Document:

exv10w1w1

Exhibit 10.1.1

[Translation of Chinese original]

EQUITY TRANSFER AGREEMENT

IN CONNECTION WITH

SHANGHAI DIANGUANG MEDIA BROADCASTING COMPANY

By and Among

REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD.

JUANJUAN TANG

And

JINYU FAN

 

 

Table of Contents

	 	 	 	 	 	 	 
	Article 1.

	 	Definitions
	 	 	1	 
	Article 2.

	 	Equity Transfer
	 	 	3	 
	Article 3.

	 	Representations and Warranties
	 	 	3	 
	Article 4.

	 	Closing
	 	 	4	 
	Article 5.

	 	Further Undertakings
	 	 	6	 
	Article 6.

	 	Rights of the Parties
	 	 	10	 
	Article 7.

	 	Confidentiality
	 	 	10	 
	Article 8.

	 	Notices
	 	 	11	 
	article 9.

	 	Liability for Breach of Agreement
	 	 	12	 
	Article 10.

	 	Expenses and Taxes
	 	 	12	 
	Article 11.

	 	Dispute Resolution
	 	 	13	 
	Article 12.

	 	Governing Law
	 	 	13	 
	Article 13.

	 	Language
	 	 	13	 
	Article 14.

	 	Entire Agreement
	 	 	13	 
	Article 15.

	 	Effectiveness
	 	 	13	 
	Appendix 1.

	 	Particulars of the Company
	 	 	2	 
	Appendix 2.

	 	Conditions Precedent to Closing
	 	 	3	 
	Appendix 3.

	 	Representations and Warranties
	 	 	5	 
	Appendix 4.

	 	Intellectual Property Protection and Non-Compete Agreement
	 	 	17	 
	Appendix 5.

	 	Non-Disclosure Agreement
	 	 	32	 
	Appendix 6.

	 	Disclosure Letter
	 	 	43	 
	Appendix 7.

	 	Financial Reports
	 	 	44	 
	Appendix 8.

	 	Existing Television Programs
	 	 	55	 

 

 

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

	(1)	 	REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD., a limited liability company lawfully
established and validly existing under the laws of the People’s Republic of China, with its
domicile at Suite 804, Building 2, 19 Jianguomenwai Avenue, Chaoyang District, Beijing (“Party
A”);
	 
	(2)	 	JUANJUAN TANG, a natural person and citizen of the People’s Republic of China whose ID card
number is 310103195712232046 and whose residential address is No. 2, Lane 520, Shunchang Road,
Shanghai;
	 
	 	 	JINYU FAN, a natural person and citizen of the People’s Republic of China whose ID card
number is 310104195808141612 and whose residential address is No. 18, Lane 481, Taixing
Road, Shanghai; (Juanjuan Tang and Jinyu Fan are hereinafter collectively referred to as
“Party B”); and
	 
	(3)	 	SHANGHAI DIANGUANG MEDIA BROADCASTING COMPANY, a limited liability company lawfully
established and validly existing under the laws of the People’s Republic of China, with its
domicile at Suites 310-9, 388 Qingshan Road, Minhang District, Shanghai (the “Company”).

WHEREAS:

	(A)	 	Party B owns 100 percent of the Equity in the Company (the detailed particulars of the
Company as at the execution date hereof are set forth in Appendix 1 hereto), of which Juanjuan
Tang owns 60 percent and Jinyu Fan owns 40 percent.
	 
	(B)	 	Party A and Party B agree that Party B will transfer 100 percent of the Equity of the Company
to Party A (the “Proposed Equity Transfer”) on the terms and conditions herein, whereby
Juanjuan Tang will transfer 60 percent of the Equity to Party A and Jinyu Fan will transfer 40
percent of the Equity to Party A.

NOW, THEREFORE, following amicable negotiations, the Parties have agreed on the Agreement as
follows:

ARTICLE 1. DEFINITIONS

	1.1	 	Unless otherwise expressly provided or required by the context, the following terms shall
have the meanings assigned to them below:
	 
	 	 	“Equity” means, unless otherwise agreed by the Parties, 100 percent of the capital
contribution to the Company owned by Party B and all title, rights and interests that

 

 

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

	1.2	 	Unless otherwise expressly provided or required by the context:

	 	1.2.1	 	any reference to a contract, agreement or document mentioned herein shall
include such contract, agreement or document as may be amended, supplemented or
substituted from time to time;

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	 	1.2.2	 	any reference to a person mentioned in this Agreement or other related
contract, agreement or document shall include such person’s successors and permitted
assigns;
	 
	 	1.2.3	 	any reference to an Article or Appendix mentioned herein shall refer to the
Article and Appendix of and to this Agreement; and
	 
	 	1.2.4	 	“Party” shall refer to any of the Parties hereto, “Parties” or “Each Party”
shall refer to each Party or all of the Parties hereto and “Both Parties” shall refer
to Party A and Party B.

ARTICLE 2. EQUITY TRANSFER

	2.1	 	Party B agrees to transfer the Company’s Equity to Party A for the price of Renminbi Five
Million (RMB5,000,000) (the “Transfer Price”) and Party A agrees to purchase the Company’s
Equity from Party B for the price of Renminbi Five Million (RMB5,000,000) in accordance with
Article 4.3 hereof. The Equity shall not be subject to any Encumbrances.
	 
	2.2	 	The Company’s Equity structure prior to the completion of the Proposed Equity Transfer is as
set forth below:

	 	 	 	 	 	 	 
	Name of shareholder	 	Capital contribution	 	Percentage
	Jinyu Fan

	 	RMB2,000,000
	 	 	40	%
	Juanjuan Tang

	 	RMB3,000,000
	 	 	60	%
	Total

	 	RMB5,000,000
	 	 	100	%

	2.3	 	The Company’s Equity structure after the completion of the Proposed Equity Transfer shall be
as follows:

	 	 	 	 	 	 	 
	Name of shareholder	 	Capital contribution	 	Percentage
	Redgate Interactive Advertising
(Beijing) Co., Ltd.

	 	RMB5,000,000
	 	 	100	%
	Total

	 	RMB5,000,000
	 	 	100	%

ARTICLE 3. REPRESENTATIONS AND WARRANTIES

	3.1	 	Each Party makes the following representations and warranties to the other Parties hereto:
	 
	 	 	Each Party has the right, authorization and power to enter into and perform this Agreement
and once executed, this Agreement shall become a lawful, valid and binding obligation on the
Parties that may be enforced pursuant to the terms hereof.

3

 

	3.2	 	Party B and the Company, separately and jointly, further give to Party A the representations
and warranties set forth in Appendix 3 hereto.
	 
	3.3	 	Unless otherwise expressly provided herein, each Party warrants that all of the
representations and warranties that said Party has given are, on the execution date hereof and
the Closing Date, true, accurate, complete and not misleading.
	 
	3.4	 	If any of the representations or warranties given in this Agreement by any Party is false or
erroneous, or if any representation or warranty is not duly and timely performed, the Party
that gave such representation or warranty shall be deemed in breach of said representation or
warranty. In addition to performing the other obligations specified herein, the Party in
breach of the representation or warranty shall pay compensation and bear the losses, damage,
expenses (including but not limited to reasonable legal fees or litigation expenses) and
liabilities incurred by the non-breaching Parties as a result of such breach.
	 
	3.5	 	Prior to the completion of the Closing, if a Party becomes aware that any of the
representations or warranties given herein by said Party is untrue, inaccurate, incomplete or
misleading to the other Parties:

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

ARTICLE 4. CLOSING

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

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

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

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

	 	4.5.1	 	this Agreement shall terminate automatically on the date the fifteen (15)
Working Day period expires, unless the Parties agree otherwise in writing. Unless
otherwise provided herein, such termination shall not affect the Parties’ rights and
obligations that may have arisen by the time of the termination hereof; and

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	 	4.5.2	 	after the termination hereof, each Party shall take all necessary actions to
restore this Agreement to a state identical to that prior to the execution, including
but not limited to applying to competent government authorities to withdraw, cancel or
amend any applications, registrations, recordals or any other relevant procedures that
have been carried out or are in the process of being carried out in connection with the
transactions specified herein.

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

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

ARTICLE 5. FURTHER UNDERTAKINGS

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

	 	5.2.1	 	the Company shall not be permitted to pay (nor shall it agree to pay) any
amounts other than amounts it is required to pay in the normal course of its business;
notwithstanding the foregoing, the Company shall not incur (or agree to incur) any
single cash payments exceeding Renminbi Fifty Thousand (RMB50,000) or cash payments
that in the aggregate exceed Renminbi One Hundred and Fifty Thousand (RMB150,000)
regardless of whether the same is incurred in the normal course of business;

	 	5.2.2	 	(i)	 	the Company shall not be permitted to pay, , sell, mortgage, pledge,
lease, assign or otherwise dispose of assets that are not set forth in its

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

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

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

	5.3	 	If the facts which Party B and/or the Company relied in making its and/or their
representations and warranties herein change, potentially causing a material adverse effect on
the transactions hereunder, Party B and/or the Company will promptly disclose such facts to
Party A.
	 
	5.4	 	The Company shall take all reasonable actions to safeguard its assets, use its best efforts
to retain its existing management and core technical personnel and maintain its relationships
with its clients, suppliers and other such third parties that have an association with the
Company’s business so as not to harm its reputation or its prospects as a going concern.
	 
	5.5	 	Subject to a prior written notice, Party A shall have the right, during normal working hours,
to request that the Company provide its financial statements and all other such documents
relating to its business for Party A’s review and the right to take copies or summaries
thereof.
	 
	5.6	 	The Parties hereby agree and confirm that the equity acquisition and payment of the Transfer
Price by Party A pursuant hereto are reliant on the Company’s net equity value as confirmed in
the financial information disclosed or provided by Party B

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	 	 	during the audit of the Company. Accordingly, if, after the completion of the Proposed
Equity Transfer, Party A discovers that the Company has any unpaid debts that are not
disclosed during the audit (a “Default Amount”), each of the parties comprising of Party B
undertakes that said Party shall bear the joint and several liability in respect of such
Default Amount in proportion to said Party’s capital contribution to the Company prior to
the Proposed Equity Transfer. Party A shall have the option, at its own discretion, to
either deduct the Default Amount from the Transfer Price (if it has not been paid) or demand
that Party B otherwise pay the Default Amount to the Company.

	5.7	 	Party B, as management of the Company, agrees to take all necessary actions after the
completion of the Closing:

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

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

	 	5.8.1	 	directing the Company’s production, operations and management, and arranging
for the implementation of the board’s resolutions;
	 
	 	5.8.2	 	arranging for the implementation of the Company’s annual business plans and
investment plans;
	 
	 	5.8.3	 	drafting the plan for the establishment of the Company’s internal management
organizations;
	 
	 	5.8.4	 	drafting the Company’s basic rules and regulations;
	 
	 	5.8.5	 	drafting the Company’s specific rules and regulations;
	 
	 	5.8.6	 	submitting for approval the appointment or dismissal of the Company’s deputy
general manager and financial controller;

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	 	5.8.7	 	submitting for approval the appointment or dismissal of management personnel
other than those who are subject to the appointment or dismissal by the Company’s
shareholder and board; and
	 
	 	5.8.8	 	attending board meetings in a non-voting capacity.

ARTICLE 6. RIGHTS OF THE PARTIES

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

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

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

	 	6.2.1	 	an act of Party A that constitutes a fundamental breach hereof, making it
impossible for Party B to obtain the Transfer Price; or
	 
	 	6.2.2	 	a matter that has or could have a material adverse effect on the transactions
hereunder that arises due to a deliberate act by or gross negligence on the part of
Party A.

ARTICLE 7. CONFIDENTIALITY

	7.1	 	A Party (the “Receiving Party”) that becomes aware of or receives Confidential Information
from a Party hereto (the “Disclosing Party”) shall keep such information confidential, may not
use such Confidential Information for any purpose other than for this Agreement and may not
disclose the Confidential Information to any party other than Party A or Party B (or a company
appointed by Party A or Party B (such company shall bear the confidentiality obligations
hereunder, and Party A or Party B shall bear the legal liability arising from a breach of the
confidentiality obligations hereunder committed by any company appointed by said Party))
without the prior written consent of the other Parties. Notwithstanding the foregoing
restrictions, the confidentiality obligations set forth in this Article 7 shall not apply to:

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

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

ARTICLE 8. NOTICES

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

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

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

	 	 	Juanjuan Tang
	 
	 	 	Fax number: 021-62179192
	 
	 	 	Correspondence address: 15th Floor, 118 Qinghai Road, Shanghai
	 
	 	 	Attn.: Jinyu Fan

11

 

	 	 	Jinyu Fan

	 	 	Fax number: 021-62179192
	 
	 	 	Correspondence address: 15th Floor, 118 Qinghai Road, Shanghai
	 
	 	 	Attn.: Jinyu Fan

	8.3	 	If Party B is required to dispatch a written notice to Party A pursuant to Article 8.1
hereof, said Party shall dispatch the same to Party A at the following fax number or
correspondence address:
	 
	 	 	Fax number: 010-85263129
	 
	 	 	Correspondence address: Suite 804, Building 2, 19 Jianguomenwai Avenue, Chaoyang District,
Beijing
	 
	 	 	Attn.: Ying Zhu

ARTICLE 9. LIABILITY FOR BREACH OF AGREEMENT

	9.1	 	If a Party breaches any of the provisions hereof, said Party shall compensate the
non-breaching Parties for all claims, expenses, costs, losses and liabilities incurred or
arising in connection with said breach, whether directly or indirectly. If the Party in
breach is one of the parties comprising Party B and/or the Company, Party B shall bear joint
and several liability in respect of the compensation for such breach.
	 
