualification or license, except in the caseof clause (ii) where the failure to be so qualified or licensed would not reasonably be expected,in the aggregate, to have a Material Adverse Effect on the Buyer.          SECTION 4.2. Authorization, Enforceability. Buyer has the corporate power and authority to execute and deliver this Agreement and theAncillary Documents to which it is a party
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and perform its obligations hereunder and thereunder.The execution and delivery of this Agreement and the Ancillary Documents to which it is a party bythe Buyer and the performance by it of its obligations hereunder and thereunder have been dulyauthorized by all necessary corporate action on the part of Buyer and no other corporate orstockholder proceedings or actions are required to consummate the transactions contemplated hereby.This Agreement has been duly executed and delivered by Buyer and, assuming due authorization,execution and delivery by the other parties thereto, constitutes a valid and binding agreement ofthe Buyer, enforceable against it in accordance with its terms, subject to the effects ofbankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Lawsrelating to or affecting creditors’ rights generally and general equitable principles (whetherconsidered in a proceeding in equity or at Law) and subject to the effect of public policy on theenforceability of the indemnification provisions set forth in the Registration Rights Agreement.          SECTION 4.3. No Approvals or Conflicts. The execution, delivery and performance by the Buyer of this Agreement and the AncillaryDocuments to which it is a party and the consummation by the Buyer of the transactions contemplatedhereby and thereby do not and will not (i) violate, conflict with or result in a breach by theBuyer of the certificates of incorporation, by-laws or equivalent documents of the Buyer, (ii)violate, conflict with or result in a breach of, or constitute a default by the Buyer (or create anevent which, with notice or lapse of time or both, would constitute a default) or give rise to anyright of termination, cancellation or acceleration under, or result in the creation of anyEncumbrance upon any of the properties of the Buyer under, any note, bond, mortgage, indenture,deed of trust, license, franchise, permit, lease, contract, agreement or other instrument to whichthe Buyer or any of its properties may be bound, (iii) violate or result in a breach of anyGovernmental Order or Law applicable to the Buyer or any of its properties or (iv) require anyorder, consent,approval or authorization of, or notice to, or declaration, filing, application, qualificationor registration with, any Governmental Authority, except, with respect to the foregoing clauses(ii), (iii) and (iv) above, as would not, individually or in the aggregate, reasonably be likely tohave a Material Adverse Effect on the Buyer.          SECTION 4.4. Litigation. Other than as disclosed in the Buyer SEC Documents, there are no suits, legal actions,arbitrations, proceedings or investigations pending or, to the Knowledge of Buyer, threatenedagainst Buyer that, if adversely determined against Buyer, would have a Material Adverse Effect onthe Buyer.          SECTION 4.5. Outstanding Share Capital. As of the date hereof, Buyer has no more than 559,000,000 (five-hundred-fifty-nine million)FM Ordinary Shares issued and outstanding. At no time prior to April 30, 2007 (without takingaccount the Initial Share Consideration) shall Buyer have more than 570,000,000(Five-Hundred-seventy Million) FM Ordinary Shares issued and outstanding on a fully diluted andconverted basis, excluding (i) any issuance of stock options pursuant to the employee stock optionplans disclosed in the Buyer SEC Documents, (ii) any FM Ordinary Shares to be issued upon thevesting of any options issued by Buyer and (iii) any FM Ordinary Shares to be issued to Total TeamInvestments Limited in connection with Buyer’s acquisition of Framedia.          SECTION 4.6. Validity of Share Consideration. The FM Ordinary Shares issuable as the Initial Share Consideration and as the RemainingShare Consideration will be duly authorized for issuance prior to First Closing and Earnout Closing(including any acceleration
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thereof) respectively and, when issued and delivered in accordance withthe provisions of this Agreement, will be validly issued and fully paid and nonassessable and freefrom any Encumbrance; and the issuance of such FM Ordinary Shares will not be subject to preemptiveor other similar rights and such delivery will convey to the Selling Shareholders good and validtitle to such FM Ordinary Shares, free and clear of any and all Encumbrances (other than anylock-up arrangements contemplated in the Lock-up Agreement and applicable securities laws).          SECTION 4.7. SEC Filings.          (a) Buyer has timely filed or furnished all documents required to be filed or furnished by itwith the U.S. Securities and Exchange Commission (the “SEC”) since January 1, 2006 (the“Buyer SEC Documents”). As of their respective dates, the Buyer SEC Documents complied inall material respects with the requirements of the Securities Act or the Exchange Act, as the casemay be, and the rules and regulations thereunder, and none of the Buyer SEC Documents contained anyuntrue statement of a material fact or omitted to state any material fact required to be statedtherein or necessary to make the statements therein, in light of the circumstances under which theywere made, not misleading. The consolidated financial statements of Buyer included in the BuyerSEC Documents (a) have been prepared from the booksand records of Buyer and its subsidiaries, (b) complied as to form in all material respectswith the applicable accounting requirements and the published rules and regulations of the SEC withrespect thereto, have been, and will be, prepared in accordance with U.S. GAAP consistently appliedthroughout the periods involved (except as may be indicated therein or in the notes thereto) and(c) present fairly in all material respects the consolidated financial position, results ofoperations and cash flows of Buyer and its consolidated subsidiaries as of the dates or for theperiods indicated therein, subject, in the case of the unaudited financial statements, to normalyear-end audit adjustments (which are not, in the aggregate, material to Buyer) and the absence offootnote disclosure.          (b) Except as and to the extent set forth on Buyer’s consolidated balance sheet as of December31, 2005, including the notes thereto, and as disclosed in the Buyer SEC Documents, none of Buyeror any of its consolidated subsidiaries has any liabilities or obligations that are required to bedisclosed pursuant to U.S. GAAP, except for liabilities or obligations incurred since December 31,2005 that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect onthe Buyer.          SECTION 4.8. Absence of Certain Changes. Since December 31, 2005, there has not been any stock split or similar change to thecapital structure of Buyer or any declaration, setting aside or payment of any dividend or otherdistribution in respect of any shares of capital stock of Buyer (other than the grant of stockoptions to directors and employees pursuant to employee benefit plans disclosed in the Buyer SECDocuments), any material amendment to any organizational document of Buyer or any agreement orcommitment by Buyer to do any of the foregoing.          SECTION 4.9. Consent to Creation of Registration Rights. The parties required by section 5.8 of that certain Amended and Restated ShareholdersAgreement, dated as of February 28, 2006, among the Buyer and certain of its shareholders, have,on or before the date hereof, executed and delivered to Buyer and the Sellers’ Representativeconsents to the creation of
