exv4w26





Exhibit 4.26




CERTAIN INFORMATION (INDICATED BY ASTERISKS) IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN

REQUESTED WITH RESPECT TO THE OMITTED PORTION.







 





SECURITIES PURCHASE AGREEMENT



dated as of December 30, 2010



by and among



VisionChina Media Inc.



Focus Media Holding Limited



and



The Other Investors Named Herein



 
















 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I
	 	 	 	 
	 
	 	 	 	 
	Purchase; Purchase price; and Closings
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.1. Purchase
	 	 	1	 
	SECTION 1.2. Purchase Price
	 	 	1	 
	SECTION 1.3. Closing
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	Representations and Warranties
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.1. Representations and Warranties of the Company
	 	 	4	 
	SECTION 2.2. Representations and Warranties of the Focus Investor
	 	 	13	 
	SECTION 2.3. Representations and Warranties of the Other Investors
	 	 	15	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	Covenants
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.1. Filings; Other Actions
	 	 	16	 
	SECTION 3.2. Expenses
	 	 	17	 
	SECTION 3.3. Confidentiality
	 	 	17	 
	SECTION 3.4. Conduct of the Business
	 	 	17	 
	SECTION 3.5. Reasonable Efforts
	 	 	18	 
	SECTION 3.6. Shareholder Litigation
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	Additional Agreements
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.1. Lock-Up
	 	 	18	 
	SECTION 4.2. Standstill
	 	 	19	 
	SECTION 4.3. Legend
	 	 	20	 
	SECTION 4.4. Indemnity
	 	 	20	 
	SECTION 4.5. Registration Rights
	 	 	23	 
	SECTION 4.6. Gross-Up Rights
	 	 	23	 
	SECTION 4.7. Anti-Takeover Matters; Takeover Laws; No Rights Triggered
	 	 	25	 
	SECTION 4.8. Continued Listing Authorization
	 	 	25	 
	SECTION 4.9. Corporate Opportunities
	 	 	26	 
	SECTION 4.10. Regulatory Matters
	 	 	27	 






i









 






	 	 	 	 	 
	 	 	Page	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	Termination
	 	 	 	 
	 
	 	 	 	 
	SECTION 5.1. Termination
	 	 	28	 
	SECTION 5.2. Effects of Termination
	 	 	28	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.1. Survival
	 	 	28	 
	SECTION 6.2. Amendment
	 	 	29	 
	SECTION 6.3. Waivers
	 	 	29	 
	SECTION 6.4. Counterparts and Facsimile
	 	 	29	 
	SECTION 6.5. Governing Law
	 	 	29	 
	SECTION 6.6. Waiver of Jury Trial
	 	 	29	 
	SECTION 6.7. Notices
	 	 	29	 
	SECTION 6.8. Entire Agreement, Etc
	 	 	31	 
	SECTION 6.9. Definitions
	 	 	31	 
	SECTION 6.10. Captions
	 	 	33	 
	SECTION 6.11. Severability
	 	 	33	 
	SECTION 6.12. No Third-Party Beneficiaries
	 	 	33	 
	SECTION 6.13. Public Announcements
	 	 	33	 
	SECTION 6.14. Specific Performance
	 	 	33	 






ii









 






LIST OF SCHEDULES AND EXHIBITS




	 	 	 

	SCHEDULE I:

	 	Investors
	SCHEDULE II:

	 	Disclosure Schedule
	Exhibit A:

	 	Form of Opinion of Counsel
	Exhibit B:

	 	Form of Officer’s Certificate from the Company
	Exhibit C:

	 	Form of Registration Rights Agreement
	Exhibit D:

	 	Form of Shareholders’ Agreement
	Exhibit E

	 	Form of Promissory Note






iii









 






INDEX OF DEFINED TERMS




	 	 	 
	 	 	Location of
	Term	 	Definition
	Affiliate

	 	SECTION 6.9(2)
	Agreement

	 	Preamble
	Articles of Association

	 	SECTION 2.1(a)
	Beneficially Own/Beneficial Owner/Beneficial Ownership

	 	SECTION 6.9(9)
	Board of Directors

	 	SECTION 2.1(c)(1)
	Burdensome Condition

	 	SECTION 4.10
	Business day

	 	SECTION 6.9(7)
	Closing

	 	SECTION 1.3(a)
	Closing Date

	 	SECTION 1.3(a)
	Common Shares

	 	Recitals
	Company

	 	Preamble
	Company 20-F

	 	SECTION 2.1(c)(1)
	Company Reports

	 	SECTION 2.1(f)(1)
	Company Restricted Shares

	 	SECTION 2.1(c)(1)
	Company Share Option

	 	SECTION 2.1(c)(1)
	Company Share Option Plans

	 	SECTION 2.1(c)(1)
	control/controlled by/under common control with

	 	SECTION 6.9(2)
	Disclosure Schedule

	 	SECTION 2.1(j)
	Disposition

	 	SECTION 4.1
	Exchange Act

	 	SECTION 2.1(f)(1)
	GAAP

	 	SECTION 2.1(e)
	Governmental Entity

	 	SECTION 1.3(b)(1)(i)
	Group Company /Group Companies

	 	SECTION 1.3(b)(1)(iv)
	herein/hereof/hereunder

	 	SECTION 6.9(5)
	including/includes/included/include

	 	SECTION 6.9(4)
	Information

	 	SECTION 3.3(a)
	Investment Amount

	 	SECTION 1.3(a)
	Investor

	 	Preamble
	Liens

	 	SECTION 1.3(a)
	Material Adverse Effect

	 	SECTION 1.3(b)(1)(iv)
	Material Contract

	 	SECTION 2.1(j)
	Merger Agreement

	 	SECTION 4.4(a)
	New Security

	 	SECTION 4.6(a)
	Other Private Placements

	 	Recitals
	Other Securities Purchase Agreements

	 	Recitals
	Per Share Purchase Price

	 	SECTION 1.3(a)
	person

	 	SECTION 6.9(8)
	PRC

	 	SECTION 1.3(a)
	Pre-Closing Period

	 	SECTION 3.4






iv









 






	 	 	 
	 	 	Location of
	Term	 	Definition
	Purchased Shares

	 	SECTION 1.3(a)
	Purchase Price

	 	SECTION 1.3(a)
	Registration Rights Agreement

	 	Recitals
	SEC

	 	SECTION 2.1
	SEC Comments

	 	SECTION 2.1
	SEC Documents

	 	SECTION 2.1
	Securities Act

	 	SECTION 2.1(f)(1)
	Shareholder Litigation

	 	SECTION 3.6
	Shareholders’ Agreement

	 	Recitals
	Standstill Period

	 	SECTION 4.2(a)
	subsidiary

	 	SECTION 6.9(1)
	Transaction Documents

	 	Recitals
	Unaudited Interim Report

	 	SECTION 2.1(f)(1)
	Voting Debt

	 	SECTION 2.1(c)(1)
	Voting Securities

	 	SECTION 4.2(a)






v









 





          THIS SECURITIES PURCHASE AGREEMENT, dated as of December 30, 2010 (this “Agreement”), is made
by and among VisionChina Media Inc., a Cayman Islands company, (the “Company”), Focus Media Holding
Limited, a Cayman Islands company (the “Focus Investor”), and the Persons other than the Focus
Investor whose names are listed in first column from the left of Schedule I hereto (the
“Other Investors”, and each an “Other Investor”). The Focus Investor and the Other Investors are
collectively referred to herein as the “Investors”, and each an “Investor”.




RECITALS:




          A. The Investment. The Investors intend to subscribe for and purchase from the
Company, and the Company intends to issue and sell to the Investors, as an investment in the
Company, the securities as described herein. The securities to be purchased at the closing are
common shares, par value $0.0001, of the Company (“Common Shares”).




          B. Registration Rights. At the Closing, the Company will enter into a Registration
Rights Agreement, substantially in the form attached as Exhibit C hereto (the “Registration
Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights
with respect to the Purchased Shares issued and sold to the Investors, under the Securities Act and
applicable state securities laws.




          C. Shareholders’ Agreement. At the Closing, the Company and the Focus Investor, among
others will enter into a Shareholders’ Agreement, substantially in the form attached as Exhibit
D hereto (the “Shareholders’ Agreement”).




          D. Transaction Documents. The term “Transaction Documents” refers to this Agreement,
the Registration Rights Agreement and the Shareholders’ Agreement.




          NOW, THEREFORE, in consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:




ARTICLE I




PURCHASE; PURCHASE PRICE; AND CLOSINGS



          SECTION 1.1. Purchase. On the terms and subject to the conditions set forth herein, each
Investor will severally and not jointly purchase from the Company, and the Company will issue and
sell to each Investor, the number of Common Shares set forth in the second column from the left of
Schedule I hereto opposite the name of such Investor (such Common Shares collectively, the
“Purchased Shares”).




          SECTION 1.2. Purchase Price. The purchase price per Purchased Share shall be US$3.979.






 









 










          SECTION 1.3. Closing.




          (a) Subject to the satisfaction (or, where permissible, waiver) of the conditions to the
closing set forth in SECTION 1.3(b), the closing shall take place at the Beijing offices of
Skadden, Arps, Slate, Meagher & Flom LLP, the People’s Republic of China (the “PRC”), or such other
location as agreed by the parties in writing (the “Closing”), on the seventh business day from the
date of this Agreement or such other date as agreed by the parties in writing (the date on which
the Closing actually occurs, the “Closing Date”). At the Closing, (i) the Company will (A) make
entries in its register of members in order to record and give effect to the issue to each Investor
of the number of Purchased Shares purchased by such Investor, and (B) deliver to each Investor one
or more certificates bearing the appropriate legends herein provided for and free and clear of all
liens, adverse rights or claims, charges, options, pledges, covenants, title defects, security
interests or other encumbrances of any kind (“Liens”) representing the number of the Purchased
Shares purchased by such Investor, (ii) each Investor shall (i) pay to the Company the amount set
forth in the third column from the left of Schedule I hereto opposite the name of such
Investor by wire transfer of immediately available funds in United States dollars to a bank account
designated by the Company and (ii) deliver to the Company a promissory note in favor of the Company
in an amount that equals to the amount set forth in the fourth column from the left of Schedule
I hereto opposite the name of such Investor in the form set forth in Exhibit E hereto,
which promissory note shall be due and payable on March 31, 2011.


     (b) Closing Conditions.