	9.2	 	Without prejudice to any of the other provisions of this Article 9, if either Party fails to
perform any of said Party’s obligations hereunder, the non-breaching Parties shall, in
addition to exercising any other rights and remedies available hereunder, have the right to
demand that the Party in breach actually perform the relevant obligation and the Parties
expressly waive the defense of sufficiency of damages.
	 
	9.3	 	Without prejudice to any of the other provisions of this Article 9, if either party
comprising Party B fails to fully transfer the Equity to Party A on the terms and conditions
hereof, Party A shall have the right to demand in writing that Party B perform said Party’s
obligations specified herein and transfer the Equity to Party A. If Party B still has not
completed the procedures for the amendment of business registration for the Proposed Equity
Transfer within seven (7) Working Days after receipt of the aforementioned written notice from
Party A, Party A shall have the right to unilaterally terminate this Agreement on the basis of
such material breach and demand that the Party in breach compensate for the losses, damage and
costs (including but not limited to reasonable legal fees and litigation expenses) incurred in
connection with the Proposed Equity Transfer by Party A as a result thereof.

ARTICLE 10. EXPENSES AND TAXES

	10.1	 	Both Parties shall each bear the expenses (including but not limited to legal, accounting,
financial, consulting, advisory and other related expenses) said Party

12

 

	 	 	expended in connection with all the negotiations and the implementation of the final
agreement, such as this Agreement (including the Appendices), etc., and the acquisition.

	10.2	 	Both Parties shall each be responsible for paying any taxes said Party may be required to pay
in connection with the Proposed Equity Transfer hereunder. Both Parties shall each be
responsible for paying the stamp tax in respect of the original of this Agreement said Party
holds.

ARTICLE 11. DISPUTE RESOLUTION

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

ARTICLE 12. GOVERNING LAW

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

ARTICLE 13. LANGUAGE

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

ARTICLE 14. ENTIRE AGREEMENT

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

ARTICLE 15. EFFECTIVENESS

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

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

13

 

Execution Page

Party A:

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

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

Party B:

	 	 	 	 	 
	JUANJUAN TANG

 	 	 
	Signature:  	/s/ Juanjuan Tang
 	 	 

	 	 	 	 	 
	JINYU FAN

 	 	 
	Signature:  	/s/ Jinyu Fan
 	 	 

	 	 	 	 	 
	SHANGHAI DIANGUANG MEDIA BROADCASTING 
COMPANY [company seal]

 
	By:  	/s/ Juanjuan Tang
 	 	 
	 	Name of Legal Representative: Juanjuan Tang 	 	 

 

 

	 	 	 	 	 

APPENDIX 1.

PARTICULARS OF THE COMPANY

	A.	 	Particulars of the Company

	 	 	 	 	 	 	 
	1.

	 	Name of the Company
	 	:
	 	Shanghai Dianguang Media Broadcasting Company
	 
	 	 	 	 	 	 
	2.

	 	Legal address
	 	:
	 	Suites 310-9, 388 Qingshan Road, Minhang District, Shanghai
	 
	 	 	 	 	 	 
	3.

	 	Establishment date
	 	:
	 	November 27, 2001
	 
	 	 	 	 	 	 
	4.

	 	Place of establishment
	 	:
	 	Suites 310-9, 388 Qingshan Road, Minhang District, Shanghai
	 
	 	 	 	 	 	 
	5.

	 	Scope of business
	 	:
	 	Designs, produces, acts as an agent for, and
publishes various types of advertising,
promotional gifts and sale of handicrafts
(other than gold and silver) (items subject
to administrative permits will be dealt in
on the strength of such permits).
	 
	 	 	 	 	 	 
	6.

	 	Legal representative
	 	:
	 	Juanjuan Tang
	 
	 	 	 	 	 	 
	7.

	 	Executive director
	 	:
	 	Juanjuan Tang
	 
	 	 	 	 	 	 
	8.

	 	Registered capital
	 	:
	 	RMB5,000,000
	 
	 	 	 	 	 	 
	9.

	 	Shareholders
	 	:
	 	Capital contribution by Juanjuan Tang: RMB3,000,000, accounting for 60% of the
registered capital;
Capital contribution by Jinyu Fan: RMB2,000,000, accounting for 40% of the
registered capital
	 
	 	 	 	 	 	 
	10.

	 	Auditor
	 	:
	 	None
	 
	 	 	 	 	 	 
	11.

	 	Business Term
	 	:
	 	10 years (from November 27, 2001 to November
26, 2011)
	 
	 	 	 	 	 	 
	12.

	 	Subsidiaries
	 	:
	 	None

2

 

APPENDIX 2.

CONDITIONS PRECEDENT TO CLOSING

The fulfillment of all of the following conditions (or the waiver thereof in writing by the
interested Party) is a Condition Precedent to the Closing of the Proposed Equity Transfer:

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

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

3

 

	 	(6)	 	all other legal documents required to be executed by this
Agreement or required to be executed in order to complete the Proposed Equity
Transfer have been duly executed;
	 
	 	(7)	 	the procedures for the amendment of business registration in
respect of the transfer of the Company’s Equity and other relevant changes have
been completed with the Registration Authority;
	 
	 	(8)	 	the Company’s directors originally appointed by Party B have
resigned from their positions with the Company and confirmed in writing that
they waive any claim of right to severance pay and any other related item they
may have against the Company;
	 
	 	(9)	 	the registration or recordal procedures for the directors
appointed by Party A have been carried out with the Registration Authority; and
	 
	 	(10)	 	the Company has completed, in accordance with applicable laws
and as required by the competent government authorities, the procedures for the
registration of the establishment of an office (if required) in the area that
it actually carries out liaison for its business.

4

 

APPENDIX 3.

REPRESENTATIONS AND WARRANTIES

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

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

5

 

	6.	 	Financial Reports: the Company’s financial reports as at December 31, 2007 (the
“Balance Sheet Date”) set forth in Appendix 7 truthfully, completely and accurately reflect
the Company’s business position and financial position during the relevant periods or on the
relevant reference dates. All of the Company’s audited accounts and unaudited accounts have
been prepared pursuant to the financial and accounting systems specified in the relevant laws
of the PRC with the consideration of the Company’s actual circumstances, and truthfully and
fairly reflect the Company’s financial and business positions as at the relevant accounting
dates. The Company’s financial records and information comply completely with the
requirements of the PRC laws and regulations and satisfy the standard accounting standards of
the PRC.
	 
	7.	 	Undisclosed debts: other than the debts set forth below, the Company does not have
any debts that are not reflected on its balance sheets: (1) debts disclosed in the Disclosure
Letter; and (2) debts incurred in the normal scope of the Company’s business after the Balance
Sheet Date, that are not prohibited by this Agreement and that will not have a material
adverse effect on any shareholder of the Company or the Company itself. Other than those
disclosed to Party A in the Disclosure Letter, the Company has never borne an obligation in
respect of a guarantee, mortgage, pledge or any form of security provided to a third party nor
has it ever created a mortgage, pledge or other security interest over its property.
	 
	8.	 	Insurance:

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

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

6

 

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

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

	 	10.1	 	prepaid a debt;
	 
	 	10.2	 	provided security to a third party in the form of a guarantee or created a
mortgage, pledge or any other form of Encumbrance over its property;
	 
	 	10.3	 	released any third party from a debt to the Company or waived any right of
recourse;
	 
	 	10.4	 	amended any existing Agreement or agreement;
	 
	 	10.5	 	paid a bonus to any manager, director, employee, sales representative, agent or
advisor of the Company or increased said persons’ income in any manner, or changed in
any manner the remuneration or benefits of such persons;
	 
	 	10.6	 	incurred any loss (insured or not) or experienced any change in the
relationship with a supplier, client or employee whereby such loss or change would have
a material adverse effect on the Company;
	 
	 	10.7	 	revised the Company’s accounting method, policies or principles, or financial
and accounting rules and regulations;
	 
	 	10.8	 	transferred or licensed the Company’s intellectual property to a third party
other than in the normal course of the Company’s business;
	 
	 	10.9	 	made a material revision or alteration to any sales practice or accounting
method of the Company, or a material change in the employment policies, rules or
regulations of the Company;

7

 

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

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

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

8

 

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

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

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

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

9

 

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

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

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

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

10

 

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

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

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

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

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

11

 

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

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

12

 

APPENDIX 3

Schedule 1. Intellectual Property

	A            Intellectual property rights owned by the Company
	 
	B            Intellectual property rights licensed to the Company

[None]

13

 

APPENDIX 3

Schedule 2. List of Senior Management Personnel

14

 

Name List of Senior Management Personnel

Jinyu Fan

General Manager

Juanjuan Tang

Deputy General Manager

15

 

APPENDIX 3

Schedule 3. Exclusive Advertising Sales Agency Agreements

[See Appendix 2 of Exhibit 10.1.5]

16

 

APPENDIX 4.

INTELLECTUAL PROPERTY PROTECTION AND NON-COMPETE

AGREEMENT

17

 

Non-Compete Agreement

This Non-Compete Agreement (hereinafter referred to as the “Agreement”) was signed by the following
parties on February 2, 2008, in Beijing, China:

	 	(1)	 	Shanghai Dianguang Media Transmission Co., Ltd, a limited liability company organized
and existing under the laws of the People’s Republic of China (“PRC”), with its registered
address at Room310-9, No.388 Qingshan Road, Minxing District, Shanghai, PRC (hereinafter
referred as “Party A”); and
	 
	 	(2)	 	Jinyu Fan, Identity Card No.: 310104195808141612, with a residential address
at: No.18,481# Nong, Taixing Road, Shanghai (hereinafter referred as “Party
B”).

(The above signatories shall hereinafter be referred to, jointly, as the “Parties” and,
individually, as a “Party”.)

     Whereas:

	 	(1)	 	Party A is a limited liability company that designs, produces, acts as an agent, and
publishes both domestic advertisements and advertisements of foreign companies coming to
China. Party A also organizes exhibitions, acts as an advertising consultant, and
organizes cultural and artistic exchange activities.
	 
	 	(2)	 	Party B is the General Manager for Party A.
	 
	 	(3)	 	Party B acknowledges that a breach of the Non-Compete obligations set forth in the
Agreement occurring during the period he holds the post of General Manager of Party A
(“Term of Employment”) and a specified period of time thereafter will cause substantial
harm to Party A.
	 
	 	(4)	 	In order to protect Party A’s interests, Party B hereby agrees to fulfill the
Non-Compete obligations in accordance with the terms and provisions of the Agreement.

Now Therefore, in accordance with the laws, regulations and rules of the PRC currently in effect
and as a result of equitable and friendly negotiations, the Parties hereby reach the following
agreement:

I. Definitions

     Related Party

With respect to the Agreement, a Related Party of any person or entity shall mean: (1) an
organization of any type at which such person or entity holds a management position or of
which such person or entity is either a director or partner or in which, either
individually or in conjunction with a Related Party, such person or entity holds, directly
or indirectly, 10% or more actual interest; (2) such person or entity of which 10% or more
of its actual interest is directly or indirectly owned by a Related Party; (3) such person
or entity of which 10% or more of its actual interest and that

18

 

of a Related Party is directly or indirectly owned by the same person or entity; (4) any
trust or other property in which such person or entity owns a substantial actual interest
or for which such person or entity is acting as a trustee (or undertaking a similar duty
of trust); and (5) any person who cohabits with such person or is the director or manager
of such entity or its parent company or its subsidiary, or any family member or spouse of
such director or manager, or any family member of such spouse.

     Competing Business

Competing Business refers to any business which is in competition with Party A, including
but not limited to the following activities: (1) developing and manufacturing products
which compete with or which are similar to products developed or manufactured by Party A;
(2) distributing, trading or selling, through direct sales or using networks or by other
means, products that are manufactured in a different location but which compete with or
are similar to products distributed, traded or sold by Party A; (3) providing, by any
means, services which compete with or which are similar to services provided by Party A
(the foregoing products or services include any products or services under development by
Party A or products or services in the course of being planned and developed during the
period that Party B holds shares in Party A or during his Term of Employment); or (4)
possessing any other attributes which compete with Party A.

II. Non-Compete

     Non-Compete Period

The Parties hereby agree that, in accordance with the intent of the Agreement, the
“Non-Compete Period” shall be the period during which Party B continues to be a Related
Party and a period of two (2) years thereafter. “Related Party Relationship” refers to
Party B’s related party relationship to Party A arising out of the fact that Party B owns
a share interest in Party A (or holds the post of the Deputy General Manager of Party A);
“Relationship Period” refers to the ongoing period during which Party B maintains a
Related Party Relationship with Party A. The Relationship Period shall be the longer of
Party B’s period of shareholding and the Term of Employment (if applicable).

     Non-Compete Territory

The Parties hereby agree that, in accordance with the intent of the Agreement, the
“Non-Compete Territory” shall refer to the entire world including, but not limited to, the
British Virgin Islands, the British Cayman Islands, the People’s Republic of China
(including the Special Administrative Region of Hong Kong, the Special Administrative
Region of Macau, and the territory of Taiwan, hereinafter referred as “China”), and any
other countries and territories in the world where Party A is currently developing or may
develop business in the future.