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a registration rights agreement (the “Registration Rights Agreement”)between the Buyer and the Selling Shareholders in form and substance substantially as set forth inExhibit D.          SECTION 4.10. No Other Representations or Warranties. Except for the representations and warranties contained in this Article IV, neither Buyernor any other person makes any other express or implied representation or warranty to the SellingShareholders.ARTICLE VCOVENANTS AND AGREEMENTS          SECTION 5.1. Conduct of Business Prior to First Closing.               (a) Without the written consent of the Buyer, until the First Closing, the Group Companies(i) shall conduct the Business in all material respects in the ordinary course of businessconsistent with commercially reasonable practice, (ii) shall not expand or change the scope of theBusiness and (iii) shall use their commercially reasonable efforts to maintain satisfactoryrelationships with customers and others having material business relationships with them. Exceptas contemplated by this Agreement and except as set forth on Schedule 5.1, prior to the FirstClosing, the Group Companies shall not do any of the following without the prior written consent ofBuyer: (i) except for purchases and sales by a Group Company to or fromanother Group Company, and except as otherwise disclosed in Schedule 5.1(a)(i),purchase, sell or issue any of their capital stock or other equity interests orgrant or make any option, subscription, warrant, call, commitment or agreementof any character in respect of their capital stock or other equity interests,including without limitation, any sale in connection with a proposed initialpublic offering;  (ii) except as otherwise set forth in Schedule 5.1(a)(ii), declare,set aside, issue or pay any dividends or other distribution in respect of any            shares of capital stock of any Group Company or repurchase, redeem or acquireany outstanding shares of capital stock or other securities of, or otherownership interest in, any Group Company;  (iii) conduct any split, recombination or reclassification orissuance of capital stock;  (iv) sell or otherwise dispose of any assets with value in theaggregate in excess of RMB500,000 or that are otherwise material assets,excluding sales of assets in the ordinary course of business consistent withpast practice;  (v) acquire assets having an aggregate value exceeding RMB500,000,excluding (A) acquisitions in the ordinary course of business consistent withpast practice and (B) capital expenditures permitted by clause (vii) below;
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 (vi) merge or consolidate with any Person;  (vii) except as set forth in Schedule 5.1(a)(vii) hereto, makecapital expenditures in excess of RMB500,000 in aggregate;  (viii) incur, assume or guarantee any Indebtedness for borrowed money or make anypayments or disbursements to any creditors other than in the ordinary course ofbusiness consistent with past practice;  (ix) make any loan to any director, officer, or other member ofsenior management of any of the Group Companies;  (x) incur any Encumbrance of material assets, other than PermittedEncumbrances;  (xi) increase the compensation of employees of the Group Companiesother than (A) in the ordinary course of business or (B) as required by anyagreement in effect as of the date hereof or as required by Law;  (xii) make any material change in the accounting methods orpractices followed by any of the Group Companies (other than such changes thathave been required by Law or U.S. GAAP);  (xiii) enter into any contract that would be a Material Contract or that restrictsthe Group Companies from engaging in any line of business in any geographicarea or competing with any Person that materially impairs the operation of thebusiness of the Group Companies, individually or taken as a whole;  (xiv) enter into any partnership, limited liability company or jointventure agreement;  (xv) except as set forth in Schedule 5.1(a)(xiv) hereto, grant anywaiver or release under any confidentiality or similar agreement;  (xvi) a change any method of Tax accounting, make or change any Taxelection, file any amended Tax Return, settle or compromise any material Taxliability, agree to an extension or waiver of the statute of limitations withrespect to the assessment or determination of Taxes, enter into any closingagreement with respect to any Tax or surrender any right to claim a Tax refund;  (xvii) terminate, amend or make any material amendment to a Material Contract, otherthan amendments made to customer Contracts made in the ordinary course ofbusiness;  (xviii) other than (A) in the ordinary course of business, (B) as required by anyagreement in effect as of the date hereof, (C) as required by Law or (D) as setforth in Schedule 5.1(a)(xviii), enter into, adopt or amend any
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   employment agreement or employee benefit plan with or for the benefit of any of itsemployees;  (xix) enter into any collective bargaining agreements except forrenewals for expired agreements;  (xx) purchase, cancel or terminate any insurance policy naming anyof the Group Companies as a beneficiary or a loss payee;  (xxi) amend any of its organizational documents; or  (xxii) agree or commit to do any of the foregoing.               (b) For purposes of this Agreement, the term “commercially reasonable efforts” shall not bedeemed to require any Person to give any guarantee or other consideration of any nature, includingin connection with obtaining any consent or waiver or to consent to any change in the terms of anyagreement or arrangement.               (c) During the period commencing on the date hereof and ending on the First Closing Date, theSelling Shareholders will cause the Group Companies to afford Buyer and its counsel, accountantsand other authorized representatives, during normal business hours, upon reasonable advance noticeto the officers, directors, employees, accountants and other advisors and agents, properties,books, records and contracts of the Group Companies, provided that such access does not interferewith normal business operations. The parties hereto agree that the provisions of Section 5.10hereof shall continue in full force and effect following the execution and delivery of thisAgreement. All information obtained by the Buyer and its counsel, accountants and representativespursuant to this Section 5.1(c) shall be kept confidential in accordance with Section 5.10 hereof.          SECTION 5.2. Filings and Consents. Except as otherwise set forth in Schedule 5.2, (A) each of the Selling Shareholders and theGroup Companies, on the one hand, and the Buyer, on the other hand, shall use commerciallyreasonable efforts to obtain and to cooperate in obtaining any consent, approval, authorization ororder of, and in making any registration or filing with, any Governmental Authority or other Personrequired in connection with the execution, delivery or performance of this Agreement, including anyfilings pursuant to (i) any applicable competition regulation, (ii) the Securities Act and ExchangeAct, and (iii) any other applicable filings or consents; (B) each Selling Shareholder which issubject to any registration or approval requirements by the State Administration for ForeignExchange (“SAFE”) shall complete all necessary filings or registrations, or obtain all necessaryapprovals, required to comply with any rules or regulations of SAFE (collectively, “SAFERegistrations”) on or prior to the Closing Date; and (C) the Company, each Selling Shareholder andBuyer shall pay all filing fees required to be paid in connection with their respective filings tobe made under each such foreign law or regulation.          SECTION 5.3. Tax Matters; Cooperation; Preparation of Returns; Tax Elections.               (a) The Company and the Management Shareholders agree to furnish or cause to be furnished toeach other, upon request, as promptly as practicable, such information and
