EX-4.6






EXHIBIT 4.6




SECOND SHARE SUBSCRIPTION AGREEMENT




by and among



CHARM COMMUNICATIONS INC.

(as “Company”)



MR. DANG HE

(as “Founder”)



MOVIE-FORWARD LTD.

(as “BVI Sub”)



JETLONG TECHNOLOGY LIMITED

(as “Marshall Sub”)



CHARM HONG KONG LIMITED

(as “HK Sub”)



NANNING JETLONG TECHNOLOGY CO., LTD.

(as “WFOE”)



EACH OF THE PERSONS LISTED ON SCHEDULE 1 HERETO

(as “Domestic Companies”)



QINGHAI CHARM YOUSHI CULTURE CO., LTD.



and



CHAVIEW INVESTMENTS LIMITED

(as “Chaview”)



Dated
as of August 15, 2008



 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	2	 
	1.2 Additional Definitions
	 	 	9	 
	1.3 Construction
	 	 	10	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF PREFERRED SHARES
	 	 	10	 
	 
	 	 	 	 
	2.1 Issuance and Subscription
	 	 	10	 
	2.2 Chaview Closing
	 	 	11	 
	2.3 Use of Proceeds
	 	 	11	 
	2.4 Chaview Adjustment Shares
	 	 	12	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE FOUNDER AND THE GROUP COMPANY
	 	 	13	 
	 
	 	 	 	 
	3.1 Organization
	 	 	13	 
	3.2 Authority
	 	 	14	 
	3.3 Valid Issuance of Preferred and Ordinary Shares
	 	 	14	 
	3.4 Capitalization
	 	 	14	 
	3.5 Subsidiaries
	 	 	14	 
	3.6 No Conflicts
	 	 	16	 
	3.7 Governmental Approvals and Filings
	 	 	16	 
	3.8 Books and Records
	 	 	17	 
	3.9 Financial Statements
	 	 	17	 
	3.10 Absence of Activities
	 	 	18	 
	3.11 Absence of Changes
	 	 	18	 
	3.12 No Undisclosed Liabilities
	 	 	20	 
	3.13 Taxes
	 	 	20	 
	3.14 Legal Proceedings
	 	 	20	 
	3.15 Compliance With Laws and Orders
	 	 	21	 
	3.16 Real Property
	 	 	21	 
	3.17 Tangible Personal Property; Investment Assets
	 	 	21	 
	3.18 Intellectual Property Rights
	 	 	21	 
	3.19 Contracts
	 	 	22	 
	3.20 Licenses
	 	 	24	 
	3.21 Insurance
	 	 	24	 
	3.22 Related Party Transactions
	 	 	24	 
	3.23 Employees; Labor Relations
	 	 	24	 
	3.24 Employee Benefits
	 	 	25	 
	3.25 Substantial Customers
	 	 	25	 
	3.26 Accounts Receivable
	 	 	25	 
	3.27 Third Party Consents
	 	 	25	 
	3.28 Brokers
	 	 	26	 
	3.29 Anti-Corruption Compliance
	 	 	26	 
	3.30 Prior Registration Rights
	 	 	26	 
	3.31 No State Assets
	 	 	26	 
	3.32  Disclosure
	 	 	26	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CHAVIEW
	 	 	27	 
	 
	 	 	 	 
	4.1 Organization
	 	 	27	 
	4.2 Authority
	 	 	27	 
	4.3 No Conflicts
	 	 	27	 
	4.4 Governmental Approvals and Filings
	 	 	28	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	4.5 Brokers
	 	 	28	 
	4.6 Offshore Transaction
	 	 	28	 
	 
	 	 	 	 
	ARTICLE V CERTAIN COVENANTS
	 	 	28	 
	 
	 	 	 	 
	5.1 Conduct of Business
	 	 	28	 
	5.2 Access
	 	 	29	 
	5.3 Regulatory and Other Approvals
	 	 	29	 
	5.4 Notice and Cure
	 	 	29	 
	5.5 Fulfillment of Conditions
	 	 	30	 
	5.6 Most Favored Nation Treatment
	 	 	30	 
	5.7 Post-Chaview Closing Covenants
	 	 	30	 
	 
	 	 	 	 
	ARTICLE VI CONDITIONS TO OBLIGATIONS OF CHAVIEW
	 	 	31	 
	 
	 	 	 	 
	6.1 Representations and Warranties
	 	 	31	 
	6.2 Performance
	 	 	31	 
	6.3 Orders and Laws
	 	 	31	 
	6.4 Regulatory Consents and Approvals
	 	 	31	 
	6.5 Opinions of Counsels
	 	 	32	 
	6.6 Execution of Agreements
	 	 	32	 
	6.7 Articles of Association
	 	 	32	 
	6.8 Directors
	 	 	32	 
	6.9 Corporate Approval
	 	 	32	 
	6.10 Compliance Certificate
	 	 	32	 
	6.11 Transfer of Trademarks
	 	 	32	 
	6.12 Amendment of First Subscription Agreement
	 	 	32	 
	6.13 No Material Adverse Change
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE COMPANY
	 	 	33	 
	 
	 	 	 	 
	7.1 Representations and Warranties
	 	 	33	 
	7.2 Performance
	 	 	33	 
	7.3 Orders and Laws
	 	 	33	 
	7.4 Regulatory Consents and Approvals
	 	 	33	 
	7.5 Non-Competition
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES
	 	 	33	 
	 
	 	 	 	 
	8.1 Survival of Representations and Warranties
	 	 	33	 
	8.2 No Other Representations
	 	 	34	 
	 
	 	 	 	 
	ARTICLE IX INDEMNIFICATION
	 	 	34	 
	 
	 	 	 	 
	9.1 Indemnification
	 	 	34	 
	9.2 Indemnification as Exclusive Remedy
	 	 	35	 
	9.3 No Consequential Damages
	 	 	35	 
	 
	 	 	 	 
	ARTICLE X TERMINATION
	 	 	35	 
	 
	 	 	 	 
	10.1 Termination
	 	 	35	 
	10.2 Effect of Termination and Survival
	 	 	36	 
	 
	 	 	 	 
	ARTICLE XI COVENANTS RELATED TO CONFIDENTIALITY
	 	 	36	 
	 
	 	 	 	 
	11.1 Confidentiality
	 	 	36	 
	11.2 Restriction on Announcements
	 	 	37	 
	 
	 	 	 	 
	ARTICLE XII GOVERNING LAW AND RESOLUTION OF DISPUTES
	 	 	37	 
	 
	 	 	 	 
	12.1 Governing Law
	 	 	37	 
	12.2 Dispute Resolution Mechanism
	 	 	37	 
	12.3 Performance Pending Dispute Resolution
	 	 	38	 
	12.4 Survival
	 	 	38	 
	 
	 	 	 	 
	ARTICLE XIII MISCELLANEOUS
	 	 	38	 
	 
	 	 	 	 
	13.1 Entire Agreement
	 	 	38	 
	13.2 Binding Effect; Benefit
	 	 	38	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	13.3 Amendment; Waiver
	 	 	39	 
	13.4 Assignment
	 	 	39	 
	13.5 Notices
	 	 	40	 
	13.6 Counterparts
	 	 	41	 
	13.7 Severability
	 	 	41	 
	13.8 Further Assurances
	 	 	41	 






LIST OF SCHEDULE AND EXHIBITS




	 	 	 
	SCHEDULE 1

	 	LIST OF DOMESTIC COMPANIES
	SCHEDULE 2

	 	CAPITALIZATION TABLE
	DISCLOSURE SCHEDULES – SCHEDULES 1.1, 3.4, 3.5, 3.6, 3.7, 3.10, 3.11, 3.14, 3.15, 3.17, 3.18,
3.19(a), 3.19(b), 3.22(a), 3.22(b), 3.23(a), 3.24, 3.25
	EXHIBIT A

	 	FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
	EXHIBIT B

	 	FORM OF AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
	EXHIBIT C

	 	FORM OF CAYMAN LEGAL OPINION
	EXHIBIT D

	 	FORM OF PRC LEGAL OPINION
	EXHIBIT E

	 	ARTICLES OF ASSOCIATION
	EXHIBIT F

	 	LIST OF TRADEMARKS AND DOMAIN NAMES






 









 





SECOND SHARE SUBSCRIPTION AGREEMENT




     This
SECOND SHARE SUBSCRIPTION AGREEMENT (this
“Agreement”) dated as of August 15, 2008 is
made by and among:




	(1)	 	Charm Communications Inc., a company established and existing under the Laws of the Cayman
Islands (the “Company”);
	 
	(2)	 	Mr. Dang He (), a PRC citizen and the 100% shareholder of the Company (the “Founder”);
	 
	(3)	 	Movie-Forward Ltd., a company incorporated under the Laws of the British Virgin Islands (the
“BVI Sub”) and a wholly-owned Subsidiary of the Company;
	 
	(4)	 	Jetlong Technology Limited, a company established under the Laws of the Marshall Islands (the
“Marshall Sub”) and a wholly-owned Subsidiary of the BVI Sub;
	 
	(5)	 	Charm Hong Kong Limited, a company incorporated under the Laws of Hong Kong (the “HK Sub”)
and a wholly-owned Subsidiary of the Marshall Sub;
	 
	(6)	 	Nanning Jetlong Technology Co., Ltd. () (the “WFOE”), a
wholly-foreign owned enterprise established under the Laws of the PRC;
	 
	(7)	 	Persons listed on Schedule 1 hereto, each a company organized and existing under the Laws of
the PRC (each a “Domestic Company”, and collectively, the “Domestic Companies” );
	 
	(8)	 	Qinghai Charm Youshi Culture Co., Ltd. (“Qinghai Charm”), a company organized and existing
under the Laws of the PRC; and
	 
	(9)	 	Chaview Investments Limited, a company incorporated under the Laws of the British Virgin
Islands (“Chaview”).





     The foregoing parties shall be hereinafter referred to collectively as the “Parties” and
individually as a “Party”.



WHEREAS:





	 	(A)	 	The Group Companies engage in the business of television advertising agency,
media investment and consultancy, and branding and identity services in the PRC (the
“Business”);
	 
	 	(B)	 	Through certain contractual arrangements that have been entered into among the
nominee shareholders of the Domestic Companies, the Domestic Companies and the WFOE
(the “Contractual Arrangements”), substantially all of the Domestic Companies’ business
operations are controlled by the WFOE and substantially all of




1









 






	 	 	 	the economic risks and benefits of the Domestic Companies have been transferred to the
WFOE.
	 
	 	(C)	 	Pursuant to a share subscription agreement dated as of July 16, 2008 (the
“First Subscription Agreement”), Dynasty Cayman Limited, a company incorporated and
existing under the laws of the Cayman Islands (“Dynasty”) has made an investment of
US$29,750,000 in the Company for 7,437,500 Series A Preferred Shares of the Company and
Swift Rise International Limited, a company incorporated under the laws of the British
Virgin Islands (“Swift Rise”) has made an investment of US$250,000 in the Company for
62,500 Series A Preferred Shares of the Company.
	 
	 	(D)	 	In connection with Chaview’s proposed investment of US$20,000,000 in the
Company for 5,000,000 Series A Preferred Shares of the Company, the Parties hereto
agree to enter into this Agreement, pursuant to which, upon the completion of the
transactions contemplated herein (the “Chaview Closing”), each of Merry Circle Trading
Limited, a company incorporated and existing under the laws of the British Virgin
Islands (“Merry Circle”), Dynasty, Swift Rise and Chaview will hold the number and
percentage of Ordinary Shares or Series A Preferred Shares of the Company set forth in,
and pursuant to the terms of, the First Subscription Agreement and this Agreement.
	 
	 	(E)	 	Chaview, Dynasty, Swift Rise, the Founder and the Company will enter into an
amended and restated registration rights agreement to be dated
August 19, 2008 (the
“Amended and Restated Registration Rights Agreement”), substantially in the form set
forth in Exhibit A hereto.
	 
	 	(F)	 	The Company, the Founder, Merry Circle, Dynasty, Swift Rise and Chaview will
enter into an amended and restated shareholders agreement to be dated
August 19,
2008 (the “Amended and Restated Shareholders Agreement”), substantially in the form set
forth in Exhibit B hereto, pursuant to which the Company, the Founder, Merry
Circle, Dynasty, Swift Rise, and Chaview will agree on their respective rights and
obligations regarding the management of the Company, the transfer of the shares of the
Company and certain other rights and obligations as set forth thereto.





     NOW THEREFORE, in consideration of the foregoing and the mutual promises, covenants and
agreements of the Parties contained herein, the Parties agree as follows:



ARTICLE I




DEFINITIONS



          1.1 Definitions. The following terms shall have the following meanings for purposes of this
Agreement:



2









 





          “Actions or Proceedings” means any action, suit, proceeding, arbitration or any investigation
or audit by any Government Authority.



          “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with such Person (including any Subsidiary).
“Affiliates” and “Affiliated” shall have correlative meaning. For the purpose of this definition,
the term “control” (including with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or by contract or
otherwise.



          “Agreement” has the meaning stated in the preamble and includes the Exhibits, and the
Schedules, as any of the same shall be amended from time to time.