     (1) The obligation of each Investor to consummate the Closing is subject to the
fulfillment prior to or contemporaneously with the Closing of each of the following
conditions:




     (i) no judgment, injunction, order or decree shall prohibit the Closing or
shall prohibit or restrict any Investor from owning, voting, converting or
exercising any securities of the Company in accordance with the terms thereof and no
lawsuit shall have been commenced by any court, administrative agency or commission
or other governmental authority or instrumentality, whether federal, state, local or
foreign, or any applicable industry self-regulatory organization (each, a
“Governmental Entity”) seeking to effect any of the foregoing;




     (ii) the representations and warranties of the Company set forth in SECTION 2.1
of this Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing Date (except (i) to the extent such representations and
warranties are made as of a specified date, in which case such representations and
warranties shall be true and correct in all material respects as of such date), and
(ii) any representations and warranties that have “material” or “Material Adverse
Effect” qualifications, in which case such representations and warranties shall be
true in all respects);




     (iii) the Company shall have performed in all material respects all obligations
required to be performed by it at or prior to or contemporaneously with the Closing
under this Agreement;



2









 






     (iv) since the date hereof, there shall not have occurred any circumstance,
event, change, development or effect that, individually or in the aggregate, (1) is
or would reasonably be expected to be material and adverse to the financial
position, results of operations, business, assets or liabilities, or management of
the Company and all of its subsidiaries, consolidated affiliated entities and their
subsidiaries as of the date of this Agreement (individually, a “Group Company” and,
collectively, the “Group Companies”) taken as a whole, or (2) would or would
reasonably be expected to materially impair the ability of the Company to perform
its obligations under this Agreement or the other Transaction Documents or otherwise
materially threaten or materially impede the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents (“Material Adverse
Effect”).




     (v) Maples and Calder, Cayman Islands counsel for the Company, shall have
delivered to the Focus Investor and JJ Media Investment Holding Limited (the “JJ
Media Investor”) their written opinion, dated the Closing Date, in the form set
forth in Exhibit A hereto;




     (vi) the Company shall have delivered to the Focus Investor and the JJ Media
Investor a duly executed Officer’s Certificate in the form set forth in Exhibit
B hereto;




     (vii) at Closing, the Registration Rights Agreement shall be executed by the
Company and Front Lead Investments Limited; and




     (viii) at Closing, the Shareholders’ Agreement shall be executed by the
Company, Front Lead Investments Limited, and Limin Li.




     (2) The obligation of the Company to consummate the Closing is subject to the
fulfillment prior to the Closing of each of the following conditions:




     (i) no judgment, injunction, order or decree shall prohibit the Closing or
shall prohibit or restrict any Investor from owning, voting, converting or
exercising any securities of the Company in accordance with the terms thereof and no
lawsuit shall have been commenced by any Governmental Entity seeking to effect any
of the foregoing;




     (ii) the representations and warranties of each Investor set forth in SECTION
2.2 and SECTION 2.3 of this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date (except to the extent such
representations and warranties are made as of a specified date, in which case such
representations and warranties shall be true and correct in all material respects as
of such date);




     (iii) Each Investor shall have performed in all material respects all
obligations required to be performed by it at or prior to or contemporaneously with
the Closing under this Agreement;



3









 






     (iv) at Closing, the Registration Rights Agreement shall be executed by the
Focus Investor and the JJ Media Investor; and




     (v) the Shareholders’ Agreement shall have been executed by the Focus Investor
and the JJ Media Investor.



ARTICLE II




REPRESENTATIONS AND WARRANTIES



          SECTION 2.1. Representations and Warranties of the Company. Except information
publicly disclosed by the Company in the Company Reports filed by it with or furnished to the U.S.
Securities and Exchange Commission (the “SEC”), including amendments thereto filed prior to the
date hereof and publicly available prior to the date hereof (the “SEC Documents”) or as disclosed
in Schedule II hereto or as set out in the SEC’s comments dated December 22, 2010 in connection
with the Company’s Form 20-F for the fiscal year ended December 31, 2009 (the “SEC Comments”),
which shall be deemed as general disclosure that qualifies any provision of this Agreement, the
Company represents and warrants as of the date of this Agreement and as of the Closing Date (except
to the extent made only as of a specified date, in which case as of such date) to each Investor on
a several but not a joint basis that:




          (a) Organization and Authority. The Company is an exempted company with limited
liability duly organized and validly existing under the laws of the Cayman Islands, is duly
qualified to do business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so qualified, and has
corporate power and authority to own its properties and assets and to carry on its business as it
is now being conducted. The Company has furnished or made available to the Investor, prior to the
date hereof, true, correct and complete copies of the Company’s Memorandum and Articles of
Association, as amended through the date of this Agreement (the “Articles of Association”).




          (b) Group Companies. The Company has disclosed in the SEC Documents a true, complete
and correct list of all of its Group Companies. Each Group Company is an entity duly organized,
validly existing, duly qualified to do business and in good standing under the laws of its
jurisdiction of organization, and has corporate or other appropriate organizational power and
authority to own or lease its properties and assets and to carry on its business as it is now being
conducted.




          (c) Capitalization.





     (1) The authorized share capital of the Company consists of 200,000,000 Common Shares.
As of the date hereof, there are 84,833,219 Common Shares outstanding. From the date hereof
through the Closing Date, except pursuant to the Transaction Documents and the transactions
contemplated hereby and thereby, the Company shall not have (i) issued, approved or agreed
the issuance of any Common Shares, or any securities convertible into or exchangeable or
exercisable for Common Shares (other than shares issued upon the exercise of share option(s)
issued pursuant to the Amended and Restated 2006 Share Incentive Plan as filed as exhibit
4.6 to the



4









 







Company’s Annual Report on Form 20-F for the year ended December 31, 2008 (the “Company
Share Option Plan”) outstanding on the date of this Agreement, (ii) reserved for issuance
any Common Shares or (iii) repurchased or redeemed, or approved or agreed the repurchase or
redemption of, any Common Shares or any securities convertible into or exchangeable or
exercisable for Common Shares. As of the date hereof, there are (i) outstanding share
options issued under the Company’s Share Option Plan to purchase an aggregate of 2,367,662
Common Shares (each, a “Company Share Option”) and (ii) 1,277,339 Common Shares reserved for
issuance under the Company Share Option Plan. Other than in respect of awards outstanding
under or pursuant to the Company Share Option Plan, no Common Shares are reserved for
issuance. All of the issued and outstanding shares of the Company have been duly authorized
and validly issued and are fully paid, in accordance with applicable law, nonassessable and
free of preemptive rights. Each Company Share Option (i) was granted in compliance with all
applicable laws and all of the terms and conditions of the Company Share Option Plan. No
bonds, debentures, notes or other indebtedness having the right to vote on any matters on
which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.
Except as set forth elsewhere in this SECTION 2.1(c), the Company does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, repurchase rights,
commitments, or agreements of any character calling for the purchase or issuance of, or
securities or rights convertible into or exchangeable or exercisable for, any Common Share
or any other equity securities of the Company or Voting Debt or any securities representing
the right to purchase or otherwise receive any shares of the Company (including any rights
plan or agreement). The Company has disclosed in the Company Reports all shares of the
Company that have been purchased, redeemed or otherwise acquired, directly or indirectly, by
the Company or any Group Company since December 31, 2009 and all dividends or other
distributions that have been declared, set aside, made or paid to the shareholders of the
Company since that date.




     (d) Authorization.




     (1) The Company has the corporate power and authority to enter into and deliver the
Transaction Documents and to carry out its obligations thereunder. The execution, delivery
and performance of the Transaction Documents by the Company and the consummation of the
transactions contemplated thereby, including the issuance of Common Shares in accordance
with the terms of this Agreement, have been duly authorized by all requisite actions on the
part of the Company. The Transaction Documents constitute the valid and legally binding
obligation of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganizations, fraudulent transfer or similar laws relating to or affecting
creditors generally or by general equitable principles (whether applied in equity or at
law). No approvals or authorizations by the Company shareholders are necessary for the
execution and delivery by the Company of the Transaction Documents, the performance by the
Company of its obligations thereunder or the consummation by the Company of the transactions
contemplated thereby.



5









 






     (2) Neither the execution, delivery and performance by the Company of any of the
Transaction Documents, nor the consummation of the transactions contemplated thereby will
(i) violate, conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or result in the loss of any benefit or
creation of any right on the part of any third party under, or accelerate the performance
required by, or result in a right of termination or acceleration of any material contract to
which the Company or any Group Company is a party, or result in the creation of, any
material Lien, upon any of the properties or assets of the Company or any Group Company (ii)
violate any ordinance, permit, concession, grant, franchise, law, statute, rule or
regulation or any judgment, ruling, order, writ, injunction or decree applicable to the
Company or any Group Company or any of their respective properties or assets.




     (3) No notice to, registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, or expiration or
termination of any statutory waiting period, is necessary for the execution and delivery of
the Transaction Documents or the consummation by the Company of the transactions
contemplated thereby.



          (e) Financial Statements. The annual consolidated financial statements of the Company
for the fiscal years ended on December 31, 2007, December 31, 2008, and December 31, 2009 filed
with the SEC on the Form 20-Fs filed on April 3, 2008, April 6, 2009, and June 23, 2010
respectively, and the unaudited consolidated balance sheet of the Company as of September 30, 2010
and related consolidated statement of operations for the three-month period then ended, filed as an
exhibit to Form 6-K for the period ended September 30, 2010 (the “Unaudited Interim Report”) (1)
have been prepared from, and are in accordance with, the books and records of the Group Companies,
(2) complied, as of each of their dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations of the SEC with
respect thereto, (3) have been prepared, in all material respects, in accordance with U.S.
generally accepted accounting principles (“GAAP”) applied on a consistent basis except as disclosed
in such financial statements or the notes thereto and (4) present fairly in all material respects
the consolidated financial position of the Company and the Group Companies at the dates set forth
therein and the consolidated results of operations and cash flows of the Company and the Group
Companies for the periods stated therein, subject to (1) the absence of notes and year-end audit
and closing adjustments, and (2) the omission of consolidated statements of cash flows and footnote
disclosures, each in the case of the Unaudited Interim Report.




          (f) Reports.





     (1) Since December 31, 2007, the Company has filed all reports, registrations,
documents, filings, statements and submissions together with any required amendments
thereto, that it was required to file with the SEC (the foregoing, collectively, the
“Company Reports”) and have paid all fees and assessments due and payable in connection
therewith. As of their respective filing dates, the Company Reports complied in all
material respects with all statutes and applicable rules and regulations of the applicable
Governmental Entities, as the case may be. As of the date of this Agreement,



6









 







except for the SEC Comments, there are no outstanding comments from the SEC or any
other Governmental Entity with respect to any Company Report. Each Company Report, including
the documents incorporated therein by reference, when it was filed with or furnished to the
SEC, did not, as of its date or if amended prior to the date of this Agreement, as of the
date of such amendment, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made in it, in the light of the
circumstances under which they were made, not misleading and complied as to form in all
material respects with the applicable requirements of the Securities Act of 1933, as amended
(the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The Company’s financial condition is, in all material respects, as described in the
Company Reports, except for changes in the ordinary course of business. No executive
officer of the Company has failed in any respect to make the certifications required of him
or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002. As of the date hereof,
the Company is not aware of any facts or circumstances that would prevent its chief
executive officer and chief financial officer or persons performing similar functions from
giving the certifications and attestations required pursuant to Rules 13a-14 and 15d-14
under the Exchange Act, without qualification, when next due.