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assistance relating toany of the Group Companies (including access to books and records, employees, contractors andrepresentatives) as is reasonably necessary for the filing of all Tax Returns, the making of anyelection related to Taxes, the preparation for any audit by any Taxing Authority, and theprosecution or defense of any claim, suit or proceeding relating to any Tax Return for any taxableyear ending on or before the First Closing Date. The Company shall retain all books and recordswith respect to Taxes pertaining to the Group Companies until the expiration of all relevantstatutes of limitations (and, to the extent notified by Buyer, any extensions thereof). At the endof such period, each party shall provide the other with at least ten days prior writtennotice before destroying any such books and records, during which period the party receivingsuch notice can elect to take possession, at its own expense, of such books and records.               (b) The Company and the Management Shareholders shall prepare, or cause to be prepared, andfile all Tax Returns in respect of any of the Group Companies for any taxable year ending on orbefore the First Closing Date. The Company shall timely pay to the relevant Taxing Authority allTaxes due in connection with any such Tax Returns. The Buyer shall prepare, or cause to beprepared, all other Tax Returns in respect of the Group Companies, including for any taxable yearending on or after the First Closing Date which begins before the First Closing Date (a“Straddle Period”) and Buyer shall permit the Management Shareholders to review and commenton any Tax Returns for any Straddle Period prior to filing and make revisions as are reasonablyrequested by the Management Shareholders to the extent such revisions are in accordance with pastpractice and applicable law.               (c) The Selling Shareholders shall pay all transfer, documentary, sales, use, registration andother such transfer Taxes and related fees (including any penalties, interest and additions to Tax)incurred in connection with this Agreement and the Ancillary Documents and the transactionscontemplated hereby and thereby.          SECTION 5.4.  Tax Indemnity. Subject to the limitations on liability set forth in Section 9.1(a)(i) and withoutduplication, the Management Shareholders shall indemnify the Buyer and its Affiliates and each oftheir respective officers, directors, employees and agents and hold them harmless against (i) allliability for Taxes of the Group Companies for all taxable periods (or portions thereof) ending onor before the First Closing Date and (ii) all Taxes of any Person (other than any Group Company)for which a Group Company is liable as a transferee, successor, by contract or otherwise provided,however, the indemnity for Tax liabilities provided under this Section 5.4 and any indemnity inSection 9 of this Agreement relating to Taxes or Tax liabilities shall not under any circumstancescover any Taxes or Tax liabilities: (a) relating to any Group Company for any period after theFirst Closing Date, (b) resulting from any act, transaction, omission or election of the Buyer, aGroup Company, any Affiliates, or transferees thereof made or occurring after the First ClosingDate (other than the filing of any Tax Return in a manner consistent with past practice orconsistent with Law, any reasonable settlement of a Tax audit or proceeding, or any actionsexpressly required by Law or expressly contemplated by this Agreement or that are in the ordinarycourse of business), (c) that are provided for in the Financial Statements or disclosed in Schedule3.12, or (d) resulting from or in connection with the Structure Agreements, further provided thatthe amount of any damages for which indemnification is provided under this Section 5.4 shall bereduced to take into account any net Tax benefit actually realized by the indemnified party as aresult of the payment of such damages. The Sellers’ Representative shall have the right to controlat its own expense any Tax audit or administrative or
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court proceeding relating to any Taxindemnity covered by this Section 5.4 and make all decisions taken in connection with themincluding the selection of counsel, the decision to pursue or forego any and all administrativeappeals, proceedings, hearings and conferences with any Taxing Authority, pay the Tax claimed andsue for a refund where applicable Law permits such refund suits or contest the Tax claim in anypermissible manner, to the extent such audit or proceeding relates to a period ending on or beforethe First Closing Date; provided, that if such audit or claim could reasonably be expected to havea material adverse effecton Buyer, the Company, Buyer and the Sellers’ Representative shall jointly control such auditor proceeding (and share costs and expenses accordingly) and there shall be no settlement withoutthe consent of the other party. If a claim is made by any Taxing Authority, which, if successful,might result in an indemnity payment to Buyer or its Affiliates under this Section 5.4 Buyer shallgive notice to Sellers’ Representative in writing of such claim to provide Management Shareholdersto reasonably enjoy its rights described in the preceding sentence.          SECTION 5.5.  Employees; Benefit Plans. Nothing herein expressed or implied shall confer upon any of the employees of the SellingShareholders, the Buyer, the Group Companies, or any of their Affiliates, any additional rights orremedies, including any additional right to employment, or continued employment for any specifiedperiod, of any nature or kind whatsoever under or by reason of this Agreement and the AncillaryDocuments.          SECTION 5.6. Related Party Accounts. Except as set forth on Schedule 5.5, prior to the First Closing, all Related Party Accountsshall be cash-settled or extinguished, such that upon the First Closing there will be no relatedparty accounts outstanding. As used herein, “Related Party Accounts” shall mean with respect toeach Group Company (i) all related party receivables due to such Group Company from the Affiliatesof the Company, the Selling Shareholders and/or their Affiliates (other than the Group Companies),other than receivables for goods and services incurred in the ordinary course of business andamounts owed under the Structure Agreements and (ii) all related party payables of such GroupCompany to the Affiliates of the Company, the Selling Shareholders and/or their Affiliates (otherthan the Group Companies), other than payables for goods and services incurred in the ordinarycourse of business.          (b) The Management Shareholders agree to cause, and the Non-Management Shareholders agree touse their reasonable best efforts to cause, the Company to provide to Buyer monthly and quarterlymanagement accounts of the Company until the Earnout Closing Date no later than ten (10) BusinessDays following the end of each month and quarter, respectively.          SECTION 5.7. Obligations of the Group Companies. Each of the Company and the Management Shareholders agrees to take any and all actionsnecessary (including prepayment of the terms of any indebtedness of the Group Companies) and causeits Affiliates other than the Group Companies to be absolutely and unconditionally relieved on orprior to the First Closing Date of all liabilities and obligations, direct or indirect, primary orsecondary, for the payment of money or otherwise, including purchase or indemnificationobligations, guarantees or performance bonds in respect of any outstanding Indebtedness of theGroup Companies, other than any obligations outstanding under the Structure Agreements.          SECTION 5.8. Non-Violation. Prior to the First Closing, neither any Selling Shareholder nor any Group Company will,without the prior written consent of Buyer, take any
