Document:

Exhibit 4.24

Exhibit 4.24

English Translation

EQUITY ACQUISITION AGREEMENT

This Equity Acquisition Agreement (hereinafter referred to as this “Agreement”) is made in Changsha
on 22 May 2009:

BY AND AMONG:

	 	(1)	 	Global Ring Limited, a limited liability company established and existing under
the laws of Hong Kong with a registered address at Room 1401, 14/F, World Commerce
Centre, No. 7-11 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong (hereinafter referred
to as the “Acquiring Party”)

	 	(2)	 	Tianming DU, a PRC citizen, male, born on 30 August 1950, with an address at
Room 202, Tower 1, No. 362 Jiefang No. 4 Village, Tianxin District, Changsha City,
Hunan Province, ID No.: 430121195008307710;

	 	(3)	 	Liangdong DU, a PRC citizen, male, born on 30 January 1982, with an address at
Room 202, Tower 1, No. 362 Jiefang No. 4 Village, Tianxin District, Changsha City,
Hunan Province, ID No.: 430102198201305551;

	 	(4)	 	Changsha Xingchen Enterprise Management & Consultation Co. Ltd. (hereinafter
referred to as “Changsha Xingchen”), a limited liability company duly incorporated and
validly existing under the laws of the PRC with a registered address at Room 501, No.
717, Wuyi Avenue, Tianxin District, Changsha City, whose legal representative is
Liangdong Du;

	 
	 	 	 	Tianming Du, Liangdong Du and Changsha Xingchen are hereinafter collectively
referred to as the “Acquired Parties”).

	 
	 	 	 	The Acquiring Party and the Acquired Parties are hereinafter collectively referred
to as the “Parties”).

WHEREAS:

(1) Changsha Little Star Cartoon Digital Technology Ltd. (hereinafter referred to as “Cartoon
Digital”) is a limited liability company duly incorporated and validly existing in Changsha City,
Hunan Province on 25 November 2005 with the registration number: 430193000003045;

Legal and registered address: 3/F, Block 5, Oak Garden, No. 8 Lutian Road, Lu Valley,
Changsha High and New Technology Development Zone, Changsha;

Legal representative: Tianming Du;

Registered Capital: RMB7,017,203;

 

 

 

On the date hereof, Tianming Du, Liangdong Du and Changsha Xingchen are the legal shareholders
of Cartoon Digital. Tianming Du contributes RMB4,634,200 to Cartoon Digital, representing 66% of
its registered capital; Liangdong Du contributes RMB1,985,800, representing 28.3% of its registered
capital; Changsha Xingchen contributes RMB397,203, representing 5.7% of its registered capital.

On the basis of the principles of equality and mutual benefits and in accordance with the
requirements of the PRC laws, the Acquired Parties and the Acquiring Party have agreed as follows
in respect of the acquisition of equity interests after friendly consultation:

ARTICLE 1. DEFINITIONS

1.1 Unless otherwise required or agreed by laws and this Agreement, the definition and meaning of
the terms and expressions used herein shall be based as follows:

	 	 	 
	PRC or China
	 	means, for the purpose of this
Agreement, the People’s Republic of
China, excluding Hong Kong, Macau and
Taiwan.

	 	 	 

	Equity
	 	means the equity interests owned as
to 66%, 28.3% and 5.7% by Tianming
Du, Liangdong Du and Changsha
Xingchen (all of whom are the
Acquired Parties), respectively, in
Cartoon Digital, amounting to 100% of
its equity interest.

	 	 	 

	Approval Authority
	 	means the Ministry of Commerce of the
PRC or any local competent
departments in charge of commerce
authorized by it for the approval of
equity acquisition of companies.

	 	 	 

	Registration Authority
	 	means the State Administration for
Industry and Commerce or any local
branches authorized by it for the
registration of companies.

	 	 	 

	Foreign Exchange Authority
	 	means the State Administration of
Foreign Exchange or any local
departments in charge of foreign
exchange.

	 	 	 

	PRC Law
	 	means any laws and regulations of the
PRC promulgated prior to (and
including) the effective date hereof
and currently in effect, and any
rules, regulations and measures
promulgated by the PRC government and
its departments that are legally
binding, as well as the standardized
documents in other forms.

	 	 	 

	Effective Date
	 	means the date on which this
Agreement becomes effective after it
is approved by the relevant Approval
Authority.

	 	 	 

	Closing Date
	 	means the date on which the equity
acquisition is approved by the
Approval Authority, the change of
registration in respect thereof is
approved by the Registration
Authority and a new business license
is issued to Cartoon Digital.

	 	 	 

	Transaction Completion
 Date
	 	means the date on which the
consideration for equity acquisition
prescribed herein has been paid to
the Acquired Parties.

 

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	Little Star Group’s Profit
	 	means all cumulative undistributed
profits of each member of Little Star
Group for the period from the date of
its establishment to 31 May 2009 as
calculated according to the
calculation of undistributed profits
recognized by the Acquiring Party and
the Acquired Parties.

	 	 	 

	Original Articles
	 	means the Articles of Association of
Changsha Little Star Cartoon Digital
Technology Ltd. signed by the
shareholders of Cartoon Digital on 5
June 2008.

	 	 	 

	Target Business
	 	means any businesses conducted by
Little Star Group prior to the
Closing Date, regardless of whether
Little Star Group is still in the
conduct of such businesses on the
Closing Date.

	 	 	 

	Little Star Group
	 	means Cartoon Digital, Changsha
Little Star Cultural Products
Development Company Limited, as well
as New Star English Training School
in Tianxin District, Changsha City,
Little Star English School in Yuetang
District, Xiangtan City, Little Star
Foreign Language School in Datong
City, Shanxi, and Little Star English
School in Tianxin District, Changsha
City.

	 	 	 

	Accounting Reference 
Date
	 	means 31 December 2008.

ARTICLE 2. ACQUISITION OF EQUITY

2.1 The Acquired Parties agree to transfer the Equity to the Acquiring Party, and the Acquiring
Party agrees to accept such transfer from the Acquired Parties on the terms and conditions set
forth herein.

2.2 With effect from the Closing Date, the Acquiring Party will become a shareholder of Cartoon
Digital. Its liabilities to Cartoon Digital shall be limited to the capital contribution
subscribed by it. All the Acquired Parties will lose all their equity interests in Cartoon Digital
and will cease to enjoy or bear any rights and obligations of shareholders in Cartoon Digital,
unless otherwise required herein.

ARTICLE 3. CONSIDERATION FOR EQUITY ACQUISITION AND ITS PAYMENT

3.1 The Acquired Parties and the Acquiring Party agree that the consideration for the Equity
acquisition shall be RMB18.2 million (hereinafter referred to as the “Acquisition Consideration”).
The Acquisition Consideration shall be paid in US dollar at an exchange rate which is the middle
price of the conversion of US dollar to Reminbi announced by the People’s Bank of China on the date
of payment. Regardless of any increase or decrease in the net assets of Cartoon Digital up to the
Transaction Completion Date, the Acquisition Consideration will remain unchanged.

3.2 The Acquiring Party shall pay the consideration in full to the Acquired Parties within three
months from the Closing Date.

 

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3.3 The Acquired Parties shall issue to the Acquiring Party a receipt for payment of the
Acquisition Consideration on the date when the Acquisition Consideration is paid. Moreover, the
Acquired Parties shall accept the entrustment from the Acquiring Party to apply for the
registration of foreign investment, foreign exchange and receipts of foreign exchange in connection
with equity transfer to the Foreign Exchange Authority at the place where the Acquired Parties are
located with two working days of the receipt of the Acquisition Consideration, and shall provide
the Acquiring Party with the documentations showing the completion of the registration of foreign
investment, foreign exchange and receipts of foreign exchange in connection with equity transfer as
soon as possible after the completion of the formalities in relation to the registration of foreign
exchange mentioned above.

ARTICLE 4. SPECIAL AGREEMENT

4.1 The Acquired Parties and the Acquiring Party agree that any profits of Little Star Group shall
belong to the Acquired Parties.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES

5.1 Save as disclosed to the Acquiring Party, the Acquired Parties jointly and severally represent
and warrant to the Acquiring Party as follows

	 	(1)	 	all the warranties made by them in Appendix 5.1 are accurate and not misleading
in all respects on the date hereof;

	 	(2)	 	all the warranties made by them in Appendix 5.1 will continue to be accurate
and not misleading in all respects until and including the Closing Date, as if they
were made again immediately before the Closing Date based on the facts and
circumstances on that day.

The Parties agree that the Acquired Parties shall be jointly liable for the representations
and warranties set forth in Appendix 5.1

5.2 The Acquiring Party hereby represents and warrants to the Acquired Parties as follows:

	 	(1)	 	the Acquiring Party meets the conditions for the acquisition of Cartoon Digital
as required by laws, and will not affect the normal operation of legal proceedings for
acquisition of the Equity due to the limitation of its own conditions;

	 	(2)	 	the acquisition of the Equity has been approved by the board of directors of
the Acquiring Party;

	 	(3)	 	the Acquiring Party has sufficient funds to acquire Cartoon Digital and
warrants that it is able to pay the Acquisition Consideration pursuant to the
requirements of this Agreement.

 

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5.3 Notwithstanding any potential investigation by any other Parties and their respective agents or
advisers, the Parties confirm and accept that the Acquiring Party executes this Agreement in
reliance on all representations and warranties made by the Acquired Party. The Acquired Parties
warrant that they will be liable for and fully indemnify the Acquiring Party against any losses,
damages, liabilities, costs or expenses arising from the following circumstances:

	 	(1)	 	any representations and warranties being untrue, misleading or involving
omission to state material facts or being violated;

	 	(2)	 	any claims in connection with the settlement of any situation where
representations and warranties are untrue or misleading, omit to state material facts
or have been violated;

	 	(3)	 	any arbitrations or legal proceedings arising from any claims made by other
Parties in respect of any situation where representations and warranties are untrue or
misleading, omit to state material facts or have been violated; and

	 	(4)	 	the implementation of any such settlement or arbitral award or judgment and the
amount therefor, including legal and other costs, and any possible tax liabilities.

5.4 Each of the representations and warranties stated in Appendix 5.1 shall be construed as a
separate and independent warranty, and shall, unless expressly provided to the contrary, not be
limited or bound by the terms of any other representation and warranties or the application of any
other terms hereof or the inference made from such other terms. If there is any conflict between
any representations and warranties stated in Appendix 5.1 and the information disclosed by the
Acquired Parties to the Acquiring Party, the information disclosed by the Acquired Parties to the
Acquiring Party shall prevail.

5.5 Each Party hereby warrants that he/it shall, prior to the Closing Date, immediately disclose to
the other Parties in writing on a voluntary basis and upon request any events, facts or
circumstances that may be known to him/it after the execution hereof to be inconsistent with any
warranties, or may reasonably expect to have material effects on the valuation of Cartoon Digital,
or may enable other Parties to make claims against him/it in accordance with this Agreement.

5.6 If any of the representations and warranties set forth in Appendix 5.1 is false or incorrect or
omits to state material facts due to the reasons of the Acquired Parties, the Acquired Parties
shall immediately indemnify and hold Cartoon Digital harmless from and against any losses, damages,
costs, and all other adverse circumstances of any kind and nature that would not be resulted if
such warranties were true or correct or did not omit any material facts.

5.7 If the Acquiring Party discovers any breach by the Acquired Parties of Article 5.1 hereof
within 18 months after the Closing Date, it shall have the right to pursue the liabilities from the
Acquired Parties in accordance with the relevant requirements of this Agreement.

 

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ARTICLE 6. RIGHTS AND OBLIGATIONS OF THE PARTIES

6.1 Within five days after the execution hereof, the Acquiring Party shall make an application to
the relevant government departments (including the Approval Authority and Registration Authority)
for the approval and registration of the Equity acquisition and the Acquired Parties shall provide
the Acquiring Party with the information in relation thereto and offer full cooperation. The
Acquiring Party shall, within one month after the execution hereof or such period as extended by
the Parties through separate consultation, obtain an approval from the Approval Authority in
respect of the Equity acquisition and the business license of Cartoon Digital from the Registration
Authority for its transformation into a wholly foreign-owned enterprise.

6.2 The Acquired Parties shall procure the original legal representative of Cartoon Digital to hand
over the chop, account books, relevant permits or licenses (including but not limited to documents
such as all government licenses, approvals, authorizations, filings and registration, or
certificates, credentials, copyrights, certificates for trademarks and patents, real estate
ownership certificates and any documents relating to the above permits or licenses) and other
business documents of Cartoon Digital to the legal representative of Cartoon Digital after its
transformation or any personnel designated by him within three days from the Closing Date. Upon
completion of the handover, the Acquiring Party and the Acquired Parties shall sign a confirmation
document for the handover.

6.3 The Acquired Parties shall have the right to receive the Acquisition Consideration from the
Acquiring Party and shall issue a receipt of payment to the Acquiring Party pursuant to Article 3.3
hereof.

6.4 The Acquiring Party shall pay the Acquisition Consideration to the Acquired Parties pursuant to
the requirements hereof.

6.5 The Acquiring Party shall have the right to formulate a new articles of association.

6.6 The Parties shall bear all of their taxes and expenses hereunder, respectively according to
laws. With regard to the costs involved in the payment of the Acquisition Consideration, the
Acquiring Party shall bear those costs incurred in China while the Acquired Parties shall bear
those costs incurred outside of China.