          “Amended and Restated Registration Rights Agreement” has the meaning stated in the whereas
clause (E).



          “Amended and Restated Shareholders Agreement” has the meaning stated in the whereas clause
(F).



          “Anti-Corruption Laws” means collectively (i) the Criminal Law of the People’s Republic of
China, (ii) any other legislation applicable to the Parties that implements the OECD Convention
Against Bribery of Foreign Public Officials in International Business Transactions, (iii) Foreign
Corrupt Practices Act of 1977, as amended, and any rules and regulations promulgated thereunder and
(iv) all other applicable Laws, conventions and international financial institution rules
applicable to the Parties regarding corruption, bribery, ethical business conduct, money
laundering, political contributions, gifts and gratuities, or lawful expenses to public officials
and private persons, agency relationships, commissions, lobbying, books and records, and financial
controls.



          “Articles of Association” means the memorandum and articles of association of the Company, as
amended from time to time.



          “Assets and Properties” of any Person means assets and properties of any kind, nature,
character and description (whether real, personal or mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including without limitation cash, cash
equivalents, Investment Assets, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and Intellectual
Property.



          “Bankruptcy Event” means with respect to any Person (the “Bankruptcy Party”), (a) the
commencement by it of a Bankruptcy Proceeding with respect to itself or the consent by it to be
subject to a Bankruptcy Proceeding commenced by another Person, (b) the commencement by another
Person of a Bankruptcy Proceeding with respect to the Bankruptcy



3









 




Party that remains unstayed or undismissed for a period of thirty (30) consecutive days, (c) the
appointment of or taking possession by a Receiver over the Bankruptcy Party or any substantial part
of its property, (d) the making by the Bankruptcy Party of a general assignment for the benefit of
its creditors or the admission by the Bankruptcy Party in writing of its inability to generally pay
its debts as they come due, (e) the entry by a court having jurisdiction over the Bankruptcy Party
or a substantial part of its property of an Order for relief under any Bankruptcy Law which remains
unstayed or undismissed for a period of thirty (30) consecutive days, (i) adjudging the Bankruptcy
Party bankrupt or insolvent, (ii) approving as properly filed a petition seeking the reorganization
or other similar relief with respect to the Bankruptcy Party, (iii) appointing a Receiver over the
Bankruptcy Party or any substantial part of its property or (iv) otherwise ordering the winding up
and liquidation of the Bankruptcy Party or (f) the occurrence of any event similar to (a), (b),
(c), (d) or (e) under any applicable Law with respect to the Bankruptcy Party.




          “Bankruptcy Law” means any bankruptcy, insolvency, reorganization, composition, moratorium or
other similar Law.



          “Bankruptcy Proceeding” means a case or proceeding under any Bankruptcy Law wherein a Person
may be adjudicated bankrupt, insolvent or become subject to an Order of reorganization,
arrangement, adjustment, winding up, dissolution, composition or other similar Order.



          “Benefit Plan” means any Employee benefit plan (including pension and severance) which (a) is
maintained, administered or contributed to by the Company or any Subsidiary or which could result
in any liability for the Company or a Subsidiary and (b) covers any Employee or former Employee of
the Company or any Subsidiary.



          “Board” means the board of directors of the Company.



          “Books and Records” means all files, documents, instruments, papers, books and records
relating to the Business or Condition of the Company and its subsidiaries, including without
limitation financial statements, tax returns and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute books, share
certificates and books, stock transfer ledgers, Contracts, Licenses, customer lists, computer files
and programs, retrieval programs, operating data and plans and environmental studies and plans.



          “Business or Condition of the Company” means the business, condition (financial or otherwise),
results of operations, Assets and Properties and prospects of the Group Companies taken as a whole.



          “Business Day” means a day other than Saturday, Sunday or any day on which banks located in
the PRC, the U.S., Hong Kong, the British Virgin Islands, the Cayman Islands or the Marshall
Islands are authorized or obligated to close.



4









 





          “Chaview Closing Date” means a date as soon as possible after the date of this Agreement but
no later than September 15, 2008 (or such other date as the Parties mutually agree in writing).



          “Chaview Indemnified Parties” means Chaview and its Representatives.



          “Company Indemnified Parties” means the Group Companies and each of their Representatives.



          “Confidential Information” means (a) any information concerning the organization, business,
technology, trade secrets, know-how, finance, transactions or affairs of any Party or any Party’s
Representatives (whether conveyed in written, oral or in any other form and whether such
information has been furnished before, on or after the date of this Agreement), (b) any information
or materials prepared by a Party or its Representatives that contains or otherwise reflects, or is
generated from, Confidential Information and (c) this Agreement, the transactions contemplated
hereby, the terms and conditions hereof or any discussions, correspondence or other communications
among the Parties or their respective Representatives relating to this Agreement or any of the
transactions contemplated hereunder.



          “Contract” means any agreement, lease, license, engagement, evidence of Indebtedness,
mortgage, indenture, security agreement, financial instrument, purchase order, commitment,
arrangement, understanding or other contract (whether written, oral or otherwise).



          “Control Documents” means the equity pledge agreement, proxy agreement, exclusive
technological service agreement, future share transfer and cooperative agreement and trademark,
domain names and trade names license agreements that have been entered into by and among the WFOE,
the Domestic Companies, the Founder and/or the shareholders of the Domestic Companies, as set forth
in Schedule 3.19(a).



          “Employee” means any officer or employee including any part-time, regular contract or
fixed-term officer or employee.



          “Encumbrance” means (a) any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, deed of trust, title retention, security interest or other encumbrance
of any kind securing, or conferring any priority of payment in respect of, any obligation of any
Person, including any right granted by a transaction which, in legal terms, is not the granting of
security but which has an economic or financial effect similar to the granting of security under
applicable Law, (b) any lease, sub-lease, occupancy agreement, easement or covenant granting a
right of use or occupancy to any Person, (c) any proxy, power of attorney, voting trust agreement,
interest, option, right of first offer, negotiation or refusal or transfer restriction in favor of
any Person, (d) any adverse claim as to title, possession or use, and (e) any direct or indirect
repurchase, resale, participation or obligation, understanding or arrangement (whether formal or
informal, written or oral).



          “Equity Securities” means the share capital, membership interests, partnership interests,
registered capital or other ownership interest in any Person or any options, warrants or



5









 




other securities that are directly or indirectly convertible into, or exercisable or exchangeable
for, such share capital, membership interests, partnership interests, registered capital or other
ownership interests (whether or not such derivative securities are issued by such Person) and
includes the Shares.




          “ESOP” means the Company’s 2008 Share Incentive Plan as adopted by a written shareholders
resolution of the Company on April 1, 2008.



          “Government Authority” means, with respect to any Person, any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of any jurisdiction in which such
Person conducts business or operations, or any province, state, country, city or other political
subdivision thereof.



          “Group Companies” means the Company, BVI Sub, Marshall Sub, HK Sub, WFOE, the Domestic
Companies and Qinghai Charm and any other existing and future, direct or indirect Subsidiary of a
Group Company collectively, and individually, a “Group Company”.



          “Hong Kong” means the Hong Kong Special Administrative Region.



          “Indebtedness” of any Person means all obligations (contingent or otherwise) of such Person
(a) for borrowed money, (b) evidenced by notes, bonds, debentures, notes payable and drafts
accepted representing extension of credit or similar instruments, (c) for the deferred purchase
price of goods or services incurred outside the ordinary course of business of such Person, (d)
under capital leases incurred outside the ordinary course of business of such Person or (e) in the
nature of guarantees of the obligations described in subsections (a) through (d) above of any other
Person.



          “Intellectual Property” means all patents and patent rights, entity models, trademarks and
trademark rights, trade names and trade name rights, service marks and service mark rights, service
names and service name rights, brand names, internet domain names and sub-domains, inventions,
processes, formulae, copyrights and copyright rights, trade dress, business and product names,
logos, slogans, trade secrets, industrial models, processes, designs, methodologies, computer
programs (including all source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how and all pending applications for and
registrations of patents, entity models, trademarks, service marks, copyrights and internet domain
names and sub-domains.



          “Investment Assets” means all debentures, notes and other evidences of Indebtedness, Equity
Securities, interests in joint ventures and general and limited partnerships, mortgage loans and
other investment or portfolio assets owned legally or beneficially by the Company or any Subsidiary
and issued by any Person other than the Company or any Subsidiary (other than trade receivables
generated in the ordinary course of business of the Company and the Subsidiaries).



6









 





          “Initial Public Offering” shall mean the first Public Offering of Equity Securities of a
Person upon the consummation of which such securities are listed on an internationally recognized
securities exchange, excluding over-the-counter and secondary boards.



          “IPO Vehicle” means the Company or a Person organized to effect an Initial Public Offering or
a Qualified IPO.



          “Law” means any constitutions, treaties, statutes, laws (including the common law), codes,
rules, regulations, ordinances, mandatory guidelines, circulars, orders or implemented policies of
any Government Authority or any Order.



          “Liabilities” means all Indebtedness, obligations, Taxes and other liabilities of a Person
(whether absolute, accrued, contingent, fixed or otherwise, or whether due or become due).



          “Licenses” means all licenses, permits, certificates of authority, authorizations, approvals,
registrations, franchises and similar consents granted or issued by any Government Authority.



          “Loss” means any and all damages, fines, fees, penalties, deficiencies, losses and expenses of
any kind or nature whatsoever (including interest, court costs, fees of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any claim, default or
assessment).



          “Material Adverse Effect” means an effect of any change, circumstance, condition, development,
effect, event, occurrence or state of facts that, individually or in the aggregate, is, has been,
or would reasonably be expected to be, materially adverse to the Business or Condition of the Group
Companies, or on the ability of any of the Group Companies or the Founder to consummate the
transactions contemplated hereby and by other Transaction Documents.



          “Option” with respect to any Person means any security, right, subscription, warrant, option,
“phantom” stock right, proxies, Contract or other understanding or arrangement (whether formal or
informal, written or oral) that gives the right to (a) purchase or otherwise receive or be issued
any Equity Securities or (b) receive or exercise any benefits or rights similar to any rights
enjoyed by or accruing to the holder of Equity Securities of such Person, including any rights to
participate in the equity or income of such Person or to participate in or direct the election or
appointment of any directors or officers of such Person or the manner in which any Equity
Securities of such Person are voted.



          “Order” means any writ, judgment, decree, injunction, award or similar order of any Government
Authority (in each such case whether preliminary or final).



          “Ordinary Shares” means ordinary shares in the Company with voting rights, par value US$0.0001
per share.



7









 





          “Ordinary Share Equivalents” means warrants, options and rights exercisable for Ordinary
Shares and instruments convertible into or exchangeable for Ordinary Shares, including, without
limitation, the Series A Preferred Shares.



          “Person” means an individual, firm, corporation, partnership, association, limited liability
company, union, trust or estate or any other entity or organization whether or not having separate
legal existence, including any Government Authority.



          “PRC” means the People’s Republic of China, but solely for the purposes of this Agreement,
excluding Hong Kong, the Macau Special Administrative Region and Taiwan.



          “Public Offering” means, in the case of an offering in the United States, an underwritten
public offering of Equity Securities of a Person pursuant to an effective registration statement
under the U.S. Securities Act of 1933, as amended, and, in the case of an offering in any other
jurisdiction, a widely distributed underwritten offering of Equity Securities of a Person in which
both retail and institutional investors are eligible to buy in accordance with the applicable
securities laws of such jurisdiction.



          “Public Official or Entity” means (i) an officer, employee, agent or representative of any
government or military; (ii) any department, agency, corporate entity, instrumentality or political
subdivision of any government or military; (iii) any person or commercial entity acting in an
official capacity for or on behalf of any government or military; (iv) any candidate for political
office, any foreign political party or any official of a foreign political party; or (v) any
officer, employee, agent or representative of any public international organization.



          “Qualified IPO” means an Initial Public Offering of the Company which must take place before
December 31, 2009 and meet the following requirements: (i) a firm commitment underwritten Public
Offering which results in the listing of Ordinary Shares on the New York Stock Exchange, the Nasdaq
Global Market or such other internationally recognized stock exchange acceptable to Dynasty and
Chaview; (ii) the valuation of the IPO Vehicle (as determined by reference to the initial public
offering price) immediately prior to the Public Offering shall be no less than US$400 million; and
(iii) the gross proceeds of such offering to the IPO Vehicle shall be at least US$100 million.



          “Representatives” means with respect to any Person, such Person’s directors, officers,
Employees, agents, Affiliates, partners, counsel, legal and financial advisers, accountants,
consultants, controlling persons, prospective investors and prospective sources of capital.



          “RMB” means the Renminbi, the lawful currency of the PRC.



          “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as from time to time in effect.



8









 





          “Series A Preferred Shares” means the Series A preferred shares, par value US$0.0001 per
share, of the Company to be created by the Company with the rights and privileges as set forth in
the Articles of Association to be amended and adopted in accordance with this Agreement.



          “Shares” means, collectively, Ordinary Shares and the Series A Preferred Shares.



          “Side Letter” means a side letter dated as of July 29, 2008, entered into among AIF Capital
Asia III, L.P., Dynasty and the Company.