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action which would result inany of the covenants contained in this Agreement and in the Ancillary Documents becomingincapable of performance. The Selling Shareholders will promptly advise Buyer of any action orevent of which the Selling Shareholders become aware which would have the effect of makingincorrect in any material respect any such representations or warranties if given with reference tofacts and circumstances then existing or which has the effect of rendering any such covenantsincapable of performance. Up to the First Closing Date, each Selling Shareholder agrees to notifyBuyer of any information or matter that comes to such Selling Shareholder’s attention that wouldrender any of the representations and warranties given in Articles III and IIIA, respectively,untrue in any material respect.          SECTION 5.9. Confidentiality. Each party hereto shall keep confidential, and shall cause its officers, directors, andemployees to keep confidential, the terms and conditions hereof and of any Ancillary Document(collectively, the “Confidential Information”) except as Buyer and the Selling Shareholdersmutually agree otherwise; provided that any party may disclose Confidential Information (i) to theextent advised by competent legal advisors that such disclosure is required by applicable Law andso long as, where such disclosure is to a Governmental Authority, such party shall use allreasonable efforts to obtain confidential treatment of the Confidential Information so disclosed,(ii) to the extent required by the rules of any stock exchange, (iii) to its officers, directors,employees and professional advisors as necessary to the performance of its obligations inconnection herewith and with the Ancillary Documents so long as such party advises each Person towhom the Confidential Information is so disclosed as to the confidential nature thereof, and (iv)to its investors and any Person otherwise providing substantial debt or equity financing to suchparty so long as the party advises each Person to whom the Confidential Information is so disclosedas to the confidential nature thereof.          SECTION 5.10. Employment Agreements. (a) The Company shall provide to the Key Company Employees new employment agreements tobe entered into by such Key Company Employees and Buyer in substantially the form attached heretoas Exhibit F (the “Key Company Employee Employment Agreements”) prior to the First Closing Date.Each Key Company Employee Employment Agreement shall contain terms that are reasonable andconsistent with the Company’s past practice. The terms of the Key Company Employee EmploymentAgreements shall also include provisions (i) requiring adherence by such employees to all ofBuyer’s internal compliance and ethical policies, guidelines and codes and (ii) prohibiting suchKey Company Employees from engaging in a Competing Business, directly or indirectly, in the PRC,for a period of one year following the termination of any such Key Company Employee EmploymentAgreement with Cause (it being understood that subclause (ii) shall not be applicable if the KeyCompany Employee is terminated without Cause).          (b) The Company shall seek to cause employees of the Company other than Key Company Employees(“Other Company Employees”) to enter into new employment agreements and non-competeagreements Buyer in substantially the form attached hereto as Exhibit G (collectively,“General Employment Agreements”) with Buyer as soonas reasonably practicable after thedate hereof which in no event shall be later than thirty (30) days after the First Closing.          SECTION 5.11. Further Actions. Each of the parties hereto shall use commercially reasonable efforts to take, or cause tobe taken, all appropriate action, do or cause to be done all things necessary, proper or advisableunder applicable Law, and execute and deliver
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such documents and other papers, as may be requiredto consummate the transactions contemplated by this Agreement and by the Ancillary Documents.          SECTION 5.12. Sellers’ Representative. Concurrent with the execution and delivery of this Agreement, each Selling Shareholdershall be deemed to appoint IDG Technology Venture Investments, LP as their agent, representativeand attorney-in-fact (the “Sellers’ Representative”) and IDG Technology Venture Investments, LPagrees to act as the Sellers’ Representative. Sellers’ Representative shall, on behalf of theSelling Shareholder (i) give and receive notices and communications, (ii) receive and accept cashfrom the Initial Cash Consideration, (iii) receive and accept the Initial Share Consideration andthe Remaining Share Consideration, (iv) review, negotiate, agree to and settle claims and disputesrelating to the adjustment to the Aggregate Consideration and indemnified amounts, (v) object tosuch deliveries, agree to, negotiate, enter into settlements and compromises of, and demandarbitration and comply with orders of Governmental Authorities and awards of arbitrators withrespect to such claims, (vi) take all actions necessary or appropriate in the judgment of Sellers’Representative for the accomplishment of the foregoing and (vii) perform other functions specifiedin this Agreement. Any notices delivered to Sellers’ Representative pursuant to this Agreementshall be deemed delivered to the Selling Shareholders. A decision, act, consent, or instruction ofthe Sellers’ Representative shall constitute a decision of the Selling Shareholder and shall befinal, binding and conclusive upon each Selling Shareholder. Buyer may rely upon any suchdecision, act, consent or instruction of the Sellers’ Representative as being the decision, act,consent or instruction of the Selling Shareholder, and Buyer is hereby relieved from any liabilityto any Person for any acts done in accordance with such decision, act, consent or instruction ofthe Sellers’ Representative.          SECTION 5.13. Management Independence; Group Companies Operation.               (a) Buyer shall cause each of the Group Companies to operate as an independent business untilat least June 30, 2008 to engage in business activities substantially similar in all respects tothe Business as it is conducted as of the signing of this Agreement; *provided that*the KeyManagement Employees’ ability to operate the Group Companies as an independent business unit shallcomply with Buyer’s code of ethics, any relevant requirements of the Sarbanes-Oxley Act and otherU.S. securities laws and regulations and the provisions of this Agreement and the AncillaryDocuments, and not take any action that would allow dismissal for Cause, and *provided further that*the Selling Shareholders agree to the matters set forth on Schedule 5.18(a).               (b) The Key Management Employees shall cause the Company to provide operation revenue and netincome data of the Company with respect to each of the quarters endingJune 30, 2007, September 30, 2007, December 31, 2007 and March 31, 2008 no later than fifteendays from the close of the previous calendar quarter.               (c) Retention of Senior Management. Buyer agrees that it shall not, prior to theEarnout Closing Date, dismiss any of the Key Management Employees without Cause and that any suchdismissal without Cause will accelerate the Earnout Closing as set forth in Section 2.4 hereof.               (d) Overhead Expenses. Buyer agrees that it shall not, prior to the Earnout ClosingDate, allocate unreasonable overhead expenses to any of the Group Companies. For