     (2) The records, systems, controls, data and information of the Company and the Group
Companies are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under
the exclusive ownership and direct control of the Company or the Group Companies or
accountants (including all means of access thereto and therefrom). The Company (A) has
implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e)
of the Exchange Act) to ensure that material information relating to the Company, including
its consolidated subsidiaries, is made known to the chief executive officer and the chief
financial officer of the Company or other persons performing similar functions by others
within those entities, and (B) has disclosed, based on its most recent evaluation prior to
the date of this Agreement, to the Company’s outside auditors and the audit committee of the
Board of Directors of the Company (the “Board of Directors”) (x) any significant
deficiencies and material weaknesses in the design or operation of internal control over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably
likely to adversely affect the Company’s ability to record, process, summarize, and report
financial information, and (y) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal controls over
financial reporting. The Company has no knowledge of any reason that its chief executive
officer and chief financial officer or persons performing similar functions will not be able
to give the certifications and attestations required pursuant to the rules and regulations
adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification,
when next due. Since December 31, 2007, (i) neither the Company nor, to the knowledge of
the Company, any director, officer, employee, or accountant of the Company has received any
material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting practices, procedures, methodologies or methods of the Company or any Group
Company or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any



7









 







Group Company has engaged in questionable accounting practices, and (ii) no attorney
representing the Company, whether or not employed by the Company, has reported evidence of a
violation of securities laws, breach of fiduciary duty or similar violation by the Company
or any of the Group Companies or any of their respective officers, directors, employees or
agents to the Board of Directors or any committee thereof or to any director or officer of
the Company or any of the Group Companies.



          (g) Properties and Leases. Except for any Permitted Liens, the Company and each Group
Company have good title free and clear of any Liens to all the real and personal property that are
material to their respective businesses, which are reflected in the Company’s consolidated balance
sheet as of December 31, 2009 included in the Company 20-F for the period then ended, and all real
and personal property that are material to their respective businesses acquired since such date,
except such real and personal property as has been disposed of in the ordinary course of business.
For purposes of this Agreement, “Permitted Liens” means (i) Liens for taxes and other governmental
charges and assessments arising in the ordinary course which are not yet due and payable, (ii)
Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen and other like
Liens arising in the ordinary course of business for sums not yet due and payable, (iii) any Lien
that may arise by operation of law, and (iv) other Liens or imperfections on property which are not
material in amount or do not materially detract from the value of or materially impair the existing
use of the property affected by such Lien or imperfection. All leases of real property and all
other leases pursuant to which the Company or such Group Company, as lessee, leases real or
personal property, which are material to their respective businesses, are valid and effective in
all material respects in accordance with their respective terms and there is not, under any such
lease, any existing material default by the Company or such Group Company.




          (h) Tax. The Company and each Group Company have timely prepared and filed all tax
returns required to have been filed by the Company with the appropriate Government Entities and
timely paid all taxes shown thereon or otherwise owed by it, except as would not have a Material
Adverse Effect. The charges, accruals and reserves on the books of the Company and each Group
Company in respect of taxes for all fiscal period are adequate in all material respects, and there
are no material unpaid assessments against the Company or any Group Company. All taxes and other
assessments and levies that the Company or any Group Company is required to withhold or to collect
for payment have been duly withheld and collected and paid to the proper Governmental Entity or
third party when due. There are no tax Liens or claims pending against the Company, any Group
Company or any of their assets or property, other than Permitted Liens. There are no tax audits or
investigations pending, which if adversely determined would result in a Material Adverse Effect.




          (i) Absence of Certain Changes. Since December 31, 2009, the business and operations
of the Company and the Group Companies have been conducted in the ordinary course of business
consistent with past practice, and there has not been any Material Adverse Effect or any change in
any method of accounting or accounting policies by the Company or any of the Group Companies.




          (j) Material Contracts. The contracts (“Material Contract”) set forth in Part 1 of
the disclosure schedule set forth in Schedule II attached hereto (the “Disclosure Schedule”)






8









 







include all of the material contracts relating to the subway and public bus LCD display
advertising business engaged in by the Company and the Group Companies. Each Material Contract is
valid and binding on the Company and the Group Companies, as applicable, and in full force and
effect. The Company and each of the Group Companies, as applicable, are in compliance in all
material respects with and have performed in all material respects all obligations required to be
performed by them to date under each Material Contract. As of the date hereof, neither the Company
nor any of the Group Companies knows of, or has received notice of, any material violation or
default (or any condition which with the passage of time or the giving of notice would cause such a
violation of or a default) by any party under any Material Contract. Each of the Company and the
Group Companies has not received any written notice from any party under any Material Contract that
it intends to stop performing such Material Contract or materially and adversely change any of the
material terms (whether related to payment, price or otherwise) with respect to such Material
Contracts (whether as a result of the transactions contemplated by this Agreement or otherwise).
Consummation of the transactions contemplated by this Agreement will not place the Company or any
of the Group Companies in breach or default of any Material Contract, or trigger any modification,
termination or acceleration thereunder.




          (k) Related Party Transaction. Other than disclosed in the SEC Documents, there are
no material transactions or series of related transactions, agreements, arrangements or
understandings, nor are there any currently proposed material transactions, or series of related
transactions between the Company or any Group Companies, on the one hand, and the Company, any
current or former director or executive officer of the Company or any Group Companies or any person
who Beneficially Owns 5% or more of the Common Shares (or any of such person’s immediate family
members or Affiliates) (other than Group Companies), on the other hand.




          (l) Offering of Securities. Neither the Company nor any person acting on its behalf
has taken any action (including, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of any of the Common Shares
to be issued pursuant to this Agreement or any other Transaction Document under the Securities Act
and the rules and regulations of the SEC promulgated thereunder) which would subject the offering,
issuance, or sale of any of such Common Shares to be issued to the registration requirements of the
Securities Act.




          (m) Litigation and Other Proceedings.





     (1) Except as disclosed in Part 2 of the Disclosure Schedule, there is no pending or,
to the knowledge of the Company, threatened, claim, action, suit, arbitration, mediation,
demand, hearing, investigation or proceeding against the Company or any Group Company that
involves a claim that is or that, if adversely determined, would result in a Material
Adverse Effect. Neither the Company nor any Group Company is subject to any injunction,
order, judgment or decree, nor are there any proceedings with respect to the foregoing
pending, or to the knowledge of the Company, threatened.




     (2) Neither the Company nor any of the Group Companies has any material liabilities or
obligations (absolute, accrued, or otherwise) arising from any legal, governmental or
administrative proceedings, claims or penalty, which are not



9









 







appropriately reflected or reserved against in the financial statements described in
SECTION 2.1(e) to the extent required to be so reflected or reserved against in accordance
with GAAP.



          (n) Compliance with Laws and Other Matters; Insurance. The Company and each Group
Company:





     (1) in the conduct of its business is in compliance in all material respects with all,
and the condition and use of its properties does not violate or infringe in any material
respect any, applicable laws, statutes, ordinances, licenses, rules, regulations, judgments,
demands, writs, injunctions, orders, decrees, rules, circulars or notices applicable thereto
or to employees conducting its business, including the Sarbanes-Oxley Act of 2002;




     (2) except as disclosed in the SEC Documents, has all material permits, licenses,
franchises, authorizations, orders, and approvals of, and has made all filings,
applications, and registrations with, Governmental Entities that are required in order to
permit it to own or lease its properties and assets and to carry on its business as
presently conducted and that are material to the business of the Company or such Group
Company; all such permits, licenses, certificates of authority, orders and approvals are in
full force and effect, and all such filings, applications and registrations are current,
and, to the knowledge of the Company, no suspension or cancellation of any of them is
threatened;




     (3) currently is complying in all material respects with and, to the knowledge of the
Company, is not under investigation with respect to, nor has been given notice of any
material violation of, all applicable laws, regulations, rules, judgments, injunctions,
decrees rules, circulars or notices; and




     (4) is presently insured, and during each of the past two calendar years (or during
such lesser period of time as the Company has owned such Group Company) has been insured,
for reasonable amounts with, to the knowledge of the Company, financially sound and
reputable insurance companies against such risks as companies engaged in a similar business
would, in accordance with industry practice, customarily be insured.



          (o) Labor. There is no strike or material labor dispute pending between the Company
or any of the Group Companies and its employees. Each of the Company and the Group Companies are
in compliance in all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment, and wages and hours.




          (p) Status of Securities. The Common Shares to be issued pursuant to this Agreement
have been duly authorized by all necessary corporate action of the Company. When issued and sold
against receipt of the consideration therefor as provided in this Agreement, such Common Shares
will be validly issued, fully paid and nonassessable, and will not subject the holders thereof to
personal liability and will not be subject to preemptive rights of any other shareholder of the
Company, nor will such issuance result in the violation or triggering of any price-based
antidilution adjustments under any agreement to which the Company or any Group Company is a party.







10









 








          (q) Investment Company. Neither the Company nor any of the Group Companies is an
“investment company” as defined under the Investment Company Act of 1940, as amended, and neither
the Company nor any of the Group Companies sponsors any person that is such an investment company.




          (r) Foreign Corrupt Practices and International Trade Sanctions. Neither the Company
nor any Group Company, nor any of their respective directors, officers, agents, employees or any
other persons acting on their behalf (i) has violated the Foreign Corrupt Practices Act, 15 U.S.C.
§ 78dd-1 et seq., as amended, or any other similar applicable PRC, foreign, U.S. federal, or state
legal requirement, (ii) has, in violation of any applicable laws and regulations, made or provided,
or caused to be made or provided, directly or indirectly, any payment or thing of value to a
foreign official, foreign political party, candidate for office or any other person knowing that
the person will pay or offer to pay the foreign official, party or candidate, for the purpose of
influencing a decision, inducing an official to violate their lawful duty, securing any improper
advantage, or inducing a foreign official to use their influence to affect a governmental decision,
(iii) has paid, accepted or received any unlawful contributions, payments, expenditures or gifts,
(iv) has violated or operated in noncompliance with any export restrictions, money laundering law,
anti-terrorism law or regulation, anti-boycott regulations or embargo regulations, or (v) is
currently subject to any United States sanctions administered by the Office of Foreign Assets
Control of the United States Treasury Department.




          (s) Environmental Liability. Except as has not had and would not have a Material
Adverse Effect, the Company and each Group Company are in compliance with all applicable
Environmental Laws. For purposes of this Agreement, “Environmental Law” means any law, regulation,
order, decree, common law or agency requirement relating to the protection of the environment or
human health and safety.




          (t) Anti-Takeover Provisions. The Company and the Board of Directors has taken all
actions necessary, if any, to ensure that the transactions contemplated by the Transaction
Documents, individually or taken as a whole (including the investment hereunder), are not subject
to the provisions of any U.S. or foreign, federal or state “anti-takeover,” “fair price,”
“moratorium,” “control share,” “supermajority,” “affiliate transaction,” or “business combination”
law (each, a “Takeover Law”) and any other similar provisions of an anti-takeover nature contained
in its organizational documents. In the case that any such transactions are subject to such
provisions or laws, the Board of Directors has taken and shall take all necessary action to ensure
that such transactions shall be deemed to be exceptions to such provisions or laws.




          (u) Intellectual Property.