          “Subsidiary” means any Person which the Company, BVI Sub, Marshall Sub, HK Sub, WFOE or each
Domestic Company, as the case may be, controls, directly or indirectly. For purposes of this
definition, “control” has the meaning set forth above under the definition of “Affiliate.”



          “Tax” means any form of taxation (including any value added, excise, use, personal property,
use and occupancy, business and occupation, mercantile, real estate, payroll, franchise or capital
gains tax), estate duty, customs duty, deduction, withholding, duty, impost, levy or fee or charge
levied, collected, withheld or assessed by any Government Authority and any interest, penalty,
surcharge or fine in connection therewith or any other measure of tax.



          “Transaction Documents” means this Agreement, the Amended and Restated Shareholders Agreement,
the Amended and Restated Registration Rights Agreement, the Side Letter and Articles of
Association.



          “US$” means the United States dollar, the lawful currency of the United States of America.



          “U.S. GAAP” means U.S. generally accepted accounting principles, consistently applied
throughout the specified period and in the immediately prior comparable period.



          1.2 Additional Definitions. The following terms shall have the meanings set forth in the
indicated section of this Agreement:



	 	 	 
	Defined Terms	 	Section Reference
	“Agreement”

	 	Preamble
	“Amended and Restated Registration Rights Agreement”

	 	Whereas (E)
	“Amended and Restated Shareholders Agreement”

	 	Whereas (F)
	“Audited Financial Statements”

	 	3.9(a)
	“Business”

	 	Whereas (A)
	“BVI Sub”

	 	Preamble
	“Change of Nominees”

	 	5.7(b)
	“Chaview Adjustment Shares”

	 	2.4(b)






9









 






	 	 	 
	Defined Terms	 	Section Reference
	“Chaview Closing”

	 	Whereas (D), 2.2
	“Closing Shares”

	 	2.1
	“Company”

	 	Preamble
	“Contractual Arrangements”

	 	Whereas (B)
	“Disclosing Party”

	 	11.1
	“Domestic Company(ies)”

	 	Preamble
	“Dynasty”

	 	Whereas (C)
	“First Subscription Agreement”

	 	Whereas (C)
	“Founder”

	 	Preamble
	“General Limitations”

	 	3.2(b)
	“HKIAC”

	 	12.2(a)
	“HK Sub”

	 	Preamble
	“Marshall Sub”

	 	Preamble
	“Merry Circle”

	 	Whereas (D)
	“Minimum Claim Amount”

	 	9.1(a)
	“Purchase Price”

	 	2.1
	“Permitted Transferees”

	 	13.4(b)
	“Related Party”

	 	3.22(a)
	“SAFE Registration”

	 	3.7(b)
	“Swift Rise”

	 	Whereas (C)
	“Tax Returns”

	 	3.13(a)
	“WFOE”

	 	Preamble
	“2008 Net Income”

	 	2.4(a)






          1.3 Construction. Whenever used in this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. Unless otherwise specified, words such as “herein,”
“hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular section or sub-section of this Agreement, and references herein to “articles”
or “sections” refer to articles or sections of this Agreement. Unless otherwise specified,
references herein to the word “including” shall be deemed to be followed by words “without
limitation” or “but not limited to,” as applicable, or words of similar import. In the event that
any translated version of this Agreement differs from the English version, the English version
shall control. Whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless Business Days are specified.



ARTICLE II




PURCHASE AND SALE OF PREFERRED SHARES



10









 





          2.1 Issuance and Subscription. Subject to the terms and conditions in this Agreement, Chaview
agrees to purchase at the Chaview Closing, and the Company agrees to sell and issue to Chaview at
the Chaview Closing, 5,000,000 Series A Preferred Shares for an aggregate purchase price of
US$20,000,000, (the “Purchase Price”) . The Series A Preferred Shares to be purchased by Chaview
at the Chaview Closing pursuant to this Agreement are referred to in this Agreement as the
(“Closing Shares”). The Closing Shares owned by Chaview shall represent 7.1429% of the fully
diluted share capital of the Company immediately after the Chaview Closing, including, without
limitation, any Ordinary Shares or Ordinary Share Equivalents issued under the ESOP and with
fractional shares rounded up, as set forth in the Capitalization Table attached as Schedule 2
hereto. The Series A Preferred Shares owned by each of Dynasty, Swift Rise and Chaview as at the
Chaview Closing shall be:-




	 	 	 	 	 	 	 	 	 
	Investor	 	Purchase price	 	Number of closing shares
	 
	Dynasty
	 	US$	29,750,000	 	 	 	7,437,500	 
	 
	Swift Rise
	 	US$	250,000	 	 	 	62,500	 
	 
	Chaview
	 	US$	20,000,000	 	 	 	5,000,000	 
	 
	Total
	 	US$	50,000,000	 	 	 	12,500,000	 
	 






          2.2 Chaview Closing. Subject to the satisfaction or waiver of all conditions to the Chaview
Closing set forth in Article VI and Article VII, at the Chaview Closing:




          (a) The Company shall deliver to Chaview one or more certificates representing the duly
authorized and validly issued and allotted Closing Shares purchased by Chaview, registered in the
name of Chaview or its designees;




          (b) The Company shall cause its register of members to be updated to reflect the Closing
Shares purchased by Chaview and deliver a certified true copy of such updated share register to
Chaview;




          (c) Written special resolutions of all shareholders of the Company adopting the amended and
restated Articles and Association in accordance with Section 6.7 hereof;




          (d) Chaview shall pay to the Company the Purchase Price by wire transfer of immediately
available funds in U.S. dollars to the following bank account in accordance with the instructions
below:




	 	 	 
	Corresponding Bank:

	 	HSBC Bank USA NA, New York
	 

	 	Swift Code — MRMD US33
	 

	 	ABA No. 0108
	Beneficiary bank:

	 	HSBC, Hong Kong
	Swift code:

	 	HSBC HK HHHKH
	Bank code:

	 	004
	Branch code:

	 	491
	Name of account:

	 	Charm Communications Inc.
	Account number:

	 	491-770129-838






11









 







          2.3 Use of Proceeds. In accordance with the directions of the Company’s board of directors,
as it shall be constituted in accordance with the Amended and Restated Shareholders Agreement and
the Articles of Association, the Company will, to the extent permitted under applicable Laws,
inject the proceeds from the sale of the Closing Shares into WFOE, in the form of an inter-company
loan (unless the Company’s board of directors finds it detrimental to the Group Companies) for
general working capital, funding to enter into exclusive agency contracts with more TV networks and
merger and acquisition projects approved by the Board, subject to the Amended and Restated
Shareholders Agreement.




          2.4 Chaview Adjustment Shares.




          (a) So long as the Company has not completed an Initial Public Offering before December 31,
2008, as soon as practical and prior to April 30, 2009, the Company shall deliver to Chaview its
2008 consolidated financial statements for the year ended December 31, 2008, which shall be
prepared in accordance with U.S. GAAP and audited by one of the “big four” international accounting
firms. The after-tax net income on such financial statements shall be adjusted by: (i) excluding
any earnings obtained through or as the result of any merger, amalgamation or other business
combination between any other entity and the Company or its Subsidiaries unless such merger,
amalgamation or other business combination has been approved by Chaview in advance; (ii) excluding
any extraordinary or non-recurring earnings obtained by the Company or its Subsidiaries other than
in their ordinary course of business and (iii) eliminating the effect of extraordinary and
non-recurring expenses (including expenses for share based compensation and expenses and costs
incurred in connection with the issuance of Series A Preferred Shares hereunder and under the First
Subscription Agreement and deemed dividends and other expenses and distributions related to Series
A Preferred Shares) (the “2008 Net Income”).




          (b) Unless the 2008 Net Income (a) is equal to or greater than US$25 million, the Company
shall, and the Founder shall procure that the Company, reasonably promptly allot and issue to
Chaview, but no later than June 30, 2009, such number of additional Series A Preferred Shares (the
“Chaview Adjustment Shares”) at no additional consideration, free and clear of all Encumbrances, in
accordance with the following formula:




Chaview Adjustment Shares = X x 40% (adjusted to eliminate fractional shares)




X = ( Adjusted Equity Share % x [A + X + B] )  —  B









12









 








Where:




	 	 	 	 	 
	X

	 	=
	 	All adjustment shares for Dynasty, Swift Rise and Chaview
	 
	 	 	 	 
	A

	 	=
	 	Total number of Ordinary Shares of the Company
outstanding immediately after the Chaview Closing + 7,500,000
	 
	 	 	 	 
	B

	 	=
	 	12,500,000
	 
	 	 	 	 
	Adjusted Equity Share %

	 	=
	 	US$50 million / Adjusted Post-money Valuation
	 
	 	 	 	 
	Adjusted Post-money Valuation

	 	=
	 	US$280 million x (2008 Net Income / US$25 million)






          (c) For the avoidance of doubt, no adjustment will be made if the 2008 Net Income is
equal or greater than US$25 million.




          (d) The terms and conditions relating to the Series A Preferred Shares are more particularly
described in the Articles and Association of the Company.




ARTICLE III




REPRESENTATIONS AND WARRANTIES OF THE FOUNDER AND THE GROUP

COMPANY



          Each of the Group Companies and the Founder, jointly and severally, represents and warrants to
Chaview the following as of the date of this Agreement, and such representations and warranties
shall be deemed to be made as of the Chaview Closing Date (if different from the date of this
Agreement), provided that each representation or warranty deemed to be made after the date of this
Agreement shall be deemed to be made by reference to the facts and circumstances existing at the
date on which such representation or warranty is deemed to be made (except that, for the avoidance
of doubt, any representation or warranty that is expressed to be made by reference to the facts and
circumstances existing as at a specific date shall be made by reference to the facts and
circumstances existing as at such specific date):




          3.1 Organization.




          (a) Each Group Company is a corporation duly organized and validly existing under the Laws of
its jurisdiction of incorporation and has full corporate power and authority to execute and deliver
this Agreement and each other Transaction Document to which it is a party and to perform its
obligations hereunder and thereunder and to consummate the transactions contemplated hereby and
thereby.




          (b) Each Group Company has the full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its Assets and Properties. Each Group
Company is duly qualified, licensed or admitted to do business in each jurisdiction in which the
ownership, use or leasing of its Assets and Properties, or the conduct or






13









 







nature of its business, makes such qualification, licensing or admission necessary, except
that the failure to be so qualified, licensed or admitted would not result in a Material Adverse
Effect.




          3.2 Authority.




          (a) The execution and delivery by each Group Company of this Agreement and each other
Transaction Document to which it is a party, and the performance by each Group Company of its
obligations hereunder and thereunder, have been duly and validly authorized by all necessary action
of such Party (including all necessary corporate actions).




          (b) This Agreement, when executed and delivered by each Group Company and the Founder, and
each other Transaction Document, when executed and delivered by each of the Group Company and the
Founder who is a party to such Transaction Document, will constitute a legal, valid and binding
obligation, enforceable against such Party in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the rights of
creditors generally and subject to rules of law governing (and all limitations on) specific
performance, injunctive relief and other equitable remedies (the “General Limitations”).



3.3 Valid Issuance of Preferred and Ordinary Shares. The Closing Shares and any Chaview
Adjustment Shares, when allotted, issued and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Encumbrances, and free of restrictions or limitations on
transfer other than restrictions on transfer under applicable Laws and those set out in the
Articles of Association and Amended and Restated Shareholders Agreement. The register of members
of the Company is prima facie evidence that the Series A Preferred Shares set forth on such
register of members as owned by Chaview are legally owned by Chaview. The Ordinary Shares issuable
upon conversion of the Series A Preferred Shares have been duly and validly reserved for issuance
and, upon issuance and upon conversion the Series A Preferred Shares in accordance with the terms
of the Articles of Association, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Encumbrances and free of restrictions or limitations on transfer other than
restrictions on transfer under applicable Laws and those set out in the Articles of Association and
Amended and Restated Shareholders Agreement.




          3.4 Capitalization. The authorized capital of the Company immediately prior to the Chaview
Closing consists or will consist of (i) 187,500,000 Ordinary Shares, par value US$0.0001 per
share, of which 50,000,000 are issued and outstanding and (ii) 17,500,000. Series A Preferred
Shares, par value US$0.0001 per share, of which 7,500,000 are issued and outstanding. Each of the
issued and outstanding Shares, are duly authorized, validly issued, fully paid and nonassessable.
The information set forth under “Current Capitalization” in Schedule 2 hereto is true and accurate.
Except as set forth in Schedule 3.4 and as may be provided in the Transaction Documents, there are
no outstanding Options, right of first refusal, preemptive rights or other rights or agreements,
either directly or indirectly, to purchase or otherwise acquire or issue any Equity Securities of
the Company.