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purposes of thisSection 5.14, “unreasonable overhead expenses” means any overhead expenses that are outside thescope set forth in Schedule 5.18(d) hereto.          SECTION 5.14. No Transfer by Selling Shareholders. Except as otherwise set forth in Schedule 5.14, from the date hereof through the FirstClosing, no Selling Shareholder shall transfer or encumber, directly or indirectly, any interest inthe Company or the entity through which it holds its interest in the Company without the approvalof Buyer; *provided that*(i) any Selling Shareholder who is a natural person to his or her guardian,conservator, executor, administrator, spouse, children, grandchildren or parents, or to a trust ofwhich the beneficiaries of the corpus and the income shall be such a person, (ii) any SellingShareholder that is not a natural person, to its limited partners, its Affiliates (including to anyperson to whom such Affiliate would be allowed to transfer such Affiliate’s shares pursuant to thisSection), or to any successor to such Selling Shareholder as the result of any merger,consolidation or other reorganization; provided further that any transferee in relation to anytransfer pursuant to any of the foregoing exceptions shall enter into an agreement or instrumentprior to the transfer thereof and prior to the First Closing Date pursuant to which such transfereeshall agree to be bound by the terms and conditions of this Agreement and the Ancillary Documentsto which the transferor is a party.          SECTION 5.15. 2007 Audited Financial Statements; 2007 Audited Annual Net Income. The Company and the Selling Shareholders shall use reasonable best efforts to cooperate inproviding to Buyer the 2007 Audited Financial Statements as soon as reasonably practicablefollowing the 12-month period after the First Closing          SECTION 5.16. No 338(g) Election. Buyer, on behalf of itself and all of its Affiliates, agrees not to make a 338(g) electionunder the United States Internal Revenue Code of 1986, as amended, with respect to the interests inthe Company, any Group Company and any Affiliated Company acquired pursuant hereto.ARTICLE VICONDITIONS TO THE SELLING SHAREHOLDERS’ OBLIGATIONS          The obligation of the Selling Shareholders to effect the First Closing under this Agreement issubject to the satisfaction, at or prior to the First Closing Date, of each of the followingconditions, unless validly waived in writing by Sellers’ Representative.          SECTION 6.1. Representations and Warranties. The representations and warranties made by Buyer in this Agreement disregarding allqualifications and exceptions as materiality and Material Adverse Effect on the Buyer, shall betrue and correct as of the First Closing Date as though such representations and warranties weremade at such date (except that any representations and warranties that are made as of a specifieddate shall be true and correct as of such specified date), with only such exceptions as would notin the aggregate have or reasonably be expected to have a Material Adverse Effect on the Buyer;*provided, however*, that the effect of such exceptions shall not be applicable to any of therepresentations and warranties contained in Sections 4.1, 4.2 and 4.6, which shall be true andcorrect as of the First Closing Date.
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          SECTION 6.2. Performance. Buyer shall have performed and complied in all material respects with all agreements andobligations required by this Agreement to be so performed or complied with by it prior to the FirstClosing.          SECTION 6.3. No Material Adverse Change. Since December 31, 2005 until the First Closing Date, there shall not have been anyMaterial Adverse Change in respect of the Buyer.          SECTION 6.4. Officer’s Certificates. Buyer shall have delivered to the Selling Shareholders a certificate, dated as of theClosing Date and executed by an executive officer of the Buyer, certifying to the fulfillment ofthe conditions specified in Sections 6.1, 6.2 and 6.3 hereof.          SECTION 6.5. Registration Rights Agreement. As of the First Closing, Buyer shall have entered into the Registration Rights Agreement inform and substance substantially as set forth in Exhibit D.          SECTION 6.6. Injunctions. At the First Closing there shall not be in effect any Law or Governmental Order directingthat the transactions provided for herein not be consummated as provided herein or which has theeffect of rendering it impossible to consummate such transactions.          SECTION 6.7. Adverse Market Change. After the date hereof and prior to the First Closing Date, there shall not have occurred asuspension or material limitation in trading in Buyer’s securities on NASDAQ which occurrence isstill outstanding as of the First Closing Date, if the effect of any such event in the reasonablejudgment of the Company makes it impracticable or inadvisable to proceed with the transactionscontemplated in this Agreement and the Ancillary Agreements.          SECTION 6.8. FM Ordinary Shares. Buyer shall deliver to the Selling Shareholders the Initial Cash Consideration and theregister of members or other documents evidencing the Initial Share Consideration being registeredunder the names of the Selling Shareholders in accordance with Article II of this Agreement.          SECTION 6.9. Opinions of Counsel. As of the First Closing Date, the Selling Shareholders shall have received from CaymanIslands counsel to Buyer a written opinion dated and delivered as of the First Closing Date insubstantially the form attached hereto as Exhibit F.ARTICLE VIICONDITIONS TO BUYER’S OBLIGATIONS          The obligation of Buyer to effect the First Closing under this Agreement is subject to thesatisfaction, at or prior to the First Closing Date, of each of the following conditions, unlesswaived in writing by Buyer.          SECTION 7.1. Representations and Warranties. The representations and warranties made by the Selling Shareholders in this Agreement,disregarding all qualifications and exceptions as to materiality and Material Adverse Effect on theCompany or the Selling
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Shareholders, shall be true and correct as of the First Closing Date asthough such representations and warranties were made at such date (except that any representationsand warranties that are made as of a specified date shall be true and correct as of such specifieddate), with only such exceptions as would not in the aggregate reasonably be expected to have aMaterial Adverse Effect in respect of the Company; *provided, that*, the effect of such exceptionsshall not be applicable to any of the representations and warranties contained in Sections 3.1,3.2, 3.3, 3.4, 3.6(c), 3A.2 and 3A.3, which shall be true and correct as of the First Closing Date.          SECTION 7.2. Performance.               (a) Covenant Compliance. The Selling Shareholders shall have performed and compliedin all material respects with all agreements and obligations required by this Agreement to beperformed or complied with by them prior to the First Closing.               (b) Proceedings and Documents. All corporate and other proceedings in connection withthe transactions contemplated at the First Closing, and all documents incident thereto, shall be inform and substance reasonably satisfactory to Buyer, and Buyer shall have received all suchcounterpart original and certified or other copies of such documents as Buyer may reasonablyrequest.               (c) Qualifications. The consents, waivers, approvals or other authorizations listedon Schedule 7.2(c) shall have been obtained or otherwise satisfied and shall continue to be ineffect.               (d) No Material Adverse Change. There shall not have occurred since the Balance SheetDate a Material Adverse Change in respect of the Group Companies.          SECTION 7.3. No Indebtedness. The Management Shareholders and the Company will have taken such action, or have caused theGroup Companies to take such action, and have provided to Buyer documentation satisfactory toBuyer, evidencing that none of the Group Companies has any outstanding indebtedness for borrowedmoney, other than (i) any Indebtedness or other obligations outstanding under the StructureAgreements, and (ii) any liabilities incurred in ordinary course of business of the Group Companiesconsistent with past practices.          SECTION 7.4. Officer’s Certificate. The Company shall have delivered to the Buyer a certificate, dated as of the Closing Dateand executed by an executive officer of the Company, certifying to the fulfillment of theconditions specified in Sections 7.1, 7.2 and 7.3 hereof.          SECTION 7.5. Lock-up Agreements. Each Selling Shareholder shall have entered into an Lock-up Agreement in substantially theform attached hereto as Exhibit B and each such agreement shall be in full force and effect.          SECTION 7.6. Outstanding Obligations. As of the Closing Date, the Company shall have provided to Buyer an updated Schedule ofOutstanding Obligations setting forth the Company’s operating lease obligations and otherobligations going forward as of December 31, 2006.