     Non-Compete Obligations

19

 

Without the prior written approval of Party A, Party B warrants that, within the
Non-Compete Period and the Non-Compete Territory, he shall not individually or in
conjunction with a Related Party:

	 	(1)	 	Engage in any conduct that will harm the interests of Party A (with respect
to the intent of Clause 2.3, “Party A” shall be interpreted as including Party A and
Party A’s subsidiary(ies), parent company(ies) or Related Party(ies)), or infringe on
the legal rights of Party A; or
	 
	 	(2)	 	Incite, induce, encourage, or facilitate by other means, any employee of
Party A to terminate the employment relationship with Party A, with the exception of
actions undertaken by Party B with Party A’s written approval in the course of the
performance of Party B’s duties within the Relationship Period.
	 
	 	(3)	 	Incite, induce, encourage or facilitate by other means any supplier,
contractor or client of Party A (including, but not limited, to any golf operating
and management companies, advertising firms, or advertisers) to terminate its
cooperative relationship with Party A, or engage in any conduct which may have a
negative effect on the cooperative relationship between Party A and such supplier,
contractor or client.
	 
	 	(4)	 	Directly or indirectly, whether on Party B’s own behalf or acting as a
representative or employee of another person or organization, provide any consulting
services or other type of service that will assist others to engage in a Competing
Business.
	 
	 	(5)	 	Individually or in conjunction with others, by any means (including, but
not limited to, via investment, merger/acquisition, joint operation, joint venture;
cooperation, partnership; subcontracting arrangement, leasing arrangement or share
purchase) directly or indirectly engage in or participate in any business or activity
which competes or may constitute competition with businesses currently being
undertaken or to be undertaken by Party A.

III. Applicable Law and Dispute Resolution

     Applicable Law

The Agreement shall be governed by the laws of the PRC and interpreted in accordance
therewith.

     Dispute Resolution

	 	(1)	 	The Parties shall use their best efforts to resolve any disputes arising
out of or in relation to the Agreement through friendly negotiations. If a dispute
is unable to be resolved by negotiations within sixty (60) days of any Party issuing
a notice to the other Party of the existence of such dispute, then such dispute
(including disputes related to the validity or existence of the Agreement) shall be
submitted to the Beijing Sub-Commission of the China International Economic and Trade
Arbitration Commission and be arbitrated

20

 

	 	 	 	in accordance with the arbitration regulations of such Sub-Commission in effect at
the time of arbitration.
	 
	 	(2)	 	The arbitral award shall be final and equally binding on the Parties and
may be compulsorily enforced in accordance with the stipulations of the relevant
terms and conditions thereof.
	 
	 	(3)	 	The arbitration fees shall be borne by the losing party, unless otherwise
specified by the arbitral award. If it is necessary for a Party to enforce the
arbitral award by means of litigation, the breaching party shall pay all reasonable
fees and expenses including, but not limited to, reasonable legal fees and any
additional litigation or enforcement fees arising out of a Party’s application for
the enforcement of the arbitral award.
	 
	 	(4)	 	During the period of dispute resolution, with the exception of the matters
in dispute, the Parties shall continue to fulfill the Agreement in its entirety.

IV. Remedies for Breach of Contract

	 	4.1	 	The Parties agree that if Party B breaches the Non-Compete obligations stipulated by
Clause II of the Agreement, he shall bear liability for such breach. All benefits and
proceeds acquired as a result of the breach of such Non-Compete obligations (such as work
product resulting from engaging in competition with Party A) shall become the property of
Party A. Furthermore, Party B shall compensate Party A for actual losses incurred by Party
A as a result of such breach. Party A shall also have the right to request that Party B
immediately terminate any activity related to the Competing Business.
	 
	 	4.2	 	Party B acknowledges that the compensation for the losses described in Clause 4.1 above
will not constitute sufficient remedy for a breach of contract. Party B agrees that if the
breach of the Agreement by Party B results in any payments, liabilities or losses suffered
on the part of Party A (including but not limited to loss of profits by Party A), Party B
shall compensate Party A such payments, liabilities or losses (including but not limited to
interest and legal fees paid or lost as a result of the breach).
	 
	 	4.3	 	Party B agrees that, upon breach of the Agreement by Party B, he shall immediately
resign from all posts held with Party A (if any) and waive any claims against Party A which
may arise from such resignation.

V. Effective Date and Term of Contract

The Agreement shall be effective upon the signing thereof by the Parties and shall remain valid
until the expiration of the Non-Compete Period stipulated by Clause 2.1 of the Agreement.
However, termination of the Agreement shall not affect the rights of a non-breaching party to
pursue a breaching party for breach of contract in accordance with the Agreement.

VI. Other

21

 

	 	6.1	 	Entire Agreement: The Agreement and its Appendices and Attachments (if any) are the
sole documents which completely and accurately describe the intentions of the Parties and
constitute the entire agreement between the Parties with respect to the matters set forth
herein. No prior statements, guarantees or agreements exist in relation to the Agreement.
Unless agreed in writing by both Parties, amendments, additions and deletions to the terms
and conditions of the Agreement shall not be binding on either Party.
	 
	 	6.2	 	Waiver: Any waiver of the breach of contract or fault under the Agreement is not to be
taken as waiver of any other breach of contract or fault, regardless of whether they are of
a similar nature. Any single or partial exercise of any right shall not exclude any other
future exercise of such right. Notwithstanding the foregoing, such waiver shall be valid
only upon issuance of a written document signed by an authorized signatory of the waiving
Party and whose contents indicate that it was issued as a result of circumstances
necessitating a waiver.
	 
	 	6.3	 	Severability: In the event that any term or condition of the Agreement is determined to
be invalid (for whatever reason), unless the invalidity of such term or condition has an
actual effect on the continued fulfillment of the contract as a whole, such invalidity
shall not affect the other terms and conditions of the Agreement and such invalid term or
condition shall be deemed to be deleted from the Agreement. After negotiations, the
Parties may sign a supplemental agreement to make arrangements regarding related matters.
	 
	 	6.4	 	Third Party Interests: The Agreement shall be binding on and shall inure to the benefit
of the Parties, their respective heirs, and those assignees approved by both Parties.
Nothing in the Agreement may be deemed to explicitly or implicitly grant any right, relief
or obligation to any other person or entity with the exception of the Parties, their
respective heirs and approved assignees.
	 
	 	6.5	 	Notice: All notices, claims, requests, acknowledgements or other correspondence shall
be made in writing, and the issuing party may personally, or through courier or registered
mail, deliver the same to the address of the receiving party set forth below (or a
different address as notified in writing by a Party). The time of delivery for all
notices, claims, requests, acknowledgements or other correspondence in relation to the
Agreement shall be deemed to be as follows: (1) in the event of a personal delivery, the
actual time of delivery; (2) in the event of courier, after the third (3rd) day
from the date of submission to the courier (if delivery occurs within three (3) days, then
the actual date of delivery shall be binding) ; (3) in the event of registered mail (or
mail posted overseas by air mail), after the fifth (5th) day from the date of
posting (if delivery occurs within five (5) days, then the actual date of delivery shall be
binding).

	 	 	 	 	 
	 

	 	To:
	 	Shanghai Dianguang Media Transmission Co., Ltd
	 

	 	 	 	Address:     Building 15, No.118 Qinghai Road, Shanghai
	 

	 	 	 	Attention:   Jinyu Fan
	 

	 	 	 	Telephone: 021-62178295

22

 

	 	 	 	 	 
	 

	 	 	 	Fax:                021-62179192
	 

	 	To:
	 	Jinyu Fan
	 

	 	 	 	Address:      Building 15, No.118 Qinghai Road, Shanghai
	 

	 	 	 	Telephone:  021-62178295
	 

	 	 	 	Fax:               021-62179192

	 	6.6	 	Headings: The headings of all clauses in the Agreement are for reference only and shall not be utilized in the
interpretation of the Agreement or affect the meaning of the Agreement.
	 
	 	6.7	 	Disclosure: Unless otherwise stipulated by laws and regulations, neither Party nor its
agent shall issue any public statements with respect to the Agreement or any other
documents or subsequent documents signed in respect to the matters herein without the prior
written consent of the other Party (such consent not to be unreasonably withheld).
	 
	 	6.8	 	Language: The Agreement is executed in Chinese.
	 
	 	6.9	 	Counterparts: The Agreement is executed in two (2) counterparts, one counterpart for
each Party.

(This page is intentionally left blank, the signature page is attached at the end)

23

 

(Non-Compete Agreement Signature Page, no other contents on this page.)

The Parties have noted the date of signature of the Agreement at the beginning of the document.

	 	 	 
	Party A:

	 	Shanghai Dianguang Media Transmission Co., Ltd (sealed)
	 
	 	 
	Party B:

	 	Jinyu Fan
	 
	 	 
	 

	 	(Signature)                                            

Non-compete Agreement Signature Page

24

 

Non-Compete Agreement

This Non-Compete Agreement (hereinafter referred to as the “Agreement”) was signed by the following
parties on February 2, 2008, in Beijing, China:

	 	(6)	 	Shanghai Dianguang Media Transmission Co., Ltd, a limited liability company organized
and existing under the laws of the People’s Republic of China (“PRC”), with its registered
address at Room310-9, No.388 Qingshan Road, Minxing District, Shanghai, PRC (hereinafter
referred as “Party A”); and
	 
	 	(7)	 	Juanjuan Tang, Identity Card No.: 310103195712232046, with a residential
address at: No.2, 520# Nong, Shunchang Road, Shanghai (hereinafter referred as
“Party B”).

(The above signatories shall hereinafter be referred to, jointly, as the “Parties” and,
individually, as a “Party”.)

     Whereas:

	 	(5)	 	Party A is a limited liability company that designs, produces, acts as an agent, and
publishes both domestic advertisements and advertisements of foreign companies coming to
China. Party A also organizes exhibitions, acts as an advertising consultant, and
organizes cultural and artistic exchange activities.
	 
	 	(6)	 	Party B is the Deputy General Manager for Party A.
	 
	 	(7)	 	Party B acknowledges that a breach of the Non-Compete obligations set forth in the
Agreement occurring during the period he holds the post of Deputy General Manager of Party
A (“Term of Employment”) and a specified period of time thereafter will cause substantial
harm to Party A.
	 
	 	(8)	 	In order to protect Party A’s interests, Party B hereby agrees to fulfill the
Non-Compete obligations in accordance with the terms and provisions of the Agreement.

Now Therefore, in accordance with the laws, regulations and rules of the PRC currently in effect
and as a result of equitable and friendly negotiations, the Parties hereby reach the following
agreement:

V. Definitions

     Related Party

With respect to the Agreement, a Related Party of any person or entity shall mean: (1) an
organization of any type at which such person or entity holds a management position or of
which such person or entity is either a director or partner or in which, either
individually or in conjunction with a Related Party, such person or entity holds, directly
or indirectly, 10% or more actual interest; (2) such person or entity of which 10% or more
of its actual interest is directly or indirectly owned by a Related

25

 

Party; (3) such person or entity of which 10% or more of its actual interest and that of a
Related Party is directly or indirectly owned by the same person or entity; (4) any trust
or other property in which such person or entity owns a substantial actual interest or for
which such person or entity is acting as a trustee (or undertaking a similar duty of
trust); and (5) any person who cohabits with such person or is the director or manager of
such entity or its parent company or its subsidiary, or any family member or spouse of
such director or manager, or any family member of such spouse.

     Competing Business

Competing Business refers to any business which is in competition with Party A, including
but not limited to the following activities: (1) developing and manufacturing products
which compete with or which are similar to products developed or manufactured by Party A;
(2) distributing, trading or selling, through direct sales or using networks or by other
means, products that are manufactured in a different location but which compete with or
are similar to products distributed, traded or sold by Party A; (3) providing, by any
means, services which compete with or which are similar to services provided by Party A
(the foregoing products or services include any products or services under development by
Party A or products or services in the course of being planned and developed during the
period that Party B holds shares in Party A or during his Term of Employment); or (4)
possessing any other attributes which compete with Party A.

VI. Non-Compete

     Non-Compete Period

The Parties hereby agree that, in accordance with the intent of the Agreement, the
“Non-Compete Period” shall be the period during which Party B continues to be a Related
Party and a period of two (2) years thereafter. “Related Party Relationship” refers to
Party B’s related party relationship to Party A arising out of the fact that Party B owns
a share interest in Party A (or holds the post of the Deputy General Manager of Party A);
“Relationship Period” refers to the ongoing period during which Party B maintains a
Related Party Relationship with Party A. The Relationship Period shall be the longer of
Party B’s period of shareholding and the Term of Employment (if applicable).

     Non-Compete Territory

The Parties hereby agree that, in accordance with the intent of the Agreement, the
“Non-Compete Territory” shall refer to the entire world including, but not limited to, the
British Virgin Islands, the British Cayman Islands, the People’s Republic of China
(including the Special Administrative Region of Hong Kong, the Special Administrative
Region of Macau, and the territory of Taiwan, hereinafter referred as “China”), and any
other countries and territories in the world where Party A is currently developing or may
develop business in the future.

     Non-Compete Obligations

26

 

Without the prior written approval of Party A, Party B warrants that, within the
Non-Compete Period and the Non-Compete Territory, he shall not individually or in
conjunction with a Related Party:

	 	(1)	 	Engage in any conduct that will harm the interests of Party A (with respect
to the intent of Clause 2.3, “Party A” shall be interpreted as including Party A and
Party A’s subsidiary(ies), parent company(ies) or Related Party(ies)), or infringe on
the legal rights of Party A; or
	 
	 	(2)	 	Incite, induce, encourage, or facilitate by other means, any employee of
Party A to terminate the employment relationship with Party A, with the exception of
actions undertaken by Party B with Party A’s written approval in the course of the
performance of Party B’s duties within the Relationship Period.
	 