          3.5 Subsidiaries.






14









 








          (a) Schedule 3.5 sets forth the name and the jurisdiction of organization of each
Subsidiary. Each such Subsidiary is a corporation duly organized and validly existing under the
Laws of its jurisdiction of incorporation, and has full corporate power and authority to conduct
its business as and to the extent now conducted or as proposed to be conducted and to own, use and
lease its Assets and Properties. Each Subsidiary is duly qualified, licensed or admitted to do
business in each jurisdiction in which it currently conducts business and has all necessary
licenses, franchises, concessions, consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all necessary declarations and filings with, all Government
Authorities to own, use and lease its Assets and Properties and to conduct business, except where
the failure to be so qualified, licensed or admitted and the lack of such licenses, franchises,
concessions, consents, authorizations, approvals, orders, certificates, permits and the failure to
such declarations or filings would not individually or in the aggregate result in a Material
Adverse Effect. All filings and registrations with the relevant PRC Government Authority required
in respect of all Subsidiaries which are incorporated under the Laws of the PRC have been duly and
timely made in accordance with the relevant PRC Laws, except for such failures that would not,
individually or in the aggregate, have a Material Adverse Effect. Neither any Group Company nor
the Founder has any reason to believe that any Government Authority is considering modifying,
suspending or revoking any such licenses, consents, authorizations, approvals, orders, certificates
or permits and the Group Companies and their Subsidiaries are in compliance with the provisions of
all such licenses, consents, authorizations, approvals, orders, certificates or permits in all
material respects. The Articles of Association and all other constitutional documents of each Group
Company provided to Chaview are true, complete and up-to-date.




          (b) Schedule 3.5 lists for each Subsidiary of the Company the amount of its authorized share
capital, the amount of its outstanding share capital and the record owners and beneficial owners,
if different from the record owners, of such outstanding share capital. All of the outstanding
shares of share capital of each Subsidiary have been duly authorized and validly issued, are fully
paid and nonassessable, and, except the outstanding shares of Domestic Companies, are owned,
beneficially and legally, by the Company or its Subsidiaries free and clear of all Encumbrances.
There are no outstanding Options or other rights, agreements, arrangements or commitments (other
than those created by the Control Documents) to which any Subsidiary of the Company is a party or
by which such Subsidiary is bound relating to the issued or unissued share capital or its
equivalent or any security of any kind convertible into or exchangeable for any equity interests of
such Subsidiary, except for those under the Transaction Documents.




          (c) Neither the Company, BVI Sub, Marshall Sub nor HK Sub has any Assets, tangible or
intangible, or Properties other than its interests in its Subsidiaries, except cash and short term
investments. In respect of any ownership interests held in a Subsidiary, (i) the Company, BVI Sub
and Marshall Sub, hold good and valid title to such ownership interests free and clear of all
restrictions on transfer or other encumbrances, other than those restrictions on transfer or other
encumbrances created by the Transaction Documents, (ii) such ownership interest was acquired in
compliance with all applicable Laws, and (iii) there are no outstanding






15









 







Options or rights for the purchase or acquisition from the Company or another Subsidiary of
such ownership interests, except for those under the Transaction Documents.




          (d) Except in the case of prohibition imposed by PRC Laws, the Subsidiaries are not
prohibited, directly or indirectly, from making any payments, dividends or other distributions to
the Company or from making any other distribution on the Subsidiaries’ equity interest or from
transferring any of the Subsidiaries’ property or assets to the Company. Except in the case of
prohibition imposed by PRC Laws, all dividends and other distributions declared and payable upon
the equity interest in the Subsidiaries to the Company may be converted into foreign currency that
may be freely transferred out of the PRC.




          3.6 No Conflicts. The execution and delivery by each of the Group Companies and the Founder
of this Agreement and each other Transaction Document to which it or he is a party does not, and
the performance by each of the Group Companies and the Founder of its obligations under this
Agreement and such other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby will not:




          (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of the formation and/or constitutional documents of any Group Company or any other
Subsidiary thereof;




          (b) subject to obtaining the consents, approvals and actions, making the filings and giving
the notices disclosed in Schedule 3.6, conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to any Group Company, the Founder or any Subsidiary or
any of their respective Assets and Properties, except as would not result in a Material Adverse
Effect; or




          (c) (i) contravene, conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default or result in a loss of benefit under, (iii)
require any Group Company, the Founder or any Subsidiary to obtain any consent, approval or action
of, make any filing with or give any notice to any Person as a result or under the terms of, (iv)
result in or give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments under, or (vi) result in
the creation or imposition of any Encumbrance upon any Group Company or any Subsidiary thereof or
any of their respective Assets and Properties under, any Contract or License to which any Group
Company or any Subsidiary is a party or under which any of their respective Assets and Properties
is bound, except as would not result in a Material Adverse Effect.




          3.7 Governmental Approvals and Filings.




          (a) Except as disclosed in Schedule 3.7, no consent, approval, order, license, authorization
or action of, or registration, qualification, designation, declaration or filing with or notice to
any Government Authority on the part of any Group Company, the Founder or any Subsidiary is
required in connection with the execution, delivery and performance of this






16









 







Agreement or any other Transaction Document to which any of them is a party or the consummation of
the transactions contemplated hereby or thereby, or if any such approval, order, license,
authorization or action, registration, qualification, designation, declaration or filing is
required, the same has been obtained or made prior to the Chaview Closing Date.




          (b) The Founder has completed the registration, as of the date hereof and the Chaview Closing
Date, as required under Circular 75 issued by the State Administration of Foreign Exchange of the
PRC (“SAFE Registration”) on October 21, 2005, titled “Notice Regarding Certain Administrative
Measures on Financing and Inbound Investments by PRC Residents Through Offshore Special Purpose
Vehicles” (), effective as
of November 1, 2005, or any successor rule or regulation under PRC Laws.




          3.8 Books and Records. The Books and Records of the Company and the Subsidiaries as made
available to Chaview prior to the date hereof contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents in lieu of meetings of
the shareholders, the boards of directors and any committees of the boards of directors of the
Company and each of the Subsidiaries. The share transfer ledgers and other similar records of the
Company and each of the Subsidiaries as made available to Chaview prior to the date hereof
accurately reflect all record transfers prior to the date hereof in the Shares of the Company and
the Subsidiaries.




          3.9 Financial Statements.




          (a) Prior to the date hereof, the Company has made available to Chaview true and complete
copies of the following audited financial statements:




          (i) the audited balance sheet of the Company and its consolidated Subsidiaries as of December
31, 2007, and the related audited consolidated statements of operations, shareholders’ equity and
cash flows for the fiscal year ended December 31, 2007 (collectively, the “Audited Financial
Statements”); and




          (ii) unqualified report from an independent registered public accounting firm in connection
with the Audited Financial Statements.




          (b) The financial statements referred to in subsection (a) above (i) were prepared in
accordance with the U.S. GAAP, (ii) fairly present, in all material respects, the consolidated
financial condition and results of operations of the Company and its consolidated Subsidiaries as
of the date thereof and for the period covered thereby, and (iii) were compiled from the Books and
Records the Company and its Subsidiaries regularly maintained by management and used to prepare the
financial statements of the Company and its Subsidiaries in accordance with the principles stated
therein.




          (c) Prior to the date hereof, the Company has made available to Chaview, true and complete
copies of the management accounts of the Company for the three-month period ended March 31, 2008
and the six-month period ended June 30, 2008.




17









 








          3.10 Absence of Activities. Except as disclosed in Schedule 3.10:




          (a) The Company, BVI Sub, Marshall Sub and HK Sub have no business operation and activities
other than their own formation, holding shares of the Subsidiaries, entering into this Agreement
and other Transaction Documents, carrying out the transactions as contemplated in the Transaction
Documents, the activities related to the Initial Public Offering and any activities incidental
thereto.




          (b) The Company does not have any Subsidiary other than BVI Sub. BVI Sub does not any
Subsidiary other than Marshall Sub. Marshall Sub does not have any Subsidiary other than HK Sub. HK
Sub does not have any Subsidiary other than WFOE.




          (c) Neither the Company, BVI Sub, Marshall Sub nor HK Sub has any material Liability.




          3.11 Absence of Changes. Except for the execution and delivery of this Agreement and the
transactions to take place pursuant hereto and to the other Transaction Documents on or prior to
the Chaview Closing Date, since the December 31, 2007, there has not been any Material Adverse
Effect, or any event or development which, individually or together with other such events, could
reasonably be expected to result in a Material Adverse Effect. Without limiting the foregoing,
except as disclosed in Schedule 3.11, there has not occurred since December 31, 2007:




          (a) any declaration, setting aside or payment of any dividend or other distribution in respect
of the Equity Securities of any Group Company or any Subsidiary, or any direct or indirect
redemption, purchase or other acquisition by any Group Company or any Subsidiary of any such Equity
Securities of or any Option with respect to any Group Company or any Subsidiary;




          (b) other than Series A Preferred Shares issued pursuant to the First Subscription Agreement,
any authorization, issuance, sale or other disposition by any Group Company or any Subsidiary of
any Equity Securities of or Option with respect to each Group Company or any Subsidiary except that
the Company may enter into an agreement to sell, and may sell, additional Series A Preferred Shares
to other investors, or any modification or amendment of any right of any holder of any outstanding
Equity Securities of or Option with respect to such Group Company or Subsidiary;




          (c) any material increase in the salary, wages or other compensation of any senior executive
officer of any Group Company or any Subsidiary;




          (d) (i) any incurrence by any Group Company or any Subsidiary of Indebtedness or (ii) any
voluntary purchase, cancellation, prepayment or complete or partial
discharge in advance of a scheduled payment date with respect to, or waiver of any right of any
Group Company or any Subsidiary under, any Indebtedness of or owing to any Group Company




18









 







or any
Subsidiary, except the incurrence of accounts payable in the ordinary course of business of the
Group Companies;




          (e) any physical damage, destruction or other casualty loss (whether or not covered by
insurance) affecting any of the plant, real or personal property or equipment of any Group Company
or any Subsidiary that would result in a Material Adverse Effect;




          (f) any material change in (i) any accounting, financial reporting, credit, allowance or Tax
practice or policy of the Company or any Subsidiary, or (ii) any method of calculating any bad
debt, contingency or other reserve of any Group Company or any Subsidiary for accounting, financial
reporting or Tax purposes, or any change in the fiscal year of any Group Company or any Subsidiary;




          (g) any write-off or write-down of or any determination to write off or write down any of the
material Assets and Properties of any Group Company or any Subsidiary;




          (h) any acquisition or disposition of, or incurrence of an Encumbrance on, any Assets and
Properties of any Group Company or any Subsidiary with a value exceeding US$1,000,000;




          (i) other than pursuant to the First Subscription Agreement, any (i) amendment of the Articles
of Association or other constitutional documents of any Subsidiary other than any amendment in
connection with the transaction contemplated hereby, (ii) recapitalization, reorganization,
composition, liquidation or dissolution of any Group Company or any Subsidiary, other than the
restructuring occurred prior to the date hereof and the Change of Nominees, (iii) material merger
or other business combination involving any Group Company or any Subsidiary with any other third
party, or (iv) any Bankruptcy Event with respect to any Group Company or any Subsidiary;




          (j) any (i) entering into, material amendment, modification, termination (partial or complete)
or granting of a waiver under or giving any consent with respect to (x) any Contract which is
required to be disclosed in Schedule 3.19(a) other than the agreements in connection with the
investment in the Company by Dynasty and Swift Rise or (y) any License held by any Group Company or
any Subsidiary, other than in connection with the restructuring occurred prior to the date hereof
and the Change of Nominees, or (ii) granting any power of attorney out of ordinary course of
business;




          (k) capital expenditures or commitments for additions to property, plant or equipment of the
Company and the Subsidiaries constituting capital assets that in the aggregate exceed US$1,000,000;




          (l) any commencement or termination by the Company or any Subsidiary of any line of business;




          (m) any transaction by the Company or any Subsidiary with the Founder or any Representative of
the Founder with a value exceeding US$100,000 annually; or




19









 








          (n) any entering into of a Contract to do or engage in any of the foregoing after the date
hereof.




          3.12 No Undisclosed Liabilities. Except as reflected or reserved against in the balance sheet
included in the Company’s Audited Financial Statements or in the notes thereto, there are no
Liabilities against the Company or any Subsidiary or any of their respective Assets and Properties,
other than Liabilities which, individually or in the aggregate, are not material to the Business or
Condition of the Company or any Subsidiary.




          3.13 Taxes.




          (a) Each Group Companies and each Subsidiary have filed all Tax returns, statement, reports
and forms (including estimated Tax returns and reports and information returns and reports) (“Tax
Returns”) that it was required to file in accordance with all applicable Laws. All such Tax
Returns were true, correct and complete in all material respects and not misleading for the purpose
of such Tax Returns. All Taxes which have become due and payable by each Group Company and each
Subsidiary (whether or not shown on any Tax Return) have been fully paid. There are no security
interests on any of the Assets and Properties of any Group Company or any Subsidiary that arose in
connection with any failure (or alleged failure) to pay any Tax other than as would not result in a
Material Adverse Effect.




          (b) Each Group Company and each Subsidiary has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any Employee, creditor,
independent contractor, or other third party in accordance with applicable Law.




          (c) Neither any Group Company nor any Subsidiary is aware of any statement of deficiency,
assessment of additional Taxes or any claim or dispute regarding the Tax liability of any Group
Company or any Subsidiary for any period for which Tax Returns have been filed. Each group Company
has delivered to Chaview correct and complete copies of all Tax Returns for the past three (3)
complete fiscal years.




          (d) None of the Subsidiaries is a party to any Tax allocation or sharing agreement.