     (1) (i) The Company and the Group Companies own (free and clear of any claims, liens or
encumbrances (including any exclusive licenses or non-exclusive licenses not granted in the
ordinary course of business)) or have a valid license to use all material Intellectual
Property used in or necessary to carry on their business as currently conducted, and (ii)
such Intellectual Property referenced in clause (i) above is valid, subsisting and
enforceable in all material respects, and is not subject to any outstanding order, judgment,
decree or agreement adversely affecting the Company’s or the Group



11









 







Companies’ use of, or rights to, such Intellectual Property in any material respect.
The Company and the Group Companies have sufficient rights to use all material Intellectual
Property used in their business as presently conducted, all of which rights shall survive
unchanged following the consummation of the transactions contemplated by this Agreement.




     (2) There have been no claims made asserting the invalidity, misuse or unenforceability
of any material Intellectual Property owned or used by the Company or any Group Company.
Neither the Company nor any Group Company has received any notice of infringement or
misappropriation of, or any conflict with, the rights of others with respect to any material
Intellectual Property (including without limitation any demand or request that the Company
or any Group Company licenses any rights to any Intellectual Property from a third party).
To the Company’s knowledge, the conduct of the business of the Company and any Group Company
has not infringed, misappropriated or conflict with any Intellectual Property Rights of any
third party. To the Company’s knowledge, no third party has infringed, misappropriated or
otherwise violated the Intellectual Property rights of the Company or the Group Companies.
The Company and each of the Group Companies has taken reasonable measures to protect the
material Intellectual Property owned by or licensed to the Company or any of the Group
Companies.



          “Intellectual Property” shall mean all trademarks, service marks, brand names, trade names,
slogans, logos domain names, certification marks, trade dress and other indications of origin, the
goodwill associated with the foregoing and registrations in any jurisdiction of, and applications
in any jurisdiction to register, the foregoing, including any extension, modification or renewal of
any such registration or application; inventions, discoveries and ideas, whether patentable or not,
in any jurisdiction; patents, applications for patents (including divisions, continuations,
continuations in part and renewal applications), and any renewals, extensions or reissues thereof,
in any jurisdiction; nonpublic information, know-how, trade secrets and confidential information
and rights in any jurisdiction to limit the use or disclosure thereof by any person; writings and
other works, whether copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions thereof; and any
similar intellectual property or proprietary rights; and computer software (including without
limitation, source code, executable code, data, databases and documentation thereof).




          (v) Brokers and Finders. Neither the Company nor any Group Company nor any of their
respective officers, directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no
broker or finder has acted directly or indirectly for the Company or any Group Company in
connection with the Transaction Documents or the transactions contemplated hereby and thereby.




          (w) Structure Agreements.





     (1) Each Group Company that is a party to a Structure Agreement (a) has full power,
authority and legal right to enter into, execute, adopt, assume, issue, deliver and



12









 







perform its obligations under such Structure Agreement, and (b) has taken all necessary
corporate and other actions and fulfilled and done all conditions and things required under
applicable PRC laws (including the obtaining and possessing of all relevant approvals, if
necessary) for the entering into, execution, adoption, assumption, issue, delivery and
performance of its obligations under such Structure Agreement.




     (2) Each of the Structure Agreement is in proper legal form under PRC law for the
enforcement thereof against each of the parties thereto in the PRC without further action by
any of them, subject as to enforcement to bankruptcy, insolvency, reorganization and other
PRC laws of general applicability relating to or affecting creditors’ rights generally and
to general equity principles.




     (3) The execution, delivery and performance of each of the Structure Agreements by the
parties thereto, and the consummation of the transactions contemplated thereunder, will not
(i) result in any violation of or penalty of the existing business license, articles of
association, other constituent documents or approvals of any of the Group Companies; (ii)
result in any violation of or penalty under any currently applicable PRC law; or (iii)
conflict with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any other existing contract, license, indenture, mortgage, deed
of trust, loan agreement, note, lease or other agreement or instrument to which any of the
parties thereto is a party or by which any of the parties thereto or to which any of
property or assets of any of the parties thereto is subject, except for such violation,
breach or default under clauses (ii) and (iii) which would not, individually or in the
aggregate, have a Material Adverse Effect.



          SECTION 2.2. Representations and Warranties of the Focus Investor. The Focus Investor
hereby represents and warrants as of the date hereof and as of the Closing Date to the Company
that:




          (a) Organization and Authority. The Focus Investor is an exempted company with
limited liability duly organized and validly existing under the laws of the Cayman Islands, is duly
qualified to do business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so qualified, and has
corporate power and authority to own its properties and assets and to carry on its business as it
is now being conducted.




          (b) Authorization.





     (1) The Focus Investor has the corporate power and authority to enter into and deliver
each of the Transaction Documents and to carry out its obligations hereunder and thereunder.
The execution, delivery and performance of the Transaction Documents by the Focus Investor
and the consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Focus Investor. This Agreement
constitutes the valid and legally binding obligation of the Focus Investor, enforceable
against the Focus Investor in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, moratorium,




13











 






reorganizations, fraudulent transfer or similar laws relating to or affecting creditors
generally or by general equitable principles (whether applied in equity or at law).




     (2) Neither the execution, delivery and performance by the Focus Investor of any of the
Transaction Documents, nor the consummation of the transactions contemplated hereby and
thereby will (i) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or result in the loss of any
benefit or creation of any right on the part of any third party under any material contract
to which the Focus Investor is a party, or (ii) violate any ordinance, permit, concession,
grant, franchise, law, statute, rule or regulation or any judgment, ruling, order, writ,
injunction or decree applicable to the Focus Investor or any of its properties or assets.




     (3) No notice to, registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, or expiration or
termination of any statutory waiting period, is required on the part of the Focus Investor
for the execution and delivery of the Transaction Documents by the Focus Investor or the
consummation by the Focus Investor of the transactions contemplated thereby.



          (c) Purchase for Investment. The Focus Investor acknowledges that the Common Shares
have not been registered under the Securities Act or under any state securities laws. The Focus
Investor (1) is acquiring the Common Shares pursuant to an exemption from registration under the
Securities Act for its own account solely for investment with no present intention or plan to
distribute any of the Common Shares to any person nor with a view to or for sale in connection with
any distribution thereof, in each case in violation of the Securities Act, (2) will not sell or
otherwise dispose of any of the Common Shares, except in compliance with the registration
requirements or exemption provisions of the Securities Act and any other applicable securities
laws, (3) has such knowledge and experience in financial and business matters and in investments of
this type that the Focus Investor is capable of evaluating the merits and risks of the investment
in the Common Shares and of making an informed investment decision, and (4) is an “accredited
investor” (as that term is defined by Rule 501 of the Securities Act). Without limiting any of the
foregoing, neither the Focus Investor nor any of its Affiliates has taken, and the Focus Investor
will not, and will cause its Affiliates not to, take any action that would otherwise cause the
securities to be purchased hereunder to be subject to the registration requirements of the
Securities Act.




          (d) Financial Capability. The Focus Investor will have immediately available funds
necessary to consummate the Closing, as of the date of the Closing, on the terms and conditions
contemplated by this Agreement.




          (e) Existing Ownership. The Focus Investor does not legally or beneficially own or
control, directly or indirectly, any shares, convertible debt or any securities convertible into or
exercisable or exchangeable for, or any rights, warrants or options to acquire, any shares or
convertible debt in the Company, or have any agreement, understanding or arrangement to





14









 







acquire any of the foregoing, except with respect to such Purchased Shares as to be purchased
by the Focus Investor pursuant to the transactions contemplated herein.




          SECTION 2.3. Representations and Warranties of the Other Investors. Each Other
Investor hereby severally but not jointly represents and warrants as of the date hereof and as of
the Closing Date to the Company and to the Focus Investor on a several but not a joint basis that:




          (a) Organization and Authority. Such Other Investor is a company duly organized and
validly existing under the laws of the jurisdiction in which it is incorporated, is duly qualified
to do business and is in good standing in all jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified, and has corporate power and
authority to own its properties and assets and to carry on its business as it is now being
conducted.




          (b) Authorization.





     (1) Such Other Investor has the power and authority to enter into and deliver this
Agreement and the Shareholders’ Agreement and to carry out its obligations hereunder and
thereunder. This Agreement constitutes valid and legally binding obligations of such Other
Investor, enforceable against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, moratorium, reorganizations, fraudulent transfer
or similar laws relating to or affecting creditors generally or by general equitable
principles (whether applied in equity or at law).




     (2) Neither the execution, delivery and performance by such Other Investor of this
Agreement or the Shareholders’ Agreement, nor the consummation of the transactions
contemplated hereby and thereby will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of, or result in
the loss of any benefit or creation of any right on the part of any third party under any
material contract to which such Other Investor is a party, or (ii) violate any ordinance,
permit, concession, grant, franchise, law, statute, rule or regulation or any judgment,
ruling, order, writ, injunction or decree applicable to it or any of its properties or
assets.




     (3) No notice to, registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, or expiration or
termination of any statutory waiting period, is required on the part of such Other Investor
for the execution and delivery of this Agreement or the Shareholders’ Agreement, as
applicable, by it or the consummation by it of the transactions contemplated by this
Agreement or the Shareholders’ Agreement.



          (c) Financial Capability. Such Other Investor will have immediately available funds
necessary to consummate the Closing, as of the date of the Closing, on the terms and conditions
contemplated by this Agreement.




          (d) Sophisticated Investor. Such Other Investor is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to






15









 







investments in shares representing an investment decision like that involved in the purchase
of the Purchased Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant in making an
informed decision to evaluate the merits and risks of a purchase of the Purchased Shares, and can
bear the economic risk and complete loss of its investment in the Purchased Shares.




ARTICLE III




COVENANTS



          SECTION 3.1. Filings; Other Actions.




          (a) The Investors and the Company will cooperate and consult with each other and use
commercially reasonable efforts to prepare and file all necessary documentation, to effect all
necessary applications, notices, petitions, filings, and other documents, and to obtain all
necessary permits, consents, orders, approvals, and authorizations of, or any exemption by, all
third parties and Governmental Entities, and expiration or termination of any applicable waiting
periods, necessary or advisable to consummate the transactions contemplated by this Agreement and
to perform covenants contemplated by this Agreement. Each party shall execute and deliver both
before and after the Closing such further certificates, agreements, and other documents and take
such other actions as the other party may reasonably request to consummate or implement such
transactions or to evidence such events or matters. The Focus Investor and the Company will each
have the right to review in advance, and to the extent practicable, each will consult with the
other, in each case subject to applicable laws relating to the exchange of information and
confidential information related to the Company or to the Focus Investor, all the information
(other than personal or sensitive information) relating to such other party, and any of their
respective Affiliates, which appears in any filing made with, or written materials submitted to,
any third party or any Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably
and as promptly as practicable. Each party hereto agrees to keep the other party apprised of the
status of matters relating to completion of the transactions contemplated hereby. The Focus
Investor and the Company shall promptly furnish each other to the extent permitted by applicable
laws with copies of written communications received by them or their Affiliates from, or delivered
by any of the foregoing to, any Governmental Entity in respect of the transactions contemplated by
this Agreement or any other Transaction Document. Notwithstanding anything in this Agreement to
the contrary, Neither the Focus Investor nor the Company shall be required to provide any materials
to the other party that it deems private or confidential nor shall either be required to make any
commitments (other than the passivity commitments described above) to any Governmental Entity in
connection therewith or suffer any Burdensome Condition.