	 	(8)	 	Incite, induce, encourage or facilitate by other means any supplier,
contractor or client of Party A (including, but not limited, to any golf operating
and management companies, advertising firms, or advertisers) to terminate its
cooperative relationship with Party A, or engage in any conduct which may have a
negative effect on the cooperative relationship between Party A and such supplier,
contractor or client.
	 
	 	(9)	 	Directly or indirectly, whether on Party B’s own behalf or acting as a
representative or employee of another person or organization, provide any consulting
services or other type of service that will assist others to engage in a Competing
Business.
	 
	 	(10)	 	Individually or in conjunction with others, by any means (including, but
not limited to, via investment, merger/acquisition, joint operation, joint venture;
cooperation, partnership; subcontracting arrangement, leasing arrangement or share
purchase) directly or indirectly engage in or participate in any business or activity
which competes or may constitute competition with businesses currently being
undertaken or to be undertaken by Party A.

VII. Applicable Law and Dispute Resolution

     Applicable Law

The Agreement shall be governed by the laws of the PRC and interpreted in accordance
therewith.

     Dispute Resolution

	 	(1)	 	The Parties shall use their best efforts to resolve any disputes arising
out of or in relation to the Agreement through friendly negotiations. If a dispute
is unable to be resolved by negotiations within sixty (60) days of any Party issuing
a notice to the other Party of the existence of such dispute, then such dispute
(including disputes related to the validity or existence of the Agreement) shall be
submitted to the Beijing Sub-Commission of the China International Economic and Trade
Arbitration Commission and be arbitrated

27

 

	 	 	 	in accordance with the arbitration regulations of such Sub-Commission in effect at
the time of arbitration.
	 
	 	(2)	 	The arbitral award shall be final and equally binding on the Parties and
may be compulsorily enforced in accordance with the stipulations of the relevant
terms and conditions thereof.
	 
	 	(5)	 	The arbitration fees shall be borne by the losing party, unless otherwise
specified by the arbitral award. If it is necessary for a Party to enforce the
arbitral award by means of litigation, the breaching party shall pay all reasonable
fees and expenses including, but not limited to, reasonable legal fees and any
additional litigation or enforcement fees arising out of a Party’s application for
the enforcement of the arbitral award.
	 
	 	(6)	 	During the period of dispute resolution, with the exception of the matters
in dispute, the Parties shall continue to fulfill the Agreement in its entirety.

VIII. Remedies for Breach of Contract

	 	4.1	 	The Parties agree that if Party B breaches the Non-Compete obligations stipulated by
Clause II of the Agreement, he shall bear liability for such breach. All benefits and
proceeds acquired as a result of the breach of such Non-Compete obligations (such as work
product resulting from engaging in competition with Party A) shall become the property of
Party A. Furthermore, Party B shall compensate Party A for actual losses incurred by Party
A as a result of such breach. Party A shall also have the right to request that Party B
immediately terminate any activity related to the Competing Business.
	 
	 	4.2	 	Party B acknowledges that the compensation for the losses described in Clause 4.1 above
will not constitute sufficient remedy for a breach of contract. Party B agrees that if the
breach of the Agreement by Party B results in any payments, liabilities or losses suffered
on the part of Party A (including but not limited to loss of profits by Party A), Party B
shall compensate Party A such payments, liabilities or losses (including but not limited to
interest and legal fees paid or lost as a result of the breach).
	 
	 	4.4	 	Party B agrees that, upon breach of the Agreement by Party B, he shall immediately
resign from all posts held with Party A (if any) and waive any claims against Party A which
may arise from such resignation.

V. Effective Date and Term of Contract

The Agreement shall be effective upon the signing thereof by the Parties and shall remain valid
until the expiration of the Non-Compete Period stipulated by Clause 2.1 of the Agreement.
However, termination of the Agreement shall not affect the rights of a non-breaching party to
pursue a breaching party for breach of contract in accordance with the Agreement.

VI. Other

28

 

	 	6.1	 	Entire Agreement: The Agreement and its Appendices and Attachments (if any) are the
sole documents which completely and accurately describe the intentions of the Parties and
constitute the entire agreement between the Parties with respect to the matters set forth
herein. No prior statements, guarantees or agreements exist in relation to the Agreement.
Unless agreed in writing by both Parties, amendments, additions and deletions to the terms
and conditions of the Agreement shall not be binding on either Party.
	 
	 	6.2	 	Waiver: Any waiver of the breach of contract or fault under the Agreement is not to be
taken as waiver of any other breach of contract or fault, regardless of whether they are of
a similar nature. Any single or partial exercise of any right shall not exclude any other
future exercise of such right. Notwithstanding the foregoing, such waiver shall be valid
only upon issuance of a written document signed by an authorized signatory of the waiving
Party and whose contents indicate that it was issued as a result of circumstances
necessitating a waiver.
	 
	 	6.3	 	Severability: In the event that any term or condition of the Agreement is determined to
be invalid (for whatever reason), unless the invalidity of such term or condition has an
actual effect on the continued fulfillment of the contract as a whole, such invalidity
shall not affect the other terms and conditions of the Agreement and such invalid term or
condition shall be deemed to be deleted from the Agreement. After negotiations, the
Parties may sign a supplemental agreement to make arrangements regarding related matters.
	 
	 	6.4	 	Third Party Interests: The Agreement shall be binding on and shall inure to the benefit
of the Parties, their respective heirs, and those assignees approved by both Parties.
Nothing in the Agreement may be deemed to explicitly or implicitly grant any right, relief
or obligation to any other person or entity with the exception of the Parties, their
respective heirs and approved assignees.
	 
	 	6.5	 	Notice: All notices, claims, requests, acknowledgements or other correspondence shall
be made in writing, and the issuing party may personally, or through courier or registered
mail, deliver the same to the address of the receiving party set forth below (or a
different address as notified in writing by a Party). The time of delivery for all
notices, claims, requests, acknowledgements or other correspondence in relation to the
Agreement shall be deemed to be as follows: (1) in the event of a personal delivery, the
actual time of delivery; (2) in the event of courier, after the third (3rd) day
from the date of submission to the courier (if delivery occurs within three (3) days, then
the actual date of delivery shall be binding) ; (3) in the event of registered mail (or
mail posted overseas by air mail), after the fifth (5th) day from the date of
posting (if delivery occurs within five (5) days, then the actual date of delivery shall be
binding).

	 	 	 	 	 
	 

	 	To:
	 	Shanghai Dianguang Media Transmission Co., Ltd
	 

	 	 	 	Address:      Building 15, No.118 Qinghai Road, Shanghai
	 

	 	 	 	Attention:    Jinyu Fan
	 

	 	 	 	Telephone:  021-62178295

29

 

	 	 	 	 	 
	 

	 	 	 	Fax:                021-62179192
	 

	 	To:
	 	Juanjuan Tang
	 

	 	 	 	Address:      Building 15, No.118 Qinghai Road, Shanghai
	 

	 	 	 	Telephone:  021-62178295
	 

	 	 	 	Fax:               021-62179192

	 	6.6	 	Headings: The headings of all clauses in the Agreement are for reference only and shall not be utilized in the
interpretation of the Agreement or affect the meaning of the Agreement.
	 
	 	6.7	 	Disclosure: Unless otherwise stipulated by laws and regulations, neither Party nor its
agent shall issue any public statements with respect to the Agreement or any other
documents or subsequent documents signed in respect to the matters herein without the prior
written consent of the other Party (such consent not to be unreasonably withheld).
	 
	 	6.8	 	Language: The Agreement is executed in Chinese.
	 
	 	6.9	 	Counterparts: The Agreement is executed in two (2) counterparts, one counterpart for
each Party.

(This page is intentionally left blank, the signature page is attached at the end)

30

 

(Non-Compete Agreement Signature Page, no other contents on this page.)

The Parties have noted the date of signature of the Agreement at the beginning of the document.

	 	 	 
	Party A:

	 	Shanghai Dianguang Media Transmission Co., Ltd (sealed)
	 
	 	 
	Party B:

	 	Juanjuan Tang
	 
	 	 
	 

	 	(Signature)                                            

Non-compete Agreement Signature Page

31

 

APPENDIX 5.

NON-DISCLOSURE AGREEMENT

32

 

Non-Disclosure Agreement

	 	 	 	 	 	 	 
	Party A:	 	Shanghai Dianguang Media Transmission Co., Ltd
	 
	 	 	 	 	 	 
	Party B:

	 	Jinyu Fan
	 	Identity card number: 310104195808141612	 	 

WHEREAS:

Party B, as an employee of Party A and during the course of carrying out duties for Party A, will
or may be exposed to trade secrets, technical know-how or other confidential information belonging
to Party A or its related companies. Party B acknowledges and agrees to the following terms
protecting the Confidential Information of Party A.

“Confidential Information” as used in this Agreement shall refer to
business, technical and management information (and confidential information in other forms) not
known by the general public, which has potential beneficial value as well as actual value to Party
A and other entities in which Party A has ownership, and which is hereby deemed confidential.
During Party B’s term of employment with Party A, Party A’s business,
technological and management information (and confidential information in other forms) that is
received by Party B shall mean, but not be limited to, the following types of information of Party
A (whether such information was obtained by Party A itself or obtained from other parties by virtue
of disclosure):

	1.	 	Patented technology;
	 
	2.	 	Non-patented technology;
	 
	3.	 	Know-how;
	 
	4.	 	Short-term and long-term business and product plans and strategies, relevant
information about market research and forecast;
	 
	5.	 	Existing and potential product descriptions, designs, cost structures, pricing,
strategies, schedules, purchase orders, product launches and market share information;
	 
	6.	 	Financial information including profit and loss statements, sales figures,
profits, budgets and financial proposals;
	 
	7.	 	Technical information related to customer demand, design expertise, production
and testing, troubleshooting, quality control and computer processes;
	 
	8.	 	Detailed human resources information such as staff planning, names of employees,
telephone numbers and e-mail addresses, job titles, reporting lines, job descriptions
and job skills;
	 
	9.	 	Names of existing and potential clients and partners, information obtained from
third

33

 

	 	 	parties (including clients and partners) subject to confidentiality agreements;

	10.	 	Or all materials marked “Party A’s Proprietary
Information”, “Party A’s Confidential Information”,
“For Party A’s Internal Use Only” or similar
language on other documents of Party A;
	 
	11.	 	Party B shall maintain the confidentiality of methodology (such as management
methods, etc.) that are disclosed to Party B during the course of employment.

The foregoing Confidential Information shall not include information related to Party A that Party
B obtains from third parties through legal channels or from the public domain or information that
is already known by Party B.

     In order to protect the Confidential Information of Party A, the Parties agree as follows:

(1) Party B acknowledges that the Confidential Information of Party A is a valuable asset with
commercial and industrial uses which has the potential to bring economic benefits to Party A and
which is not intended for disclosure to the general public.

(2) Party B acknowledges that Party A has established procedures and adopted measures to protect
the Confidential Information, and the former undertakes to abide by and comply with such procedures
and measures.

(3) Party B acknowledges that the disclosure of Party A’s Confidential Information
without the authorization of Party A or the divulging of the same will be injurious to the
interests of Party A, and may assist Party B or third parties in receipt of such Confidential
Information to obtain ill-gotten gains.

(4) Party B undertakes that he shall not, at any time during his employment with Party A and
after the discharge of the employment relationship with Party A, engage in, directly or
indirectly, in whole or in part (unless Party B has already obtained prior written permission
from Party A or unless Party B has sufficient evidence to prove such information is already in
the public domain), any of the following actions with respect to the Confidential Information of
Party A:

i. disclose or divulge Confidential Information to anyone for whom receipt of the same
has not been authorized by Party A ;

ii. announce or release the Confidential Information to any public media which has not
been approved by Party A;

iii. re-use the Confidential Information in any manner for Party B’s personal purposes
or for profit-making by others.

34

 

(5) Party B undertakes that he shall not, at any time during his employment with Party A and after
the discharge of the employment relationship with Party A, transmit confidential materials
containing Party A’s Confidential Information outside the workplace of Party A, or assist in the
transmitting thereof unless prior written permission from Party A has been obtained. The term
“transmit” as used herein shall include but not be limited to physical transfer, illegal
duplication, transmission of information through various modes of communication, transmission of
information through various network interfaces, etc.

(6) Party B undertakes that during the term of his employment with Party A, duplication of
documents in any form containing Party A’s Confidential Information shall be made out of necessity
relating to Party B’s work rather than for other purposes. Duplication procedures shall comply
with Party A’s confidentiality measures.

(7) Party B shall, prior to the discharge or termination of the employment relationship with Party
A, deliver to the recipient designated by Party A at Party A’s request all materials, originals and
duplicates of documents belonging to Party A which are in the Party B’s possession or under Party
B’s control and management.

(8) The foregoing confidentiality obligations shall be applicable to materials, data and
information which have been provided to Party A by third parties with accompanying restrictions on
their use, duplication or disclosure.

(9) Party B undertakes that, if it should discover that the Confidential Information of Party A is
being infringed upon by means of unauthorized use or disclosure, Party B shall immediately notify
Party A and take reasonable measures to assist Party A to prevent further infringement.