          3.14 Legal Proceedings. Except as disclosed in Schedule 3.14:




          (a) there are no Actions or Proceedings pending or, to the best knowledge of any Group Company
and the Founder, threatened, against any of Founder, any Group Company or any Subsidiary or any of
their respective Assets and Properties; and




          (b) there are no Orders outstanding against any Group Company or any Subsidiary thereof.






20









 








          3.15 Compliance With Laws and Orders. Except as disclosed in Schedule 3.15, neither any Group
Company, the Founder nor any Subsidiary is, or has received any notice that it is, in violation of
or in default under any Law or Order applicable to the Company or any Subsidiary thereof or any of
their respective Assets and Properties.




          3.16 Real Property.




          (a) The Group Companies and their Subsidiaries have a valid and subsisting leasehold estate in
and the right to quiet enjoyment of the real properties leased by them for the full term of the
lease thereof except as would not have a Material Adverse Effect.




          (b) Each Group Company has delivered to Chaview prior to the execution of this Agreement true
and complete copies of all leases that are material to the Business (including any amendments and
renewal letters) and, to the extent reasonably available.




          3.17 Tangible Personal Property; Investment Assets. Except as would not have a Material
Adverse Effect,




          (a) The Group Companies and/or the Subsidiaries are in possession of and have good title to,
or have valid leasehold interests in or valid rights under Contract to use, all machinery,
equipment, furniture, fixtures, vehicles and other properties and assets material for the conduct
of the Business of the Group Companies, including all such property on the balance sheet included
in the Company’s Audited Financial Statements and property acquired since December 31, 2007 (other
than property disposed of since December 31, 2007) in the ordinary course of business consistent
with past practice. All such property is free and clear of any Encumbrances and is in working
order and condition.




          (b) Schedule 3.17 describes each Investment Asset owned by each Group Company or any
Subsidiary on the date hereof. Except as disclosed in Schedule 3.17, all such Investment Assets
are owned by such Group Company or Subsidiary free and clear of all Encumbrances.




          3.18 Intellectual Property Rights. Each Group Company and the Subsidiaries have interests in
or right to use the Intellectual Property disclosed in Schedule 3.18. Each Group Company or
Subsidiary has all rights, titles and interests in or valid and binding rights under Contract to
use such Intellectual Property in connection with the Business. Other than the Intellectual
Property disclosed in Schedule 3.18, there is no other Intellectual Property material in the
conduct of the Business. Except as disclosed in Schedule 3.18, (i) none of the Group Companies has
granted to any Person the right to use the Intellectual Property disclosed in Schedule 3.18, (ii)
all registrations with and applications to any Government Authority in respect of the Intellectual
Property owned by the Group Companies are valid and in full force and effect, (iii) each Group
Company and the Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of their trade secrets, (iv) neither any Group Company nor any Subsidiary
is, or has received any notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any Contract to use such






21









 







Intellectual Property, and (v) to the best knowledge of the Company and the Founder, no such
Intellectual Property is being infringed by any other Person except as disclosed on Schedule 3.18.
Neither the Founder, any Group Company nor any Subsidiary has received notice that any Group
Company or any Subsidiary has infringed or is infringing any Intellectual Property of any other
Person, and no claim is pending or has been made to such effect that has not been resolved and, to
the best knowledge of the Company and the Founder, neither any Group Company nor any Subsidiary is
infringing any Intellectual Property of any other Person, except as would not result in a Material
Adverse Effect.




          3.19 Contracts.




          (a) Except as set forth on Schedule 3.19(a) and the Transaction Documents, neither any Group
Company nor any Subsidiary is bound by:




               (i) any Contract providing for (x) a commitment of employment for a specified or unspecified
term or otherwise relating to employment or the termination of employment of senior executive
officers of the Company; and (y) any obligation of any Group Company or any Subsidiary to make
payments, other than in the ordinary course of business, to any Employee exceeding RMB2,000,000 or
any group of Employees exceeding RMB5,000,000 in the aggregate;



               (ii) any material Contract (other than the Transaction Documents) with any Person containing
any provision or covenant prohibiting or limiting the ability of the Company or any Subsidiary to
engage in any business activity or compete with any Person;



               (iii) any material partnership, joint venture, shareholders or other similar Contracts with
any Person, except that the Company may enter into such Contract with other investors that purchase
addition Series A preferred Shares;



               (iv) any Contract relating to Indebtedness of any Group Company or any Subsidiary or to any
preferred shares issued by any Group Company or any Subsidiary, other than the incurrence of
accounts payable in the ordinary course of business of the Group Companies, except that the Company
may enter into such Contract with other investors that purchase addition Series A preferred Shares;



               (v) any material Contract relating to (x) the future disposition or acquisition of any Assets
and Properties and (y) any merger or other business combination;



               (vi) any material Contract between or among any Group Company or any Subsidiary, on the one
hand, and the Founder, on the other hand;



               (vii) any Contract (other than the Transaction Documents) that in any material respect, (x)
limits, or contains restrictions on, the ability of any Group Company or any Subsidiary to declare
or pay dividends on, to make any other distribution in respect of or to issue or purchase, redeem
or otherwise acquire its Equity Securities, to incur Indebtedness, to incur or suffer to exist any
Encumbrance, to purchase or sell any Assets and Properties, to change the
lines of business in which it participates or engages or to engage in any business combination
or



22









 




(y) require any Group Company or any Subsidiary to maintain specified financial ratios or levels
of net worth or other indicia of financial condition; and




          (viii) any other Contract that requires the payment by or to any Group Company or any
Subsidiary of more than RMB10,000,000 annually, except the incurrence of accounts payable and
receivable in the ordinary course of business of the Group Companies.




          (b) Each Contract required to be disclosed in Schedule 3.19(a) constitutes a legal, valid and
binding agreement of the Group Companies who are parties to such Contract, enforceable against them
in accordance with its terms; and except as disclosed in Schedule 3.19(b), neither any Group
Company nor any Subsidiary or the Founder is aware of, or has received any notice that it is, in
violation or breach of or default under any such Contract (or with notice or lapse of time or both,
would be in violation or breach of or default under any such Contract).




          (c) The Control Documents:




               (i) have been duly authorized, executed and delivered by each of the Group Companies and the
Founder that is a party thereto and constitute a legal, valid and binding obligation of it,
enforceable against it in accordance with their terms, except as limited by General Limitations;



               (ii) have been effected in compliance with all applicable Laws and no consents, approvals,
authorizations, orders, registrations and qualifications by any Government Authority, other than
the registration of equity pledge under the Contractual Arrangements, are required in connection
with the Control Documents except as received prior to the Chaview Closing; and



               (iii) are not the subject of any action, claim, suit, demand, hearing, notice of violation or
proceeding seeking to restrain, enjoin or otherwise challenge any of the transactions contemplated
therein, except to the extent such would not, individually or in the aggregate, have a Material
Adverse Effect.



          The transactions contemplated by the Control Documents constitute binding transactions
completed by the parties to such Control Documents and such transactions are substantially
complete, effective and enforceable in accordance with the relevant terms and conditions of the
Control Documents other than the registration of equity pledge under the Contractual Arrangements.




          3.20 Licenses. The Group Companies and each of them validly hold all Licenses necessary to
the conduct of their Business. None of the Group Companies is in default under any such Licenses in
any material respect. Each License is valid and in full force and effect.




          3.21 Insurance. No premiums are due or have not been paid in relation to, and neither any
Group Company nor any Subsidiary has received any notice of cancellation or
termination in respect of, or is in default under, any insurance policy currently in effect that




23









 







insure the business, operations or employees of any Group Company or any Subsidiary or affect or
relate to the ownership, use or operation of any of the Assets and Properties of any Group Company
or any Subsidiary.




          3.22 Related Party Transactions.




          (a) Except as disclosed in Schedule 3.22(a) hereto, no employee, officer, director or
shareholder of the Company or any Subsidiary or any Affiliate of any of them (a “Related Party”) or
member of such Related Party’s immediately family, or any corporation, partnership or other entity
in which such Related Party is an officer, director or partner, or in which such Related Party has
significant ownership interests or otherwise controls, is indebted to the Company, or any
Subsidiary, nor is the Company or any Subsidiary indebted (or committed to make loans or extend or
guarantee credit) to any of them other than (a) for payment of salary for services rendered not
exceeding amounts equal to one month’s salary, (b) reimbursement for reasonable expenses incurred
on behalf of the Company or the Subsidiary, and (c) for other standard employee benefits made
generally available to all employees, which indebtedness described in clauses (a)-(c) is incurred
in the ordinary course of business consistent with past practice.




          (b) Except as disclosed in Schedule 3.22(b), none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company or any Subsidiary is
affiliated or with which the Company or any Subsidiary has a business relationship, or any firm or
corporation that competes with the Company or any Subsidiary, except that employees, officers, or
directors of the Company and its Subsidiaries and members of such Related Party’s immediately
families may own shares in publicly traded companies that may compete with the Company or any
Subsidiary. No Related Party or member of their immediate family is directly or indirectly
interested in any material contract with the Company or any Subsidiary.




          3.23 Employees; Labor Relations.




          (a) Schedule 3.23 contains a list of the name of each director and senior executive officer of
the Group Companies at the date hereof, together with each such person’s position or function.




          (b) Each of the Group Company and the Subsidiaries has materially complied with all applicable
Laws relating to the employment of labor, including provisions thereof relating to wages, hours,
housing funds, social welfare, social insurance contribution and collective bargaining and none of
such Group Company and Subsidiaries is subject to any investigation or examination by any
applicable Government Authority regarding the employment of labor, including but not limited to
matters relating to social welfare, employee safety, housing funds and social insurance
contribution.




          (c) Neither any Group Company nor any Subsidiary has entered into any Contract with any
Employee or former Employee of any Group Company or any Subsidiary
which entitles any such person to a claim for or as a result of which such person will become
eligible for any bonus, retirement, severance, job security or similar benefit as a result of the
transactions contemplated by this Agreement or any other Transaction Document.




24









 








          (d) Each of the senior executive officers listed in Schedule 3.23 has entered into an
employment agreement, non-competition agreement, and confidentiality and proprietary information
agreement with the Company or the Subsidiary.




          (e) The Company has reserved, but has not yet issued, whether or not subject to a contingency
of condition which may or may not be realised or realisable, 7,500,000 Ordinary Shares, solely for
the purpose of issuing shares and granting options to Employees, advisors, officers, and directors
of, and consultants to, the Company pursuant to the ESOP.



3.24 Employee Benefits.




          (a) Schedule 3.24 identifies each Benefit Plan of each Group Company and each Subsidiary.
Each Group Company has furnished to Chaview copies of such Benefit Plans and all amendments
thereto. Each Benefit Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable Laws and is fully funded.




          (b) Other than statutory social insurance plans operated under the applicable Laws of the PRC,
neither any Group Company nor any Subsidiary provides or is required to provide any retirement,
social insurance, life insurance, medical, dental or other welfare benefits provided on health,
injury, death disability or on termination of employment (whether voluntary or involuntary) to any
current or former employees, officers, consultants, independent contractors or agents of the Group
Companies and the Subsidiaries. Each of the Group Companies and the Subsidiaries has complied with
all applicable Laws relating to any of the Benefit Plans, including by making all required
contributions and payments required to be made by or on behalf of any employees of the Group
Companies and the Subsidiaries to the relevant PRC Government Authority.




          3.25 Substantial Customers. Schedule 3.25 lists the ten largest customers of the Group
Companies, on the basis of revenues for services provided in the year ended December 31, 2007.




          3.26 Accounts Receivable. Each of the accounts and notes receivable of each Group Company and
the Subsidiaries reflected on the balance sheet included in the Company’s Audited Financial
Statements, and all accounts and notes receivable arising subsequent to the December 31, 2007, (i)
arose from bona fide transactions in the ordinary course of business and are payable on ordinary
trade terms, (ii) are not subject to any valid set-off or counterclaim, (iii) are collectible in
the ordinary course of business consistent with past practice in the aggregate recorded amounts
thereof, and (iv) are not the subject of any Actions or Proceedings brought by or on behalf of any
Group Company or any Subsidiary.




          3.27 Third Party Consents. No consent, waiver or approval to the performance by each Group Company
of each of its obligations under this Agreement and each
other Transaction Document to which it is a party or to the consummation of the transactions
contemplated hereby and thereby as is required under any Contract to which such Group Company is a
party or by which any of its Assets and Properties are bound.




25









 








          3.28 Brokers. All arrangements and discussions relating to this Agreement and the Transaction
Documents contemplated hereby and thereby have been carried out by the Founders, each Group Company
directly with Chaview without the intervention of any Person on behalf of the Founder or each Group
Company in such manner as to give rise to any valid claim by any Person against Chaview or any
Group Company for a finder’s fee, brokerage commission or similar payment.