          (b) Each party agrees, upon request, to furnish the other party with all information
concerning itself, its subsidiaries, Affiliates, directors, officers, partners, and shareholders
and such other matters as may be reasonably necessary or advisable in connection with any
statement, filing, notice, or application made by or on behalf of such other party or any of its
subsidiaries to any Governmental Entity in connection with this Agreement. Notwithstanding
anything herein to the contrary, neither the Focus Investor nor the Company






16









 







shall be required to furnish the other party with any (1) sensitive personal biographical or
personal financial information of any of the directors, officers, employees, managers or partners
of the Investor or any of its Affiliates, (2) proprietary and non-public information related to the
organizational terms of, or investors in, the it or its Affiliates, or (3) any information that it
deems private or confidential.




          (c) From the time of this Agreement until the Closing, the Company shall not act, directly or
indirectly, to amend, modify, or waive, and the Board of Directors shall not recommend approval of
any proposal to the shareholders having the effect of amending, modifying, or waiving any provision
in the Articles of Association of the Company in any manner adverse to the Investors.




          SECTION 3.2. Expenses. Each of the parties will bear and pay all costs and expenses
incurred by it or on its behalf in connection with this Agreement and the transactions contemplated
under this Agreement.




          SECTION 3.3. Confidentiality.




          (a) Each party to this Agreement will hold, and will cause its respective subsidiaries and
their directors, officers, employees, agents, consultants, and advisors to hold, in strict
confidence, unless disclosure to a Governmental Entity is necessary in connection with any
necessary regulatory approval or unless compelled to disclose by judicial or administrative process
or, in the written opinion of its counsel, by other requirement of law or the applicable
requirements of any Governmental Entity, all nonpublic records, books, contracts, instruments,
computer data and other data and information (collectively, “Information”) concerning the other
party hereto furnished to it by such other party or its representatives pursuant to this Agreement
(except to the extent that such information can be shown to have been (1) previously known by such
party on a nonconfidential basis, (2) in the public domain through no fault of such party, or (3)
later lawfully acquired from other sources by the party to which it was furnished), and neither
party hereto shall release or disclose such Information to any other person, except its auditors,
attorneys, financial advisors, other consultants, and advisors.




          (b) Prior to the Closing, the Company shall promptly provide the Focus Investor with written
notice of the occurrence of any circumstance, event, change, development or effect occurring after
the date hereof and relating to the Company or any Group Company of which the Company has knowledge
and which constitutes a Material Adverse Effect or, in the reasonable judgment of the Company, may
otherwise cause or render any of the representations and warranties of the Company set forth in
SECTION 2.1 of this Agreement to be inaccurate in any material respect.




          SECTION 3.4. Conduct of the Business. Prior to the earlier of the Closing Date and
the termination of this Agreement pursuant to SECTION 5.1 (the “Pre-Closing Period”), the Company
shall, and shall cause each Group Company to, (i) conduct its business in the ordinary course
consistent with past practice, (ii) use commercially reasonable efforts to preserve intact its
current business organizations and its rights and permits issued by Governmental Entities, keep
available the services of its current officers and key employees and preserve its relationships
with customers, suppliers, Governmental Entities and others having






17









 







business dealings with it to the end that its goodwill and ongoing businesses shall be
unimpaired, and (iii) not take any action that would reasonably be expected to materially adversely
affect or materially delay the consummation of the transactions contemplated by the Transaction
Documents.




          SECTION 3.5. Reasonable Efforts. Each of the Investors and the Company will use its
commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to
be done all things necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement, including using
commercially reasonable efforts to accomplish the following: (a) the taking of all reasonable acts
necessary to cause the conditions to Closing to be satisfied; (b) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of
all necessary registrations and filings and the taking of all reasonable steps necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by any Governmental Entity; (c) the
obtaining of all necessary consents, approvals or waivers from third parties; and (d) executing and
delivering any additional instruments necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, this Agreement.




          SECTION 3.6. Shareholder Litigation. The Company shall promptly inform the Focus
Investor of any claim, action, suit, arbitration, mediation, demand, hearing, investigation or
proceeding (“Shareholder Litigation”) against the Company or any of the past or present executive
officers or directors of the Company that is threatened or initiated by or on behalf of any
shareholder of the Company in connection with or relating to the transactions contemplated hereby.
The Company shall consult with the Focus Investor and keep the Focus Investor informed of all
material filings and developments relating to any such Shareholder Litigation.




ARTICLE IV




ADDITIONAL AGREEMENTS



          SECTION 4.1. Lock-Up. Each Investor agrees that it will not, without the prior
written consent of the Board of Directors, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, lend or otherwise dispose of or transfer any of its Purchased Shares or
(ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of any of its Purchased Shares
(each of the foregoing in (i) and (ii) a “Disposition”) prior to the date 365 days after the
Closing Date, provided, however, that nothing in this SECTION 4.1 shall apply to a Disposition by
such Investor in connection with a transaction in which (a) any person or group shall have acquired
or entered into a binding definitive agreement that has been approved by the Board of Directors (or
any duly constituted committee thereof composed entirely of independent directors ) to acquire (i)
more than 50% of the Voting Securities of the Company or (ii) assets of the Company and/or its
Group Companies representing more than 50% of the consolidated earnings power of the Company and
its Group Companies, taken as a whole; or (b) any person shall have commenced a tender or exchange
offer which, if consummated, would result in such person’s acquisition of beneficial ownership of
more than 50% of the Voting Securities of the Company, and in






18









 







connection therewith, the Company files with the SEC a Schedule 14D-9 with respect to such
offer that does not either (i) recommend that the Company’s shareholders reject such offer or (ii)
advise the Company’s shareholders that the Board of Directors is considering its response to the
offer or (c) such Investor transfers its Purchased Shares to an Affiliate of such Investor that
shall be bound by this Agreement as if such Affiliate were a party, provided that, prior to such
Affiliate ceasing to be an Affiliate of such Investor, such Affiliate shall transfer such Purchased
Shares back to such Investor or another Affiliate of such Investor in compliance with this SECTION
4.1.




          SECTION 4.2. Standstill.




          (a) Each of the Focus Investor and JJ Media Investor hereby agrees that, without the prior
written approval of the Board of Directors, it or its Affiliates will not, from the date of this
Agreement until the earlier of (i) the [***] of the Closing Date and (ii) the [***] of the Closing
Date if the volume-weighted average closing price of Common Shares for the twenty (20) consecutive
trading days immediately prior to the date that is the [***] of the Closing Date is less than [***]
per American Depositary Share subject to any equitable adjustment pursuant to any change to the
number of Common Shares or securities convertible or exchangeable into or exercisable for Common
Shares issued and outstanding prior to the [***] of the Closing Date as a result of a
reclassification, share split (including a reverse share split), share dividend or distribution,
recapitalization, merger, issuer tender or exchange offer, or other similar transaction (the
"Standstill Period”), acquire or offer to acquire any Voting Securities of the Company. “Voting
Securities” shall mean the Common Shares and any other securities entitled to vote generally for
the election of directors of the Company other than those acquired by each Investor on the Closing
Date.




          (b) Each of the Focus Investor and JJ Media Investor hereby agrees that, without the prior
written approval of the Board of Directors, it or its Affiliates will not, during the Standstill
Period, directly or indirectly, acting alone or with others, assist, support, encourage, finance,
participate with or advise any other Person’s or entity’s efforts to:





     (1) propose or make a merger, business combination, tender or exchange offer, share
exchange, recapitalization, consolidation or other similar transaction involving any of the
Company and the Group Companies;




     (2) propose or offer to purchase, lease or otherwise acquire all or a substantial
portion of the assets of any of the Company and the Group Companies;




     (3) form, join or in any way participate in a “group” (as defined in Section 13(d)(3)
of the Exchange Act), or act in concert with any person with respect to the securities of
any of the Group Companies in an attempt to circumvent the provisions of this Agreement;




     (4) solicit or participate in the solicitation of any proxies or consents with respect
to the voting securities of any of the Group Companies; or




     (5) enter into discussions or arrangements with any third party with respect to any of
the foregoing.



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          (c) The provisions in SECTION 4.2(a) and (b) above shall not apply to any acquisition by the
Focus Investor of the Voting Securities of the Company pursuant to its gross-up rights set forth in
SECTION 4.6 of this Agreement or pursuant to its right of first offer set forth in Section 3.3 and
Section 3.4 of the Shareholders’ Agreement. In addition, the provisions of SECTION 4.2(a) and (b)
above shall not apply to any transaction in which: (a) any person or group shall have acquired or
entered into a binding definitive agreement that has been approved by the Board of Directors (or
any duly constituted committee thereof composed entirely of independent directors ) to acquire (i)
more than 50% of the Voting Securities of the Company or (ii) assets of the Company and/or its
Group Companies representing more than 50% of the consolidated earnings power of the Company and
its Group Companies, taken as a whole; or (b) any person shall have commenced a tender or exchange
offer which, if consummated, would result in such person’s acquisition of beneficial ownership of
more than 50% of the Voting Securities of the Company, and in connection therewith, the Company
files with the SEC a Schedule 14D-9 with respect to such offer that does not either (i) recommend
that the Company’s shareholders reject such offer or (ii) advise the Company’s shareholders that
the Board of Directors is considering its response to the offer.




          SECTION 4.3. Legend.




          (a) Each Investor agrees that all certificates or other instruments representing the
securities subject to this Agreement will bear a legend substantially to the following effect:





“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT OR SUCH LAWS. ANY ATTEMPT TO TRANSFER, SELL, OFFER TO
SELL, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS INSTRUMENT IN VIOLATION OF
THESE RESTRICTIONS SHALL BE VOID.”



          (b) Upon request of the Investor, upon receipt by the Company of an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend is no longer required under
the Securities Act or applicable state laws, as the case may be, the Company shall promptly cause
the legend to be removed from any certificate for any securities. Each Investor acknowledges that
the Purchased Shares have not been registered under the Securities Act or under any state
securities laws and agrees that it will not sell or otherwise dispose of any of the Purchased
Shares except in compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws.




          SECTION 4.4. Indemnity.







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          (a) The Company agrees to indemnify and hold harmless each Investor and its Affiliates and
each of their respective officers, directors, partners, members, managers, employees and agents, to
the fullest extent lawful, from and against any and all actions, suits, claims, proceedings, costs,
losses, liabilities, damages, expenses (including attorneys’ fees and disbursements), amounts paid
in settlement and other costs incurred by such party (collectively, “Losses”) arising out of or
resulting from (1) any inaccuracy in or breach of the Company’s representations or warranties in
SECTION 2.1 of this Agreement, (2) the Company’s breach of agreements or covenants made by the
Company in this Agreement, and (3) any litigation in connection with the Company’s acquisition of
Digital Media Group Company Limited, a company organized under the laws of the British Virgin
Islands, pursuant to the Amended and Restated Agreement and Plan of Merger dated as of November 16,
2009 (the “Merger Agreement”) and its related documents, which results in a final and nonappealable
judgment against the Company to pay any amount in excess of the unpaid First Deferred Consideration
and Second Deferred Consideration, contemplated in section 1.8 of the Merger Agreement and the
unreleased Indemnity Escrow Fund, contemplated in section 1.9(c) of the Merger Agreement.