(10) Party B acknowledges that if any acts of breach under the Agreement result in the infringement
of Party A’s intellectual property rights or leads to circumstances involving unfair competition;
it shall bear responsibility for all consequential losses of Party A arising therefrom.

(11) Party A may assign the Agreement to its subsidiaries, branches or representative offices. In
the event that Party B is transferred within any of the above-mentioned companies, the Agreement
shall automatically be assigned to the new employer entity without requiring the signature of Party
B; provided, however, that if the new employer entity should request a new agreement, both parties
shall negotiate the signing of the same.

(12) The Agreement constitutes the sole document with respect to the employment of Party B by Party
A. It shall take effect on the effective date set forth herein after it is

35

 

signed/sealed by the
parties. The Agreement comprises two originals, of which each party shall
retain one original. The period of validity shall comprise the entire period of Party B’s
employment with Party A and five years after the termination of the employment relationship between
Party B and Party A. Party A shall terminate the Agreement in writing.

(13) The Agreement shall be governed by and receive the protection of the laws of the People’s
Republic of China. If a dispute arises between the Parties to the Agreement and negotiations are
unsuccessful, then either Party may submit an application for arbitration to the Beijing Municipal
Labor Dispute Arbitration Commission. Any Party which refuses to comply with the arbitral award
may request a judgment thereon from the People’s Court.

[The remainder of this page is left blank]

36

 

(No substantive text on this page)

	 	 	 
	Party A: Shanghai Dianguang Media

	 	Party B: Jinyu Fan
	 
	 	 
	Transmission Co., Ltd
	 	 
	 
	 	 
	Seal:

	 	Signature:

Date: April 8, 2008

Venue: Building 15, No.118 Qinghai Road, Shanghai

[Signature Page of the Non-Disclosure Agreement]

37

 

Non-Disclosure Agreement

	 	 	 	 	 	 	 
	Party A:	 	Shanghai Dianguang Media Transmission Co., Ltd
	 
	 	 	 	 	 	 
	Party B:

	 	Juanjuan Tang
	 	Identity card number: 310103195712232046	 	 

WHEREAS:

Party B, as an employee of Party A and during the course of carrying out duties for Party A, will
or may be exposed to trade secrets, technical know-how or other confidential information belonging
to Party A or its related companies. Party B acknowledges and agrees to the following terms
protecting the Confidential Information of Party A.

“Confidential Information” as used in this Agreement shall refer to
business, technical and management information (and confidential information in other forms) not
known by the general public, which has potential beneficial value as well as actual value to Party
A and other entities in which Party A has ownership, and which is hereby deemed confidential.
During Party B’s term of employment with Party A, Party A’s business,
technological and management information (and confidential information in other forms) that is
received by Party B shall mean, but not be limited to, the following types of information of Party
A (whether such information was obtained by Party A itself or obtained from other parties by virtue
of disclosure):

	1.	 	Patented technology;
	 
	2.	 	Non-patented technology;
	 
	3.	 	Know-how;
	 
	4.	 	Short-term and long-term business and product plans and strategies, relevant
information about market research and forecast;
	 
	5.	 	Existing and potential product descriptions, designs, cost structures, pricing,
strategies, schedules, purchase orders, product launches and market share information;
	 
	6.	 	Financial information including profit and loss statements, sales figures,
profits, budgets and financial proposals;
	 
	7.	 	Technical information related to customer demand, design expertise, production
and testing, troubleshooting, quality control and computer processes;
	 
	8.	 	Detailed human resources information such as staff planning, names of employees,
telephone numbers and e-mail addresses, job titles, reporting lines, job descriptions
and job skills;

38

 

	9.	 	Names of existing and potential clients and partners, information obtained from
third parties (including clients and partners) subject to confidentiality agreements;
	 
	10.	 	Or all materials marked “Party A’s Proprietary
Information”, “Party A’s Confidential Information”,
“For Party A’s Internal Use Only” or similar
language on other documents of Party A;
	 
	11.	 	Party B shall maintain the confidentiality of methodology (such as management
methods, etc.) that are disclosed to Party B during the course of employment.

The foregoing Confidential Information shall not include information related to Party A that Party
B obtains from third parties through legal channels or from the public domain or information that
is already known by Party B.

     In order to protect the Confidential Information of Party A, the Parties agree as follows:

(1) Party B acknowledges that the Confidential Information of Party A is a valuable asset with
commercial and industrial uses which has the potential to bring economic benefits to Party A and
which is not intended for disclosure to the general public.

(2) Party B acknowledges that Party A has established procedures and adopted measures to protect
the Confidential Information, and the former undertakes to abide by and comply with such procedures
and measures.

(3) Party B acknowledges that the disclosure of Party A’s Confidential Information
without the authorization of Party A or the divulging of the same will be injurious to the
interests of Party A, and may assist Party B or third parties in receipt of such Confidential
Information to obtain ill-gotten gains.

(4) Party B undertakes that he shall not, at any time during his employment with Party A and
after the discharge of the employment relationship with Party A, engage in, directly or
indirectly, in whole or in part (unless Party B has already obtained prior written permission
from Party A or unless Party B has sufficient evidence to prove such information is already in
the public domain), any of the following actions with respect to the Confidential Information of
Party A:

i. disclose or divulge Confidential Information to anyone for whom receipt of the same
has not been authorized by Party A;

ii. announce or release the Confidential Information to any public media which has not
been approved by Party A;

39

 

iii. re-use the Confidential Information in any manner for Party B’s personal purposes
or for profit-making by others.

(5) Party B undertakes that he shall not, at any time during his employment with Party A and after
the discharge of the employment relationship with Party A, transmit confidential materials
containing Party A’s Confidential Information outside the workplace of Party A, or assist in the
transmitting thereof unless prior written permission from Party A has been obtained. The term
“transmit” as used herein shall include but not be limited to physical transfer, illegal
duplication, transmission of information through various modes of communication, transmission of
information through various network interfaces, etc.

(6) Party B undertakes that during the term of his employment with Party A, duplication of
documents in any form containing Party A’s Confidential Information shall be made out of necessity
relating to Party B’s work rather than for other purposes. Duplication procedures shall comply
with Party A’s confidentiality measures.

(7) Party B shall, prior to the discharge or termination of the employment relationship with Party
A, deliver to the recipient designated by Party A at Party A’s request all materials, originals and
duplicates of documents belonging to Party A which are in the Party B’s possession or under Party
B’s control and management.

(8) The foregoing confidentiality obligations shall be applicable to materials, data and
information which have been provided to Party A by third parties with accompanying restrictions on
their use, duplication or disclosure.

(9) Party B undertakes that, if it should discover that the Confidential Information of Party A is
being infringed upon by means of unauthorized use or disclosure, Party B shall immediately notify
Party A and take reasonable measures to assist Party A to prevent further infringement.

(10) Party B acknowledges that if any acts of breach under the Agreement result in the infringement
of Party A’s intellectual property rights or leads to circumstances involving unfair competition;
it shall bear responsibility for all consequential losses of Party A arising therefrom.

(11) Party A may assign the Agreement to its subsidiaries, branches or representative offices. In
the event that Party B is transferred within any of the above-mentioned companies, the Agreement
shall automatically be assigned to the new employer entity without requiring the signature of Party
B; provided, however, that if the new employer entity should request a new agreement, both parties
shall negotiate the signing of the same.

40

 

(12) The Agreement constitutes the sole document with respect to the employment of Party B by Party
A. It shall take effect on the effective date set forth herein after it is signed/sealed by the
parties. The Agreement comprises two originals, of which each party shall retain one original.
The period of validity shall comprise the entire period of Party B’s employment with Party A and
five years after the termination of the employment relationship between Party B and Party A. Party
A shall terminate the Agreement in writing.

(13) The Agreement shall be governed by and receive the protection of the laws of the People’s
Republic of China. If a dispute arises between the Parties to the Agreement and negotiations are
unsuccessful, then either Party may submit an application for arbitration to the Beijing Municipal
Labor Dispute Arbitration Commission. Any Party which refuses to comply with the arbitral award
may request a judgment thereon from the People’s Court.

[The remainder of this page is left blank]

41

 

(No substantive text on this page)

	 	 	 
	Party A: Shanghai Dianguang Media

	 	Party B: Juanjuan Tang
	Transmission Co., Ltd
	 	 
	 
	 	 
	Seal:

	 	Signature:

Date: April 8, 2008

Venue: Building 15, No.118 Qinghai Road, Shanghai

[Signature Page of the Non-Disclosure Agreement]

42

 

APPENDIX 6.

DISCLOSURE LETTER

[None]

43

 

APPENDIX 7.

FINANCIAL REPORTS

44

 

Balance Sheet

					
	 	 	 	 	 
	Compiled by: Shanghai Dianguang Transmission Co., Ltd.
	 	December

31st, 2006
	 	Cai Kuai Nian Qi Sheet 01

Monetary Unit Yuan

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Opening	 	Closing
	 	 	 	 	 	 	Balance of	 	Balance of
	Item	 	Line No.	 	Year	 	Year
	Monetary Fund
	 	 	1.00	 	 	 	5154203.84	 	 	 	1545561.81	 
	Short-term Investment
	 	 	2.00	 	 	 	0.00	 	 	 	0.00	 
	Notes Receivable
	 	 	3.00	 	 	 	0.00	 	 	 	0.00	 
	Dividends Receivable
	 	 	4.00	 	 	 	0.00	 	 	 	0.00	 
	Interests Receivable
	 	 	5.00	 	 	 	0.00	 	 	 	0.00	 
	Accounts Receivable
	 	 	6.00	 	 	 	268591.40	 	 	 	176947.00	 
	Other Receivables
	 	 	7.00	 	 	 	2413251.75	 	 	 	9503751.27	 
	Prepayment
	 	 	8.00	 	 	 	0.00	 	 	 	0.00	 
	Futures Margin
	 	 	9.00	 	 	 	0.00	 	 	 	0.00	 
	Subsidy Payments Receivable
	 	 	10.00	 	 	 	0.00	 	 	 	0.00	 
	Export Rebate Receivable
	 	 	11.00	 	 	 	0.00	 	 	 	0.00	 
	Inventories
	 	 	12.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Raw Materials
	 	 	13.00	 	 	 	0.00	 	 	 	0.00	 
	Commodity Stocks (Finished Commodities)
	 	 	14.00	 	 	 	0.00	 	 	 	0.00	 
	Deferred Expenses
	 	 	15.00	 	 	 	6512040.10	 	 	 	25165042.18	 
	Net Losses of Current Assets in Suspense
	 	 	16.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Debt Investment due within a Year
	 	 	17.00	 	 	 	0.00	 	 	 	0.00	 
	Other Current Assets
	 	 	18.00	 	 	 	0.00	 	 	 	0.00	 
	Total Current Assets
	 	 	19.00	 	 	 	14348087.09	 	 	 	36391302.26	 
	Long-term Investment
	 	 	20.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Long-term Equity Investment due
within a Year
	 	 	21.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Debt Investment
	 	 	22.00	 	 	 	0.00	 	 	 	0.00	 
	* Consolidated Difference
	 	 	23.00	 	 	 	0.00	 	 	 	0.00	 
	Total Long-term Investment
	 	 	24.00	 	 	 	0.00	 	 	 	0.00	 
	Original Value of Fixed Assets
	 	 	25.00	 	 	 	66036.24	 	 	 	128328.62	 
	Less: Accumulated Depreciation
	 	 	26.00	 	 	 	17752.88	 	 	 	35068.05	 
	Net Value of Fixed Assets
	 	 	27.00	 	 	 	48283.36	 	 	 	93260.57	 
	Less: Reserves for Fixed Assets Impairment
	 	 	28.00	 	 	 	0.00	 	 	 	0.00	 
	Net Fixed Assets
	 	 	29.00	 	 	 	48283.36	 	 	 	93260.57	 
	Engineering Materials
	 	 	30.00	 	 	 	0.00	 	 	 	0.00	 
	Construction in Process
	 	 	31.00	 	 	 	0.00	 	 	 	0.00	 
	Liquidation of Fixed Assets
	 	 	32.00	 	 	 	0.00	 	 	 	0.00	 
	Net Losses of Fixed Assets in Suspense
	 	 	33.00	 	 	 	0.00	 	 	 	0.00	 
	Total Fixed Assets
	 	 	34.00	 	 	 	48283.36	 	 	 	93260.57	 
	Intangible Assets
	 	 	35.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Land-use Right
	 	 	36.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Deferred Expenses (Deferred
Assets)
	 	 	37.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Repair of Fixed Assets
	 	 	38.00	 	 	 	0.00	 	 	 	0.00	 
	Improvement of Fixed Assets
	 	 	39.00	 	 	 	0.00	 	 	 	0.00	 
	Circulation Right for Equity Separation
	 	 	40.00	 	 	 	0.00	 	 	 	0.00	 
	Other Long-term Assets
	 	 	41.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Special Reserve Materials
	 	 	42.00	 	 	 	0.00	 	 	 	0.00	 
	Total Intangible and Other Assets
	 	 	43.00	 	 	 	0.00	 	 	 	0.00	 
	Deferred Tax Debits
	 	 	44.00	 	 	 	0.00	 	 	 	0.00	 
	Total Assets
	 	 	45.00	 	 	 	14396370.45	 	 	 	36484562.83	 