6.7 The Acquired Parties shall procure Little Star Group to develop the businesses conducted by it
within the normal business scope during the period from the date hereof to the Closing Date
(hereinafter referred to as the “Transition Period”). During the Transition Period, the Acquired
Parties shall procure Little Star Group to meet the following requirements:

	 	(1)	 	to prevent its existing business structure and reputation from being infringed,
unless the change of the business structure has been approved in writing by the
Acquiring Party in advance;

	 	(2)	 	to protect the assets and properties of Little Star Group and to maintain their
good working condition so as to enable the normal operation of such assets and
properties, and to make foreseeable depreciation to them in reasonable circumstances;

 

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	 	(3)	 	to maintain the services provided to it by its customers, suppliers and other
units or individuals or its cooperation with them, and to preserve the good reputation
of Little Star Group;

	 	(4)	 	unless with the prior written consent from the Acquiring Party, to continue all
production, sale, marketing and promotion activities in connection with the business
being operated by Little Star Group;

	 	(5)	 	to keep the accounts and accounting records of Cartoon Digital in a normal or
usual manner without making any significant changes to the following: financial year,
pricing, investment, accounting, financial statement, inventory, bank deposit,
government subsidies, taxation practices; the method of calculation of doubtful debt
and reserves;

	 	(6)	 	to comply with all applicable laws and regulations, and government rules for
the development of the businesses of Little Star Group. In the event of the breach of
any applicable laws and regulations, it shall immediately notify the Acquiring Party
after it is aware of such breach.

6.8 The Acquired Parties jointly and severally warrant that, without the written consent of the
Acquiring Party, Cartoon Digital and other members of Little Star Group shall, during the
Transition Period, not do the following:

	 	(1)	 	amendments to articles of association or other constituent documents;

	 	(2)	 	increase or decrease of registered capital;

	 	(3)	 	merger, consolidation, sale or transfer of all or substantial part of assets;

	 	(4)	 	realization, dissolution or liquidation, reorganization or restructuring of
capital structure in any form, or any matters leading to the change of control;

	 	(5)	 	any significant changes to any accounting policies, standards or principles;

	 	(6)	 	any significant change to the nature of the businesses of Little Star Group, or
suspension or termination of any part of the current businesses of Little Star Group;

	 	(7)	 	authorization or issue of any securities, including any equity;

	 	(8)	 	purchase of any equity of entities, or merger with any other entities or
participation in any joint ventures;

	 	(9)	 	increase of the number of directors;

	 	(10)	 	declaration and payment of any dividends or making distribution in any other
form (save for the circumstances described in Article 4 hereof);

	 	(11)	 	approval of the annual budget and business plan;

 

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	 	(12)	 	creation of an indebtedness whose single amount or cumulative exceeds
RMB100,000 (the indebtedness of all members of Little Star Group shall be calculated on
a consolidated basis);

	 	(13)	 	creation of a guarantee whose single amount or cumulative amount exceeds
RMB100,000 (the guarantees of all members of Little Star Group shall be calculated on a
consolidated basis);

	 	(14)	 	obtaining of loans or credits from any financial institutions;

	 	(15)	 	creation of indebtedness of any types that are beyond the scope of ordinary
business operation of Little Star Group;

	 	(16)	 	transfer, sale or disposal of the fixed assets and property of Little Star
Group that are beyond the scope of its ordinary business operation, creation of any
pledge, mortgage or guarantee over such assets and property, or provision of any
guarantee to third parties;

	 	(17)	 	making any capital expenditure or commitment in an amount of RMB100,000 or
more, such as the purchase of fixed assets or investment (the capital expenditure or
commitment of all members of Little Star Group shall be calculated on a consolidated
basis);

	 	(18)	 	execution of contracts that are not in the nature of normal business operation;

	 	(19)	 	change of the senior management, or change of the terms and conditions of any
labor contracts with employees;

	 	(20)	 	institution or resolution of any litigation or arbitration;

	 	(21)	 	other acts which will reduce the value of Little Star Group.

6.9 Upon execution hereof, each of the Acquired Parties shall undertake and warrant that he/it and
any of his/its family members (including his spouse, children, brothers and sisters), associated
enterprises, subsidiary enterprises, subsidiaries and shareholders shall not:

	 	(1)	 	directly or indirectly engage, invest or be involved in or manage any entities,
businesses or products that are identical, similar to or in competition with the Target
Business, nor shall they have any direct or indirect rights or interests in any
entities, businesses or products that are identical, similar to or in competition with
the Target Business.

	 	(2)	 	directly or indirectly enter into any transactions in relation to the Target
Business with any customers, potential customers, representatives, agents, enterprises
with business relationship or other persons doing business with Little Star Group in
any manner or way for the account of themselves or any third parties.

 

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	 	(3)	 	directly or indirectly induce any customers, potential customers,
representatives, agents, suppliers, enterprises with business relationship or other
persons doing business with Little Star Group in any manner or way to terminate their
relationship or contact with Little Star Group for the account of themselves or any
third parties.

	 	(4)	 	directly or indirectly employ, hire or induce, recruit, encourage, persuade or
procure any advisers, contractors, employees, directors, management, managers,
representatives, agents or other persons currently working for Little Star Group in any
manner or way to terminate their relationship or contact with Little Star Group for the
account of themselves or any third parties.

	 	(5)	 	use or register any patents, trademarks, trade names, logos, copyrights,
proprietary technologies or other intellectual property rights that are identical,
similar or relevant to the intellectual property rights owned by, transferred or
licensed to Little Star Group (whether registered or not) or that are developed based
on such intellectual property rights.

ARTICLE 7. AMENDMENT, MODIFICATION AND TERMINATION OF THE AGREEMENT

7.1 Without the consent of the Parties, no Party shall make any amendment or modification to this
Agreement without authorization.

7.2 If this Agreement cannot be fully performed due to the non-performance by a Party of his/its
obligations hereunder or serious breach of this Agreement, it shall be deemed as the termination of
this Agreement unilaterally by the defaulting Party. In addition to any claims against the
defaulting Party, the non-defaulting Party shall be entitled to discharge this Agreement in
accordance with the Contract Law.

ARTICLE 8. LIABILITIES FOR BREACH OF CONTRACT

8.1 If any Party does not perform any of its substantive obligations hereunder, or any
representations and warranties hereunder are inaccurate, untrue or misleading, it shall constitute
a breach of this Agreement (hereinafter referred to as the “Breach”). The defaulting Party shall
indemnify against all damages and losses suffered by the non-defaulting Party as a result of such
Breach.

8.2 If this Agreement cannot take effect or be performed in whole or in part due to the reasons of
the Approval Authority or other government departments, the Parties shall not be liable to the
breach for each other.

 

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ARTICLE 9. FORCE MAJEURE

9.1 If the performance of this Agreement is directly affected and this Agreement cannot be
performed according to the agreed terms due to earthquake, typhoon, flood, fire, war and other
force majeure which are not foreseeable and the occurrence and consequence of which are
unpreventable or unavoidable, the Party affected by the force majeure described above shall
immediately notify the other Parties by telex of such a force majeure and shall, within 15 days,
provide the details of the force majeure and valid documentation certifying the reasons for the
failure to perform or fully perform or the need to delay the performance of this Agreement. Such
documentation shall be issued by a notarization authority at the place where the force majeure
occurred. The Parties shall, in accordance with the extent to which the performance of this
Agreement is affected by the force majeure, decide on whether or not to discharge this Agreement,
or to exempt part of the obligations under this Agreement or to extend the term for the performance
of this Agreement.

9.2 In the event of any force majeure, the Party affected by the force majeure shall be exempt from
any liabilities for the breach of this Agreement arising therefrom.

ARTICLE 10. GOVERNING LAW AND DISPUTE RESOLUTION

10.1 The formation of this Agreement, its validity, interpretation, performance, and dispute
resolution arising therefrom shall be governed by the PRC Laws.

10.2 All disputes arising from the performance of this Agreement or in connection herewith shall be
resolved by the Parties through friendly consultation. In the event that a dispute cannot be
resolved through consultation, it shall be referred to China International Economic and Trade
Arbitration Commission for arbitration in Beijing. During the arbitration, the Parties shall
continue to perform this Agreement, except for those parts that are in disputes or being
arbitrated.

ARTICLE 11. LANGUAGE AND COUNTERPARTS

This Agreement is written and executed in Chinese in 13 originals. The Parties shall each
keep one copy. Cartoon Digital shall also keep one copy and the remaining copies shall be
submitted to the relevant government departments for completion of the relevant formalities.

ARTICLE 12. EFFECTIVENESS AND MISCELLANEOUS

This Agreement shall become effectives after it is signed by the legal representative or
authorized representatives of the Parties and approved by the Approval Authority.

(The following intentionally left blank)

 

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	[Signature Page]
	 	 
	 
	 	 
	Acquiring Party:

	 	Global Ring Limited
	 
	 	 
	 

	 	(Chop)
	 
	 	 
	 

	 	[Chop of Global Ring Limited is affixed]

	 	 	 	 	 
	Authorized Representative:

	 	/s/
 

	 	 

	 	 	 	 	 
	Acquired Parties:

	 	Tianming Du	 	 
	 
	 	 	 	 
	 

	 	/s/
 

	 	 
	 
	 	 	 	 
	 

	 	Liangdong Du	 	 
	 
	 	 	 	 
	 

	 	/s/
 

	 	 

	 	 	 
	 

	 	Changsha Xingchen Enterprise Management & Consultation Co. Ltd.
	 
	 	 
	 

	 	[Chop of Changsha Xingchen Enterprise Management & Consultation
Co., Ltd. is affixed]

	 	 	 	 	 
	Legal Representative:

	 	/s/
 

	 	 

Date of Execution: 22 May 2009

Place of Execution: Changsha

 

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APPENDIX 5.1

Save as disclosed to the Acquiring Party, each of the Acquired Parties jointly and severally
represents and warrants to the Acquiring Party as follows:

	1.	 	Approval and License from the PRC Regulatory Authorities

	 	(A)	 	All licenses, consents and other permits and approvals of each member of Little
Star Group that are necessary for its establishment, validly existence and the
operation of its current businesses have been obtained and are in full force and
effect.

	 	(B)	 	All reports, declaration forms and information relating to the existence and
operation of Little Star Group as required by laws or necessary to be submitted or
provided to any person or competent authorities as a condition for any licenses,
consents, permits or approvals have been submitted or provided to the relevant persons
or competent authorities, except for those reports, declaration forms and information
that have not been submitted or provided, which would not have any material adverse
effect on Little Star Group.

	 	(C)	 	There are no circumstances where any licenses, consents, permits or approvals
that are necessary for the continuous operation of each member of Little Star Group may
be modified, revoked or not renewed, or any right of modification or revocation may be
given in such circumstances, save for the circumstances where such modification,
revocation or non-renewal is expected not to have any material adverse effect on Little
Star Group.

	2.	 	Civil Capacity of the Acquired Parties

	 	(A)	 	They have full legal rights, all requisite corporate power and authority, and
have taken all corporate actions required to execute and deliver this Agreement, fully
perform their respective obligations under such documents and to complete the
transaction hereunder.

	 	(B)	 	This Agreement, once executed and delivered by the Parties hereto, constitutes
their lawful, valid and binding obligations and is enforceable against them pursuant to
their respective terms.

	 	(C)	 	The execution and delivery by the Acquired Parties of this Agreement and the
performance of their respective obligations hereunder will:

	 	(i)	 	not violate any provisions of their respective memorandum or
articles of association; and

	 	(ii)	 	not violate any legal instrument binding on them nor constitute
the non-performance of their respective obligations under such legal
instruments; and

	 	(iii)	 	not violate orders, judgments or decrees of any court or
government authorities binding on them; and

	 	(iv)	 	not require any consent from shareholders of any of the
Acquired Parties, except for those consents that have been obtained.

except for the above circumstances which would not affect the performance of their
obligations hereunder.

 

 

 

	3.	 	Ownership

	 	(A)	 	Each member of Little Star Group is a limited liability company or
non-enterprise legal person duly incorporated, existing and registered under the laws
of the PRC. It has the right to exercise all civil rights, power and capacity of a
company/non-enterprise legal person, and has passed annual inspections over the years.

	 	(B)	 	All capital contribution has been paid towards the registered capital/school
fund of each member of Little Star Group, and the capital verification in respect there
of has been made in accordance with the applicable PRC Laws and regulations.

	 	(C)	 	There are no options, pre-emptive rights, mortgages, pledges, liens or other
forms of guarantees or other rights relating to or created over or affecting all or any
part of the shares of any member of Little Star Group. In addition, there are no
agreements or undertakings for the provision or creation of any of the above, nor are
there any persons who claim to be entitled to any of the above interests.

	 	(D)	 	There are no outstanding agreements or undertakings requiring the allocation,
issue or transfer of any equity of any member of Little Star Group, or granting to any
persons the right to allocate, issue or transfer any equity of any member of Little
Star Group.

	 	(E)	 	Save for the members of Little Star Group, Cartoon Digital does not own any
 shares nor has similar shareholders’ interest in any companies, affiliated companies,
offices, branches and other social organizations; nor does it directly or indirectly
control or invest nor has any interest in any other entities.

	 	(F)	 	Copies of the existing business license/license for non-enterprise legal person
and articles of association of each member of Little Star Group that have been
submitted by the Acquired Parties to the Acquiring Party or its representatives and
advisers on the date of this Agreement are complete and accurate in all respects.

	 	(G)	 	Each member of Little Star Group maintains any account books that are necessary
for its business operation in accordance with applicable PRC laws and regulations, and
such account books accurately recorded any matters that shall be recorded in the
account books; Little Star Group has not received any notices or allegations stating
that any of the above records are inaccurate or should be rectified.