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          SECTION 7.7. Employment Agreements. As of the Closing Date, each Key Company Employee shall have entered into a Key CompanyEmployee Employment Agreement each such agreement shall be in full force and effect.          SECTION 7.8. Corporate Matters.               (a) On or prior to the First Closing Date, all outstanding options and warrants of the Companyshall have been cancelled. The Selling Shareholders shall have provided evidence of suchcancellation to Buyer’s reasonable satisfaction and of such option and warrant holders’ consent tosuch cancellation.               (b) On or prior to the First Closing Date, the Company shall have provided to Buyer theCancellation and Waiver of Rights Agreement from holders of options and warrants issued by theCompany that are outstanding as of the date of this Agreement, waiving any rights that such optionand warrant holders may have had to such options and warrants.          SECTION 7.9. Opinions of Counsel. Buyer shall have received from Cayman Islands counsel and PRC counsel to the Company andthe Selling Shareholders and the Group Companies, as the case may be, written opinions dated anddelivered as of the First Closing Date, in form and substance attached hereto as Exhibits G and H,respectively.          SECTION 7.10. Structure Agreements. The Company and Management Shareholders shall (i) have completed all documentationnecessary to change the nominees named in the Structured Agreements to David Zhu and Jason NanchunJiang, (ii) have submitted all such documentation to the appropriate government authorities on orprior to First Closing and (ii) have provided evidence to Buyer’s reasonable satisfaction that suchdocumentation has been completed and submitted.          SECTION 7.11. Injunctions. At the First Closing Date, there shall not be in effect any Law or Governmental Orderdirecting that the transactions provided for herein not be consummated as provided herein or whichhas the effect of rendering it impossible to consummate such transactions.ARTICLE VIIITERMINATION          SECTION 8.1. Termination. This Agreement may be terminated at any time prior to the First Closing Date:               (a) by the mutual written consent of the Selling Shareholders and the Buyer;               (b) by either the Company and the Required Majority of the Selling Shareholders, on one hand,or the Buyer, on the other hand, if any Governmental Authority of competent jurisdiction shall haveissued an order, decree or ruling or taken any other action restraining, enjoining or otherwiseprohibiting the transactions contemplated hereby and such order, decree or ruling or other actionshall have become final and nonappealable;
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               (c) by Buyer, if Selling Shareholders breach or fail to perform in any respect any of theirrepresentations, warranties or covenants contained in this Agreement or any Ancillary Document andsuch breach or failure to perform (A) would give rise to the failure of a condition set forth inSection 7.1 or Section 7.2 of Article VII, (B) cannot be or has not been cured within 15 daysfollowing written notice of such breach or failure to perform and (C) has not been waived by Buyer;               (d) by the Company and the Required Majority of the Selling Shareholders, if Buyer breaches orfails to perform in any respect any of its representations, warranties or covenants contained inthis Agreement or any Ancillary Document and such breach or failure to perform (A) would give riseto the failure of a condition set forth in Sections 6.1 or 6.2 of Article VI, (B) cannot be or hasnot been cured within 15 days following written notice of such breach or failure to perform and (C)has not been waived by the Company and the Required Majority of the Selling Shareholders; or               (e) by either Company and the Required Majority of the Selling Shareholders, on one hand, orBuyer, on the other hand, if the First Closing Date shall not have occurred (other than through thefailure of any party seeking to terminate this Agreement to comply fully with its obligations underthis Agreement) on or before May 31, 2007.          SECTION 8.2. Procedure and Effect of Termination. In the event of the termination of this Agreement and the abandonment of the transactionscontemplated hereby pursuant to Section 8.1 hereof, written notice thereof shall forthwith be givento all other parties. If this Agreement is terminated and the transactions contemplated by thisAgreement are abandoned as provided herein:               (a) The Buyer will upon request return to the Selling Shareholders or destroy all documents,due diligence materials, accounting working papers, transaction work papers, draft registrationstatements of the Company and other material of the Company or any Selling Shareholder relating tothe transactions contemplated hereby or obtained in connection with the transactions contemplatedhereby, including any reports, summaries, studies or memorandums based on the foregoing material,whether so obtained before or after the execution hereof (provided that the General Counsel of theBuyer may keep a copy of all such materials for evidentiary purposes only);               (b) The provisions Section 5.10 shall continue in full force and effect; and               (c) No party to this Agreement will have any liability under this Agreement to any otherexcept that nothing herein shall relieve any party from any liability for any willful breach ofthis Agreement.
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ARTICLE IXINDEMNIFICATION          SECTION 9.1. Indemnification.               (a) Indemnification by Management Shareholders and Non-Management Shareholders. (i) Subject to the limits set forth in this Section 9.1, from andafter the First Closing, the Management Shareholders, jointly and severally,agree to indemnify, defend and hold the Buyer, its Affiliates (including, afterthe First Closing, the Group Companies) and their respective officers,directors, stockholders, employees, agents and representatives (the “BuyerIndemnified Persons”) harmless from and in respect of any and all losses,damages, costs and reasonable expenses (including reasonable fees and expensesof counsel) (collectively, “Losses”), that they may incur arising outof or due to any breach of any representation or warranty, covenant or otheragreement of the Management Shareholders contained in this Agreement and in theAncillary Documents, *provided, however*, that (1) each Management Shareholder’saggregate liability for such Losses under this Section 9.1(a)(i) shall notexceed the product of (x) the percentage of equity interest held by suchManagement Shareholder in the Company on a fully diluted and as converted basisimmediately prior to the First Closing Date and (y) the Value of the AggregateConsideration and (2) no Management Shareholder shall be responsible for thebreach by any other Management Shareholder of the portion of therepresentations and warranties set forth in Section 3.2, 3.3 or 3.7 that relatesolely to particular Management Shareholders. The representations andwarranties of the Management Shareholders set forth in Article III of thisAgreement shall survive for a period of fifteen (15) months immediatelyfollowing the First Closing Date, *provided, however,*that (i) therepresentations and warranties set forth in Sections 3.2, 3.3, 3.4(a), 3A.2 and3A.3 shall survive for three (3) years and (ii) the representations andwarranties set forth in Section 3.12 (Tax Matters) shall survive the Closinguntil ninety (90) days after the expiration of the applicable statute oflimitations. Anything to the contrary notwithstanding, other than in the caseof the representations and warranties set forth in Sections 3.2, 3.3, 3.4(a),3A.2 and 3A.3, none of the Buyer Indemnified Persons shall be entitled torecover from the Management Shareholders for any Losses arising from thefailure of a representation orwarranty by the Management Shareholders contained herein to be true andcorrect unless and until the total of all such Losses indemnifiablehereunder exceeds US$1,000,000, provided that when such amount is exceeded,the Management Shareholders shall be liable for all amounts including thefirst US$1,000,000.