45

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Opening	 	Closing
	 	 	 	 	 	 	Balance of	 	Balance of
	Item	 	Line No.	 	Year	 	Year
	Short-term Loans
	 	 	46.00	 	 	 	8000000.00	 	 	 	8000000.00	 
	Notes Payable
	 	 	47.00	 	 	 	0.00	 	 	 	0.00	 
	Accounts Payable
	 	 	48.00	 	 	 	0.00	 	 	 	659180.00	 
	Accounts Received in Advance
	 	 	49.00	 	 	 	0.00	 	 	 	0.00	 
	Accrued Payroll
	 	 	50.00	 	 	 	0.00	 	 	 	0.00	 
	Welfare Benefits Payable
	 	 	51.00	 	 	 	0.00	 	 	 	0.00	 
	Dividends Payable (Profits Payable)
	 	 	52.00	 	 	 	0.00	 	 	 	0.00	 
	Interests Payable
	 	 	53.00	 	 	 	0.00	 	 	 	0.00	 
	Taxes Payable
	 	 	54.00	 	 	 	23825.64	 	 	 	201722.93	 
	Other Accounts Payable
	 	 	55.00	 	 	 	0.00	 	 	 	14466.19	 
	Other Payables
	 	 	56.00	 	 	 	201254.00	 	 	 	20894476.72	 
	Accrued Expenses
	 	 	57.00	 	 	 	0.00	 	 	 	0.00	 
	Estimated Liabilities
	 	 	58.00	 	 	 	0.00	 	 	 	0.00	 
	Deferred Income
	 	 	59.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Liabilities due within a Year
	 	 	60.00	 	 	 	0.00	 	 	 	0.00	 
	Warrants Payable
	 	 	61.00	 	 	 	0.00	 	 	 	0.00	 
	Other Current Liabilities
	 	 	62.00	 	 	 	0.00	 	 	 	0.00	 
	Total Current Liabilities
	 	 	63.00	 	 	 	8225079.64	 	 	 	29769845.84	 
	Long-term Loans
	 	 	64.00	 	 	 	0.00	 	 	 	0.00	 
	Bonds Payable
	 	 	65.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Payable
	 	 	66.00	 	 	 	0.00	 	 	 	0.00	 
	Special Payables
	 	 	67.00	 	 	 	0.00	 	 	 	0.00	 
	Other Long-term Liabilities
	 	 	68.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Special Reserve Fund
	 	 	69.00	 	 	 	0.00	 	 	 	0.00	 
	Total Long-term Liabilities
	 	 	70.00	 	 	 	0.00	 	 	 	0.00	 
	Deferred Tax Credits
	 	 	71.00	 	 	 	0.00	 	 	 	0.00	 
	Total Liabilities
	 	 	72.00	 	 	 	8225079.64	 	 	 	29769845.84	 
	* Minority Interests
	 	 	73.00	 	 	 	0.00	 	 	 	0.00	 
	Paid-up Capital (Stock)
	 	 	74.00	 	 	 	5000000.00	 	 	 	5000000.00	 
	State Capital
	 	 	75.00	 	 	 	0.00	 	 	 	0.00	 
	Collective Capital
	 	 	76.00	 	 	 	0.00	 	 	 	0.00	 
	Corporate Capital
	 	 	77.00	 	 	 	0.00	 	 	 	0.00	 
	Including: State-owned Corporate Capital
	 	 	78.00	 	 	 	0.00	 	 	 	0.00	 
	Collective Corporate Capital
	 	 	79.00	 	 	 	0.00	 	 	 	0.00	 
	Personal Capital
	 	 	80.00	 	 	 	5000000.00	 	 	 	5000000.00	 
	Foreign Capital
	 	 	81.00	 	 	 	0.00	 	 	 	0.00	 
	Capital Reserves
	 	 	82.00	 	 	 	0.00	 	 	 	0.00	 
	Surplus Reserves
	 	 	83.00	 	 	 	431997.96	 	 	 	1500572.53	 
	Including: Statutory Public Welfare Funds
	 	 	84.00	 	 	 	431997.96	 	 	 	—	 
	*Unrecognized Investment Losses (presented by “-”)
	 	 	85.00	 	 	 	0.00	 	 	 	0.00	 
	Undistributed Profits
	 	 	86.00	 	 	 	739292.85	 	 	 	214144.46	 
	Including: Cash Dividends
	 	 	87.00	 	 	 	0.00	 	 	 	0.00	 
	Foreign Exchange Financial Statements Translation Difference
	 	 	88.00	 	 	 	0.00	 	 	 	0.00	 
	Subtotal of Owner’s Equity
	 	 	89.00	 	 	 	6171290.81	 	 	 	6714716.99	 
	Less: Impairment of Assets
	 	 	90.00	 	 	 	0.00	 	 	 	0.00	 
	Total Owner’s Equity (after eliminating Impairment of Assets)
	 	 	91.00	 	 	 	6171290.81	 	 	 	6714716.99	 
	Total Liabilities and Owner’s Equity
	 	 	92.00	 	 	 	14396370.45	 	 	 	36484562.83	 

Note: Items with * in the table are for the specific use of consolidated financial statements.

46

 

Profits and Profit Appropriation Statement

					
	 	 	 	 	 
	 
	 	 	 	Cai Kuai Nian Qi Sheet 02
	Compiled by: Shanghai Dianguang	 	 	 	 
	Transmission Co., Ltd.
	 	2006
	 	Monetary Unit Yuan

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Actual	 	Actual
	 	 	Line	 	Amount of	 	Amount of
	Item	 	No.	 	Last Year	 	Current Year
	I. Main Operating Income
	 	 	1.00	 	 	 	24048167.50	 	 	 	34317009.09	 
	Including: Export Products (Commodity)
Sales Revenue
	 	 	2.00	 	 	 	0.00	 	 	 	0.00	 
	Imported Products (Commodity) Sales Revenue
	 	 	3.00	 	 	 	0.00	 	 	 	0.00	 
	Less: Discounts and Allowance
	 	 	4.00	 	 	 	0.00	 	 	 	0.00	 
	II. Net Income from Main Operating Income
	 	 	5.00	 	 	 	24048167.50	 	 	 	34317009.09	 
	Less: (I) Main Operating Costs
	 	 	6.00	 	 	 	21660705.97	 	 	 	10638272.82	 
	Including: Costs of Sales of Export
Products (Commodity)
	 	 	7.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Tax and Extra Charges on Main Business
	 	 	8.00	 	 	 	188076.80	 	 	 	480188.30	 
	(III) Operating Expenses
	 	 	9.00	 	 	 	959481.96	 	 	 	1098601.85	 
	(IV) Others
	 	 	10.00	 	 	 	0.00	 	 	 	0.00	 
	Add: (I) Deferred Income
	 	 	11.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Income from purchase and sales
commission
	 	 	12.00	 	 	 	0.00	 	 	 	0.00	 
	(III) Others
	 	 	13.00	 	 	 	0.00	 	 	 	0.00	 
	III. Main Operating Profits (Losses are
presented by “-”)
	 	 	14.00	 	 	 	1239902.77	 	 	 	22099946.12	 
	Add: Other Operating Profits (Losses are
presented by “-”)
	 	 	15.00	 	 	 	0.00	 	 	 	0.00	 
	Less: (I) Operating Expenses
	 	 	16.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Administrative Expenses
	 	 	17.00	 	 	 	620484.38	 	 	 	642510.47	 
	Including: Business Entertainment Expenses
	 	 	18.00	 	 	 	121555.30	 	 	 	338908.90	 
	Research and Development Expenses
	 	 	19.00	 	 	 	0.00	 	 	 	0.00	 
	(III) Financial Expenses
	 	 	20.00	 	 	 	364485.24	 	 	 	466277.90	 
	Including: Interest Expenses
	 	 	21.00	 	 	 	374929.50	 	 	 	484689.50	 
	Interest Income
	 	 	22.00	 	 	 	11145.46	 	 	 	18835.90	 
	Net Exchange Losses (Net income is
presented by “-”)
	 	 	23.00	 	 	 	0.00	 	 	 	0.00	 
	(IV) Others
	 	 	24.00	 	 	 	0.00	 	 	 	0.00	 
	IV. Operating Profits (Losses are
presented by “-”)
	 	 	25.00	 	 	 	254933.15	 	 	 	20991157.75	 

47

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Actual	 	Actual
	 	 	Line	 	Amount of	 	Amount of
	Item	 	No.	 	Last Year	 	Current Year
	Add: (I) Investment Proceeds (Losses are
presented by “-”)
	 	 	26.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Futures Return (Losses are presented
by “-”)
	 	 	27.00	 	 	 	0.00	 	 	 	0.00	 
	(III) Subsidy Income
	 	 	28.00	 	 	 	0.00	 	 	 	0.00	 
	Including: deficit enterprise allowance
income before subsidy
	 	 	29.00	 	 	 	0.00	 	 	 	0.00	 
	(IV) Non-operating Income
	 	 	30.00	 	 	 	0.00	 	 	 	31254.40	 
	Including: Net Return on Disposal of Fixed
Assets
	 	 	31.00	 	 	 	0.00	 	 	 	0.00	 
	Return on Non-monetary Transactions
	 	 	32.00	 	 	 	0.00	 	 	 	0.00	 
	Return on Sales of Intangible Assets
	 	 	33.00	 	 	 	0.00	 	 	 	0.00	 
	Net Income of Penalty
	 	 	34.00	 	 	 	0.00	 	 	 	0.00	 
	(V) Others
	 	 	35.00	 	 	 	0.00	 	 	 	0.00	 
	Including: remedy profit with the
Contracted Performance-linked Salary in
the previous years
	 	 	36.00	 	 	 	0.00	 	 	 	0.00	 
	Less: (I) Non-operating Expenses
	 	 	37.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Net Losses on Disposal of Fixed
Assets
	 	 	38.00	 	 	 	0.00	 	 	 	0.00	 
	Loss on Sales of Intangible Assets
	 	 	39.00	 	 	 	0.00	 	 	 	0.00	 
	Penalty Expenses
	 	 	40.00	 	 	 	0.00	 	 	 	0.00	 
	Donation Expenses
	 	 	41.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Other Expenses
	 	 	42.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Balance Carried Forward from Contracted Performance-linked
Salary
	 	 	43.00	 	 	 	0.00	 	 	 	0.00	 
	V. Total Profits (Total losses are presented by “-”)
	 	 	44.00	 	 	 	254933.15	 	 	 	21022412.15	 
	Less: Income Tax
	 	 	45.00	 	 	 	84127.94	 	 	 	168910.44	 
	* Minority Interests
	 	 	46.00	 	 	 	0.00	 	 	 	0.00	 
	Add: * Unrecognized Investment Losses (presented by “+”)
	 	 	47.00	 	 	 	0.00	 	 	 	0.00	 
	VI. Net Profit (Net losses are presented by “-”)
	 	 	48.00	 	 	 	170805.21	 	 	 	20853501.71	 
	Add: (I) Undistributed Profits at the beginning of the year
	 	 	49.00	 	 	 	2930485.60	 	 	 	739292.85	 
	(II) Surplus Reserves Recover Loss
	 	 	50.00	 	 	 	0.00	 	 	 	0.00	 
	(III) Other Adjustment Factors
	 	 	51.00	 	 	 	0.00	 	 	 	-7158.72	 
	Profits Available for Distribution
	 	 	52.00	 	 	 	3101290.81	 	 	 	21585635.84	 
	Less: (I) Withdrawal Statutory Surplus Reserves
	 	 	53.00	 	 	 	431997.96	 	 	 	1068574.57	 
	(II) Appropriation of Statutory Public Welfare Funds
	 	 	54.00	 	 	 	0.00	 	 	 	—	 
	(III) Appropriation of Staff Bonus and Welfare Fund
	 	 	55.00	 	 	 	0.00	 	 	 	0.00	 
	(IV) Appropriation of Reserves Fund
	 	 	56.00	 	 	 	0.00	 	 	 	0.00	 
	(V) Appropriation of Enterprise Expansion Fund
	 	 	57.00	 	 	 	0.00	 	 	 	0.00	 
	(VI) Profits Capitalized on Return of Investment.
	 	 	58.00	 	 	 	0.00	 	 	 	0.00	 
	(VII) Supplementary Current Assets
	 	 	59.00	 	 	 	0.00	 	 	 	0.00	 
	(VIII) Profits Reserved for a Single Item
	 	 	60.00	 	 	 	0.00	 	 	 	0.00	 
	(VIIII) Others
	 	 	61.00	 	 	 	0.00	 	 	 	0.00	 

48

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Actual	 	Actual
	 	 	Line	 	Amount of	 	Amount of
	Item	 	No.	 	Last Year	 	Current Year
	VIII Profits Available for Distribution to Investors
	 	 	62.00	 	 	 	2669292.85	 	 	 	20517061.27	 
	Less: (I) Preference Stock Dividends Payable
	 	 	63.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Appropriation of Discretionary Surplus Reserves
	 	 	64.00	 	 	 	0.00	 	 	 	0.00	 
	(III) Ordinary Stock Dividends Payable (Profits Payable)
	 	 	65.00	 	 	 	1930000.00	 	 	 	20302916.81	 
	(IV) Ordinary Stock Dividends Transferred to Capital (Stock)
	 	 	66.00	 	 	 	0.00	 	 	 	0.00	 
	(V) Others
	 	 	67.00	 	 	 	0.00	 	 	 	0.00	 
	VIIII. Undistributed Profits
	 	 	68.00	 	 	 	739292.85	 	 	 	214144.46	 
	Including: Losses to be made up from profits before tax in subsequent
years (presented by “+”)
	 	 	69.00	 	 	 	0.00	 	 	 	0.00	 
	Supplementary Information:
	 	 	70.00	 	 	 	 	 	 	 	 	 	 
	(I) Gain on sale and disposal of a department or an invested enterprise.
	 	 	71.00	 	 	 	0.00	 	 	 	0.00	 
	(II) Losses due to Natural Disasters (presented by “+”)
	 	 	72.00	 	 	 	0.00	 	 	 	0.00	 
	(III) Total Increase (Decrease) in Profits due to Accounting Policies
Changes
	 	 	73.00	 	 	 	0.00	 	 	 	0.00	 
	(IV) Total Increase (Decrease) in Profits due to Accounting Estimation
Changes
	 	 	74.00	 	 	 	0.00	 	 	 	0.00	 
	(V) Debt Restructuring Losses (presented by “+”)
	 	 	75.00	 	 	 	0.00	 	 	 	0.00	 
	(VI) Others
	 	 	76.00	 	 	 	0.00	 	 	 	0.00	 

Note: Items with * in the table are for the specific use of consolidated financial statements.