          (b) Each Investor agrees to, severally but not jointly, indemnify and hold harmless each of
the Company and its Affiliates and each of their respective officers, directors, partners, members,
managers, employees and agents, to the fullest extent lawful, from and against any and all Losses
arising out of or resulting from (1) any inaccuracy in or breach of such Investor’s representations
or warranties in this Agreement or (2) such Investor’s breach of agreements or covenants made by it
in this Agreement.




          (c) A party entitled to indemnification hereunder (an “Indemnified Party”) shall give written
notice to the party indemnifying it (the “Indemnifying Party”) of any claim with respect to which
it seeks indemnification promptly after the discovery by such Indemnified Party of any matters
giving rise to a claim for indemnification; provided that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its obligations under
this SECTION 4.4 unless and to the extent that the Indemnifying Party shall have been actually
prejudiced by the failure of such Indemnified Party to so notify such party. Such notice shall
describe in reasonable detail such claim. In case any such action, suit, claim or proceeding is
brought against an Indemnified Party, the Indemnified Party shall be entitled to hire, at the cost
and expense of the Indemnifying Party, counsel and conduct the defense thereof; provided, however,
that the Indemnifying Party shall only be liable for the legal fees and expenses of one law firm
for all Indemnified Parties, taken together with regard to any single action or group of related
actions, upon agreement by the Indemnified Parties and the Indemnifying Parties. If the
Indemnifying Party assumes the defense of any claim, all Indemnified Parties shall thereafter
deliver to the Indemnifying Party copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the claim, and any Indemnified Party shall cooperate
in the defense or prosecution of such claim. Such cooperation shall include the retention and
(upon the Indemnifying Party’s request) the provision to the Indemnifying Party of records and
information that are reasonably relevant to such claim, and making employees available on a
mutually convenient basis to provide additional information and explanation of any material
provided hereunder. The Indemnifying Party shall not be liable for any settlement of any action,
suit, claim or proceeding effected without its written consent; provided, however, that the
Indemnifying Party shall not unreasonably withhold, delay or condition its consent. The
Indemnifying Party further agrees that it will not, without the






21









 







Indemnified Party’s prior written consent (which shall not be unreasonably withheld or
delayed), settle or compromise any claim or consent to entry of any judgment in respect thereof in
any pending or threatened action, suit, claim or proceeding in respect of which indemnification has
been sought hereunder unless such settlement or compromise includes an unconditional release of
such Indemnified Party from all liability arising out of such action, suit, claim or proceeding.




          (d) For purposes of the indemnity contained in SECTION 4.4(a)(1) and SECTION 4.4(b)(1), all
qualifications and limitations set forth in the parties’ representations and warranties as to
“materiality,” “Material Adverse Effect” and words of similar import, shall be disregarded in
determining (i) whether there shall have been any inaccuracy in or breach of any representations
and warranties in this Agreement and (ii) the amount of Losses in respect of any breach of any
representation or warranty.




          (e) The Company shall not be required to indemnify the Indemnified Parties pursuant to SECTION
4.4(a)(1) (other than the Fundamental Representations), disregarding all qualifications or
limitations set forth in its representations and warranties as to “materiality,” “Material Adverse
Effect” and words of similar import, (1) with respect to any claim for indemnification if the
amount of Losses with respect to such claim are less than $100,000 (any claim involving Losses less
than such amount being referred to as a “De Minimis Claim”) and (2) unless and until the aggregate
amount of all Losses incurred with respect to all claims (other than De Minimis Claims) pursuant to
SECTION 4.4(a)(1) exceed $1,000,000 (the “Threshold Amount”), in which event the Company shall be
responsible for the entire amount of such Losses. Each Investor shall not be required to indemnify
the Indemnified Parties pursuant to SECTION 4.4(b)(1) (other than the Fundamental Representations),
disregarding all qualifications or limitations set forth in the representations and warranties as
to “materiality,” “Material Adverse Effect” and words of similar import, (1) with respect to any De
Minimis Claim and (2) unless and until the aggregate amount of all Losses incurred with respect to
all claims (other than De Minimis Claims) pursuant to SECTION 4.4(b)(1) exceed the Threshold
Amount, in which event such Investor shall be responsible for the entire amount of such Losses.
Notwithstanding anything in this SECTION 4.4 or in this Agreement provided otherwise, the aggregate
total liability of the Company in relation to each Investor under SECTION 4.4(a)(1) and SECTION
4.4(a)(2) shall not exceed ten percent (10%) of the amount set forth in the last column from the
left of Schedule I hereto opposite the name of such Investor, and the aggregate total
liability of the Company in relation to each Investor under SECTION 4.4(a) shall not exceed fifteen
percent (15%) of the amount set forth in the last column from the left of Schedule I hereto
opposite the name of such Investor. Notwithstanding anything in this SECTION 4.4 or in this
Agreement provided otherwise, the aggregate total liability of each Investor in relation to the
Company under this SECTION 4.4 shall not exceed ten percent (10%) of the amount set forth in the
last column from the left of Schedule I hereto opposite the name of such Investor. Absent
a showing of fraud by a party, and assuming the Closing has occurred, the indemnification
obligation of a party under this SECTION 4.4 shall be the sole remedy of any other party against
such party for monetary damages for breach of any representation or warranty or covenant contained
in this Agreement. Nothing herein shall limit a party’s right to seek injunctive or other
equitable relief in connection with the enforcement of this Agreement.




          (f) The obligations of the Indemnifying Party under this SECTION 4.4 shall survive the
transfer or redemption of the Common Shares issued pursuant to this Agreement, or






22









 







the Closing or termination of this Agreement; provided that in the event of any transfer of
the Common Shares to a third party that is not an Affiliate of the transferor, the Indemnifying
Party shall have no obligations under this SECTION 4.4 to such transferee. The indemnity provided
for in this SECTION 4.4 is in addition to, and not in derogation of, any statutory, equitable or
common law remedy that any party may have with respect to a breach of the provisions hereof, any
other agreement or contract or the transactions contemplated by this Agreement. The Company and
the Investors and their Affiliates have and retain all other rights and remedies existing in their
favor at law or equity, including without limitation, any actions for specific performance and/or
injunctive or other equitable relief (without posting a bond or other security) to enforce or
prevent any violations of any provisions of this Agreement. No party to this Agreement (or any of
its Affiliates) shall, in any event, be liable or otherwise responsible to any other party (or any
of its Affiliates) for any consequential or punitive damages of such other party (or any of its
Affiliates) arising out of or relating to this Agreement or the performance or breach hereof. The
indemnification rights contained in this SECTION 4.4 are not limited or deemed waived by any
investigation or knowledge by the Indemnified Party prior to or after the date hereof.




          (g) Any indemnification payments pursuant to this SECTION 4.4 shall be treated as an
adjustment to the Investment Amount for the Purchased Shares for U.S. federal income and applicable
state and local Tax purposes, unless a different treatment is required by applicable law.




          SECTION 4.5. Registration Rights.




          At the Closing, the Company will enter into the Registration Rights Agreement, substantially
in the form attached as Exhibit C hereto.




          SECTION 4.6. Gross-Up Rights.




          (a) Sale of New Securities. For so long as the Focus Investor, together with its
Affiliates, owns 10% or more of all of the outstanding Common Shares (counting for such purposes
all Common Shares into or for which the securities of the Company owned by the Investor and its
Affiliates are directly or indirectly convertible or exercisable) (before giving effect to any
issuances triggering provisions of this Section) if, at any time after the date hereof and on or
before the fifth anniversary of the date hereof, the Company makes any nonpublic offering or sale
of any equity security (including Common Shares, preferred shares or restricted shares), or any
securities, options or debt that is convertible or exchangeable into equity or that includes an
equity component (such as an “equity kicker”) (any such security, a “New Security”) (other than (i)
any Common Shares or other securities issuable upon the exercise or conversion of any securities of
the Company issued or agreed to be issued as of the date hereof; (ii) pursuant to the granting or
exercise of employee share options or other share incentives pursuant to the Company’s share
incentive plans approved by the Board of Directors or the issuance of shares pursuant to the
Company’s employee share purchase plan approved by the Board of Directors or similar plan where
shares are being issued or offered to a trust, other entity or otherwise, for the benefit of any
employees, officers or directors of the Company, in each case in the ordinary course of providing
incentive compensation; or (iii) issuances of shares or other securities as full or partial
consideration for a merger, acquisition, joint venture, strategic alliance, license






23









 







agreement or other similar nonfinancing transaction), then, to the extent not prohibited, not
restricted, and not requiring any shareholders’ approval by any applicable law or by obligations
pursuant to any listing agreement with any securities exchange or any securities exchange
regulation, the Focus Investor shall be afforded the opportunity to acquire from the Company for
the same price (net of any underwriting discounts or sales commissions) and on the same terms
(except that, to the extent permitted by law and the Articles of Association, the Investor may
elect to receive such securities in nonvoting form, convertible into voting securities in a widely
dispersed or public offering) as such securities are proposed to be offered to others, up to the
amount of New Securities in the aggregate required to enable it to maintain its interest in the
Purchased Shares proportionate to the total number of Common Shares of the Company either
outstanding or issued pursuant to currently exercisable rights of Common Share-equivalent interest
in the Company immediately prior to any such issuance of New Securities; provided, that, except in
the case of any transfer of Common Shares to an Affiliate of the Focus Investor, who will from that
date forward assume jointly with the Focus Investor all obligations under the Transaction
Documents, such right to acquire such securities is not transferable. The amount of New Securities
that the Focus Investor shall be entitled to purchase in the aggregate shall be determined by
multiplying (x) the total number or principal amount of such offered New Securities by (y) a
fraction, the numerator of which is the number of Purchased Shares held by the Focus Investor, and
the denominator of which is the number of Common Shares outstanding immediately prior to the
issuance of such New Securities.




          (b) Notice. In the event the Company proposes to make any nonpublic offering or sale
of New Securities, it shall give the Focus Investor written notice of its intention, describing the
price (or range of prices), anticipated amount of securities, timing, and other terms upon which
the Company proposes to offer the same, no later than two business days after the Company proposes
to pursue such offering or sale. The Focus Investor shall have 5 business days from the date of
receipt of such a notice to notify the Company in writing that it intends to exercise its rights
provided in this SECTION 4.6 and, as to the amount of New Securities the Focus Investor desires to
purchase, up to the maximum amount calculated pursuant to SECTION 4.6(a). Such notice shall
constitute an irrevocable offer and legally binding obligation of the Focus Investor to purchase
the amount of New Securities so specified at the price and other terms set forth in the Company’s
notice to it, subject only to (i) the completion of the issuance of such New Securities specified
in the Focus Investor’s notice, and (ii) the required regulatory or corporate approvals, if any.
The failure of the Focus Investor to respond within such 5 business day period shall be deemed to
be a waiver of the Focus Investor’s rights under this SECTION 4.6 only with respect to the offering
described in the applicable notice.