	 	(H)	 	All documents that shall be submitted by each member of Little Star Group to
all the relevant PRC government departments and other competent authorities
have been properly submitted, save for those documents that have not been submitted,
which would not have any material adverse effect on Little Star Group.

 

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	4.	 	Accuracy and Sufficiency of Information

	 	(A)	 	All information supplied by the Acquired Parties or Cartoon Digital to the
Acquiring Party or its advisers are true, accurate and complete in all respects, and
there are no facts or matters that have not been disclosed to the Acquiring Party or
any of its advisers, which would result in any of the information becoming inaccurate
or misleading because of omission or ambiguity in terms of meaning or due to any other
reasons.

	 	(B)	 	The Acquired Parties and Cartoon Digital have, upon reasonable request from the
Acquiring Party or its advisers, provided the Acquiring Party or its advisers with all
information that can be obtained without paying unreasonable costs within the scope of
their control for the Acquiring Party to determine whether or not to accept the
transfer of the Target Equity. The written information and public documents provided
by Cartoon Digital or/and the Acquired Parties to the Acquiring Party in relation to
this Agreement do not include the misrepresentation or misstatement of material facts,
or material facts the omission of which would make any representations contained in
this Agreement or such disclosed documents misleading.

	5.	 	Accounts

	 	(A)	 	The accounts of each member of Little Start Group:

	 	(i)	 	are prepared in accordance with the PRC laws, and the
accounting principles and practices recognized by the PRC and also generally
accepted by companies which conduct any business that is similar to Little Star
Group (IFRS);

	 	(ii)	 	are complete and accurate in all respects, and have made full
provisions for bad and doubtful debts, obsolete, depreciated and unsaleable
stocks and profit taxes (whether they are profits from income or capital
profits) for any period ending on or prior to the completion date of its
accounts;

	 	(iii)	 	reflect a true and fair view of the state of affairs of each
member of Little Star Group for each of the financial year ends covered by its
accounts, and the profits or losses of each member of Little Star Group for
each financial year covered by its accounts; and

	 	(iv)	 	are not affected by any extraordinary, exceptional or
non-recurring items, save for any items expressly disclosed in the accounts of
each member of Little Star Group.

	 	(B)	 	On the Accounting Reference Date, Cartoon Digital does not have any liabilities
that have not been fully disclosed or provided for in its accounts (whether actual,
contingent, undetermined in terms of amount or in dispute) or
any outstanding capital commitments, with the exception of those outstanding amounts
that have been settled prior to 30 June 2009.

 

14

 

	6.	 	Accounting Records

	 	(A)	 	Each member of Little Star Group maintains proper and consistent accounts,
books, ledgers, financial and other records; such accounting records contain the latest
information, the complete and accurate details of the business activities of each
member of Little Star Group, and all matters that must be recorded in accordance with
the Company Law of the People’s Republic of China and the Accounting System of
Enterprises of the People’s Republic of China.

	 	(B)	 	Such accounts, books, ledgers, financial and other records, which constitute
the property of Little Star Group, are owned and controlled by Little Star Group, and
no notices or allegations stating that any of the above records are inaccurate or
should be rectified have been received.

	 	(C)	 	All transactions relating to the Target Business of Little Star Group have
been recorded in the accounting records of the relevant members of Little Star Group in
a proper and timely manner, and no errors or differences of any nature have been
included or reflected in such accounts, books, ledgers, financial and other records,
and such records truly and accurately reflect the financial situation of Little Star
Group and give explanation of its transactions.

	7.	 	Events Subsequent to the Accounting Reference Date

	 	(A)	 	Subsequent to the Accounting Reference Date:

	 	(i)	 	there has been no material adverse change in the financial or
operating position or prospect of Little Star Group, and to the best of
knowledge of the Acquired Parties, there are no circumstances which would give
rise to such kind of change;

	 	(ii)	 	Little Star Group has been operating its usual and ordinary
business, and operates its business in a manner as before (including the nature
and scope of its operation);

	 	(iii)	 	no member of Little Star Group has any capital expenditure of
over RMB150,000;

	 	(iv)	 	no member of Little Star Group has acquired nor sold any assets
on its capital account with a total value of over RMB100,000, nor has it agreed
to acquire or sell the assets of this kind. In addition, it has not entered
into any contracts involving expenditures on capital account;

	 	(v)	 	no member of Little Star Group has made any factoring
arrangement in respect of its indebtedness or other amount receivables, nor has
it sold or agreed to sell indebtedness or other amount receivables;

	 	(vi)	 	Little Star Group has not incurred any indebtedness, guarantee,
security , prepayment or amount receivables with a combined value of
over RMB100,000, save for any amount receivables incurred in the ordinary
course of business;

 

15

 

	 	(vii)	 	Little Star Group has not incurred any amount receivables
whose single amount exceeds RMB100,000 and whose cumulative amount (the amount
receivables of all members of Little Star Group shall be calculated on a
consolidated basis) exceed RMB500,000 in the ordinary course of business;

	 	(viii)	 	no member of Little Star Group has created any mortgage, pledge or other
encumbrance on any assets of Little Star Group;

	 	(ix)	 	no member of Little Star Group has invested in any companies or
other entities, nor has it formed any joint ventures or merged with any
companies, natural persons or other entities;

	 	(x)	 	no member of Little Star Group has issued any securities,
including equity;

	 	(xi)	 	no member of Little Star Group has increased the costs of its
employees, with the exception of the increased costs incurred in accordance
with the rules and regulations currently in force or the relevant labor
contracts;

	 	(xii)	 	no member of Little Star Group has provided any loans to any
of its directors, management or other employees, save for any travelling
expenses prepaid in the ordinary course of business pursuant to the rules and
regulations of the relevant members of Little Star Group and any amounts that
have been settled in full prior to 30 June 2009;

	 	(xiii)	 	no member of Little Star Group has offered price reduction or discounted
price or discount in the provision of its service nor has it provided services
at a price lower than its costs, which might have material effects on its
profitability;

	 	(xiv)	 	no member of Little Star Group has changed its financial year.

	 	(B)	 	No member of Little Star Group has made any commitments which might result in
the Acquired Parties violating this Article 7.

	8.	 	Contract and Undertakings

	 	(A)	 	Each member of Little Star Group is not a party to, nor does it bear any legal
liabilities (whether present or future) in respect of any of the following:

	 	(i)	 	any guarantee, indemnification, guarantee relationship or
letter of credit;

	 	(ii)	 	any contract or arrangement which directly or indirectly
restricts the freedom of Little Star Group to operate its business around the
world in any manner as it think fits, or directly or indirectly restricts the
ability of Little Star Group to transfer all or any part of its business;

 

16

 

	 	(iii)	 	any joint venture agreement or arrangement, partnership right
or obligation for the purpose of profit sharing (but for avoidance of doubts,
excluding any arrangement which shares fees or operating income on a
case-by-case basis), or any other agreement or arrangement where any members of
Little Star Group and any other persons jointly participate in any business;

	 	(iv)	 	any agreement or arrangement involving any matters that are
beyond the ordinary business scope of Little Star Group, or constituting
commercial transactions or arrangements that derivate from the usual model of
Little Star Group;

	 	(v)	 	any contract or arrangement in which any directors of any
members of Little Star Group or its Affiliates have direct or indirect
interest, except for employment contracts;

	 	(vi)	 	any contract or arrangement that is not signed in the ordinary
course of business and involving the expenses or incomes of any members of
Little Star Group in any financial year which exceed RMB100,000;

	 	(vii)	 	any contract or arrangement that is not signed with any
Affiliates or subsidiary enterprises of any members of Little Star Group in the
ordinary course of business and involving the payment or incomes which exceed
RMB100,000;

	 	(viii)	 	any contract or arrangement that cannot be terminated by any members of
Little Star Group by a notice of 3 months or such shorter period without the
payment of any special compensation; or

	 	(ix)	 	any contract or arrangement which may be terminated in the
event of any change in the ownership or control of any members of Little Star
Group or will be materially affected due to such change.

	 	(B)	 	All members of Little Star Group and the Acquired Parties have not been aware
of the violation or invalidity of any material contracts to which any members of Little
Star Group is a party, or any reasons that such contracts be terminated, revoked,
abrogated or refused for performance, nor have they been aware of any such allegation,
except for the circumstance where a third party to the relevant contracts has not made
any payment.

	 	(C)	 	No member of Little Star Group has any outstanding prices or tenders or sale or
service proposals which are of significance to its business and, if accepted, are
likely to result in loss.

	9.	 	Authorization

Except for the authorization given to employees to enter into contracts for routine
transactions in the course of the performance of their usual duties or to be involved in the
business operation and management activities customarily conducted by Little Star Group, no
member of Little Star Group has given nor provided any authorization or other basis of
authorization that are outstanding or remain effective to any person
to enter into any contracts or undertakings on behalf of any members of Little Star Group.

 

17

 

	10.	 	Operation

The major customers or suppliers of any members of Little Star Group have not ceased or
expressed their intention to cease their transactions with the relevant members of Little
Star Group, and to the best of knowledge of the Acquired Parties, no major customers or
suppliers of any members of Little Star Group are likely to reduce significantly the number
of their transactions with any members of Little Star Group; to the best of knowledge of the
Acquired Parties, the execution or Closing of this Agreement will not have any adverse
effect on the attitude or act of the major customers or suppliers towards any members of
Little Star Group.

Each member of Little Star Group is in compliance with all applicable laws, regulations,
government requirements and the relevant permits and licenses during its operation.

	11.	 	Arrangement between Little Star Group and the Acquired Parties

No member of Little Star Group has agreed to provide guarantee or any security or
indemnification in respect of any liabilities or obligations of any of the Acquired Parties
or any persons related to the Acquired Parties.

	12.	 	Bank Accounts and Loans

	 	(A)	 	No member of Little Star Group has had any outstanding loan capital, nor has it
borrowed or agreed to borrow any amount which consequently fail to make repayment or to
perform its loan obligations. It is not a party to nor has any obligation relating to
any of the following:

	 	(i)	 	any loan agreement, debenture, acceptance credit, bill of
exchange, promissory note, finance lease, debt or stock financing, transfer and
sale arrangement or sales and leaseback arrangement for discount or account
receivables;

	 	(ii)	 	any other arrangement for the purposes of fund raising or the
provision of fund or credit.

	 	(B)	 	No member of Little Star Group holds any shares and securities that are not
paid in full or with any additional liabilities, nor does it have any liabilities in
connection with the above shares or securities.

	 	(C)	 	No member of Little Star Group has lent or agreed to lend any amount which
consequently fail to get back the repayment, nor is it interested in any existing or
future debts (save for the outstanding amounts and amount receivables between the
members of Little Star Group in the ordinary course of business).

	 	(D)	 	No member of Little Star Group has signed any mortgage, guarantee or
indemnification contract that is invalid and unenforceable pursuant to its terms.

 

18

 

	 	(E)	 	There have been no events which would result in the non-performance or breach
of any terms of the loan capitals, borrowings, debentures or financing of any members
of Little Star Group, or which would entitle any third parties to demand for repayment
prior to the normal payment date. No persons have alleged the occurrence of such
events.

	 	(F)	 	Subsequent to the Accounting Reference Date, no member of Little Star Group has
borrowed any amount from any source of capital, save for those amount that is borrowed
in the ordinary course of business and will not have any material adverse effect on the
production and operation of any members of Little Star Group.

	 	(G)	 	No member of Little Star Group has any indebtedness or amount payables from the
following personnel/enterprises:

	 	(i)	 	the Acquired Parties;

	 	(ii)	 	the directors or senior officers of the members of Little Star
Group; or

	 	(iii)	 	the Affiliates or family members (including parents, spouse,
brothers and sisters) of the above personnel/entities.

	13.	 	Working Capital

Each member of Little Star Group has sufficient working capital from internal source to meet
its current requirement and to complete any purchase orders, projects and contractual
obligations that have been issued to or assumed by it pursuant to the relevant terms.

	14.	 	Insolvency

	 	(A)	 	No orders nor applications have been made to require for the liquidation of any
members of Little Star Group; no meetings have been convened for the purpose of
considering resolutions for the liquidation of any members of Little Star Group; and no
such resolutions have been approved.

	 	(B)	 	No receiving orders have been made for any members of Little Star Group; no
petitions or applications have been made to require for making such orders; no
receivers have been appointed for any members of Little Star Group; no notices have
been issued or submitted for the purpose of appointing receivers for any members of
Little Star Group; and no steps or procedures have been taken or commenced for the
purpose of appointing receivers for any members of Little Star Group.

	 	(C)	 	No receivers (including administrative receivers) have been appointed in
connection with all or any assets of any members of Little Star Group.

	 	(D)	 	No debt restructuring agreements between any members of Little Star Group and
its creditors or proposals of similar arrangement have been put forward.

 

19

 

	 	(E)	 	There are no valid rights of any members of Little Star Group to delay in
making payment; no steps or procedures have been taken or commenced for the purpose of
obtaining such right.

	 	(F)	 	No events involving any member of Little Star Group that are similar to any of
the above have been occurred.

	 	(G)	 	No member of the Little Star Group is insolvent nor unable to pay debts, nor
does it cease to repay any debts that are due.

	 	(H)	 	No judgments against any of the members of Little Star Group have not been
performed.