49

 

Balance Sheet

					
	 	 	 	 	 
	 
	 	 	 	Cai Kuai Nian Qi Sheet 01
	Compiled by: Shanghai Dianguang
	 	December	 	 
	Transmission Co., Ltd.
	 	31st, 2007
	 	Monetary Unit: RMB Yuan

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Opening
	 	 	 	 	 	 	Closing	 	balance at the
	 	 	Line	 	balance at the	 	beginning of the
	Item	 	No.	 	end of the year	 	period
	Current Assets:
	 	 	1.00	 	 	 	—	 	 	 	—	 
	Monetary Fund
	 	 	2.00	 	 	 	1545561.81	 	 	 	83847.54	 
	ΔTrading Financial Assets
	 	 	3.00	 	 	 	0.00	 	 	 	0.00	 
	#Short-term Investment
	 	 	4.00	 	 	 	0.00	 	 	 	0.00	 
	Notes Receivable
	 	 	5.00	 	 	 	0.00	 	 	 	0.00	 
	Dividends Receivable
	 	 	6.00	 	 	 	0.00	 	 	 	0.00	 
	Interests Receivable
	 	 	7.00	 	 	 	0.00	 	 	 	0.00	 
	Accounts Receivable
	 	 	8.00	 	 	 	176947.00	 	 	 	233564.92	 
	Other Receivables
	 	 	9.00	 	 	 	9503751.27	 	 	 	6153398.41	 
	Prepayment
	 	 	10.00	 	 	 	0.00	 	 	 	0.00	 
	Inventories
	 	 	11.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Raw Materials
	 	 	12.00	 	 	 	0.00	 	 	 	0.00	 
	Commodity Stocks
(Finished
Commodities )
	 	 	13.00	 	 	 	0.00	 	 	 	0.00	 
	Non-current Assets due
within a Year
	 	 	14.00	 	 	 	0.00	 	 	 	0.00	 
	Other Current Assets
	 	 	15.00	 	 	 	25165042.18	 	 	 	27834433.36	 
	Total Current Assets
	 	 	16.00	 	 	 	36391302.26	 	 	 	34305244.23	 
	Non-current Assets:
	 	 	17.00	 	 	 	—	 	 	 	—	 
	ΔFinancial Assets for Sales
	 	 	18.00	 	 	 	0.00	 	 	 	0.00	 
	ΔHeld-to-maturity Investment
	 	 	19.00	 	 	 	0.00	 	 	 	0.00	 
	#Long-term Debt Investment
	 	 	20.00	 	 	 	0.00	 	 	 	0.00	 
	ΔLong-term Receivables
	 	 	21.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Equity Investment
	 	 	22.00	 	 	 	0.00	 	 	 	0.00	 
	# Circulation Right for Equity
Separation
	 	 	23.00	 	 	 	0.00	 	 	 	0.00	 
	ΔInvestment Real Estate
	 	 	24.00	 	 	 	0.00	 	 	 	0.00	 
	Original Value of Fixed Assets
	 	 	25.00	 	 	 	128328.62	 	 	 	145894.08	 
	Less: Accumulated
Depreciation
	 	 	26.00	 	 	 	35068.05	 	 	 	57403.39	 
	Net Value of Fixed Assets
	 	 	27.00	 	 	 	93260.57	 	 	 	88490.69	 
	Less: Reserves for Fixed
Assets Impairment
	 	 	28.00	 	 	 	0.00	 	 	 	0.00	 
	Net Fixed Assets
	 	 	29.00	 	 	 	93260.57	 	 	 	88490.69	 
	Construction in Process
	 	 	30.00	 	 	 	0.00	 	 	 	0.00	 
	Engineering Materials
	 	 	31.00	 	 	 	0.00	 	 	 	0.00	 
	Liquidation of Fixed Assets
	 	 	32.00	 	 	 	0.00	 	 	 	0.00	 
	ΔManufacturing Biological Assets
	 	 	33.00	 	 	 	0.00	 	 	 	0.00	 
	ΔOil and Gas Assets
	 	 	34.00	 	 	 	0.00	 	 	 	0.00	 
	Intangible Assets
	 	 	35.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Land-use Right
	 	 	36.00	 	 	 	0.00	 	 	 	0.00	 
	ΔDevelopment Expenses
	 	 	37.00	 	 	 	0.00	 	 	 	0.00	 
	ΔGoodwill
	 	 	38.00	 	 	 	0.00	 	 	 	0.00	 
	#*Consolidated Difference
	 	 	39.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Deferred Expenses
(Deferred Assets)
	 	 	40.00	 	 	 	0.00	 	 	 	0.00	 
	ΔDeferred Income Tax Assets
	 	 	41.00	 	 	 	0.00	 	 	 	0.00	 
	#Deferred Tax Debits
	 	 	42.00	 	 	 	0.00	 	 	 	0.00	 
	Other Non-current Assets (Other
Long-term Assets)
	 	 	43.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Special
Reserve Materials
	 	 	44.00	 	 	 	0.00	 	 	 	0.00	 
	Total Non-current Assets
	 	 	45.00	 	 	 	93260.57	 	 	 	88490.69	 
	Total Assets
	 	 	46.00	 	 	 	36484562.83	 	 	 	34393734.92	 

50

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Opening
	 	 	 	 	 	 	Closing	 	balance at the
	 	 	Line	 	balance at the	 	beginning of the
	Item	 	No.	 	end of the year	 	period
	Current Liabilities:
	 	 	47.00	 	 	 	—	 	 	 	—	 
	Short-term Loans
	 	 	48.00	 	 	 	8000000.00	 	 	 	10000000.00	 
	ΔTrading Financial Liabilities
	 	 	49.00	 	 	 	0.00	 	 	 	0.00	 
	#Warrants Payable
	 	 	50.00	 	 	 	0.00	 	 	 	0.00	 
	Notes Payable
	 	 	51.00	 	 	 	0.00	 	 	 	0.00	 
	Accounts Payable
	 	 	52.00	 	 	 	659180.00	 	 	 	8844882.00	 
	Accounts Received in Advance
	 	 	53.00	 	 	 	0.00	 	 	 	0.00	 
	Staff Salaries Payable
	 	 	54.00	 	 	 	0.00	 	 	 	44912.03	 
	Including: Accrued Payroll
	 	 	55.00	 	 	 	0.00	 	 	 	0.00	 
	Welfare Benefits Payable
	 	 	56.00	 	 	 	0.00	 	 	 	44912.03	 
	Taxes and Charges Payable
	 	 	57.00	 	 	 	216189.12	 	 	 	165.03	 
	Including: Taxes Payable
	 	 	58.00	 	 	 	201722.93	 	 	 	165.03	 
	Interests Payable
	 	 	59.00	 	 	 	0.00	 	 	 	0.00	 
	Dividends Payable
	 	 	60.00	 	 	 	0.00	 	 	 	0.00	 
	Other Payables
	 	 	61.00	 	 	 	20894476.72	 	 	 	8544013.02	 
	Non-current Liabilities due with a Year
	 	 	62.00	 	 	 	0.00	 	 	 	0.00	 
	Other Current Liabilities
	 	 	63.00	 	 	 	0.00	 	 	 	0.00	 
	Total Current Liabilities
	 	 	64.00	 	 	 	29769845.84	 	 	 	27433972.08	 
	Non-current Liabilities:
	 	 	65.00	 	 	 	—	 	 	 	—	 
	Long-term Loans
	 	 	66.00	 	 	 	0.00	 	 	 	0.00	 
	Bonds Payable
	 	 	67.00	 	 	 	0.00	 	 	 	0.00	 
	Long-term Payable
	 	 	68.00	 	 	 	0.00	 	 	 	0.00	 
	Special Payables
	 	 	69.00	 	 	 	0.00	 	 	 	0.00	 
	Estimated Liabilities
	 	 	70.00	 	 	 	0.00	 	 	 	0.00	 
	ΔDeferred Income Tax Liabilities
	 	 	71.00	 	 	 	0.00	 	 	 	0.00	 
	#Deferred Tax Credits
	 	 	72.00	 	 	 	0.00	 	 	 	0.00	 
	Other non-current Liabilities
	 	 	73.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Special Reserve Fund
	 	 	74.00	 	 	 	0.00	 	 	 	0.00	 
	Total Non-current Liabilities
	 	 	75.00	 	 	 	0.00	 	 	 	0.00	 
	Total Liabilities
	 	 	76.00	 	 	 	29769845.84	 	 	 	27433972.08	 

51

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Opening
	 	 	 	 	 	 	Closing	 	balance at the
	 	 	Line	 	balance at the	 	beginning of the
	Item	 	No.	 	end of the year	 	period
	Owner’s Equity (or Shareholder’s Equity):
	 	 	77.00	 	 	 	—	 	 	 	—	 
	Paid-up Capital (Stock)
	 	 	78.00	 	 	 	5000000.00	 	 	 	5000000.00	 
	State Capital
	 	 	79.00	 	 	 	0.00	 	 	 	0.00	 
	Collective Capital
	 	 	80.00	 	 	 	0.00	 	 	 	0.00	 
	Corporate Capital
	 	 	81.00	 	 	 	0.00	 	 	 	0.00	 
	Including: State-owned Corporate Capital
	 	 	82.00	 	 	 	0.00	 	 	 	0.00	 
	Collective Corporate Capital
	 	 	83.00	 	 	 	0.00	 	 	 	0.00	 
	Personal Capital
	 	 	84.00	 	 	 	5000000.00	 	 	 	5000000.00	 
	Foreign Capital
	 	 	85.00	 	 	 	0.00	 	 	 	0.00	 
	Capital Reserves
	 	 	86.00	 	 	 	0.00	 	 	 	0.00	 
	Less: Treasury Stock
	 	 	87.00	 	 	 	0.00	 	 	 	0.00	 
	Surplus Reserves
	 	 	88.00	 	 	 	1500572.53	 	 	 	1500572.53	 
	ΔGeneral Risks Reserves
	 	 	89.00	 	 	 	0.00	 	 	 	0.00	 
	* #Unrecognized Investment Losses (presented by “-”)
	 	 	90.00	 	 	 	0.00	 	 	 	0.00	 
	Undistributed Profits
	 	 	91.00	 	 	 	214144.46	 	 	 	459190.31	 
	Including: Cash Dividends
	 	 	92.00	 	 	 	0.00	 	 	 	0.00	 
	*Foreign Exchange Financial Statements Translation Difference
	 	 	93.00	 	 	 	0.00	 	 	 	0.00	 
	Total Owner’s Equity Attributable to Owner of Parent Company
	 	 	94.00	 	 	 	6714716.99	 	 	 	6959762.84	 
	* Minority Interests
	 	 	95.00	 	 	 	0.00	 	 	 	0.00	 
	Total Owner’s Equity
	 	 	96.00	 	 	 	6714716.99	 	 	 	6959762.84	 
	#Less: Losses of Assets
	 	 	97.00	 	 	 	0.00	 	 	 	0.00	 
	Total Owner’s Equity (after eliminating Impairment of Assets)
	 	 	98.00	 	 	 	6714716.99	 	 	 	6959762.84	 
	Total Liabilities and Owner’s Equity
	 	 	99.00	 	 	 	36484562.83	 	 	 	34393734.92	 

Note: Items with * in the table are for the specific use of financial
statements; items with Δ in the table are for the specific use of enterprises
implementing New Accounting Rules, other enterprises need not fill in it; items
with # in the table are for the specific use of enterprises implementing the
Corporate Accounting System, other enterprises implementing New Accounting
Rules need not fill in it.