          3.29 Anti-Corruption Compliance. The Company and its Affiliates, directors, officers, employees
and authorized agents are in compliance and shall continue to comply with applicable
Anti-Corruption Laws and shall not cause Chaview or its Affiliates to be in violation of any
applicable Anti-Corruption Law. The Company, its Affiliates, directors, officers, employees and
authorized agents have not and will not, directly or indirectly, pay, promise or offer to pay, or
authorize the payment of, any money or give any promise or offer to give, or authorize the giving
of anything of value, to a Public Official or Entity for purposes of unduly obtaining or retaining
business for or with, or directing business to, any person by (i) influencing any official act,
decision or omission of such Public Official or Entity; (ii) inducing such Public Official or
Entity to do or omit to do any act in violation of the lawful duty of such Public Official or
Entity; (iii) securing any improper advantage; or (iv) inducing such Public Official or Entity to
affect or influence any act or decision of another Public Official or Entity. The Company shall
ensure that no part of any payment, compensation, reimbursement or fee paid by Chaview pursuant to
this Agreement or otherwise will be used directly or indirectly as a corrupt payment, gratuity,
emolument, bribe, kickback or other improper benefit to a Public Official or Entity.




          3.30 Prior Registration Rights. Except as to be provided in the registration rights agreement
entered into pursuant to the First Subscription Agreement, which is being amended by the Amended
and Restated Registration Rights Agreement, or in any Transaction Documents, neither the Company
nor any of its Subsidiaries is under any contractual obligation to register under the United States
Securities Act of 1933, as amended, any of its presently outstanding securities or any of its
securities that may subsequently be issued.




          3.31 No State Assets. None of the assets of any Group Company or any Subsidiary constitute
state-owned assets or are required to undergo any form of valuation under applicable Laws of the
PRC governing the transfer of state-owned assets prior to the consummation of the transactions
contemplated herein or in any of the other Transaction Documents.




          3.32 Disclosure. The Company and its Subsidiaries have provided Chaview with all the
information reasonably requested by Chaview to decide whether to subscribe to the Closing Shares.
There is no fact known to the Company or any Subsidiary or the Founder that has not been disclosed
herein or in any other agreement, document or written statement furnished
by the Company to Chaview in connection with the transactions contemplated hereby which would have
a Material Adverse Effect. No representation or warranty contained in this Agreement, and no
statement contained in any Exhibit or Schedule hereto or in any certificate,




26









 







list or other writing
furnished to Chaview pursuant to any provision of this Agreement (including without limitation the
financial statements) contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light of the circumstances
under which they were made, not misleading.




ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF CHAVIEW



          Chaview hereby represents and warrants to the Company as of the date hereof and as of the
Chaview Closing Date as follows:




          4.1 Organization. Chaview is duly organized and validly existing under the Laws of its
jurisdiction. It has full corporate power and authority to execute and deliver this Agreement and
each other Transaction Document to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.




          4.2 Authority. The execution and delivery by Chaview of this Agreement and each other
Transaction Document to which it is a party, and the performance by Chaview of its obligations
hereunder and thereunder, have been duly and validly authorized by all necessary action on the part
of Chaview. This Agreement has been duly and validly executed and delivered by Chaview and
constitutes, and upon the execution and delivery by Chaview of Transaction Documents to which it is
a party, such Transaction Documents will constitute, a legal, valid and binding obligation of
Chaview enforceable against it in accordance with each of its terms.




          4.3 No Conflicts. The execution and delivery by Chaview of this Agreement and each other
Transaction Document to which it is a party does not, and the performance by Chaview of its
obligations under this Agreement and such other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not:




          (a) conflict with or result in a violation or breach of any of the terms, conditions or
provisions of the constitutional documents of Chaview;




          (b) other than the SAFE Registration by Mr. Chen Xiaotao, conflict with or result in a
violation or breach of any term or provision of any Law or Order applicable to Chaview or any of
its Assets and Properties; or




          (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require Chaview to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as a result or under
the terms of, or (iv) result in the creation or imposition of any Encumbrance upon
Chaview or any of its Assets or Properties under, any Contract or License to which Chaview is a
party or under which any of its Assets and Properties is bound.




27









 








          4.4 Governmental Approvals and Filings. Except the SAFE Registration by Mr. Chen Xiaotao, no
consent, approval or action of, filing with or notice to any Government Authority on the part of
Chaview is required in connection with the execution, delivery and performance of this Agreement or
any other Transaction Document to which any of them is a party or the consummation of the
transactions contemplated hereby or thereby.




          4.5 Brokers. All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Chaview directly with Founder and the Group Companies without the
intervention of any Person on behalf of Chaview in such manner as to give rise to any valid claim
by any Person against any Group Company for a finder’s fee, brokerage commission or similar
payment.




          4.6 Offshore Transaction. Chaview acknowledges that the Closing Shares have not been and may
not be registered under the Securities Act, and that:




          (a) at the time of the Chaview Closing, Chaview is not a “U.S. Person” (as such term is
defined in Regulation S under the Securities Act) and is located outside the United States; and




          (b) it is acquiring the Closing Shares in an “offshore transaction” (as such term is defined
in Regulation S under the Securities Act) in accordance with Regulation S.




ARTICLE V




CERTAIN COVENANTS



          5.1 Conduct of Business. Between the date hereof and the Chaview Closing Date, each Group
Company and each Subsidiary shall conduct the Business only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, between the date hereof and the
Chaview Closing Date, the Group Companies shall and the Founder shall cause each Group Company to
(it being understood that this Section 5.1 does not obligate any Group Company or the
Founder to do anything other than conducting the Business in the ordinary course consistent with
past practice):




          (a) use and cause each Subsidiary to use its best efforts to (i) preserve intact the present
business organization and reputation of each Group Company and the Subsidiaries in all material
respects, (ii) keep available (subject to dismissals and retirements in the ordinary course of
business consistent with past practice) the services of the present key officers, Employees and
consultants of each Group Company and the Subsidiaries, (iii) maintain the Assets and Properties of
each Group Company and the Subsidiaries material to the conduct of the Business in good working
order and condition, ordinary wear and tear excepted, (iv) maintain the good will of significant
customers, suppliers, and other Persons to whom any Group Company or any Subsidiary sells goods or
provides services or with whom the Company or any
Subsidiary otherwise has significant business relationships and (v) continue all current sales,
marketing and promotional activities relating to the business and operations of any Group Company
and the Subsidiaries;




28









 








          (b) (i) use and cause each Subsidiary to use best efforts to comply with and cause each
Subsidiary to comply with all Laws and Orders applicable to the business and operations of each
Group Company and the Subsidiaries, and reasonably promptly following receipt thereof to give
Chaview copies of any notice received from any Government Authority or other Person alleging any
violation of any such Law or Order.




          5.2 Access. Between the date of this Agreement and the Chaview Closing, upon at least two
(2) days’ prior notice to the Company, the Company shall, and shall cause their Subsidiaries and
their respective Representatives to (a) afford the Representatives of Chaview and its Affiliates
designated by Chaview, during normal business hours, reasonable access at reasonable times to its
officers, employees, auditors, legal counsel, properties, offices, plants and other facilities and
to all books and records, (b) furnish Chaview and such Affiliates with all financial, operating and
other data and information as Chaview or such Affiliate, through their respective Representative,
may from time to time reasonably request, and (c) afford Chaview and such Affiliate the opportunity
to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the officers
of the Company and its Subsidiaries from time to time as Chaview or such Affiliate may reasonably
request, and to make proposals, recommendations and suggestions to the Company or its Subsidiaries
relating to the business and affairs of the Company or its Subsidiaries; provided that the Board of
Directors of the Company shall have the sole discretion to decide on such proposals,
recommendations and suggestions after considering them in good faith. Any costs incurred by
Chaview in connection with the foregoing shall be borne by Chaview.




          5.3 Regulatory and Other Approvals. The Founder and each Group Company shall, and shall cause
the Subsidiaries to, as promptly as practicable (a) take all commercially reasonable steps
necessary or desirable to obtain all consents, approvals or actions of, make all filings with and
give all notices to Government Authorities or any other Person required of the Founder, each Group
Company or any Subsidiary to consummate the transactions contemplated hereby and by each other
Transaction Document, including those described in Schedule 3.7 and (b) provide such other
information and communications to such Government Authorities or other Persons as Chaview or such
Government Authorities or other Persons may reasonably request in connection therewith. The
Founder and/or each Group Company shall provide prompt notification to Chaview when any such
consent, approval, action, filing or notice referred to in subsection (a) above is obtained, taken,
made or given, as applicable, and will advise Chaview of any communications (and, unless precluded
by Law, provide copies of any such communications that are in writing) with any Government
Authority or other Person regarding any of the transactions contemplated by this Agreement or any
other Transaction Document.




          5.4 Notice and Cure. The Founder and/or each Group Company shall notify Chaview in writing
(where appropriate, through updates to the relevant schedule to this Agreement) of, and shall use
all commercially reasonable efforts to cure before the Chaview
Closing, any event, transaction or circumstance, as soon as reasonably practicable after it becomes
known to the relevant party, occurring after the date of this Agreement and before the Chaview
Closing Date, causes or will cause any covenant or agreement of the Founder or any



29









 






Group Company
under this Agreement to be breached or that renders or will render untrue any representation or
warranty of the Founder or any Group Company contained in this Agreement as if the same were made
on or as of the date of such event, transaction or circumstance. No notice given pursuant to this
Section shall have any effect on the representations, warranties, covenants or agreements contained
in this Agreement for purposes of determining satisfaction of any condition contained herein or
shall in any way limit Chaview’s right to seek indemnity under Article IX.




          5.5 Fulfillment of Conditions. The Founder and each Group Company shall take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of Chaview contained in this Agreement and shall not, and shall not
permit any Subsidiary to, take or fail to take any action that could reasonably be expected to
result in the non-fulfillment of any such condition.




          5.6 Most Favored Nation Treatment. The Company and the Founder agree to comply with the most
favored nation treatment provisions in Section 12.1 of the Amended and Restated
Shareholders Agreement from the date hereof.




          5.7 Post-Chaview Closing Covenants.




          (a) The Founder shall complete amendment(s) to the SAFE Registration with respect to the
investments in the Company by Dynasty and Swift Rise and by Chaview as soon as practically feasible
after the Closing;




          (b) Each of the Founder, WFOE and the Domestic Companies agrees and undertakes to complete the
replacement of the current shareholders of the Domestic Companies with the Founder and his mother
with their respective equity interests being 67% and 33%, including updating the registration
records with the relevant company registration authorities, and making corresponding changes to the
Control Documents no later than August 31, 2008 (the “Change of Nominees”). The Company will
promptly deliver a copy of the amended Control Documents to Chaview;




          (c) Prior to December 31, 2008, the Founder and the Group Companies shall use their reasonable
best effort to procure that Hunan Heli Charm Business Development Advertising Co., Ltd.
() and Zhejiang Charm Advertising Co., Ltd.
() stop using the trade name “Charm” or “” in their business names;




          (d) Prior to August 31, 2008, the Company shall pay all Taxes due and payable by any Group
Company in full;




          (e) The Company and the Founder shall take all reasonably necessary steps to expand the
operation of the WFOE so that it can provide technical consulting services to the Domestic
Companies pursuant to the Control Documents, including transferring certain officers and employees
from Domestic Companies to the WFOE and causing the WFOE to hire additional qualified employees, as
necessary; and




30









 








          (f) The Company agrees to use its best efforts to maximize the tax efficiency of the Company
and its Subsidiaries on a consolidated basis. In particular, the Company agrees that, to the
extent permitted by applicable laws, rules and regulations, within twenty-four (24) months from the
Chaview Closing Date, the Company and the Founder shall transfer assets and operations of the
Domestic Companies and their media business (present or future) to the advertising company
incorporated in Hong Kong recently acquired by the Company to enjoy the benefits under the Mainland
and Hong Kong Closer Economic Partnership Arrangement.




          (g) The Company shall complete registration of the transfer of the trademarks and domain names
listed in Exhibit F with the relevant Chinese governmental agency as soon as practically feasible
after the Closing;




ARTICLE VI




CONDITIONS TO OBLIGATIONS OF CHAVIEW



          The obligation of Chaview to proceed with the Chaview Closing is subject to the fulfillment,
at or before the Chaview Closing, of each of the following conditions (all or any of which may be
waived in whole or in part by Chaview in its sole discretion):




          6.1 Representations and Warranties. Each of the representations and warranties made by
Founder or any Group Company in this Agreement and each other Transaction Document shall be true
and correct in all material respects on and as of the Chaview Closing Date as though such
representation or warranty was made on and as of the Chaview Closing Date, except with respect to
the representation or warranty contained in Section 3.11, was made on a continuous basis
from the date hereof until the Chaview Closing Date. The Company and the Founder shall have
delivered a certificate to Chaview dated the Chaview Closing Date, to such effect.




          6.2 Performance. The Founder and the Group Companies shall have performed and complied in all
material respects with each agreement, covenant and obligation required by this Agreement and each
other Transaction Document to be so performed or complied with by it at or before the Chaview
Closing and the Group Companies and the Founder shall have delivered a certificate to Chaview
dated the Chaview Closing Date, to such effect.




          6.3 Orders and Laws. There shall not be in effect on the Chaview Closing Date any Order or
Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any other Transaction Document.




          6.4 Regulatory Consents and Approvals. All consents, approvals and actions of, filings with
and notices to any Government Authority necessary to permit each of the Parties to perform its
obligations under this Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby and thereby (a) shall have been duly obtained, made
or given, and (b) shall be in full force and effect, and all




31









 




terminations or expirations of waiting
periods imposed by any Government Authority necessary for the consummation of the transactions
contemplated by this Agreement and each other Transaction Document shall have occurred.