          (c) Purchase Mechanism. If the Focus Investor exercises its rights provided in this
Section 4.5, the closing of the purchase of the New Securities with respect to which such right has
been exercised shall take place within 30 calendar days after the giving of notice of such
exercise, which period of time shall be extended for a maximum of 180 days in order to comply with
applicable laws and regulations (including receipt of any applicable regulatory or corporate
approvals). The Company and the Focus Investor agree to use commercially reasonable efforts to
secure any regulatory or corporate approvals or other consents, and to comply with any law or
regulation necessary in connection with the offer, sale and purchase of, such New Securities.







24









 








          (d) Failure of Purchase. In the event that the Focus Investor fails to exercise its
rights provided in this SECTION 4.6 within said 5 business day period or, if so exercised, the
Focus Investor is unable to consummate such purchase within the time period specified in SECTION
4.6(c) because of the Focus Investor’s failure to obtain any required regulatory or corporate
consent or approval, the Company shall thereafter be entitled (during the period of 180 days
following the conclusion of the applicable period) to sell or enter into an agreement (pursuant to
which the sale of the New Securities covered thereby shall be consummated, if at all, within 30
days from the date of said agreement) to sell the New Securities not elected to be purchased
pursuant to this SECTION 4.6 by the Focus Investor or which the Focus Investor is unable to
purchase because of such failure to obtain any such consent or approval, at a price and upon terms
no more favorable in the aggregate to the purchasers of such securities than were specified in the
Company’s notice to the Focus Investor. Notwithstanding the foregoing, if such sale is subject to
the receipt of any regulatory or corporate approval or consent or the expiration of any waiting
period, the time period during which such sale may be consummated shall be extended until the
expiration of five business days after all such approvals or consents have been obtained or waiting
periods expired, unless such time period exceed 180 days from the date of the applicable agreement
with respect to such sale. In the event the Company has not sold the New Securities or entered
into an agreement to sell the New Securities within said 180-day period (or sold and issued New
Securities in accordance with the foregoing within 30 days from the date of said agreement (as such
period may be extended in the manner described above for a period not to exceed 180 days from the
date of said agreement)), the Company shall not thereafter offer, issue or sell such New Securities
without first offering such securities to the Focus Investor in the manner provided above.




          (e) Non-Cash Consideration. In the case of the offering of securities for a
consideration in whole or in part other than cash, including securities acquired in exchange
therefor (other than securities by their terms so exchangeable), the consideration other than cash
shall be deemed to be the fair value thereof as determined by the Board of Directors; provided,
however, that such fair value as determined by the Board of Directors shall not exceed the
aggregate market price of the securities being offered as of the date the Board of Directors
authorizes the offering of such securities.




          (f) Cooperation. The Company and the Investor shall cooperate in good faith to
facilitate the exercise of the Investor’s rights under this SECTION 4.6, including to secure any
required approvals or consents.




          SECTION 4.7. Anti-Takeover Matters; Takeover Laws; No Rights Triggered. If any
Takeover Law may become, or may purport to be, applicable to the transactions contemplated or
permitted by this Agreement, the Company and the members of the Board of Directors shall grant such
approvals and take such actions as are necessary so that the transactions contemplated or permitted
by this Agreement may be consummated, as promptly as practicable, on the terms contemplated by this
Agreement and the other respective Transaction Documents, as the case may be, and otherwise act to
eliminate or minimize the effects of any Takeover Law on any of the transactions contemplated or
permitted by this Agreements.




          SECTION 4.8. Continued Listing Authorization. For so long as the Focus Shareholder,
together with its Affiliates, owns not less than five percent (5%) of all of the






25









 







outstanding Common Shares (counting for such purposes all Common Shares into or for which the
securities of the Company owned by the Focus Shareholder and its Affiliates are directly or
indirectly convertible or exercisable), the Company shall use its commercially reasonable efforts
to prevent the Common Shares from being delisted from the NASDAQ.




          SECTION 4.9. Corporate Opportunities.




          (a) For so long as the Focus Investor, together with its Affiliates, owns five percent (5%) or
more of all of the outstanding Common Shares (counting for such purposes all Common Shares into or
for which the securities of the Company owned by the Focus Shareholder and its Affiliates are
directly or indirectly convertible or exercisable), neither the Focus Investor, nor its Affiliates,
nor the Focus Nominee (as defined in the Shareholders’ Agreement) shall, directly or indirectly,
engage in, invest in, participate in, control, operate, manage or otherwise compete with the
Company in the Company Business without the prior written approval of the Board of Directors,
except for the investment by the Focus Investor and/or its Affiliates in the Company in accordance
with the Transaction Documents. Notwithstanding anything to the contrary, the foregoing provisions
of this SECTION 4.9(a) shall not prohibit the Focus Investor from, directly or indirectly, doing
any of the following: (i) acquiring ownership of securities having less than five percent (5%) of
the outstanding voting power of any person engaged in any Company Business, provided that the Focus
Investor does not, as a result of acquiring such ownership of securities, directly or indirectly
own five percent (5%) or more of the outstanding voting power of any person engaged in any Company
Business; or (ii) acquiring ownership of any economic interest in a person which is an investment
vehicle with respect to which the Focus Investor has no control and which is not formed for the
purpose of making investments in persons engaged in any Company Business.




          (b) For so long as the Focus Investor, together with its Affiliates, owns five percent (5%) or
more of all of the outstanding Common Shares (counting for such purposes all Common Shares into or
for which the securities of the Company owned by the Focus Shareholder and its Affiliates are
directly or indirectly convertible or exercisable), neither the Company nor its Affiliates shall,
directly or indirectly, engage in, invest in, participate in, control, operate, manage or otherwise
compete with the Focus Investor and its Affiliates in the Focus Business without the prior written
approval of the Board of Directors of the Focus Investor. Notwithstanding anything to the
contrary, the foregoing provisions of this SECTION 4.9(b) shall not prohibit the Company from,
directly or indirectly, doing any of the following: (i) acquiring ownership of securities having
less than five percent (5%) of the outstanding voting power of any person engaged in any Focus
Business, provided that the Company does not, as a result of acquiring such ownership of
securities, directly or indirectly own five percent (5%) or more of the outstanding voting power of
any person engaged in any Focus Business; or (ii) acquiring ownership of any economic interest in a
person which is an investment vehicle with respect to which the Company has no control and which is
not formed for the purpose of making investments in persons engaged in any Focus Business.




          (c) To the fullest extent permitted by applicable law or regulation, neither the Focus
Investor nor any of its Affiliates, nor the Focus Nominee shall be restricted in any way whatsoever
by this Agreement from engaging in the Focus Business, nor shall be obliged to refer or present any
particular business opportunity to the Company unless otherwise provided in






26









 







SECTION 4.9(d) and SECTION 4.9(e) below. Unless otherwise provided in SECTION 4.9(d) below,
the Focus Investor shall have the right to take all business opportunities within the scope of the
Focus Business for its own account (individually or as a partner, shareholder, member, participant
or fiduciary) or recommend to others such particular opportunity.




          (d) Subject to SECTION 4.9(a), so long as the Focus Nominee remains a director of the Company,
in the event the Focus Nominee learns from the Board of Directors of any business opportunities
(provided he has not previously learned of or obtained information regarding such business
opportunity from any other source), he shall not recommend to the Focus Investor or any Affiliates
of the Focus Investor or any other persons such business opportunity unless and until (i) the Focus
Nominee has provided written notice to the Board of Directors indicating his intention to recommend
such opportunity to the Focus Investor and (ii) (x) within ninety (90) days of the receipt of such
notice by the Board of Directors the Company has decided not to pursue such opportunity or has not
pursued such opportunity or (y) the Company subsequently determines to abandon the pursuit of such
business opportunity.




          (e) Subject to SECTIONS 4.9(a) to (c), until the earlier of (i) the third anniversary of the
Closing Date and (ii) the date on which the Focus Nominee remains a director of the Company, in the
event the Focus Nominee, in his capacity as a director of the Company, learns of any business
opportunities other than through the Board of Directors (provided he has not previously learned of
or obtained information regarding such business opportunity in a capacity other than as a director
of the Company), he shall not recommend to the Focus Investor or any Affiliates of the Focus
Investor such business opportunity without first presenting such opportunity to the Company in
writing. Subject to SECTION 4.9(a), if the Company does not decide to pursue such business
opportunity within thirty (30) days of the written notice of the Focus Nominee in respect of such
business opportunity, or subsequently determines to abandon the pursuit of such business
opportunity, the Focus Nominee (and the Focus Investor or its Affiliates) shall have the right to
recommend to the Focus Investor or any of its Affiliate or any other persons such business
opportunity.




          (f) In the event of any dispute arising from this SECTION 4.9, the Focus Investor and the
Company shall use their respective reasonable efforts to resolve such dispute between such parties
through negotiations.




          SECTION 4.10. Regulatory Matters.




          Notwithstanding anything in this Agreement to the contrary, neither any of the Investors
including their respective Affiliates nor the Company shall be required (i) to modify or limit its
operations or commercial practices; (ii) to modify or limit its governance, structure, or
compensation arrangements; (iii) to modify the terms of this Agreement, including, for the
avoidance of doubt, the terms or the amount of the Purchased Shares to be delivered by the Company
under this Agreement; (iv) to become subject to or otherwise permit or accept any other condition,
limitation, restriction, or restraint that would reasonably be expected to adversely affect (with
respect to an Investor or its Affiliates) any material financial term of the transactions
contemplated by this Agreement or the anticipated benefits or burdens to such Investor and its
Affiliates or the Company of the transactions contemplated hereby; (v) to propose, agree, or accept
any of the items described in clauses (i) through (iv) as a condition to






27









 







receiving any regulatory or governmental approval or consent (each of clauses (i) through (v),
a “Burdensome Condition”).




ARTICLE V




TERMINATION



          SECTION 5.1. Termination. This Agreement may be terminated prior to the Closing:




          (a) by mutual written consent of the Focus Investor and the Company;




          (b) by the Company, upon written notice to the Focus Investor, in the event that any of the
conditions of Closing set forth in SECTION 1.3(b)(2) are not satisfied, or waived by the Company,
on or before the seventh business day after the date hereof; provided, however, that the right to
terminate this Agreement pursuant to this SECTION 5.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date;




          (c) by the Focus Investor, upon written notice to the Company, in the event that the
conditions of Closing set forth in SECTION 1.3(b)(1) are not satisfied, or waived by the Focus
Investor, on or before the seventh business day after the date hereof; provided, however, that the
right to terminate this Agreement pursuant to this SECTION 5.1(c) shall not be available to any
party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or
shall have resulted in, the failure of the Closing to occur on or prior to such date; or




          (d) by the Company or the Focus Investor, upon written notice to the other parties, in the
event that any Governmental Entity shall have issued any order, decree or injunction or taken any
other action restraining, enjoining or prohibiting any of the transactions contemplated by this
Agreement, and such order, decree, injunction or other action shall have become final and
nonappealable.