52

 

Income Statement

					
	 
	 	 	 	Cai Kuai Nian Qi Sheet 02
	Compiled by: Shanghai Dianguang	 	 	 	 
	Transmission Co., Ltd.
	 	2007
	 	Monetary Unit: RMB Yuan

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount of	 	 
	 	 	Line	 	Current	 	Amount of
	Item	 	No.	 	Period	 	Last Period
	I. Total Operating Income
	 	 	1.00	 	 	 	39556836.23	 	 	 	34317009.09	 
	Including: Operating Income
	 	 	2.00	 	 	 	39556836.23	 	 	 	34317009.09	 
	Including: Main Operating Income
	 	 	3.00	 	 	 	39556836.23	 	 	 	34317009.09	 
	Other Business Income
	 	 	4.00	 	 	 	0.00	 	 	 	0.00	 
	II. Total Operating Costs
	 	 	5.00	 	 	 	39191096.16	 	 	 	13325851.34	 
	Including: Operating Costs
	 	 	6.00	 	 	 	35755924.22	 	 	 	10638272.82	 
	Including: Main Operating Costs
	 	 	7.00	 	 	 	35755924.22	 	 	 	10638272.82	 
	Other Operating Costs
	 	 	8.00	 	 	 	0.00	 	 	 	0.00	 
	Business Tax and Extra Charges
	 	 	9.00	 	 	 	281413.54	 	 	 	480188.30	 
	Sales Expenses
	 	 	10.00	 	 	 	881571.83	 	 	 	1098601.85	 
	Administrative Expenses
	 	 	11.00	 	 	 	1642492.07	 	 	 	642510.47	 
	Including: Business
Entertainment Expenses
	 	 	12.00	 	 	 	523202.40	 	 	 	338908.90	 
	Research and
Development Expenses
	 	 	13.00	 	 	 	0.00	 	 	 	0.00	 
	Financial Expenses
	 	 	14.00	 	 	 	629694.50	 	 	 	466277.90	 
	Including: Interest Expenses
	 	 	15.00	 	 	 	606735.87	 	 	 	484689.50	 
	Interest Income
	 	 	16.00	 	 	 	22601.63	 	 	 	18835.90	 
	Net Exchange Loss
(Net income is
presented by “-”)
	 	 	17.00	 	 	 	0.00	 	 	 	0.00	 
	ΔLosses on Impairment of Assets
	 	 	18.00	 	 	 	0.00	 	 	 	0.00	 
	Others
	 	 	19.00	 	 	 	0.00	 	 	 	0.00	 
	Add: Profit and Loss from Fair Value
Changes (Losses are presented by “-”)
	 	 	20.00	 	 	 	0.00	 	 	 	0.00	 
	Return on Investment (Losses are
presented by “-”)
	 	 	21.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Investment Proceeds in Associated Enterprises and Joint Ventures
	 	 	22.00	 	 	 	0.00	 	 	 	0.00	 

53

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount of	 	 
	 	 	Line	 	Current	 	Amount of
	Item	 	No.	 	Period	 	Last Period
	III. Operating Profits (Losses are presented by “-”)
	 	 	23.00	 	 	 	365740.07	 	 	 	20991157.75	 
	Add: Non-operating Income
	 	 	24.00	 	 	 	31254.40	 	 	 	0.00	 
	Including: Gains on Disposal of Non-current Assets
	 	 	25.00	 	 	 	0.00	 	 	 	0.00	 
	Gains on Non-monetary Assets Exchange (Return on Non-monetary Transactions)
	 	 	26.00	 	 	 	0.00	 	 	 	0.00	 
	Governmental Subsidy (Subsidy Income)
	 	 	27.00	 	 	 	0.00	 	 	 	0.00	 
	Debt Restructuring Gains
	 	 	28.00	 	 	 	0.00	 	 	 	0.00	 
	Less: Non-operating Expenses
	 	 	29.00	 	 	 	0.00	 	 	 	0.00	 
	Including: Losses on Disposal of Non-current Assets
	 	 	30.00	 	 	 	0.00	 	 	 	0.00	 
	Losses on Non-monetary Assets Exchange (Losses on Non-monetary Transactions)
	 	 	31.00	 	 	 	0.00	 	 	 	0.00	 
	Losses of Debt Restructuring
	 	 	32.00	 	 	 	0.00	 	 	 	0.00	 
	IV. Total Profits (Total losses are presented by “-”)
	 	 	33.00	 	 	 	396994.47	 	 	 	20991157.75	 
	Less: Income Tax Expenses
	 	 	34.00	 	 	 	0.00	 	 	 	0.00	 
	Add: *#Unrecognized Investment Losses
	 	 	35.00	 	 	 	0.00	 	 	 	0.00	 
	. Net Profits (Net losses are presented by “-”)
	 	 	36.00	 	 	 	396994.47	 	 	 	20991157.75	 
	Less: * Minority Interests
	 	 	37.00	 	 	 	0.00	 	 	 	0.00	 
	VI. Net Profits Attributable to Owners of Parent Company
	 	 	38.00	 	 	 	0.00	 	 	 	0.00	 
	VII. Earnings Per Share
	 	 	39.00	 	 	 	0.00	 	 	 	0.00	 
	Basic Earnings Per Share
	 	 	40.00	 	 	 	0.00	 	 	 	0.00	 
	Diluted Earnings Per Share
	 	 	41.00	 	 	 	0.00	 	 	 	0.00	 

Note: Items with * in the table are for the specific use of financial
statements; items with Δ in the table are for the specific use of enterprises
implementing New Accounting Rules, other enterprises need not fill in it; items
with # in the table are for the specific use of enterprises implementing the
Corporate Accounting System, other enterprises implementing New Accounting
Rules need not fill in it.

54

 

APPENDIX 8.

EXISTING TELEVISION PROGRAMS

1. Xin Yule Yingyuan on the News and Entertainment Channel of Shanghai TV

55exv10w1w2

Exhibit 10.1.2

[Translation of Chinese original]

SUPPLEMENTAL AGREEMENT

For the

SHANGHAI DIANGUANG MEDIA BROADCASTING COMPANY EQUITY

TRANSFER

By and Among

REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD.

JUANJUAN TANG

And

JINYU FAN

 

 

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

	(1)	 	REDGATE INTERACTIVE ADVERTISING (BEIJING) CO., LTD., a limited liability company lawfully
established and validly existing under the laws of the People’s Republic of China, with its
domicile at Suite 804, Building 2, 19 Jianguomenwai Avenue, Chaoyang District, Beijing (“Party
A”);
	 
	(2)	 	JUANJUAN TANG, a natural person and citizen of the People’s Republic of China whose ID card
number is 310103195712232046 and whose residential address is No. 2, Lane 520, Shunchang Road,
Shanghai;
	 
	 	 	JINYU FAN, a natural person and citizen of the People’s Republic of China whose ID card
number is 310104195808141612 and whose residential address is No. 18, Lane 481, Taixing
Road, Shanghai; (Juanjuan Tang and Jinyu Fan are hereinafter collectively referred to as
“Party B”); and
	 
	(3)	 	SHANGHAI DIANGUANG MEDIA BROADCASTING COMPANY, a limited liability company lawfully
established and validly existing under the laws of the People’s Republic of China, with its
domicile at Suites 310-9, 388 Qingshan Road, Minhang District, Shanghai (the “Company”).

WHEREAS:

	(A)	 	On April 8, 2008, the Parties executed an Equity Transfer Agreement (the “Equity Transfer
Agreement”) providing for the transfer by Party B to Party A of 100 percent of the Equity of
the Company (the “Proposed Equity Transfer”), of which Juanjuan Tang is to transfer 60 percent
of the Equity to Party A, and Jinyu Fan is to transfer 40 percent of the Equity to Party A.
	 
	(B)	 	On April 8, 2008, the Parties additionally executed with Redgate Media Inc. (the “Proposed
Listed Company”) an agreement (the “Share Issuance Agreement”) whereby the Proposed Listed
Company is to issue shares of the Proposed Listed Company or pay a cash consideration to Party
B once certain conditions have been fulfilled.
	 
	(C)	 	The Parties have agreed to provide for matters not covered in the Equity Transfer Agreement
and the Share Issuance Agreement by entering into this Agreement.

NOW, THEREFORE, following amicable negotiations, the Parties have agreed on the Agreement as
follows:

	1.	 	Definitions

	1.1	 	Unless otherwise provided or required by the context, relevant terms in this Agreement shall
have the same meanings as those assigned to them in the Equity Transfer Agreement.
	 
	1.2	 	Unless otherwise provided or required by the context:

 

 

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

	2.	 	Payment of Offshore Consideration and Vesting of Retained Profits
	 
	2.1	 	Pursuant to the Equity Transfer Agreement, Party B agrees to transfer the Company’s Equity to
Party A for the price of Renminbi Five Million (RMB5,000,000) (the “Transfer Price”) and Party
A agrees to purchase the Company’s Equity from Party B for the Transfer Price. The Transfer
Price will be paid by Party A to Party B in accordance with the Equity Transfer Agreement.
	 
	2.2	 	Pursuant to the Share Issuance Agreement, Party A agrees, based on such factors as the
performance of the Company and the actual progress of the listing of the Proposed Listed
Company on the stock exchange, to issue to Party B shares of the Proposed Listed Company or
pay a certain amount of cash as consideration for the services provided to the Company by
Party B and other matters (the “Offshore Consideration”).
	 
	2.3	 	With a view to fully safeguarding the interests of Party B, the Parties confirm and agree
that:

	 	2.3.1	 	the Company’s 2007 distributable profits (the “2007 Profits”) shall vest in
Party B, unless the circumstance set forth in Article 2.3.3 arises. For this purpose,
the Parties agree to have, after the execution hereof, PricewaterhouseCoopers confirm
the specific amount of the 2007 Profits in accordance with generally accepted
international accounting standards. When calculating the 2007 Profits, all past losses
(if any) shall first be written down and the allocation to the statutory common
reserve shall be made. Additionally, PricewaterhouseCoopers shall confirm the total
amount of the Company’s receivables (the “Receivables”) and payables (the “Payables”)
as of December 31, 2007;
	 
	 	2.3.2	 	unless payment is made to Party B pursuant to Article 2.3.4, the 2007 Profits
shall not, for the time being, be paid to Party B; however, the Company shall enter the
2007 Profits in its accounts as profits distributable by the Company to Party B;
	 
	 	2.3.3	 	if the Proposed Listed Company complies with the Share Issuance Agreement by
paying the Offshore Consideration to Party B, the entire amount of the

2

 

	 	 	 	2007 Profits shall vest in, and be disposed of directly by, Party A; Party B
undertakes that on the date of payment of the Offshore Consideration, it shall no
longer have any rights in the 2007 Profits and shall not assert any claims against
Party A or the Company in respect of the 2007 Profits;

	 	2.3.4	 	if the Proposed Listed Company fails to realize its initial public offering of
shares and listing on or prior to December 31, 2010 and Party B has not received the
shares or cash consideration in accordance with Article 2.2(d) of the Share Issuance
Agreement, the 2007 Profits shall be paid to Party B;
	 
	 	2.3.5	 	the Party that ultimately actually receives the 2007 Profits shall bear the
income tax payable on said profits; and
	 
	 	2.3.6	 	until the payment of the Offshore Consideration, Party A shall not, as the
shareholder of the Company, withdraw any funds from the Company; Party B shall ensure
that all of the Receivables are recovered in full and returned to the Company and,
while ensuring the Company’s normal cash flow, will determine the time and method of
payment of the 2007 Payables, provided that Party B promptly informs Party A thereof.

	2.4	 	In the event of any discrepancy between the provisions of this Article and the Equity
Transfer Agreement, the provisions of this Article shall prevail.
	 
	3.	 	Corporate Governance
	 
	 	 	Party A undertakes that, until the Offshore Consideration is paid, it will not require the
Company, without the consent of the majority of Party B and the consent of Party A, to:
	 
	3.1	 	distribute profits;
	 
	3.2	 	reduce its registered capital;
	 
	3.3	 	carry out any borrowing, financing or advanced payment transaction with Party A, an affiliate
of Party A, an affiliate of the Company or any director of the foregoing companies that is
prejudicial to the Company’s interests;
	 
	3.4	 	merge, enter into an equity joint venture, divide, make a material asset transfer or make any
other change in its capital that would be sufficient to have a material adverse effect on the
Company; or
	 
	3.5	 	dissolve or liquidate.
	 
	4.	 	Liability for Breach of Agreement
	 
	4.1	 	If a Party breaches any of the provisions hereof, the Party in breach shall compensate the
non-breaching Parties for all claims, expenses, costs, losses and liabilities incurred or
arising in connection with said breach, whether directly or indirectly. If the Party in
breach is one of the parties comprising Party B and/or the Company, Party B shall bear joint
and several liability in respect of the compensation for such breach.

3

 

	4.2	 	Without prejudice to any of the other provisions of this Article 4, if any Party fails to
perform any of said Party’s obligations hereunder, the non-breaching Parties shall, in
addition to exercising any other rights and remedies available hereunder, have the right to
demand that the Party in breach actually perform the relevant obligation and the Parties
expressly waive the defense of sufficiency of damages.
	 
	5.	 	Governing Law
	 
	 	 	This Agreement shall be governed by, and construed in accordance with, the laws of the
People’s Republic of China.
	 
	6.	 	Language
	 
	 	 	This Agreement is made in Chinese in six (6) counterparts, of which Party A shall hold one
original and each party comprising of Party B shall hold one original.
	 
	7.	 	Effectiveness
	 
	 	 	This Agreement shall enter into effect on the date when it is signed/sealed by the Parties
or their authorized representatives.

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

4

 

Execution Page

Party A:

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

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

Party B:

JUANJUAN TANG

	 	 	 	 	 
	Signature:  	/s/ Juanjuan Tang
 	 	 
	 	 	 
	JINYU FAN

 	 	 
	Signature:  	/s/ Jinyu Fan
 	 	 
	 	 	 

SHANGHAI DIANGUANG MEDIA BROADCASTING COMPANY [company seal]

	 	 	 	 	 
	 	 	 
	By:  	/s/ Juanjuan Tang
 	 	 
	  	Name of Legal Representative: Juanjuan Tang
 	 	 

5

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