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 (ii) Subject to the limits set forth in this Section 9.1, from andafter the First Closing, the Non-Management Shareholders, severally and notjointly, agree to indemnify, defend and hold the Buyer Indemnified Personsharmless from and in respect of any and all Losses that they may incur arisingout of or due to any breach any of the representations or warranties made by itin Article III.A or of any other representation or warranty, covenant or otheragreement made by it in the Ancillary Documents to which they are a party,*provided, however*that each Non-Management Shareholder’s liability for suchLosses under this Section 9.1(a)(ii) shall in no event exceed the product of(x) the aggregate percentage of equity interest of the Company held by suchNon-Management Shareholder on a fully diluted and as converted basisimmediately prior to the First Closing Date and (y) the Value of the AggregateConsideration. The representations and warranties of the Non-ManagementShareholders set forth in Article III.A of this Agreement and any otherrepresentation or warranty set forth in an Ancillary Agreement shall survivefor fifteen (15) months following the First Closing Date, *provided, however,*that the representations and warranties set forth in Sections 3A.2 and 3A.3shall survive for three (3) years. Anything to the contrary notwithstanding,other than in the case of the representations and warranties set forth inSections 3A.2 and 3A.3, none of the Buyer Indemnified Persons shall be entitledto recover from any Non-Management Shareholder for any Losses under thisSection 9.1(a)(ii) arising from the failure of a representation and warranty bysuch Non-Management Shareholder contained herein or in an Ancillary Document tobe true and correct (or for breach of any covenant or agreement of suchNon-Management Shareholder contained herein or in an Ancillary Document) unlessand until the total of all such Losses indemnifiable hereunder exceedsUS$1,000,000, *provided that*when such amount is exceeded, such Non-ManagementShareholder shall be liable for all amounts including the first US$1,000,000.               (b) Indemnification by the Buyer. Subject to the limits set forth in this Section9.1, from and after the First Closing, Buyer agrees to indemnify, defend and hold the SellingParties and their Affiliates and their respective officers, directors, stockholders, employees,agents and representatives (the “Seller Indemnified Persons”) harmless from and in respectof any and all Losses that they may incur arising out of or due to any breach of any representationor warranty, covenant or other agreement of the Buyer contained in this Agreement and Taxesresulting from any Buyer Tax Act; provided that, with respect to all Losses indemnifiable pursuantto this paragraph (b) arising from the failure of a representation or warranty herein by the Buyerto be true and correct, the Seller Indemnified Persons shall not be entitled to recover more thanthe Value of the Aggregate Consideration. The representations andwarranties of Buyer set forth in Article IV of this Agreement shall survive for a period ofone year immediately following the First Closing Date.               (c) Indemnification as Exclusive Remedy. The indemnification provided in this ArticleIX, subject to the limitations set forth herein, shall be the exclusive post-Closing remedyavailable to any party in connection with any Losses arising out of or resulting from this
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Agreement and the transactions contemplated hereby. Each party hereto shall take all reasonablesteps to mitigate its Losses after becoming aware of any event which could reasonably be expectedto give rise to any Losses. None of the parties hereto shall be liable under any provision ofSection 9.1 of this Agreement for any consequential or punitive damages (other than consequentialor punitive damages payable to a third party).               (d) Indemnification Calculations. The amount of any Losses for which indemnificationis provided under this Article IX shall be computed net of any insurance proceeds received by theindemnified party in connection with such Losses. If an indemnified party receives insuranceproceeds in connection with Losses for which it has received indemnification hereunder, such partyshall refund to the indemnifying party the amount of such insurance proceeds when received, up tothe amount of indemnification received. Each indemnified party agrees to use all reasonable bestefforts to seek all available insurance reimbursements in connection with matters that are thesubject of indemnification hereunder. If the amount with respect to which any claim is made underthis Article IX or under Section 5.4 (an “Indemnity Claim”) gives rise to a currentlyrealizable Tax Benefit (as defined below) to the party making the claim, the indemnity paymentshall be reduced by the amount of such Tax Benefit available to the party making the claim. Forpurposes of this Section 9.1(d), a “Tax Benefit” to a party means an amount by which thetax liability of such party (or group of Affiliates including such party) is actually reduced as aresult of Losses incurred by the indemnified party for which the indemnification payment is beingmade. Where a party has other losses, deductions, credits or items available to it, the TaxBenefit from any Losses, deductions, credits or items relating to the Indemnity Claim shall bedeemed to be realized after any other losses, deductions, credits or items. For purposes of thisSection 9.1(d), a Tax Benefit is “currently realizable” to the extent that such Tax Benefit can berealized in the taxable period or year in which the indemnity payment is made or in any Tax Returnwith respect thereto (including through a carryback to a prior taxable period) or in any taxableperiod or year prior to the date of the Indemnity Claim. In the event that there should be adetermination disallowing the Tax Benefit, the indemnifying party shall be liable to refund to theindemnified party the amount of any related reduction previously allowed or payments previouslymade to the indemnifying party pursuant to this Section. The amount of the refunded reduction orpayment shall be deemed a payment under this Section and thus shall be paid subject to anyapplicable reductions under this Section. The parties agree that any indemnification payments madepursuant to this Agreement shall be treated for tax purposes as an adjustment to the PurchasePrice, unless otherwise required by applicable Law.               (e) Notice and Opportunity to Defend. If there occurs an event which a party assertsis an indemnifiable event pursuant to Section 9.1(a) or 9.1(b), the party or parties seekingindemnification shall notify the other party or parties obligated to provide indemnification (the“Indemnifying Party”) promptly. If such event involves any claim or the commencement ofany action or proceeding by a third person, the party seeking indemnification will give suchIndemnifying Party prompt written notice of such claim or the commencement of such action orproceeding; provided, however, that the failure to provide prompt notice asprovided herein will relieve the Indemnifying Party of its obligations hereunder only to the extentthat such failure prejudices the Indemnifying Party hereunder. In case any such action shall bebrought against any party seeking indemnification and it shall notify the Indemnifying Party of thecommencement thereof, the Indemnifying Party shall be entitled to assume the defense thereof, withcounsel selected by the Indemnifying Party and, after notice from the Indemnifying Party to suchparty or