          6.5 Opinions of Counsels.




          (a) Chaview shall have received from Maples and Calder, Cayman Islands counsel for the
Company, a legal opinion, dated as of the Chaview Closing Date, substantially in the form and to
the effect of Exhibit C hereto.




          (b) Chaview shall have received from [Commerce and Finance Law Offices], PRC counsel for the
Group Companies, a legal opinion, dated as of the Chaview Closing Date, substantially in the form
and to the effect of Exhibit D hereto.




          6.6 Execution of Agreements. Each party to each Transaction Document (other than Chaview)
shall have executed and delivered each of the Transaction Documents to which it is a party which
shall each be on terms satisfactory to Chaview.




          6.7 Articles of Association. The amended and restated Articles of Association, substantially
in the form set forth in Exhibit E hereto, shall have been duly adopted by all necessary actions of
the Company’s board of directors and the Company’s shareholders, and shall become effective
immediately upon the Chaview Closing.




          6.8 Corporate Approval. The respective boards of directors and shareholders of each Group
Company shall have (i) approved the entry by such Parties into this Agreement and each other
Transaction Document to which it is a party and the performance by such Parties of each of its
obligations hereunder and thereunder and (ii) taken such action as is required to effectuate the
conditions set forth in Section 6.7.




          6.9 Compliance Certificate. A certificate dated as of the Chaview Closing, signed on behalf
of the Group Companies and the Founder, certifying that the conditions set forth in Sections 6.1,
6.2 and 6.12 have been satisfied, shall have been delivered to Chaview.




          6.10 Transfer of Trademarks. The trademarks and domain names listed in Exhibit F have been
transferred to the WFOE or exclusively licensed to the WFOE.




          6.11 Amendment of First Subscription Agreement. The First Subscription Agreement shall have
been amended to reflect the same formula as in Section 2.4(b) herein.




          6.12 No Material Adverse Change. Prior to and on the Chaview Closing Date, there shall have
been no Material Adverse Effect.




ARTICLE VII




CONDITIONS TO OBLIGATIONS OF THE COMPANY



32









 





          The obligations of the Group Companies and the Founder to proceed with the Chaview Closing are
subject to the fulfillment, at or before the Chaview Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by the Company in their sole discretion):




          7.1 Representations and Warranties. Each of the representations and warranties made by
Chaview in this Agreement shall be true and correct in all material respect on and as of the
Chaview Closing Date as though such representation or warranty was made on and as of the Chaview
Closing Date.




          7.2 Performance. Chaview shall have performed and complied in all material respect with each
agreement, covenant and obligation required by this Agreement to be so performed or complied with
by Chaview at or before the Chaview Closing.




          7.3 Orders and Laws. There shall not be in effect on the Chaview Closing Date any Order or
Law that became effective after the date of this Agreement restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions contemplated by this
Agreement.




          7.4 Regulatory Consents and Approvals. Except the SAFE Registration by Mr. Chen Xiaotao, all
consents, approvals and actions of, filings with and notices to any Government Authority necessary
to permit each of the Parties to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby (a) shall have been duly obtained, made or given, (b) shall not be
subject to the satisfaction of any condition that has not been satisfied or waived and (c) shall be
in full force and effect, and all terminations or expirations of waiting periods imposed by any
Government Authority necessary for the consummation of the transactions contemplated by this
Agreement shall have occurred.




ARTICLE VIII




SURVIVAL OF REPRESENTATIONS AND WARRANTIES



          8.1 Survival of Representations and Warranties. All of the representations and warranties of
the Parties contained in this Agreement and all claims and causes of action with respect thereto
(whether in contract, tort or otherwise) shall survive the Chaview Closing and shall terminate two
(2) years after the Chaview Closing Date; provided, however, that the representations and
warranties in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.13, 4.1, 4.2, 4.3 and 4.4 shall
terminate on the expiration of the statutory limitation period under the Laws of the applicable
jurisdiction; provided, further, that any claim or cause of action with respect to any breach of
the representations and warranties of any of the Parties contained herein which (or the delay in
discovery of which) is the consequence of fraudulent, dishonest, deliberate, negligence
or reckless misstatement, concealment or other fraudulent or international conduct by such
party in breach or any of such Party’s directors or officers or former directors or officers (who
were involved in the negotiation of this Agreement) shall terminate upon the expiration of the
statutory limitation period under the Laws of the applicable jurisdiction. If written notice of a




33









 




claim has been given in accordance with Article IX prior to the expiration of the applicable
representations and warranties, then the relevant representations and warranties shall survive as
to such claim, until such claim has been finally resolved.




          8.2 No Other Representations. Notwithstanding anything to the contrary contained in this
Agreement, it is the explicit intent of each Party hereto that the Group Companies and the Founder
are making no representation or warranty whatsoever, express or implied, at law or in equity,
whether under contract, tort or other applicable Law, in respect of the Business, any Group Company
or any Subsidiary, or any of their respective Assets and Properties, Liabilities or operations,
except those representations and warranties contained in Article III as qualified by the
Disclosure Schedules. In addition, none of the Group Companies and the Founder makes any
representation or warranty to Chaview with respect to any financial projection or forecast relating
to the Business provided by or on behalf of the Company to Chaview or any of its Affiliates or
Representatives. With respect to any projection or forecast with respect to the Company and the
Subsidiaries or the Business delivered by or on behalf of the Company to Chaview or any of its
Affiliates or Representatives, Chaview acknowledges that (a) there are uncertainties inherent in
attempting to make such projections and forecasts, (b) it is taking full responsibility for making
its own evaluation of the adequacy and accuracy of all such projections and forecasts furnished to
it and (c) it shall have no claim against the Founder, any Group Company or any of its Affiliates
or Representatives with respect thereto.




ARTICLE IX




INDEMNIFICATION



          9.1 Indemnification.




          (a) The Founder and the Group Companies shall jointly and severally indemnify the Chaview
Indemnified Parties and hold the Chaview Indemnified Parties harmless from and against any Losses
as a result of or arising out of (x) any breach of any representation or warranty of any Group
Company or the Founder contained in this Agreement or in any other Transaction Document or in any
Exhibit or Schedule hereto or thereto, (y) the non-fulfillment of or failure to perform any
covenant or agreement on the part of any Group Company or the Founder in this Agreement or in any
other Transaction Document, or (z) the enforcement of this indemnity, provided however, that (i)
the total amount of Losses for which the Founder and the Group Companies will be required to
indemnify all of the Chaview Indemnified Parties under this Agreement shall be limited to the
Purchase Price set forth in this Agreement; (ii) no amount of indemnity shall be payable by any of
the Founder and the Group Companies, with respect to any single claim, unless and until the Chaview
Indemnified Parties have suffered, incurred or sustained Losses in the aggregate exceeding
US$500,000 (“Minimum Claim Amount”); (iii) no amount of indemnity shall be payable by any of the
Founder and the Group Companies to the
extent that Chaview had been otherwise compensated for such Losses; or (iii) no amount of indemnity
shall be payable under this Section 9.1(a) for the Losses caused solely and directly by
actions of Chaview or its Affiliates based on a final non-appealable judgment by any court or
tribunal.




34









 








          (b) Any indemnity as referred to in subsection 9.1(a) above shall be such as to place
the Chaview Indemnified Party in the same position as it would have been in had the cause for which
such Chaview Indemnified Party is to be indemnified not occurred, subject to subsection 9.1(a)
and Section 9.3.




          (c) Chaview shall indemnify and hold harmless the Company Indemnified Parties from and against
any Losses as a result of or arising out of (i) any breach of any representation or warranty of
Chaview contained in this Agreement or in any other Transaction Document or any Exhibit or Schedule
hereto or thereto, (ii) the non-fulfillment of or failure to perform any covenant or agreement on
the part of Chaview in this Agreement or in any other Transaction Document or (iii) the enforcement
of this indemnity.




          (d) Any indemnity as referred to in subsection 9.1(c) above shall be such as to place
the Indemnified Party in the same position as it would have been in had the cause for which such
Indemnified Party is to be indemnified not occurred, subject to Section 9.3.




          9.2 Indemnification as Exclusive Remedy. The indemnification provided in this Article IX,
subject to the limitations set forth herein, shall be the exclusive post-closing remedy available
to any Party in connection with any Losses arising out of or resulting from this Agreement, and
other transactions contemplated hereby and by other Transaction Documents.




          9.3 No Consequential Damages. Notwithstanding anything to the contrary in this Agreement, none of
the Group Companies and the Founder shall be liable under this Agreement or with respect to the
transaction contemplated hereby for any consequential, exemplary, punitive, special, indirect or
incidental damages, or any multiple of damages or diminution of value, including, without
limitation, loss of profits or revenue.




ARTICLE X




TERMINATION



          10.1 Termination. Prior to the Chaview Closing, this Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:




          (a) by mutual written agreement of the Parties;




          (b) by the Company, in the event of a material breach hereof by Chaview, which is not cured
within thirty days following written notification thereof by the Company;




          (c) by Chaview, in the event of a material breach hereof by any Group Company or the Founder
which is not cured within thirty days following written notification thereof by Chaview;




          (d) by Chaview, if there shall be any Law that makes consummation of the transactions
contemplated by this Agreement or any other Transaction Document illegal
or




35









 








          otherwise prohibited or
if consummation of the transactions contemplated by this Agreement or any other Transaction
Document would violate any Order;




          (e) by Chaview, if any Group Company has become subject to a Bankruptcy Event; or




          (f) at any time after September 15, 2008 by Chaview, upon notification to the Company, or by
the Company, upon notification to Chaview.




          10.2 Effect of Termination and Survival. If this Agreement is validly terminated pursuant to
Section 10.1, this Agreement shall forthwith become null and void, and there shall be no
further liability or obligation on the Parties (or any of their respective Representatives);
provided, that any right, provision or obligation of this Agreement that by its nature should
survive thereafter shall survive following any such termination. Notwithstanding any other
provision in this Agreement to the contrary, upon any termination of this Agreement pursuant to
Section 10.1, the Founder and each Group Company shall remain liable to Chaview for any
breach of this Agreement by any Group Company or the Founder existing at the time of such
termination, and Chaview shall remain liable to the Company for any breach of this Agreement by
Chaview existing at the time of such termination, and Company or Chaview may seek such remedies in
accordance with Article XII with respect to any such breach as are provided in this Agreement or as
are otherwise available at Law or in equity.




ARTICLE XI




COVENANTS RELATED TO CONFIDENTIALITY



          11.1 Confidentiality. Each Party who has received Confidential Information from another Party
(such other Party, the “Disclosing Party”) undertakes that neither it or any of its Representatives
nor any Representative of any of its Affiliates shall reveal to any other Person such Confidential
Information without the prior written consent of the Disclosing Party, provided that, such
undertaking shall not apply to:




          (a) disclosures of Confidential Information that is or has become generally available to the
public other than as a result of disclosure by or at the direction of such Party or its
Representatives or the Representatives of any Affiliate of such Party in violation of this
Agreement;




          (b) disclosures of Confidential Information by such Party to its Representatives to whom it is
necessary or appropriate for the transactions contemplated in this Agreement and other Transaction
Documents;




          (c) disclosures of Confidential Information to the extent necessary or required under any
applicable Law or the rules of any stock exchange or in connection with any judicial process
regarding any legal action, suit or proceeding arising out of or relating to this Agreement or any
other Transaction Document, after giving prior written notice to the Disclosing Party to



36









 






the extent
practicable under the circumstances to the extent legally permissible, and subject to having
undertaken any reasonably available arrangements to protect confidentiality.




          (d) disclosure of Confidential Information to the Permitted Transferees and any partner or
investors in the Permitted Transferee; provided that, each of such Permitted Transferee agrees to
keep such information that is not publicly available strictly confidential; or




          (e) disclosure of Confidential Information to legal counsels, accountants and other
professionals subject to confidentiality obligations retained by the Parties for the purposes of an
Initial Public Offering.




          The obligations under this Section 11.1 shall (i) not prejudice, and be additional to,
the confidentiality obligations under any other written agreement entered into between Parties
hereto concerning the Confidential Information and (ii) survive for one year following the later of
(x) termination of this Agreement and (y) the consummation of transactions contemplated by this
Agreement and other Transaction Document.




          11.2 Restriction on Announcements. Each Party shall, and shall cause each of its Representatives
and each Representative of each of its Affiliates, not to make any public announcement about the
subject matter of this Agreement or regarding the Company or any of its business and operating
plans from time to time, whether in the form of a press release or otherwise, without first
consulting with the other Parties and obtaining the other Parties’ written consent to make such
announcement, save as required by applicable Law or the rules of any stock exchange on which such
Party or any Affiliate of such Party is listed or registered. If disclosure is so required, the
other Parties shall be given a reasonable opportunity to review and comment on any such required
disclosure to the extent permitted by Law.




ARTICLE XII




GOVERNING LAW AND RESOLUTION OF DISPUTES



          12.1 Governing Law.



This Agreement and any disputes, claims or controversies arising from, related to or in
connection with this Agreement shall be construed in accordance with the Laws of Hong Kong, without
regard to its conflict of laws principles.