	15.	 	Litigation and Claims

	 	(A)	 	To the best of knowledge of the Acquired Parties, neither any members of Little
Star Group nor the Acquired Parties participate in any prosecutions, arbitrations or
other dispute resolution proceedings or administrative or criminal proceedings that are
pending and have effects on the major assets and business of Little Star Group in the
capacity of claimant, defendant or other capacity. To the best of knowledge of the
Acquired Parties, there are no prosecutions, arbitrations or other dispute resolution
proceedings or administrative or criminal proceedings pending that are brought by or
against any members of Little Star Group or the Acquired Parties, or threatened to be
brought by any members of Little Star Group or threatened to be brought by others
against any members of Little Star Group or the Acquired Parties or expected to be
brought by or against any members of Little Star Group or the Acquired Parties. To the
best of knowledge of the Acquired Parties, there are no facts or circumstances which
might give rise to any prosecutions, arbitrations, mediation or administrative or
criminal proceedings.

	 	(B)	 	To the best of knowledge of the Acquired Parties, neither any members of Little
Star Group nor the Acquired Parties have received any written notices in relation to
any investigations or enquiries into the affairs of any members of Little Star Group or
the Acquired Parties that are being made or have been made by any government or other
authorities, in particular (but not limited to) any matters in the areas of
environmental protection, public health, safety, labor and publication. The existing
shareholders are not aware of any situations which would give rise to such formal
investigations or enquiries.

If any matters occurred as of the Closing Date give rise to any dispute with any
relevant authorities over the matters of environmental protection, public health,
safety, labor and publication and other relevant laws and regulations, the Acquired
Parties agree to compensate Little Star Group immediately for all costs in
connection with the settlement of such disputes, including any interests and fines
that are imposed, and the Acquired Parties hereby agree to assume the joint and
several liabilities in respect thereof.

 

20

 

	 	(C)	 	No member of Little Star Group has committed any criminal, illegal, unlawful or
unauthorized acts, nor has it breached any obligations or liabilities prescribed by or
arising from regulations, contracts or otherwise; it does not
have any legal liabilities involving the above acts or breaches, nor any claims
pending that are against any members of Little Star Group or the Acquired Parties,
save for those claims which would not have material adverse effects on the
production and operation of Little Star Group.

If any matters occurred due to the reasons of the Acquired Parties as of the Closing
Date give rise to any claims or disputes relating to such violations or breaches,
the Acquired Parties agree to compensate Little Star Group immediately for all
expenses and losses in connection with the settlement of such claims or disputes.

	 	(D)	 	No member of Little Star Group has produced, sold or provided any products or
services that fail to meet all applicable laws, regulations or standards or are
defective or hazardous or do not meet any expressed representations or warranties.

If any matters occurred due to the reasons of the Acquired Parties as of the Closing
Date give rise to any claims or disputes relating to such violations or breaches,
the Acquired Parties agree to compensate Little Star Group immediately for all
expenses and losses in connection with the settlement of such claims or disputes.

	16.	 	Ownership and Status of Assets

	 	(A)	 	The assets of each member of Little Star Group that are necessary for use in
the course of the operation of the Target Business have been included in its account.

	 	(B)	 	Each member of Little Star Group is the legal and beneficial owner of each
asset contained in its account or obtained by it after the Accounting Reference Date
(save for the current assets sold, disposed of or used in the ordinary course of
business); such assets are not subject to any third parties’ rights (including but not
limited to encumbrances such as mortgage, pledge and lien) and each asset that can be
possessed is possessed by the relevant members of Little Star Group.

	 	(C)	 	Each member of Little Star Group has the ownership of all land use rights,
buildings and fixed assets that are reflected in its balance sheets as assets and there
are no mortgages, pledges or liens created over them. Such land use rights, buildings
and fixed assets are properly registered with the registration office of the relevant
government authorities under the name of the relevant members of Little Star Group in
accordance with the relevant laws and regulations.

	 	(D)	 	Save as disclosed by the Acquired Parties, any member of Little Star Group has
the titles to any real property, personal property and assets used by it in its
business that are good, merchantiable and free from any encumbrances. Any entities
under Little Star Group have paid in full all land premiums pursuant to applicable
laws, and the lands owned by it are not farmlands specified in the relevant PRC Laws.

 

21

 

	 	(E)	 	All non self-owned lands, buildings and fixed assets being used by any members
of Little Star Group are leased in accordance with valid leases. All such leases are
lawful and valid. No member of Little Star Group has violated such leases or committed
any faults thereunder.

	 	(F)	 	There are no options, pre-emptive rights, mortgages, pledges, liens (except for
any liens legally created in the ordinary course of business) or other forms of
guarantees or third parties’ rights relating to or created over or affecting all or any
part of the business or assets of any members of Little Star Group. There are also no
agreements or undertakings for the provision or creation of any of the above, nor are
there any persons who claim to be entitled to any of the above interests.

	 	(G)	 	All vehicles and office equipment used by each member of Little Star Group in
relation to its business are repaired and maintained properly and operated normally,
and can be used for the business of Little Star Group.

	17.	 	Intellectual Property Rights

	 	(A)	 	No member of Little Star Group use any name other than the name shown in its
business license/license for non-enterprise legal person.

	 	(B)	 	Each member of Little Star Group owns or has the right to use any intellectual
property rights and business information that are being used for the Target Business or
that are necessary to meet the requirements of current plans and proposals.

	 	(C)	 	All fees and steps in connection with the renewal, application and other formal
registration that are necessary for the maintenance, protection and enforcement of
intellectual property rights of each member of Little Star Group have been paid or
adopted, or will be paid or adopted according to plans.

	 	(D)	 	The intellectual property rights owned by each member of Little Star Group are
valid, existing and enforceable, and are not subject to any mortgages, options, third
parties’ rights or other rights.

	 	(E)	 	All permits involving intellectual property rights and business information,
and all agreements entered into by each member of Little Star Group in relation thereto
will not be terminated due to the change of ownership or control of Cartoon Digital.

	 	(F)	 	None of the members of Little Star Group and, to the best of knowledge of the
Acquired Parties, any third parties violate any permits or agreements which are
currently used for the purpose of the business, and which are of significance to the
Target Business and relate to any intellectual property rights.

	 	(G)	 	No member of Little Star Group is under the obligation to grant any licenses or
sub-licenses or to make transfer in respect of any intellectual property rights or
business information owned or used by it.

 

22

 

	 	(H)	 	To the best of knowledge of the Acquired Parties, no third parties are
infringing or using without authorization or have infringed or used without
authorization any intellectual property rights or business information owned or used by
any of the members of Little Star Group.

	 	(I)	 	No activities, business information and intellectual property rights of each
member of Little Star Group constitute and have constituted any infringement or
unauthorized use of third parties’ intellectual property rights or business
information.

	 	(J)	 	The intellectual property rights and business information of any member of
Little Star Group are not the subject of any litigations, objections or administrative
proceedings.

	 	(K)	 	To the best of knowledge of the Acquired Parties, the Confidential Information
of Little Star Group has not been disclosed or otherwise made known to any third
parties without requiring the third parties to perform the obligation of
confidentiality.

	 	(L)	 	Any member of Little Star Group is not a party to any confidentiality or other
agreement that restricts the freedom to use or the disclosure of its business
information, nor does it assume any obligations that restrict the freedom to use or the
disclosure of its business information, which might have material adverse effect on the
business of Little Star Group.

	 	(M)	 	The operation of Little Star Group does not give rise to the obligations to pay
any fees for using intellectual property right or similar payment.

	18.	 	Information Technologies

	 	(A)	 	Little Star Group is the sole legal and beneficial owner of all its information
technologies. Such information technologies are not subject to any liens, mortgages,
third parties’ rights or other rights.

	 	(B)	 	All information technologies owned or used by Little Star Group or in the name
of any members of Little Star Group are in good operating conditions, and have been
maintained in accordance with good industry practices.

	 	(C)	 	The information technologies and domains owned or used by Little Star Group are
not the subject of any litigations or other disputes or claims. To the best of
knowledge of the Acquired Parties, no litigations, disputes or claims in relation to
any information technologies or domains owned or used by Little Star Group are expected
or likely to occur.

	 	(D)	 	The business or operation of Little Star Group has not been materially
interfered due to one of the following events: (a) any breach of the security
regulations relating to any information technologies, (b) malfunction of any
information technologies (whether it is due to any breakdown, virus, defects or other
reasons), insufficient capacity, or failure to meet the required standards in other
aspects, or (c) malfunction, interruption or defective operation of any information
technologies due to the occurrence or processing of one or more
dates. There exists no circumstances which are likely or expected to give rise to
any such interference.

 

23

 

	 	(E)	 	Little Star Group is the legal and beneficial owner of all information
technologies and business information that are necessary or required for the operation
of its business in a manner used currently or at any time within one year prior to the
date of this Agreement, and for the performance or implementation of any existing
contracts, undertakings, plans or proposals, or the party which has the contractual
rights to use such information technologies; such contractual rights will not be
directly or indirectly affected due to any transaction contemplated under this
Agreement.

	 	(F)	 	Little Star Group has not disclosed any source programs to any third parties;
no source programs relating to proprietary software have been disclosed or otherwise
made known to any third parties.

	 	(G)	 	Little Star Group is not a party to any agreements or arrangements that
restrict the freedom to use or the disclosure of any source programs relating to any
proprietary software, nor does it assume any obligations that restrict the freedom to
use or the disclosure of any source programs relating to any proprietary software.

	19.	 	Employees

	 	(A)	 	Little Star Group does not have any employees who have not been disclosed to
the Acquiring Party.

	 	(B)	 	Subsequent to the Accounting Reference Date, no change has been made to the
compensation of any senior employees of the company or its subsidiaries or other
employment terms.

	 	(C)	 	There are no circumstances in any members of Little Star Group that its
employees or directors are entitled to receive an annual remuneration of over
RMB500,000 (including wages, bonus or other benefits) or (if the amount of remuneration
is not fixed) an annual remuneration of over RMB500,000 on average for the past three
financial years.

	 	(D)	 	All employees of any members of Little Star Group have not made any claims in
respect of any intellectual property rights pertaining to the Target Business or
relating to any teaching materials sold by any members of Little Star Group (including
but not limited to teaching materials that have been, is being and will be sold). In
addition, to the best of knowledge of the Acquired Parties, there will not have any
employees who make such claims.

	 	(E)	 	No disputes exist nor are there any outstanding or possible disputes between
any members of Little Star Group and any trade unions or other organizations that are
formed for similar purposes. Moreover, no member of Little Star Group is a party to
any collective bargaining agreements or other arrangements (whether they are binding or
not).

 

24

 

	 	(F)	 	There are no acts or circumstances of any members of Little Star Group which
are in violation of the laws and regulations with regard to labor, employment and
social security.

	 	(G)	 	To the best of knowledge of the Acquired Parties, no employees or other
personnel (whether existing or former) threaten to make any claims against any members
of Little Star Group, nor do any other persons threaten to make any claims against any
members of Little Star Group in respect of any employees or other personnel (whether
existing or former), for any accidents, injuries, unpaid salaries, overtime pay,
severance payment, contributions to social security funds, holidays or any other
matters resulting or arising from the employment or engagement by any members of Little
Star Group of such employees or other personnel (whether existing or former). In
addition, there are no outstanding claims of this kind.

	20.	 	Taxation

	 	(A)	 	Each member of Little Star Group has legally submitted all tax returns that
shall be submitted by it in accordance with the requirements of the relevant taxation
authorities, and such tax returns are complete and correct in all material respects.
Each member of Little Star Group has legally paid all taxes payable (whether they are
shown in tax returns) or made appropriate provisions in its financial statements in
accordance with the requirements of the relevant taxation authorities. There are no
tax guarantees which are ordered by the relevant taxation authorities to provide for
any assets or property of each member of Little Star Group, save for those guarantees
relating to payable taxes that are outstanding. Each member of Little Star Group meets
the requirements of the relevant taxation authorities that are applicable to it or its
business (including but not limited to any conditions of preferential tax treatment
granted); and to the best of knowledge of the Acquired Parties, no governments or
regulatory authorities will impose or have reasons to impose on any members of Little
Star Group any additional taxes for the period for which tax returns are or have been
required to submit. No member of Little Star Group has:

	 	(i)	 	any disputes or complaints relating to any tax liabilities that
have been asserted or put forward by any governments or regulatory authorities;
or

	 	(ii)	 	to the best of knowledge of the Acquired Parties, any warning
concerning the disputes or complaints of any tax liabilities as reasonably
expected.

	 	(B)	 	On the Accounting Reference Date, the provisions made for the deferred tax of
each member of Little Star Group in its account are sufficient and in fully compliance
with the accounting practices recognized by the PRC and also generally accepted by
companies or organizations which conduct any business that is similar to Little Star
Group.

	 	(C)	 	If all facts and circumstances currently known to any members of Little Star
Group or the Acquired Parties are the publicly known facts and circumstances
at the time of the preparation of accounts, the provisions made for the deferred tax
in the corresponding accounts shall not be greater than those provisions that have
currently been made.

 

25

 

	21.	 	Tax Declaration, Disputes, Records and Requests

	 	(A)	 	Each member of Little Star Group has submitted and provided to any taxation
authorities all appropriate tax returns and information required by them by itself or
through others.

	 	(B)	 	As at the date of this Agreement, there are no tax obligations of Little Star
Group that are outstanding or, to the best of knowledge of the Acquired Parties, are
expected to occur, which would allow any taxation authorities to recover from any
members of Little Star Group any taxes (including fines or interests), nor are there
any disputes or disagreements with any taxation authorities regarding the provision of
any preferential tax treatments to any members of Little Star Group, and there are no
circumstances which are likely to give rise to any such disputes or disagreements.