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parties seeking indemnification of such election so to assume the defense thereof, theIndemnifying Party shall not be liable to the party or parties seeking indemnification hereunderfor any legal expenses of other counsel or any other expenses subsequently incurred by such partyor parties in connection with the defense thereof. The Indemnifying Party and the party seekingindemnification agree to cooperate fully with each other and their respective counsel in connectionwith the defense, negotiation or settlement of any such action or asserted liability. The party orparties seeking indemnification shall have the right to participate at their own expense in thedefense of such action or asserted liability. If the Indemnifying Party assumes the defense of anaction no settlement or compromise thereof may be effected (i) by the Indemnifying Party withoutthe written consent of the indemnified party (which consent shall not be unreasonably withheld ordelayed) unless all relief provided is paid or satisfied in full by the Indemnifying Party or (ii)by the indemnified party without the consent of the Indemnifying Party. In no event shall anIndemnifying Party be liable for any settlement effected without its written consent.          SECTION 9.2. Limitation on Indemnification. No claim may be asserted against either party for breach of any representation, warranty,covenant or agreement contained herein, unless written notice of such claim or action is receivedby such party describing in reasonable detail the facts and circumstances with respect to thesubject matter of such claim on or prior to the date on which the representation, warranty,covenant or agreement on which such claim is based ceases to survive as set forth in Section 9.1irrespective of whether the subject matter of such claim shall have occurred before or after suchdate.          SECTION 9.3. Contribution. Each of the Selling Shareholders (the “Contributing Shareholder”) acknowledges and agreesthat, to the extent any other Selling Shareholder pays any amount as an indemnity to the BuyerIndemnified Parties under this Article X in respect of which such Contributing Shareholder is alsoliable hereunder, such Contributing Shareholder shall, promptly upon demand, pay to such otherSelling Shareholder its pro rata portion (based on the aggregate portion of the Cash Considerationand Share Consideration received by such other Selling Shareholder) of such indemnity in cash.          SECTION 9.4. Payment in Kind. Any indemnity payable by such Selling Shareholder may, at such Selling Shareholder’s option,be paid with FM Ordinary Shares received by such Selling Shareholder pursuant to this Agreement.For the purposes of calculating the number of FM Ordinary Shares to be paid to satisfy any suchindemnity, the value of each FM Ordinary Share shall be an amount equal to one-tenth (asappropriately adjusted for any stock split, stock dividend, recapitalization orreorganization) of the closing price per ADS on the date one (1) Business Day prior to thepayment of any such indemnity.ARTICLE XMISCELLANEOUS          SECTION 10.1. Fees and Expenses. Except as otherwise provided in this Agreement, the Selling Shareholders and Buyer shallbear their own fees and expenses in connection with the preparation and negotiation of thisAgreement and the Ancillary Documents
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and the consummation of the transactions contemplated herebyand thereby, including without limitation, legal and other professional fees and expenses; *providedthat*: (i) all legal and other professional fees and expenses set forth inSchedule 10.1 hereto which were incurred by the Selling Shareholders relatingor leading to the consummation of the transactions contemplated in thisAgreement and the Ancillary Documents shall be borne by the Company and paid infull at the First Closing;  (ii) Any auditing or accounting fees and expenses incurred inconnection with the preparation by the auditors of a special acquisition reportshall be borne by the Company, *provided, however,*that in the event thisAgreement is terminated for any reason the Company and the Buyer shall sharesuch auditing or accounting fees and expenses equally.          SECTION 10.2. Governing Law. This Agreement shall be construed under and governed by the Laws of the State of New York.          SECTION 10.3. Materiality. As used in this Agreement, unless the context would require otherwise, the terms “material”and the concept of the “Material” nature of an effect upon the Group Companies or the Buyer shallbe measured relative to the entire business of the Group Companies, taken as a whole, and the Buyerand its subsidiaries and affiliated companies, taken as a whole. There have been, however,included in the Schedules and may be included elsewhere in this Agreement items which are not“Material” within the meaning of the immediately preceding sentence in order to avoid anymisunderstanding, and such inclusion shall not be deemed to be an agreement by the SellingShareholders or the Buyer, as applicable, that such items are “material” or to further define themeaning of such term for purposes of this Agreement.          SECTION 10.4. Amendment. This Agreement may not be amended, modified or supplemented except upon the execution anddelivery of a written agreement executed by the Buyer, the Company and the Required Majority of theSelling Shareholders and except for the joinder of any additional Selling Shareholders between thedate hereof and the First Closing Date (which additional Selling Shareholders shall be deemed tomake the representations and warranties set forth in Article III.A as of the date of theirjoinder).          SECTION 10.5. No Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall beassigned by any party hereto without the prior written consent of (i) the Buyer, in the case ofassignment by any of the Selling Shareholders, or (ii) the Sellers’ Representative, in the case ofany assignment by the Buyer; provided that the Buyer may assign its rights to acquire and hold theShares acquired hereunder but Buyer shall remain liable in all other respects for the performanceof the payment and other obligations hereunder.          SECTION 10.6. Waiver. Any of the terms or conditions of this Agreement which may be lawfully waived may be waivedin writing at any time by the Buyer or the Required Majority of the Selling Shareholders each partywhich is entitled to the benefits thereof. Any waiver of any of the provisions of this Agreementby any party hereto shall be binding only if set forth in an instrument in writing signed on behalfof such party. No failure to enforce any
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provision of this Agreement shall be deemed to or shallconstitute a waiver of such provision and no waiver of any of the provisions of this Agreementshall be deemed to or shall constitute a waiver of any other provision hereof (whether or notsimilar) nor shall such waiver constitute a continuing waiver.          SECTION 10.7. Notices.               (a) Any notice, demand, or communication required or permitted to be given by any provision ofthis Agreement shall be deemed to have been sufficiently given or served for all purposes if (i)personally delivered, (ii) sent by a nationally recognized overnight courier service to therecipient at the address below indicated or (iii) delivered by facsimile which is confirmed inwriting by sending a copy of such facsimile to the recipient thereof pursuant to clause (i) or (ii)above:          If to the Buyer:Focus Media Holding Limited