          12.2 Dispute Resolution Mechanism




          (a) Any controversy or claim arising out of or relating to this Agreement, or the breach
termination or invalidity thereof, shall be settled by binding arbitration under the
auspices of the Hong Kong International Arbitration Center (the “HKIAC”) and the seat of the
arbitration shall be Hong Kong. The arbitral tribunal shall be appointed within thirty (30) days
of the notice of dispute, and shall consist of three arbitrators. The Company and Founder shall
jointly appoint one arbitrator, Chaview shall appoint the second arbitrator and the third
arbitrator (who shall be the “Chairman of the Tribunal”) shall be jointly appointed by the Company,
the



37









 






Founder and Chaview by agreement or, failing such agreement within such 30-day period, the
HKIAC shall appoint the Chairman of the Tribunal.




          (b) The arbitration tribunal shall apply the UNCITRAL Arbitration Rules in accordance with the
HKIAC Procedures for the Administration of International Arbitration in force at the date of this
Agreement. The language of arbitration shall be English.




          (c) The award of the arbitration tribunal shall be final and binding upon the disputing
parties, and the prevailing party or parties may apply to a court of competent jurisdiction for
enforcement of such award.




          (d) Any party shall be entitled to seek preliminary injunctive relief from any court of
competent jurisdiction pending the constitution of the arbitral tribunal.




          12.3 Performance Pending Dispute Resolution.



Unless otherwise terminated in accordance with the terms hereof, this Agreement and the rights and
obligations of the Parties hereunder shall remain in full force and effect during the pendency of
the arbitration under Section 12.2.




          12.4 Survival.




          Unless otherwise terminated in accordance with the terms hereof, this Article XII
shall survive the termination or expiration of this Agreement.




ARTICLE XIII




MISCELLANEOUS



          13.1 Entire Agreement. This Agreement (together with the other Transaction Documents)
constitutes the whole agreement among the Parties hereto and thereto relating to the subject matter
hereof and thereof and supersedes all prior agreements or understandings both oral and written
among all of the parties hereto and thereto relating to the subject matter hereof and thereof. To
the extent of any conflict between the terms of the Side Letter and the other Transaction
Documents, the terms of the other Transaction Documents shall control.




          13.2 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective heirs, successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the Parties, and their
respective heirs, successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.




          13.3 Amendment; Waiver.




          (a) This Agreement may not be amended, modified or supplemented except by a written instrument
executed by each of the Parties.





38









 








          (b) No waiver of any provision of this Agreement shall be effective unless set forth in a
written instrument signed by the Party waiving such provision. No failure or delay by a Party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of the same preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Without limiting the foregoing, no waiver by a
Party of any breach by any other Party of any provision hereof shall be deemed to be a waiver of
any subsequent breach of that or any other provision hereof. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies provided by Law.




          13.4 Assignment.




          (a) Neither any Group Company, the Founder nor Chaview may assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of the other Parties (and any
attempted assignment or transfer without such consent shall be null and void).




          (b) Without prejudice to the foregoing clause (a), Chaview shall be entitled in its absolute
discretion to transfer any or all of its rights hereunder to or for the benefit of (i) any
Affiliates of Chaview or funds managed by AIF Capital Asia III, L.P. that are investment funds;
(ii) any fund, collective investment scheme, trust, partnership (including any co-investment
partnership), special purpose or other vehicle or any subsidiary or Affiliate that is an investment
fund of any of the foregoing, in which any Affiliate of Chaview or AIF Capital Asia III, L.P. is a
general or limited partner, shareholder, investment manager or advisor, member of a management or
investment committee, nominee, custodian, trustee or unit holder; and (iii) in the case of any
entity included in clause (ii), any partners, members, directors, officers, employees or investors
(either directly or indirectly through any investment partnerships of entities of such entity) who
are distributees of investments held by such entity pursuant to bona fide liquidation of such
entity in which securities held by such entity are distributed to such distributees (all of the
above in clause (i), (ii) and (iii) in this paragraph are together referred to as the “Permitted
Transferees”). For the avoidance of doubt, Permitted Transferees shall not include any of the
portfolio companies of Chaview.




          (c) Chaview shall effect a transfer by delivering a written notice of the transfer to the
Company pursuant to Section 13.5. Such written notice shall specify the name and address
of the transferee, the consideration for the transfer, if applicable, and the effective date of the
transfer.




          13.5 Notices. Each notice, demand or other communication given or made under this Agreement shall
be in writing and delivered or sent to the relevant Party at its address or fax number set out
below (or such other address or fax number as the addressee has by five days’ prior written notice
specified to the other Parties). Any notice, demand or other
communication so addressed to the relevant Party shall be deemed to have been delivered (a) if
delivered in person or by messenger, when proof of delivery is obtained by the delivering Party;
(b) if sent by post within the same country, on the third day following posting, and if sent by
post to another country, on the ten(10) day following posting, and (c) if given or made by fax,
upon



39









 






dispatch and the receipt of a transmission report confirming dispatch. The initial address
and facsimile for the Parties for the purposes of this Agreement are:




          (a) if to the Founder or the Group Companies, to:



Charm Communications Inc.

26th Floor, Oriental Media Center

4 Guanghua Road, Chaoyang District

Beijing 100026

People’s Republic of China

Attention: Mr. He Dang

Fax No.:



with a copy to:



Simpson Thacher & Bartlett LLP

35th Floor, ICBC Tower

3 Garden Road

Central, Hong Kong

Attention: Chris Lin

Fax No.: + 852 2869 7694



(b) if to Chaview, to



P.O. Box 309GT

Ugland House

South Church Street

George Town

Grand Cayman, Cayman Islands

Attention: Stephen Lee



with a courtesy copy to:

AIF Capital Asia III, L.P.

Suite 3401, Jardine House

1 Connaught Place

Central, Hong Kong

Attention: Stephen Lee/Daniel Hui

Fax number: (852) 2845 0786



Heller Ehrman

35th Floor, One Exchange Square

8 Connaught Place

Central

Hong Kong

Attention: Simon Luk

Fax number: (852) 2292 2200






40









 








          13.6 Counterparts. This Agreement may be signed in any number of counterparts including
counterparts transmitted by facsimile, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.




          13.7 Severability. If any provision contained in this Agreement shall for any reason be determined
to be partially or wholly invalid, illegal or unenforceable by any court of competent jurisdiction,
such provision shall be of no force and effect to the extent so determined, but the invalidity,
illegality or unenforceability of such provision shall have no effect upon and shall not impair the
validity, legality or enforceability of any other provision of this Agreement.




          13.8 Further Assurances. Each Party shall give such further assurance, provide such further
information, take such further actions and execute and deliver such further documents and
instruments as are, in each case, within its power to give, provide and take so as to give full
effect to the provisions of this Agreement.




[Signatures to follow]




41









 





          IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.




	 	 	 	 	 
	 	Charm Communications Inc.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Mr. Dang He

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Passport Number: G00306355 	 
	 	 	 	 
	 



[Signature Page to Second Share Subscription Agreement]





 









 





	 	 	 	 	 
	 	Movie-Forward Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Jetlong Technology Limited

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Charm Hong Kong Limited

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Nanning Jetlong Technology Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 



[Signature Page to Second Share Subscription Agreement]





 









 





	 	 	 	 	 
	 	Beijing Boda Charm Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Beijing Xingyang Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Xinyang Heli Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Xinxin Charm Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 



[Signature Page to Second Share Subscription Agreement]





 









 





	 	 	 	 	 
	 	Yida Charm Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Shidai Charm Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Ruiyi Youshi Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 



[Signature Page to Second Share Subscription Agreement]





 









 





	 	 	 	 	 
	 	Shanghai Haobangyang Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Hubei Haobangyang Advertising Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Beijing Yuanjing Ruishi Culture Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 
	 	Qinghai Charm Youshi Culture Co., Ltd.

 	 
	 	By:  	/s/ He
Dang	 
	 	 	Name:  	He
Dang 	 
	 	 	Title:  	 	 
	 



[Signature Page to Second Share Subscription Agreement]





 









 





	 	 	 	 	 
	 	Chaview Investments Limited

 	 
	 	By:  	/s/ Stephen
Lee	 
	 	 	Name:  	Stephen
Lee 	 
	 	 	Title:  	 	 
	 



[Signature Page to Second Share Subscription Agreement]





 









 





Schedule 1





	1.	 	Beijing Boda Charm Advertising Co., Ltd.
	 
	 	 	()
	 
	2.	 	Beijing Xingyang Advertising Co., Ltd.
	 
	 	 	()
	 
	3.	 	Xinyang Heli Advertising Co., Ltd.
	 
	 	 	()
	 
	4.	 	Xinxin Charm Advertising Co., Ltd.
	 
	 	 	()
	 
	5.	 	Yida Charm Advertising Co., Ltd.
	 
	 	 	()
	 
	6.	 	Shidai Charm Advertising Co., Ltd.
	 
	 	 	()
	 
	7.	 	Ruiyi Youshi Advertising Co., Ltd.
	 
	 	 	()
	 
	8.	 	Shanghai Haobangyang Advertising Co., Ltd.
	 
	 	 	()
	 
	9.	 	Hubei Haobangyang Advertising Co., Ltd.
	 
	 	 	()
	 
	10.	 	Beijing Yuanjing Ruishi Culture Co., Ltd.
	 
	 	 	()




 









 











Schedule 2




CHARM COMMUNICATIONS INC.

CAPITALIZATION TABLE




Current Capitalization




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	% (w/o the	 	% (w/ the effect
	 	 	Shares	 	effect of ESOP)	 	of ESOP)
	Ordinary Shares — Merry Circle
	 	 	50,000,000	 	 	 	86.9565	%	 	 	76.9231	%
	ESOP — Pool
	 	 	7,500,000	 	 	 	n/a	 	 	 	11.5385	%
	Dynasty
	 	 	7,437,500	 	 	 	12.9348	%	 	 	11.4423	%
	Swift Rise
	 	 	62,500	 	 	 	0.1087	%	 	 	0.0962	%
	Total
	 	 	65,000,000	 	 	 	 	 	 	 	100	%






Capitalization Immediately After the Chaview Closing




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	% (w/o the	 	% (w/ the effect
	 	 	Shares	 	effect of ESOP)	 	of ESOP)
	Ordinary Shares — Merry Circle
	 	 	50,000,000	 	 	 	80.0000	%	 	 	71.4286	%
	Series A Preferred — All investors
	 	 	12,500,000	 	 	 	20.0000	%	 	 	17.8571	%
	Dynasty
	 	 	7,437,500	 	 	 	11.9000	%	 	 	10.6250	%
	Swift Rise
	 	 	62,500	 	 	 	0.1000	%	 	 	0.0893	%
	Chaview
	 	 	5,000,000	 	 	 	8.0000	%	 	 	7.1429	%
	Subtotal w/o ESOP
	 	 	62,500,000	 	 	 	100.0000	%	 	 	89.2857	%
	ESOP — Pool
	 	 	7,500,000	 	 	 	n/a	 	 	 	10.7143	%
	Total
	 	 	70,000,000	 	 	 	n/a	 	 	 	100.00	%






 









 






Disclosure Schedules






 









 








Exhibit A




Form of Amended and Restated Registration Rights Agreement






 









 








Exhibit B




Form of Amended and Restated Shareholders Agreement









 









 








Exhibit C




Form of Cayman Legal Opinion







 









 








Exhibit D




Form of PRC Legal Opinion






 









 








Exhibit E




Articles of Association






 









 








Exhibit F




List of Trademarks and Domain Names




	 	 	 	 	 	 	 
	 	 	 	 	Registered	 	Expiry
	Domain Name	 	Registered Owner	 	Time	 	Time
	charmbj.com

	 	Shidai Charm Advertising Co., Ltd.
	 	2005-8-12
	 	2012-8-12
	charmcommunications.com

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.net.cn

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.com.cn

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.net

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.cn

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.mobi

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.biz

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2014-2-3
	charmcommunications.hk

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.info

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2014-2-3
	charmcommunications.asia

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2014-2-3
	charmcommunications.tv

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charmcommunications.cc

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.cn

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.net.cn

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.com.cn

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.mobi

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.net

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Registered	 	Expiry
	Domain Name	 	Registered Owner	 	Time	 	Time
	charm-communications.com

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.biz

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2014-2-3
	charm-communications.hk

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.info

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2014-2-3
	charm-communications.asia

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2014-2-3
	charm-communications.cc

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	charm-communications.tv

	 	Shidai Charm Advertising Co., Ltd.
	 	2008-2-3
	 	2013-2-3
	brand-billboard.cn

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	charmsh.com

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	brandbsh.com

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	brand-billboard.com

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	haobangyang.net

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	brand-billboard.net

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	charmsh.net

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	brand-billboard.com.cn

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	charmsh.com.cn

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17
	brandbsh.com.cn

	 	Shanghai Haobangyang Advertising Co., Ltd.
	 	2008-1-17
	 	2013-1-17






	 	 	 	 	 	 	 
	 	 	 	 	Approved Category	 	 
	Trademark Name	 	Registered Owner	 	of Service	 	Valid Registration Term
	Changrong

	 	Beijing Boda Charm Advertising Co., Ltd.
	 	No. 35
	 	April 7, 2003 to April 6, 2013