	22.	 	Insurance

To the best of knowledge of the Acquired Parties, all major assets of Little Star Group that
can be and are required to be insured pursuant to the industry practices (which specifically
refer to real estate and vehicles) have been insured against those risks that shall
generally be insured in accordance with applicable PRC Laws and the industry practices.

	23.	 	Incentive Mechanism

There are no share options or other similar performance-based incentive arrangements
(including stock appreciation right schemes) for any employees (or former employees) or
directors (or former directors) or advisers (or former advisers) or contractors (or former
contractors) of any members of Little Star Group, nor are there any arrangements affecting
any such personnel.

	24.	 	No State-owned Assets

Little Star Group does not have any state-owned assets, and therefore are not required to
carry out the evaluation of state-owned assets in any form as required by the PRC Laws and
regulation for the purpose of facilitating the completion of the transaction.

	25.	 	No Undisclosed Business

Little Star Group has not conducted any business that has not been disclosed to the
Acquiring Party.

	26.	 	Commercial Practices in Compliance with Laws

None of the Acquired Parties, all members of Little Star Group, their Affiliates and any
other persons who act for the above Parties (i) willfully violate any applicable laws and
orders; and (ii) make any inappropriate payment to government officers to obtain any
commercial benefits or advantages in respect of the transaction under this
Agreement or other matters.

 

26Exhibit 4.25

Exhibit 4.25

English Translation

EQUITY TRANSFER AGREEMENT

BY AND AMONG

MR. TIANMING DU

(PRC)

AND

MR. LIANGDONG DU

(PRC)

AND

CHANGSHA XINGCHEN ENTERPRISE MANAGEMENT & CONSULTATION CO., LTD

(PRC)

AND

SHENZHEN ZHI YUAN NOAH INTERNET CO., LTD.

(PRC)

Dated 22 May 2009

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1. Definitions and Interpretation
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 2. Equity Transfer
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 3. Transfer Price
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 4. Representations and Warranties
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 5. Transition Period
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 6. Closing and Further Assurance After the Closing
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 7. Non-Competition
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 8. Effectiveness
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 9. Confidentiality
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 10. Breach of Contract
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 11. Termination
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 12. Disputes Resolution
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 13. Miscellaneous
	 	 	16	 

 

2

 

EQUITY TRANSFER AGREEMENT

This Equity Transfer Agreement (hereinafter referred to as “this Agreement”) is made in Changsha,
the People’s Republic of China (hereinafter referred to as the “PRC”), on 22 May 2009:

BY AND AMONG:

Mr. Tianming DU, a PRC citizen (ID No. 430121195008307710) with an address at Room 202, Tower 1,
No. 362 Jiefang No.4 Village, Tianxin District, Changsha City, Hunan Province;

Mr. Liangdong DU, a PRC citizen (ID No. 430102198201305551) with an address at Room 202, Tower 1,
No. 362 Jiefang No.4 Village, Tianxin District, Changsha City, Hunan Province;

Changsha Xingchen Enterprise Management & Consultation Co., Ltd. (hereinafter referred to as
“Changsha Xingchen”), a limited liability company duly incorporated and validly existing under the
laws of the PRC with a registered address at Room 501, No. 717 Wuyi Avenue, Tianxin District,
Changsha City, whose legal representative is Liangdong DU;

and

Shenzhen Zhi Yuan Noah Internet Co., Ltd. (hereinafter referred to as “Future Noah”), a limited
liability company duly incorporated and validly existing under the laws of the PRC with a
registered address at No. B1003, Futian Tian’an Hi-Tech Venture Park, Futian District, Shenzhen,
Guangdong Province

PRELIMINARY STATEMENT

WHEREAS, Changsha Leisen Education Software Co., Ltd. (hereinafter referred to as “Leisen”), is a
limited liability company duly incorporated and validly existing under the laws of the PRC. Its
business scope is as follows: research and development, production and sale of education software
and the provision of technology services in relation thereto, retail of audio-visual products,
retail and leasing of newspapers and journals, and retail of electronic publications (the operating
permit for the retail of publications has a valid term until 5 May 2015).

WHEREAS, Leisen has a registered capital of RMB1 million. Mr. Tianming Du, Mr. Liangdong Du and
Changsha Xingchen are the shareholders of Leisen, who hold 66%, 28.3% and 5.7% of its equity
interests, respectively.

WHEREAS, the existing shareholders (defined as below) intend to transfer to Future Noah all of
their 100% equity interest in Leisen, and Leisen intends to accept such transfer from the existing
shareholders.

 

3

 

THEREFORE, given the aforesaid and the representations, warranties, undertakings and agreements
made herein, it is hereby agreed as follows:

ARTICLE 1.

DEFINITIONS AND INTERPRETATION

1.1 Definitions

Unless otherwise required by the clauses or provisions hereof, the following terms shall have
the meaning defined below:

“Confidential Information” has the meaning provided in Article 9.1 below.

“Warranties” collectively means the representations, warranties and undertakings
stated in Appendix 4.1.

“Restructuring Memorandum” means the Memorandum for the Restructuring of Little Star
Group attached to Appendix 6.1, which has been jointly confirmed and approved by Future Noah and
the existing shareholders.

“Third Parties” means any entities or persons other than Mr. Tianming Du, Mr.
Liangdong Du, Future Noah, Leisen, or their respective affiliates.

“Board of Directors” means the board of directors or executive directors of Leisen.

“Parties” or “Party” collectively means Mr. Tianming Du, Mr. Liangdong, Future Noah,
or individually means any of them as the context hereof requires, including their permitted
successors and assigns.

“SAIC” means the State Administration for Industry and Commerce of the People’s
Republic of China and/or any other local branch as required by the context hereof.

“Affiliate” means any enterprise or other entity that directly or indirectly controls
or is controlled by a Party.

“Closing” has the meaning provided in Article 3.2 hereof.

“Closing Date” means 2 July 2009 or other date as jointly agreed by the Parties.

“Closing Conditions” means all the conditions that shall be satisfied prior to the
Closing as provided in Article 6.1 hereof.

“Transaction” mean the transfer of target equity interest hereunder.

“Control” means the ownership of fifty percent (50%) or more of the registered
capital, equity interest and/or assets of such enterprise or other entity, or the possession of the
power to appoint or direct the management of such enterprise or other entity or to appoint or elect
the majority of directors of a company; or with respect to a natural person, includes the spouse,
parents, children, brothers and sisters of such natural person.

“Competing Business” means the following businesses: (i) target business; (ii) the
research and development, production and sale of educational electronic products, online
educational electronic information service and educational instruments and the provision of the
technology services in relation thereto, and any other auxiliary educational products and services
with pre-school children and/or primary and secondary school students as target
market; (iii) auxiliary products of and related to training schools and/or kindergartens in
all forms; (iv) the design, production and sale of cartoon animation, online games and educational
software in relation to education, the design, development and sale of educational tools, the
design, production and sale of broadcast television programs in relation to education.

 

4

 

“Target Equity” means the 100% equity interest held by the existing shareholders in
Leisen.

“Target Business” means the business activities being conducted and developed by
Leisen on the Closing, including without limitation, the research and development, sale and leasing
of teaching materials, educational auxiliary tools, audio-visual products, compact discs,
electronic publications and books.

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

“Existing Shareholders” means Mr. Tianming Du, Mr. Liangdong Du and Changsha Xingchen,
or individually mean any of them as the context hereof requires, including their permitted
successors and assigns.

“Information Technology” means computer hardware, software and network.

“Business Information” means all information, know-how and records (whether they are
confidential and held in any form), including (without limited to) all formula, processes,
innovations, designs, findings, specifications, drawings, data, manuals and descriptions, and all
lists of customers and suppliers, sales information, business plans and forecasts, all technologies
or other expertise, all computer software and all accounting and taxation records, communications,
purchase orders and inquiries.

“Subsidiaries” means any subject (excluding natural person) directly or indirectly
controlled by the Existing Shareholders.

“Intellectual Properties” means the patents, trademarks, DMF documents, domains, trade
secrets and know-how, design rights, copyrights, copyrights of computer software, processes and
procedures, innovations and database rights (whether they have been registered and including
applications for registration of any of the above), and other similar rights or forms of
protection.

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

1.2 Interpretation

The number and heading of articles are for convenience of reference only and shall not affect
the interpretation and construction of this Agreement.

 

5

 

ARTICLE 2.

EQUITY TRANSFER

2.1 The Existing Shareholders, as the legal owners and beneficiaries of the Target Equity, hereby
agree to sell and transfer to Future Noah, and Future Noah hereby agrees to accept the transfer of,
the Target Equity on the terms and conditions of this Agreement.

2.2 There shall be no encumbrances on the Target Equity to be transferred on the date specified
herein.

ARTICLE 3.

TRANSFER PRICE

3.1 As a consideration for the acquisition of the Target Equity, Future Noah shall pay to the
Existing Shareholders a transfer price in an amount of RMB1.3 million in accordance with the terms
and conditions set forth herein.

3.2 Subject to the satisfaction or waiver by Future Noah in writing of all the Closing Conditions,
Future Noah shall fully pay the transfer price set forth in Article 3.1 on the Closing Date. The
payment shall be remitted in RMB by way of wire transfer to a bank account in China as designated
by the Existing Shareholders. The Existing Shareholders shall issue to Future Noah an invoice or
payment receipt in respect of the transfer price on the Closing Date.

3.3 The Existing Shareholders shall provide Future Noah in writing with the information relating to
their bank account opened in China for receiving the transfer price no later than five day prior to
the Closing Date.

3.4 All the distributable profits of Leisen as of 31 May 2009 as calculated according to the method
confirmed by the Parties shall belong to the Existing Shareholders.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

4.1 Save as disclosed in the manner confirmed by Future Noah, each Party represents and warrants to
the other Parties as follows:

	 	(a)	 	all the Warranties made by him/it in Appendix 4.1 are accurate in all respects
on the date hereof; and

	 	(b)	 	all the Warranties made by him/it in Appendix 4.1 will continue to be accurate
in all respects until and including the Closing Date, as if they were made again
immediately before the Closing based on the facts and circumstances on that day.

 

6

 

The Parties agree that the Existing Shareholders shall be severally and jointly liable for the
Warranties set forth in this Article 4.1.

4.2 Notwithstanding any potential investigation by any other Parties and their respective agents or
advisers, the Parties confirm and accept that Future Noah executes this Agreement in reliance on
all representations and Warranties made by the Existing Shareholders. The Existing Shareholders
warrant that they will be liable for and fully indemnify Future Noah against any losses, damages,
liabilities, costs or expenses arising from the following circumstances:

(i) any representations and Warranties being untrue, misleading or involving omission to state
material facts or being violated;

(ii) any claims in connection with the settlement of any situation where representations and
Warranties are untrue or misleading, omit to state material facts or have been violated;

(iii) any arbitrations or legal proceedings arising from any claims made by other Parties in
respect of any situation where representations and Warranties are untrue or misleading, omit to
state material facts or have been violated; and

(iv) the implementation of any such settlement or arbitral award or judgment and the amount
therefor, including legal and other costs, and any possible tax liabilities.

4.3 Each of the representations and Warranties stated in Appendix 4.1 shall be construed as a
separate and independent warranty, and shall not be limited or bound by the terms of any other
representation and Warranties or the application of any other terms hereof or the inference made
from such other terms (provided that any contrary expressly stipulated). If there is any conflict
between any representations and Warranties stated in Appendix 4.1 and the information disclosed by
the Existing Shareholders in the manner confirmed by Future Noah, the information disclosed by the
Existing Shareholders in the manner confirmed by Future Noah shall prevail.

4.4 Each Party hereby warrants that he/it shall, prior to the Closing, immediately disclose to the
other Parties in writing on a voluntary basis and upon request any events, facts or circumstances
that may be known to him/it after the execution hereof to be inconsistent with any Warranties, or
may reasonably expect to have material effects on the valuation of Leisen, or may enable other
Parties to make claims against him/it in accordance with this Agreement.

4.5 If any of the representations and Warranties set forth in Part A of Appendix 4.1 is false or
incorrect or omits to state material facts due to the reasons of the Existing Shareholders, the
Existing Shareholders shall immediately indemnify and hold Leisen harmless from and against any
losses, damages, costs, and all other adverse circumstances of any kind and nature that would not
be resulted if such warranties were true or correct or did not omit any material facts.

4.6 If Future Noah discovers any breach by the Existing Shareholders of Article 4.1 hereof within
18 months after the Closing, it shall have the right to pursue the liabilities from the Existing
Shareholders in accordance with the relevant requirements of this Agreement.

 

7

 

ARTICLE 5.

TRANSITION PERIOD

5.1 The Existing Shareholders shall procure Leisen to develop the Target Business within the normal
business scope during the period from the date hereof to the Closing Date (hereinafter referred to
as the “Transition Period”). During the Transition Period, the Existing Shareholders shall procure
Leisen to meet the following requirements. Leisen shall:

	 	(a)	 	make reasonable effort to

	 	(i)	 	prevent its existing business structure and reputation from
being infringed;

	 	(ii)	 	protect its assets and properties and maintain their good
working condition to enable the normal operation of Leisen, and make
foreseeable depreciation to them in reasonable circumstances;

	 	(iii)	 	maintain the services provided to it by its customers,
suppliers and other units or individuals or its cooperation with them, and
preserve the good reputation of Leisen;

	 	(iv)	 	continue to take part in all existing production, sale,
marketing and promotion activities in connection with the Target Business and
Leisen.

