Waiver Letter



 Exhibit 10.41 
  

			
		 	 




  

			
		 	 Suite 4703-05 Plaza 66 Tower 2

		 	 1366 Nanjing Road West

		 	 Shanghai, PRC 200040

		 	 Tel: (8621) 6113 5811

		 	 Fax: (8621) 6113 5818

		 	 info@arccapitalchina.com


 PYPO DIGITAL COMPANY LIMITED 
 48/F, Bank of China Tower, 
 1 Garden Road, Central, Hong Kong 
 Attention: Mr. KAM Yuen 
 BEIJING PYPO TECHNOLOGY GROUP COMPANY LIMITED 
 South 3/F, Chang An Xiong Rong Center 
 No.1 Nao Shi Kou Street 
 XiCheng District, Beijing, PRC 
 Attention: Mr. ZHANG Kuo 
 GOLDEN MEDITECH COMPANY LIMITED 
 48/F, Bank of China Tower, 
 1 Garden Road, Central, Hong Kong 
 Attention: Mr. KAM Yuen 
 CAPITAL ALLY INVESTMENTS LIMITED 
 48/F, Bank of China Tower, 
 1 Garden Road, Central, Hong Kong 
 Attention: Mr. KAM Yuen 

Mr. Francis WAN 
 South 3/F, Chang An Xiong Rong Center 

No.1 Nao Shi Kou Street 
 XiCheng District, Beijing, PRC 
 Mr. ZHANG Kuo 
 South 3/F, Chang An Xiong Rong Center 
 No.1 Nao Shi Kou Street 
 XiCheng District, Beijing, PRC 
 Mr. FEI Dong Ping 
 South 3/F, Chang An Xiong Rong Center 
 No.1 Nao Shi Kou Street 
 XiCheng District, Beijing, PRC 
 Dear Sirs: 
  

	RE:	Waiver of ARCH Digital Holdings Limited Redemption Right under the Equity Subscription Agreement 

  

 1 








 

 
 Whereas: 
  

	1.	ARCH Digital Holdings Limited (“ARCH Digital”), Pypo Digital Company Limited (“Pypo Cayman”), Beijing Pypo Technology Group Company Limited
(“Beijing Pypo”), Golden Meditech Company Limited, China Bright Group Co., Ltd. (“China Bright”), Style Technology Development Limited (“Style Tech”), Mr. ZHANG, Mr. FEI Dong Ping, and
Mr. Francis WAN (collectively “Parties”) have entered into the equity subscription agreement on October 15, 2007 (“Equity Subscription Agreement”), pursuant to which ARCH Digital has acquired 33% enlarged equity
interests in Pypo Cayman at a purchase price of US$90,000,000. 

  

	2.	Pursuant to the Section 8.10 of the Equity Subscription Agreement, ARCH Digital is entitled to the following redemption right: 

 “8.10 Redemption. If by March 31, 2008, the aggregate Guaranteed Net Profit of all the Retailers acquired by Beijing Pypo following
the Closing attributable to Beijing Pypo does not meet RMB 40,000,000 (Renminbi forty million), the Investor may at its sole discretion, choose to, but is not obligated to, terminate the Investment and request a redemption of all the Purchased
Securities. Upon such redemption request by the Investor, the Company, the Sponsors and Beijing Pypo shall have the joint and several obligation to promptly redeem the Purchased Securities from the Investor, and as consideration thereof, to pay
US$90,000,000 (Ninety Million US Dollars) to the Investor within sixty (60) days of the redemption request, in such manner (including form of payment) as satisfactory to the Investor.” 
  

	3.	Subsequently on December 2007, China Bright and Style Tech transferred all of its respective 91,350,000 Pypo Cayman shares to Capital Ally Investments Limited (“Capital
Ally”). 

  

	4.	On December 28, 2007, Capital Ally executed the Instrument of Transfer, pursuant to which Capital Ally as a transferee agreed to join the Equity Transfer Agreement and other
agreements singed by or between the Parties and to be bound by and subject to all of the obligations of each of China Bright and Style Tech as if Capital Ally were an original party thereto. 

  

	5.	Due the late date at which capital invested under the Equity Subscription Agreement was made available for retail acquisitions, being December 2007, we had agreed verbally to extend
the date by which Beijing Pypo had to amass retail acquisitions meeting the above targets to June 30, 2008. 

  

	6.	Based on the information provided by Beijing Pypo, the aggregate of the six retailer targets secured by Beijing Pypo till June 30, 2008 provides guaranteed net profit
attributable to Beijing Pypo of approximately RMB 62,020,000 (see the attached Schedule I), which is over RMB 40,000,000 under Section 8.10 of the Equity Subscription Agreement. 

 NOW, THEREFORE, based on the foregoing, we hereby inform you that we waive the redemption right under Section 8.10 of the Equity Transfer Agreement. 
  

 2 








 

 
 Regards, 
  

	
	Clement KWONG
	
	 /s/    Clement KWONG

	
	For and on behalf of
	ARCH DIGITAL HOLDINGS LIMITED
	
	Date:             , 2008

 By countersigning this letter, you hereby acknowledge and accept this waiver, and represent and warrant that
Beijing Fei Jie Investment Company Limited, an acquiring company wholly controlled by Beijing Pypo, has entered into agreements to acquire the targets on the conditions stated in the attached Schedule I: 
  

	
	 /s/    ZHANG Kuo

	ZHANG Kuo
	
	 /s/    FEI Dong Ping

	FEI Dong Ping
	
	 /s/    Francis WAN

	Francis WAN

 The following parties to the Equity Subscription Agreement hereby acknowledge and accept this waiver letter:

  

	
	 /s/    KAM Yuen

	KAM Yuen
	For and on behalf of
	PYPO DIGITAL COMPANY LIMITED / GOLDEN MEDITECH COMPANY LIMITED
	/ CAPITAL ALLY INVESTMENTS LIMITED
	
	 /s/    ZHANG Kuo

	ZHANG Kuo
	For and for behalf of
	BEIJING PYPO TECHNOLOGY GROUP COMPANY LIMITED

  

 3 








 

 
 Schedule I 
 Guaranteed Net Profit Attributable to Beijing Pypo 
  

								
	 Acquisition Target
	  	Guaranteed Net
Profit (RMB)	  	Beijing Pypo Interest
Percentage	 	 	Guaranteed Net
Profit Attributable to
Beijing Pypo (RMB)
	 Heibei Guoxun
	  	15,000,000	  	51	%	 	7,650,000
	 Henan Xinya
	  	12,000,000	  	51	%	 	6,120,000
	 Hunan Feihong
	  	10,000,000	  	100	%	 	10,000,000
	 Yunan Bailaohui
	  	8,000,000	  	51	%	 	4,080,000
	 Jiangsu Guanzhilin
	  	62,000,000	  	51	%	 	31,620,000
	 Inner Mongolia Zhongyu
	  	5,000,000	  	51	%	 	2,550,000
	 Total
	  		  			 	62,020,000

  

 4