          SECTION 5.2. Effects of Termination. In the event of any termination of this
Agreement as provided in SECTION 5.1, this Agreement (other than SECTION 3.2, SECTION 4.4, this
SECTION 5.2, ARTICLE VI (other than SECTION 6.1) and all applicable defined terms, which shall
remain in full force and effect) shall forthwith become wholly void and of no further force and
effect; provided that nothing herein shall relieve any party from liability for willful breach of
this Agreement.




ARTICLE VI




MISCELLANEOUS



          SECTION 6.1. Survival. Each of the representations and warranties set forth in this
Agreement shall survive the Closing under this Agreement but only for a period of eighteen (18)
months following the Closing Date (or until final resolution of any claim or action arising from
the breach of any such representation and warranty, if notice of such breach was provided prior to
the end of such period) and thereafter shall expire and have no further force and






28









 







effect; provided that the representations and warranties in SECTION 2.1(a), SECTION 2.1(c),
SECTION 2.1(d), SECTION 2.2(a), and SECTION 2.2(b) (collectively, the “Fundamental
Representations”) shall survive indefinitely and the representations and warranties in SECTION
2.1(h) and SECTION 2.1(s) shall survive until 90 days after the expiration of the applicable
statutory periods of limitations. Except as otherwise provided herein, all covenants and
agreements contained herein shall survive for the duration of any statutes of limitations
applicable thereto or until, by their respective terms, they are no longer operative.




          SECTION 6.2. Amendment. No amendment or waiver of this Agreement will be effective
with respect to any party unless made in writing and signed by an officer of a duly authorized
representative of such party.




          SECTION 6.3. Waivers. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The conditions to each party’s obligation to consummate the Closing are for the sole
benefit of such party and may be waived by such party in whole or in part to the extent permitted
by applicable law. No waiver of any party to this Agreement will be effective unless it is in a
writing signed by a duly authorized officer of the waiving party that makes express reference to
the provision or provisions subject to such waiver.




          SECTION 6.4. Counterparts and Facsimile. For the convenience of the parties hereto,
this Agreement may be executed in any number of separate counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts will together constitute the same
agreement. Executed signature pages to this Agreement may be delivered by facsimile and such
facsimiles will be deemed as sufficient as if actual signature pages had been delivered.




          SECTION 6.5. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the substantive laws of the State of New York, without regard to New York choice
of law rules. Any dispute arising out of or in connection with this Agreement shall be referred to
the Hong Kong International Arbitration Centre in Hong Kong. The arbitration proceedings shall be
conducted in English pursuant to the Arbitration Rules of the United Nations Commission on
International Trade Law, as currently in effect and a decision rendered by the arbitral tribunal in
such proceedings shall be final and binding on the parties. All rights to apply or appeal to any
court on a preliminary or other point of law are excluded; provided, however, that nothing herein
shall limit the ability of a party to seek specific performance or interim injunctive relief in any
court of competent jurisdiction.




          SECTION 6.6. Waiver of Jury Trial EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.




          SECTION 6.7. Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to have been duly given
(a) on the date of delivery if delivered personally or by telecopy or facsimile, upon






29









 







confirmation of receipt, (b) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the third business day following the
date of mailing if delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as follows:




          (a) If to the Focus Investor:



Focus Media Holding Limited

28F, No. 369, Zhaofeng World Trade Tower

Jiangsu Road, Shanghai

PRC 200050



Attn: Jason Nanchun Jiang

Facsimile: +86 21 3212-4661




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



Simpson Thacher & Bartlett LLP

3119 China World Office 1

1 Jianguomenwai Avenue

Beijing, China 100004



Attn: Douglas Markel, Esq.

Facsimile: +86 10 5965-2988




          (b) If to the Company:



VisionChina Media Inc.

1/F Block No.7 Champs Elysees

Nongyuan Road, Futian District

Shenzhen 518040

The People’s Republic of China



Attn: Minghua Zhou

Email: minghua.zhou@visionchina.cn

Facsimile: +86 755 8298-1111




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



Skadden, Arps, Slate, Meagher & Flom

42/F, Edinburgh Tower, The Landmark

15 Queen’s Road Central, Hong Kong



Attn: Julie Gao, Esq.

Facsimile: +(852) 39104850




          (c) If to Front Lead Investments Limited:







30









 







VisionChina Media Inc.

1/F Block No.6 Champs Elysees

Nongyuan Road, Futian District

Shenzhen 518040

The People’s Republic of China



Attn: Yingming Lei

Email: leiyingming@visionchina.cn

Facsimile: +86 755 8317-1111




          (d) If to JJ Media Investment Holding Limited:



c/o Focus Media Holding Limited

28F, No. 369, Zhaofeng World Trade Tower

1 Jianguomenwai Avenue

PRC 200050



Attn: Jason Nanchun Jiang

Facsimile: +86 21 3212-4661




          SECTION 6.8. Entire Agreement, Etc. This Agreement (including the Exhibits,
Schedules, and Disclosure Schedule hereto) constitutes the entire agreement, and supersedes all
other prior agreements, understandings, representations and warranties, both written and oral,
between the parties, with respect to the subject matter hereof; the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective
successors and their permitted assigns. Neither this Agreement nor any of the rights, duties or
obligations hereunder may be assigned by the Company or by Front Lead Investments Limited without
the express consent of the Focus Investor, or by any Investor (other than Front Lead Investments
Limited) without the express consent of the Company; provided, however, that the Focus Investor may
assign its rights and obligations under this Agreement, in whole or in part, to one of its
Affiliates without the consent of the Company and that such assignee shall be included in the term
“Focus Investor.” Any purported assignment in violation of this SECTION 6.8 shall be null and
void.




          SECTION 6.9. Definitions. For purposes hereof, terms, when used herein with initial
capital letters, shall have the respective meanings given to them in the respective Sections set
forth in the index of defined terms at the beginning of this Agreement. Wherever required by the
context of this Agreement, the singular shall include the plural and vice versa, and the masculine
gender shall include the feminine and neuter genders and vice versa, and references to any
agreement, document or instrument shall be deemed to refer to such agreement, document or
instrument as amended, supplemented or modified from time to time. All article, section, paragraph
or clause references not attributed to a particular document shall be references to such parts of
this Agreement, and all exhibit, annex and schedule references not attributed to a particular
document shall be references to such exhibits, annexes and schedules to this Agreement. When used
herein:







31









 









     (1) the term “subsidiary” means those corporations, entities or other persons of which
such person owns or controls more than 50% of the outstanding equity securities either
directly or indirectly through an unbroken chain of entities as to each of which more than
50% of the outstanding equity securities is owned directly or indirectly by its parent or
otherwise controlled by such parent;




     (2) the term “Affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other person. For
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”) when used with respect to any person, means
the possession, directly or indirectly, of the power to cause the direction of management
and/or policies of such person, whether through the ownership of voting securities by
contract or otherwise;




     (3) the word “or” is not exclusive;




     (4) the words “including,” “includes,” “included” and “include” are deemed to be
followed by the words “without limitation”;




     (5) the terms “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph or
subdivision;




     (6) the words “it” or “its” are deemed to mean “him” or “her” and “his” or “her,” as
applicable, when referring to an individual;




     (7) “business day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of New York or the PRC
generally are authorized or required by law or other governmental actions to close;




     (8) “person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act;




     (9) “Beneficially Own,” “Beneficial Owner” and “Beneficial Ownership” are defined in
Rules 13d-3 and 13d-5 of the Exchange Act;




     (10) “knowledge of the Company” or “Company’s knowledge” means the actual knowledge,
after due inquiry, of the executive officers of the Company;




     (11) “Structure Agreements” means, collectively, the contracts and instruments, which
enable the Company to control and consolidate with its financial statements each Group
Company and its Affiliates in respect of which at least a majority of the equity is not
directly held but is controlled by the Company;




     (12) “Company Business” means [***], and




     (13) “Focus Business” means [***].



32









 





          SECTION 6.10. Captions. The article, section, paragraph and clause captions herein
are for convenience of reference only, do not constitute part of this Agreement and will not be
deemed to limit or otherwise affect any of the provisions hereof.




          SECTION 6.11. Severability. If any provision of this Agreement or the application
thereof to any person (including the officers and directors of the Investor and the Company) or
circumstance is determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or unenforceable, will remain
in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination, the parties shall negotiate in
good faith in an effort to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.




          SECTION 6.12. No Third-Party Beneficiaries. Nothing contained in this Agreement,
expressed or implied, is intended to confer or shall confer upon any person other than the express
parties hereto, any benefit right or remedies, except that the provisions of SECTION 4.2 shall
inure to the benefit of the person referred to therein. The representations and warranties set
forth in Article II and the covenants set forth in Articles III and IV have been made solely for
the benefit of the parties to this Agreement and (a) may be intended not as statements of fact, but
rather as a way of allocating the risk to one of the parties if those statements prove to be
inaccurate; and (b) may apply standards of materiality in a way that is different from what may be
viewed as material by shareholders of, or other investors in, the Company.




          SECTION 6.13. Public Announcements. Except as otherwise required by applicable law,
in the event that any party is required by applicable law or by obligations pursuant to any listing
agreement with any securities exchange or any securities exchange regulation to issue a press
release or otherwise make an announcement related to this Agreement and any of the transactions
contemplated by this Agreement, it shall notify the other parties in advance and provide the other
parties with the opportunity to review such press release or announcement and shall limit the
disclosure therein to that required by applicable law (except to the extent otherwise agreed by the
other party).




          SECTION 6.14. Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms. It is accordingly agreed that the parties shall be entitled to seek
specific performance of the terms hereof, this being in addition to any other remedies to which
they are entitled at law or equity.



* * *




33









 








          IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officers of the parties hereto as of the date first herein above written.




	 	 	 	 	 
	 	VISIONCHINA MEDIA INC.

 	 
	 	By:  	/s/
Limin Li	 
	 	 	Name:  	Limin Li	 
	 	 	Title:  	Chief Executive Officer 	 
	 


Signature Page to Securities Purchase Agreement




 









 








	 	 	 	 	 
	 	FOCUS MEDIA HOLDING LIMITED 

 	 
	 	By:  	/s/
Jason Nanchun Jiang	 
	 	 	Name:  	Jason Nanchun Jiang	 
	 	 	Title:  	Chief Executive Officer	 
	 


Signature Page to Securities Purchase Agreement




 









 








	 	 	 	 	 
	 	FRONT LEAD INVESTMENTS LIMITED 

 	 
	 	By:  	/s/
Limin Li	 
	 	 	Name:  	Limin Li	 
	 	 	Title:  	 	 
	 


Signature Page to Securities Purchase Agreement




 









 








	 	 	 	 	 
	 	JJ MEDIA INVESTMENT
HOLDING LIMITED

 	 
	 	By:  	/s/
Jason Nanchun Jiang	 
	 	 	Name:  	Jason Nanchun Jiang	 
	 	 	Title:  	Director	 
	 


Signature Page to Securities Purchase Agreement