	 	(b)	 	keep its accounts and accounting records in a normal or usual manner

	 	(i)	 	without making any significant changes to the following: the
methods of pricing, investment, financial statement, inventory, bank deposit,
government subsidies, taxation practices, calculation of doubtful debt, and
reserves;

	 
	 	(ii)	 	without making any changes to financial years.

	 	(c)	 	comply with all applicable laws and regulations, and government rules for the
development of the Target Business. In the event of the breach of any applicable laws
and regulations, it shall immediately notify Future Noah after it is aware of such
breach.

5.2 During the Transition Period and without prejudice to Article 6.1 hereof and without affecting
the normal operation of Leisen, the Exiting Shareholders shall procure Leisen to allow Future Noah
and its representatives to enter the office premises of Leisen and to have access to Leisen’s
senior officers within the normal office hours after serving a reasonable advance notice, and
shall, upon reasonable request from Future Noah or its representatives and advisers from time to
time, provide or cause others to provide them with any financial and operational data relevant to
the Target Business of Leisen and other information.

 

8

 

5.3 The Existing Shareholders jointly undertake that, without the written consent of Future Noah,
Leisen shall, during the Transition Period, not do the following:

	 	(i)	 	amendments to its articles of association or other constituent
documents;

	 
	 	(ii)	 	increase or decrease of its registered capital;

	 
	 	(iii)	 	merger, consolidation, sale or transfer of all or substantial
part of its assets;

	 
	 	(iv)	 	realization, dissolution or liquidation, reorganization or
restructuring of capital structure in any form, or any matters leading to the
change of control;

	 
	 	(v)	 	authorization or issue of any securities, including any equity;

	 
	 	(vi)	 	purchase of any equity of entities, or merger with any other
entities or participation in any joint ventures;

	 
	 	(vii)	 	increase of the number of directors;

	 
	 	(viii)	 	any significant changes to any accounting policies, standards or principles
of Leisen;

	 
	 	(ix)	 	declaration and payment of any dividends or making distribution
in any other form (save for the circumstances described in Article 3.4 hereof);

	 
	 	(x)	 	any significant change to the nature of the Target Business, or
suspension or termination of any part of the Target Business;

	 
	 	(xi)	 	approval of the annual budget and business plan;

	 
	 	(xii)	 	creation of an indebtedness whose single amount or cumulative
amount for three months exceeds RMB50,000;

	 
	 	(xiii)	 	creation of a guarantee whose single amount or cumulative amount for three
months exceeds RMB50,000;

	 
	 	(xiv)	 	obtaining of loans or credits from any financial institutions;

	 
	 	(xv)	 	creation of indebtedness of any types that are beyond the scope
of ordinary business operation of Leisen;

	 
	 	(xvi)	 	transfer, sale or disposal of the fixed assets and property of
Leisen that are beyond the scope of its ordinary business operation, creation
of any pledge, mortgage or guarantee over such assets and property, or
provision of any guarantee to third parties;

	 
	 	(xvii)	 	making any capital expenditure or commitment in an amount of RMB50,000 or
more, such as the purchase of fixed assets or investment;

	 
	 	(xviii)	 	execution of contracts that are not in the nature of normal business
operation;

	 
	 	(xix)	 	change of the senior management of Leisen, or change of the
terms and conditions of any labor contracts between Leisen and its employees;

	 
	 	(xx)	 	institution or resolution of any litigation or arbitration;

	 
	 	(xxi)	 	other acts which will reduce the value of Leisen.

 

9

 

5.4 Satisfication of the Closing Conditions

The Existing Shareholders shall sign and deliver all documents required to be signed or
delivered at the Closing. As one of the conditions for the completion of the Closing, the Existing
Shareholders shall make the best effort to take all steps that are necessary or required and act
with great effort, in good faith and responsibly to satisfy the requirements of the Closing, and
shall warrant that Leisen will not take or omit to take any action, which enables the Closing
Conditions not to be satisfied.

5.5 If the Existing Shareholders fails to comply or violates any requirements of this Article 5
without the consent of Future Noah, Future Noah shall have the right to: i) terminate this
Agreement by serving a written notice to the Existing Shareholders; in which case, Future Noah will
not bear its obligation hereunder, including the obligation to pay the consideration for transfer
of the Target Equity; and ii) demand for compensation for damages. The Existing Shareholders shall
indemnify Future Noah against any loss or damage suffered by it due to the breach of this
Agreement.

ARTICLE 6.

CLOSING AND FURTHER ASSURANCE AFTER THE CLOSING

6.1 The Closing shall be conditional upon the fulfillment or waiver by Future Noah in writing of
all the following conditions:

	 	(i)	 	there exists no laws or orders which prohibit or restrict the
equity transfer hereunder.

	 	(ii)	 	Future Noah completes the due diligence, but fails to discover
any material legal defects or risks or potential liabilities of Leisen, or any
other circumstances which might have material adverse effects on the business
or assets or the Target Equity of Leisen.

	 
	 	(iii)	 	all the restructuring steps No. 1 to 20 as set forth in Part 3
of the Restructuring Memorandum have been completed in a legal and effective
manner, and the completion of all such restructuring steps have been verified
by the legal counsel to Future Noah.

	 
	 	(iv)	 	the change of registration of shareholders hereunder with the
relevant SAIC has been completed, and Future Noah has registered with the
relevant SAIC as a shareholder of Leisen.

	 
	 	(v)	 	the appointment of the new board of directors of Leisen has
been made in accordance with the requirements of Future Noah, and such
appointment has been filed with the relevant department in charge of industrial
and commercial registration.

 

10

 

	 	(vi)	 	all Warranties made by each Party to the other Parties as
stipulated in Appendix 4.1 are true and accurate in all respects on the Closing
Date by reference to the facts and circumstances occurred on that day (except
for those disclosed by the Existing Shareholders and approved by Future Noah).
Leisen and the Existing Shareholders shall give written confirmation in respect
thereof to Future Noah on the Closing Date.

	 
	 	(vii)	 	Leisen and the Existing Shareholders shall perform and comply
with all agreements, undertakings and obligations that shall be completed or
complied with on or prior to the Closing Date as required by this Agreement.
The Existing Shareholders shall issue to Future Noah on the Closing Date a
certificate showing the compliance with the aforesaid.

	 
	 	(viii)	 	there have been no significant changes to the Target Business of Leisen,
which might have substantive adverse effects on the Target Business after the
Closing, unless such changes have been approved in advance by Future Noah in
writing. Such significant changes mean the loss of one or more key customers;
revocation, withdrawal or cancellation of any business license of Leisen or any
permits relevant to the Target Business (or the issuance of notice by any PRC
government authorities threatening to revoke, withdraw or cancel such licenses
and permits); destruction of or serious damages to any facilities, property or
information being or to be applied for the development of the Target Business;
any adverse changes to the training team and research and development team in
relation to the Target Business.

	 
	 	(ix)	 	there have been no material adverse changes to the operation of
Leisen, its assets, financial or other situations.

	 
	 	(x)	 	all assets necessary for the businesses being or to be
conducted by Leisen (including without limitation, tangible assets, licenses,
contracts, IP, intellectual property rights registered and unregistered,
proprietary technologies, products being developed with or without copyrights,
teaching materials, related electronic or written materials, etc.) are
complete, lawful, valid and in good condition, and Leisen shall be the legal
and valid owner of such assets or have the right to use the same.

	 
	 	(xi)	 	the legal counsel to Leisen as recognized by Future Noah has
issued a legal opinion on the Closing Date, the form and substance of which are
to the satisfactory of Future Noah.

6.2 The Parties shall use their best endeavor to procure all the Closing Conditions to be
satisfied, and Leisen shall deliver to Future Noah any originals such as letters, certificates or
documents or such other written form as may be acceptable by Future Noah, showing that all the
Closing Conditions have been satisfied no later than three working days prior to the Closing Date.
If a Party is at any time aware of any facts or circumstances that may prevent any condition from
being satisfied, he/it shall notify the other Parties immediately.

 

11

 

6.3 Future Noah shall, within three working days of the receipt of the originals of all letters,
certificates and documents specified in Article 6.2 or their certified true copies, issue a written
notice to Leisen to confirm that all the Closing Conditions have been satisfied or deemed to have
been satisfied. Future Noah may at any time waive any of the Closing Conditions in writing
pursuant to the conditions as may be determined by it within the scope as it thinks fit and is
legally entitled to do so.

ARTICLE 7.

NON-COMPETITION

7.1 Within ten years from the date hereof, each of the Existing Shareholders shall undertake and
warrant that he/it and any of his/its family members (including his spouse, children, brothers and
sisters), associated enterprises, subsidiary enterprises, subsidiaries and shareholders shall not:

	 	(i)	 	directly or indirectly engage, invest or be involved in or
manage any entities, businesses or products that are identical, similar to or
in competition with the Competing Business, nor shall they have any direct or
indirect rights or interests in any entities, businesses or products that are
identical, similar to or in competition with the Competing Business.

	 	(ii)	 	directly or indirectly enter into any transactions in relation
to the Competing Business with any customers, potential customers,
representatives, agents, enterprises with business relationship or other
persons doing business with Leisen in any manner or way for the account of
themselves or any third parties.

	 	(iii)	 	directly or indirectly induce any customers, potential
customers, representatives, agents, suppliers, enterprises with business
relationship or other persons doing business with Leisen in any manner or way
to terminate their relationship or contact with Leisen for the account of
themselves or any third parties.

	 	(iv)	 	directly or indirectly employ, hire or induce, recruit,
encourage, persuade or procure any advisers, contractors, employees, directors,
management, managers, representatives, agents or other persons currently
working for Leisen in any manner or way to terminate their relationship or
contact with Leisen for the account of themselves or any third parties.

	 	(v)	 	use or register any patents, trademarks, trade names, logos,
copyrights, proprietary technologies or other intellectual property rights that
are identical, similar or relevant to the intellectual property rights owned
by, transferred or licensed to Leisen (whether registered or not) or that are
developed based on such intellectual property rights.

7.2 Notwithstanding the above Article 7.1, to the extent that the employment of the shareholders of
Changsha Xingchen is discharged by Leisen for the reasons other than their individual fault, the
obligations of non-competition mentioned above shall not apply to those shareholders whose
employment have been discharged.

 

12

 

ARTICLE 8.

EFFECTIVENESS

This Agreement shall become effective once it is signed by the respective authorized
representatives of the Parties.

ARTICLE 9.

CONFIDENTIALITY

9.1 The Parties agree to keep in strict confidence all information, proprietary technologies,
documents and records relating to any Party or his/its proprietary rights (hereinafter referred to
as the “Confidential Information”), regardless of whether such information, proprietary
technologies, documents and records are obtained during, prior to or after the execution hereof.
Save as disclosed to any directors, officers, employees, agents or other professional personnel or
advisers who must know these information for the performance of their duties, the Parties shall not
disclose any such Confidential Information to any persons or entities.

9.2 The obligation of confidentiality stipulated in Article 9.1 above shall not apply to the
following information:

	 	(i)	 	as may be evidenced by reasonable proof, any information
possessed by the receiving Party at the time of disclosure by the disclosing
Party and, in respect of which the receiving Party is not subject to any
obligation of confidentiality;

	 	(ii)	 	any information which is in the public domain at the time of or
after receiving such information by the receiving Party, except for the
information that is in the public domain due to the breach of this Agreement by
the receiving Party;

	 	(iii)	 	any information obtained by the receiving Party from a third
party who is entitled to disclose such information to the receiving Party, and
such disclosure does not violate any obligation of confidentiality; or

	 	(iv)	 	any information that is developed by the employees or agents of
the receiving Party completely independent of any such disclosure or
disclosures from the disclosing Party.

9.3 The Parties shall ensure that any personnel who receives the Confidential Information from
their respective directors, officers, employees, agents, other professional personnel and advisers
will comply with Article 9 hereof with regard to the obligation of confidentiality. Non compliance
with the requirement by the personnel shall be deemed as a breach of Article 9 hereof by the Party
to which such personnel belongs.

9.4 Any restrictive use of such confidentiality obligation and Confidential Information shall not
apply to the circumstances where disclosure is required by laws and regulations or any governmental
departments or relevant authorities, provided that the receiving Party shall consult with the
disclosing Party with respect to the form, time, nature and purpose of disclosure in advance.

 

13

 

9.5 All Confidential Information and all materials provided by the disclosing Party to the
receiving Party shall in any way be the property of the disclosing Party. The receiving Party
shall, upon request in writing by the disclosing Party, immediately return all documents in hard
copies and electronic format, and other articles containing the Confidential Information, and shall
not keep any copies thereof.

9.6 After the termination or expiration hereof, unless otherwise agreed by the Parties in writing,
the receiving Party shall, upon request by the disclosing Party in writing, return to the
disclosing Party or destroy all documents in hard copies and electronic format containing the
Confidential Information and other materials, as well as all the copies thereof. In the event that
the above documents or materials are destroyed upon request, the receiving Party shall notify the
disclosing Party in writing after the destruction.

9.7 The receiving Party shall indemnify against all losses, liabilities and costs suffered by the
disclosing Party in connection with any breach of Article 9 hereof by the receiving Party or any of
its directors, officers, employees, agents, other professional personnel or advisers.

9.8 The confidentiality obligation stipulated in Article 9 hereof shall continue to be effective
during the whole term of this Agreement and within one year thereafter.

ARTICLE 10.

BREACH OF CONTRACT

10.1 If any Party does not perform any of its substantive obligations hereunder, or any
representations and Warranties hereunder are inaccurate, untrue or misleading, it shall constitute
a breach of this Agreement (hereinafter referred to as the “Breach”). The defaulting Party shall
indemnify against all damages and losses suffered by the non-defaulting Party as a result of such
Breach. Notwithstanding this Article 10.1 hereof, the defaulting Party shall make compensation
pursuant to Article 11.4 hereof and shall not be subject to this Article 10.1 in the event of the
circumstances stipulated in this Article 11.4.

10.2 Except for the circumstances set forth in Article 4.5, if any Party is in breach of this
Agreement, the defaulting Party shall make remedy to such Breach within 30 days after any of the
other Parties issue a written notice of the Breach. If the remedy cannot be made during the above
period, the non-defaulting Party shall be entitled to compensation for all damages and losses in
relation to or arising from such Breach.

ARTICLE 11.

TERMINATION

11.1 If the defaulting Party fails to make remedy to the Breach within 30 days after the
non-defaulting Party issues a written notice pursuant to Article 10.2, this Agreement may be
terminated by the non-defaulting Party (if the Breach is made by any of the Existing Shareholders,
then Future Noah; if the Breach is made by Future Noah, then any of the Existing Party) by written
notice.

11.2 Without prejudice to any other rights or reliefs that may be available to the non-defaulting
Party, following the termination of this Agreement:

	 	(i)	 	all rights and obligations of the Parties will be ceased
immediately after the termination but such termination will not affect the
rights and
obligations of the Parties that have been occurred at that time (including
the right to claim for damages due to the Breach leading to the termination
hereof (if any)), and any other Breaches by any Party prior to the
termination;

	 	(ii)	 	the Parties shall use the best endeavor to coordinate among
themselves to revoke transactions so as to resume to the state as if this
Agreement had never been signed by the Parties.

 

14

 

11.3 Unless otherwise agreed by the Parties in writing, if any Closing Condition fails to be
satisfied on the Closing Date, the Closing Date will be extended to 1 August 2009 at the latest.
If, as at 1 August 2009, any Closing Condition has not yet been satisfied or the conditions that
are not satisfied have not been waived by Future Noah in writing, Future Noah and the Existing
Shareholders shall have the right to terminate this Agreement by giving the other Parties a written
notice at least 30 days prior to the termination. When this Agreement is terminated under this
Article, all obligations of the Parties hereunder shall be terminated, save for any obligations
that are survived because of no time restriction expressly stated, but (for avoidance of doubts)
all rights and obligations created prior to the termination shall survive. Notwithstanding the
above requirements, If all the Closing Conditions cannot be satisfied due to the fault of the
Existing Shareholders, the Existing Shareholders shall have no right to terminate this Agreement
pursuant to this Article 11.3; if all the Closing Conditions cannot be satisfied due to the fault
of Future Noah, Future Noah shall have no right to terminate this Agreement pursuant to this
Article 11.3.

11.4 If the Closing hereunder has not been taken place on 1 August 2009 due to the fact that any
Closing Condition of this Agreement has not been satisfied, the Existing Shareholders shall
immediately indemnify RMB1.3 million to Future Noah. In the event that all the Closing Conditions
cannot be satisfied due to the reason of government, the Existing Shareholders shall not be liable
for making any compensation to Future Noah due to the failure to satisfy the Closing Condition; for
avoidance of doubts, the Parties agree that if all the Closing Conditions cannot be satisfied when
the Parties cooperate with each other with the greatest sincerity but still fails to obtain all the
necessary government approvals, permits or registrations relating to the Closing Conditions, it
shall be deemed as the reason of government as agreed above. If all the Closing Conditions are
satisfied prior to the Closing Date and Leisen has delivered to Future Noah the originals of any
letters, certificates, documents showing that all the Closing Conditions have been satisfied or any
other written form that may be satisfactory to Future Noah pursuant to Article 6.2 but Future Noah
fails to pay the transfer consideration pursuant to Article 3.2 hereof, Future Noah shall
immediately indemnify RMB1.3 million to the Existing Shareholders.

 

15

 

ARTICLE 12.

DISPUTES RESOLUTION

12.1 In the event of any conflict, demand or dispute arising from this Agreement, or any breach,
termination or invalidity hereof, the Parties shall resolve such conflict, demand or dispute
through friendly consultation. If such dispute cannot be resolved by the Parties through friendly
consultation within 30 days after a Party gives a written notice demanding for consultation in
respect of such conflict, demand or dispute, it shall be referred to China International Economic
and Trade Arbitration Commission for arbitration in Beijing in accordance with its arbitration
rules.

	 	(i)	 	Save for their respective obligations of confidentiality, the
Parties shall, during arbitration and in the course relating to the
arbitration, fully disclose to the other Party any information or documents
required by him/it, and provide him/it with complete channels from which such
information or documents are obtained.

	 	(ii)	 	The Parties shall continue to exercise and perform their
respective rights and obligations hereunder at the time of and after submitting
the dispute for arbitration, except for those rights or obligations directly
related to such dispute.

	 	(iii)	 	The arbitration award shall be final and binding upon the
Parties.

12.2 Actual Performance

The Parties shall be aware that any relief stipulated by laws may not be sufficient in the
event of any breach or possible breach of this Agreement, and that they may demand for actual
performance and other reliefs available under applicable laws and regulations in addition to the
relief specified in Article 12.1 to the extent that no guarantee is provided.

ARTICLE 13.

MISCELLANEOUS

13.1 The formation of this Agreement, its validity, interpretation and implementation shall be
governed by the laws of the People’s Republic of China.

13.2 The Parties agree that all expenses and costs incurred by the Parties in connection with the
transaction, including but not limited to the following costs, shall be borne by the Parties:

	 	(i)	 	any cost relating to the due diligence by Leisen;

	 	(ii)	 	any cost in connection with the drafting, negotiation and
execution of this Agreement;

	 	(iii)	 	any cost for the Closing of the transaction, such as (but not
limited to) the cost for change of registration of shareholders with SAIC;

	 	(iv)	 	actual expenses incurred by Future Noah for the transaction
(such as travelling expenses).

For avoidance of doubts, all costs in connection with the engagement of professional
advisers in related field for the transaction, such as professional advisers in the areas of
law, taxation, accounting and the Target Business, shall also be borne by the Parties.

 

16

 

13.3 Failure or delay on the part of the Parties to exercise any right, power or privilege under
this Agreement shall not be deemed as a waiver thereof, nor shall any single or partial waiver of
any right, power or privilege preclude the further exercise of such right, power or privilege.

13.4 No Party shall transfer all or part of this Agreement without the prior written consent of the
other Parties.

13.5 Any modification or amendment to this Agreement shall not be made unless with the written
consent of the Parties.

13.6 The invalidity of any provision of this Agreement shall not affect the validity of any other
provision of this Agreement.

13.7 This Agreement shall constitute the complete agreement between the Parties with respect to the
subject matter of this Agreement and supersede all previous discussions, negotiations and
agreements between the Parties.

13.8 Any notice or written correspondence to be given by a Party to any of the other Parties
hereunder, including but not limited to all proposals, written documents or notices referred to
herein, shall be written in Chinese, and shall be delivered by facsimile or courier. Any notice or
written correspondence described above shall be deemed to have been given: (i) upon 5 days after
delivery to a courier company when it is sent by courier; or (ii) upon 2 days after transmission as
evidenced by a transmission report if it is transmitted by facsimile. Unless the other Parties
receive a written notice from a Party for the change of the following address, all notices and
written correspondences shall be delivered to the Parties at the following address:

Mr. Tianming Du

Address: 5/F, Wuyi Xinganxian, No. 717, Wuyi Road West, Changsha City

Telephone: 073-2682655

Mr. Liangdong Du

Address: 5/F, Wuyi Xinganxian, No. 717, Wuyi Road West, Changsha City

Telephone: 0731-2682655

Changsha Xingchen Enterprise Management & Consultation Co. Ltd.

Contact person: Mei Huang

Address: 5/F, Wuyi Xinganxian, No. 717, Wuyi Road West, Changsha City

Telephone: 0731-2682655

Shenzhen Zhi Yuan Noah Internet Technology Co., Ltd.

Contact person: Honghong Li

	 	 	 	Address: 	 No. B1003, Futian Tian’an Hi-Tech Venture Park, Futian District, Shenzhen,
Guangdong Province

Telephone: 0755-82049585

 

17

 

13.9 All appendices hereto shall constitute an integral part of this Agreement and shall have the
same effect as Article 1 to Article 13 of this Agreement.

13.10 This Agreement is executed in Chinese in 8 original copies and each Party hereto shall keep
one copy. One copy shall be submitted to the SAIC for the change of registration of shareholders
and the remaining copies shall be kept by Leisen.

[This page is intentionally blank and the signature page for the Equity Transfer Agreement]

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be duly executed by
their respective duly authorized representatives on the day first above written.

	 	 	 	 	 
	Mr. Tianming Du	 	 
	 
	 	 	 	 
	/s/
 

	 	(Signature)
	 	 
	 
	 	 	 	 
	Mr. Liangdong Du	 	 
	 
	 	 	 	 
	/s/
 

	 	(Signature)
	 	 

Changsha Xingchen Management Consulting Co. Ltd.

	 	 	 	 	 
	Legal representative:

	 	/s/
	 	(Signature)
	 

	 	 	 	 
	 

	 	Liangdong Du	 	 

[Chop of Changsha Xingchen Management Consulting Co. Ltd. is affixed]

Shenzhen Zhi Yuan Noah Internet Technology Co., Ltd.

	 	 	 	 	 
	Legal representative:

	 	/s/
	 	(Signature)
	 

	 	 	 	 
	 

	 	Dong Xu	 	 

 

18

 

APPENDIX 4.1

REPRESENTATIONS AND WARRANTIES

Part A

Save as disclosed by the Existing Shareholders to Future Noah in a manner acceptable to Future
Noah, each of the Existing Shareholders jointly and severally represents and warrants to Future
Noah as follows:

1. Approval and License from the “PRC” Regulatory Authorities

	 	(A)	 	All licenses, consents and other permits and approvals necessary for or in
relation to the development of the Target Business of Leisen have been obtained and are
in full force and effect.

	 	(B)	 	All reports, declaration forms and information relating to the Target Business
of Leisen as required by laws or necessary to be submitted or provided to any person or
competent authorities as a condition for any licenses, consents, permits or approvals
have been submitted or provided to the relevant persons or competent authorities,
except for those reports, declaration forms and information that have not been
submitted or provided, which would not have any material adverse effect on Leisen.

	 	(C)	 	There are no circumstances where any licenses, consents, permits or approvals
that are necessary for the continuous operation of the Target Business of Leisen may be
modified, revoked or not renewed, or any right of modification or revocation may be
given in such circumstances, save for the circumstances where such modification,
revocation or non-renewal is expected not to have any material adverse effect on
Leisen.

2. Civil Capacity of the Existing Shareholders

	 	(A)	 	They have full legal rights, all requisite corporate power and authority, and
have taken all corporate actions required to execute and deliver this Agreement, fully
perform their respective obligations under such documents and to complete the
transaction hereunder.

	 	(B)	 	This Agreement, once executed and delivered by the Parties hereto, constitutes
their lawful, valid and binding obligations and is enforceable against them pursuant to
their respective terms.

	 	(C)	 	The execution and delivery by the Existing Shareholders of this Agreement and
the performance of their respective obligations hereunder will:

	 	(i)	 	not violate any provisions of their respective memorandum or
articles of association; and

	 	(ii)	 	not violate any legal instrument binding on them nor constitute
the non-performance of their respective obligations under such legal
instruments; and

	 	(iii)	 	not violate orders, judgments or decrees of any court or
government authorities binding on them; and

	 	(iv)	 	not require any consent from shareholders of any of the
Existing Shareholders, except for those consents that have been obtained.

except for the above circumstances which would not affect the performance of their
obligations hereunder.

 

19

 

3. Ownership of Leisen and its Affairs

	 	(A)	 	Leisen is a limited liability company duly incorporated, existing and
registered under the laws of the PRC. It has the right to exercise all civil rights,
power and capacity of a company, and has passed annual inspections over the years.

	 	(B)	 	The total amount of the registered capital of Leisen amounts to RMB1 million.
Leisen has made capital contributions and settled the payment in respect thereof in
full, and the capital verification has been made in accordance with the applicable PRC
laws and regulations.

	 	(C)	 	There are no options, pre-emptive rights, mortgages, pledges, liens or other
forms of guarantees or other rights relating to or created over or affecting all or any
part of the shares of Leisen. In addition, there are no agreements or undertakings for
the provision or creation of any of the above, nor are there any persons who claim to
be entitled to any of the above interests.

	 	(D)	 	There are no outstanding agreements or undertakings requiring the allocation,
issue or transfer of any equity of Leisen, or granting to any persons the right to
allocate, issue or transfer any equity of Leisen.

	 	(E)	 	Leisen does not own any shares nor has similar shareholders’ interest in any
companies, affiliated companies, offices, branches and other social organizations; nor
does it directly or indirectly control or invest nor has any interest in any other
entities.

	 	(F)	 	Copies of the existing business license and articles of association of Leisen
that have been submitted by the Existing Shareholders to Future Noah or its
representatives and advisers on the date of this Agreement are complete and accurate in
all respects.

	 	(G)	 	Leisen maintains any account books that are necessary for its business
operation in accordance with applicable PRC laws and regulations, and such account
books accurately recorded any matters that shall be recorded in the account books;
Leisen has not received any notices or allegations stating that any of the above
records are inaccurate or should be rectified.

	 	(H)	 	All documents that shall be submitted by Leisen to all the relevant PRC
government departments and other competent authorities have been properly submitted,
save for those documents that have not been submitted, which would not have any
material adverse effect on Leisen.

 

20

 

4. Accuracy and Sufficiency of Information

	 	(A)	 	All information supplied by the Existing Shareholders or Leisen to Future Noah
or its advisers are true, accurate and complete in all respects, and there are no facts
or matters that have not been disclosed to Future Noah or any of its advisers, which
would result in any of the information becoming inaccurate or misleading because of
omission or ambiguity in terms of meaning or due to any other reasons.

	 	(B)	 	Leisen and the Existing Shareholders have, upon reasonable request from Future
Noah, provided Future Noah or its advisers with all information that can be obtained
without paying unreasonable costs within the scope of their control for Future Noah to
determine whether or not to accept the transfer of the Target Equity. The written
information and public documents provided by Leisen to Future Noah in relation to this
Agreement do not include the misrepresentation or misstatement of material facts, or
material facts the omission of which would make any representations contained in this
Agreement or such disclosed documents misleading.

5. Accounts of Leisen

	 	(A)	 	The accounts of Leisen:

	 	(i)	 	are prepared in accordance with the PRC laws, and the
accounting principles and practices recognized by the PRC and also generally
accepted by companies which conduct any business that is similar to the Target
Business (PRC GAAP and IFRS);

	 	(ii)	 	are complete and accurate in all respects, and have made full
provisions for bad and doubtful debts, obsolete, depreciated and unsaleable
stocks and profit taxes (whether they are profits from income or capital
profits) for any period ending on or prior to the completion date of the
accounts of Leisen;

	 	(iii)	 	reflect a true and fair view of the state of affairs of Leisen
for each of the financial year ends covered by the corporate accounts, and the
profits or losses of Leisen for each financial year covered by the corporate
accounts; and

	 	(iv)	 	are not affected by any extraordinary, exceptional or
non-recurring items, save for any items expressly disclosed in the accounts of
Leisen.

	 	(B)	 	Leisen does not have any liabilities that have not been fully disclosed or
provided for in its accounts (whether actual, contingent, undetermined in terms of
amount or in dispute) or any outstanding capital commitments.

 

21

 

6. Accounting Records

	 	(A)	 	Leisen maintains proper and consistent accounts, books, ledgers, financial and
other records; such accounting records contain the latest information, the complete and
accurate details of the business activities of Leisen, and all matters that must be
recorded in accordance with the Company Law of the
People’s Republic of China and the Accounting System of Enterprises of the People’s
Republic of China.

	 	(B)	 	Such accounts, books, ledgers, financial and other records, which constitute
the property of Leisen, are owned and controlled by Leisen, and no notices or
allegations stating that any of the above records are inaccurate or should be rectified
have been received.

	 	(C)	 	 All transactions relating to the Target Business of Leisen have been recorded
in the accounting records of Leisen in a proper and timely manner, and no errors or
differences of any nature have been included or reflected in such accounts, books,
ledgers, financial and other records, and such records truly and accurately reflect the
financial situation of Leisen and give explanation of its transactions.

7. Contract and Undertakings

	 	(A)	 	Leisen is not a party to, nor does it bear any legal liabilities (whether
present or future) in respect of any of the following:

	 	(i)	 	any guarantee, indemnification, guarantee relationship or
letter of credit;

	 	(ii)	 	any contract or arrangement which directly or indirectly
restricts the freedom of Leisen to operate its business around the world in any
manner as it think fits, or directly or indirectly restricts the ability of
Leisen to transfer all or any part of its business;

	 	(iii)	 	any joint venture agreement or arrangement, partnership right
or obligation for the purpose of profit sharing (but for avoidance of doubts,
excluding any arrangement which shares fees or operating income on a
case-by-case basis), or any other agreement or arrangement where Leisen and any
other persons jointly participate in any business;

	 	(iv)	 	any agreement or arrangement involving any matters that are
beyond the ordinary business scope of Leisen, or constituting commercial
transactions or arrangements that derivate from the usual model of the Target
Business;

	 	(v)	 	any contract or arrangement in which any directors of Leisen or
its Affiliates have direct or indirect interest, except for employment
contracts;

	 	(vi)	 	any contract or arrangement that is not signed in the ordinary
course of business and involving the expenses or incomes of Leisen in any
financial year which exceed RMB100,000;

	 	(vii)	 	any contract or arrangement that is not signed with any
Affiliates or subsidiary enterprises of Leisen in the ordinary course of
business and involving the payment or incomes which exceed RMB50,000;

	 	(viii)	 	any contract or arrangement that cannot be terminated by Leisen by a notice
of 3 months or such shorter period without the payment of any special
compensation; or

	 	(ix)	 	any contract or arrangement which may be terminated in the
event of any change in the ownership or control of Leisen or will be materially
affected due to such change.

 

22

 

	 	(B)	 	Save for any guarantees or Warranties required by laws or those contained in
the standard business terms of Leisen that the Existing Shareholders have provided to
Future Noah on or prior to the date hereof, Leisen has not provided any guarantee,
indemnification or Warranties, nor made any representation in respect of any goods or
services that have been provided or will be provided pursuant to executed contracts,
nor has it assumed any liabilities or obligations applicable to it after the provision
of such goods or service.

	 	(C)	 	Leisen and the Existing Shareholders have not been aware of the violation or
invalidity of any material contracts to which Leisen is a party, or any reasons that
such contracts be terminated, revoked, abrogated or refused for performance, nor have
they been aware of any such allegation, except for the circumstance where a third party
to the relevant contracts has not made any payment.

	 	(D)	 	Leisen does not have any outstanding prices or tenders or sale or service
proposals which are of significance to its business and, if accepted, are likely to
result in loss.

8. Authorization

Except for the authorization given to employees to enter into contracts for routine
transactions in the course of the performance of their usual duties or to be involved in the
business operation and management activities customarily conducted by Leisen, Leisen has not
given nor provided any authorization or other basis of authorization that are outstanding or
remain effective to any person to enter into any contracts or undertakings on behalf of
Leisen.

9. Operation

The major customers or suppliers of Leisen have not ceased or expressed their intention to
cease their transactions with Leisen, and to the best of knowledge of the Existing
Shareholders, no major customers or suppliers of Leisen are likely to reduce significantly
the number of their transactions with Leisen; to the best of knowledge of the Existing
Shareholders, the execution or Closing of this Agreement will not have any adverse effect on
the attitude or act of the major customers or suppliers towards Leisen.

Leisen is in compliance with all applicable laws, regulations, government requirements and
the relevant permits and licenses during its operation. There are no circumstances where
such applicable laws, regulations, government requirements and the relevant permits and
licenses are violated.

 

23

 

10. Arrangement between Leisen and the Existing Shareholders

Leisen has not agreed to provide guarantee or any security or indemnification in respect of
any liabilities or obligations of any of the Existing Shareholders or any persons related to
the Existing Shareholders.

11. Bank Accounts and Loans

	 	(A)	 	Leisen has not have any outstanding loan capital, nor has it borrowed or agreed
to borrow any amount which consequently fail to make repayment or to perform its loan
obligations. It is not a party to nor has any obligation relating to any of the
following:

	 	(i)	 	any loan agreement, debenture, acceptance credit, bill of
exchange, promissory note, finance lease, debt or stock financing, transfer and
sale arrangement or sales and leaseback arrangement for discount or account
receivables;

	 	(ii)	 	any other arrangement for the purposes of fund raising or the
provision of fund or credit.

	 	(B)	 	Leisen does not hold any shares and securities that are not paid in full or
with any additional liabilities, nor does it have any liabilities in connection with
the above shares or securities.

	 	(C)	 	Leisen has not lent or agreed to lend any amount which consequently fail to
get back the repayment, nor is it interested in any existing or future debts (save for
the amount receivables of Leisen in the ordinary course of business).

	 	(D)	 	Leisen has not signed any mortgage, guarantee or indemnification contract that
is invalid and unenforceable pursuant to its terms.

	 	(E)	 	There have been no events which would result in the non-performance or breach
of any terms of the loan capitals, borrowings, debentures or financing of Leisen, or
which would entitle any third parties to demand for repayment prior to the normal
payment date. No persons have alleged the occurrence of such events.

	 	(F)	 	Leisen has not borrowed any amount from any source of capital, save for those
amount that is borrowed in the ordinary course of business and will not have any
material adverse effect on the production and operation of Leisen.

12. Working Capital

Leisen has sufficient working capital from internal source to meet its current requirement
and to complete any purchase orders, projects and contractual obligations that have been
issued to or assumed by it pursuant to the relevant terms.

 

24

 

13. Insolvency

	 	(A)	 	No orders nor applications have been made to require for the liquidation of
Leisen; no meetings have been convened for the purpose of considering
resolutions for the liquidation of Leisen; and no such resolutions have been
approved.

	 	(B)	 	No receiving orders have been made for Leisen; no petitions or applications
have been made to require for making such orders; no receivers have been appointed for
Leisen; no notices have been issued or submitted for the purpose of appointing
receivers for Leisen; and no steps or procedures have been taken or commenced for the
purpose of appointing receivers for Leisen.

	 	(C)	 	No receivers (including administrative receivers) have been appointed in
connection with all or any assets of Leisen.

	 	(D)	 	No debt restructuring agreements between Leisen and its creditors or proposals
of similar arrangement have been put forward.

	 	(E)	 	There are no valid rights of Leisen to delay in making payment; no steps or
procedures have been taken or commenced for the purpose of obtaining such right.

	 	(F)	 	No events involving Leisen that are similar to any of the above have been
occurred.

	 	(G)	 	Leisen is not insolvent nor unable to pay debts, nor does it cease to repay any
debts that are due.

	 	(H)	 	No judgements against Leisen have not been performed.

14. Litigation and Claims

	 	(A)	 	Neither Leisen nor its Existing Shareholders participate in any prosecutions,
arbitrations or other dispute resolution proceedings or administrative or criminal
proceedings as the capacity of claimant, defendant or otherwise. To the best of
knowledge of the Existing Shareholders and Leisen, there are no prosecutions,
arbitrations or other dispute resolution proceedings or administrative or criminal
proceedings pending that are brought by or against Leisen or its Existing Shareholders,
or threatened to be brought by or against Leisen or its Existing Shareholders or
expected to be brought by or against Leisen or its Existing Shareholders. To the best
of knowledge of the Existing Shareholders, there are no facts or circumstances which
might give rise to any prosecutions, arbitrations, mediation or administrative or
criminal proceedings.

	 	(B)	 	To the best of knowledge of the Existing Shareholders, neither Leisen nor its
Existing Shareholders have received any written notices in relation to any
investigations or enquiries into the affairs of Leisen or its Existing Shareholders
that are being made or have been made by any government or other authorities, in
particular (but not limited to) any matters in the areas of environmental protection,
public health, safety, labor and publication. The Exiting Shareholders are not aware
of any situations which would give rise to such formal investigations or enquiries.

	 
	 	 	 	If any matters occurred as of the Closing Date give rise to any dispute with any
relevant authorities over the matters of environmental protection, public
health, safety, labor and publication and other relevant laws and regulations, the
Existing Shareholders agree to compensate Leisen immediately for all costs in
connection with the settlement of such disputes, including any interests and fines
that are imposed.

 

25

 

	 	(C)	 	Neither Leisen nor its Existing Shareholders have committed any criminal,
illegal, unlawful or unauthorized acts, nor have they breached any obligations or
liabilities prescribed by or arising from regulations, contracts or otherwise; none of
them have any legal liabilities involving the above acts or breaches, nor any claims
pending that are against Leisen or its Existing Shareholders, save for those claims
which would not have material adverse effects on the production and operation of
Leisen.

If any matters occurred due to the reasons of the Existing Shareholders as of the
Closing Date give rise to any claims or disputes relating to such violations or
breaches, the Existing Shareholders agree to compensate Leisen immediately for all
costs in connection with the settlement of such claims or disputes.

	 	(D)	 	Leisen has not produced, sold or provided any products or services that fail to
meet all applicable laws, regulations or standards or are defective or hazardous or do
not meet any expressed representations or Warranties.

If any matters occurred due to the reasons of the Existing Shareholders as of the
Closing Date give rise to any claims or disputes relating to such violations or
breaches, the Existing Shareholders agree to compensate Leisen immediately for all
costs in connection with the settlement of such claims or disputes.

15. Ownership and Status of Assets

	 	(A)	 	The major assets of Leisen that are necessary for use in the course of the
operation of the Target Business have been included in the corporate account of Leisen.

	 	(B)	 	Leisen is the legal and beneficial owner of each asset contained in the
corporate account (save for the current assets sold, disposed of or used in the
ordinary course of business); such assets are not subject to any third parties’ rights
and each asset that can be possessed is possessed by Leisen.

	 	(C)	 	Leisen has the ownership of all assets that are reflected in its balance
sheets as assets and there are no mortgages, pledges or liens created over them.

	 	(D)	 	All other lands, buildings and fixed assets being used by Leisen are leased in
accordance with valid leases. All such leases are lawful and valid. Leisen has not
violated such leases or committed any faults thereunder.

	 
	 	(E)	 	Leisen does not have any buildings nor any self-owned land use right.

	 	(F)	 	There are no options, pre-emptive rights, mortgages, pledges, liens (except for
any liens legally created in the ordinary course of business) or other forms of
guarantees or third parties’ rights relating to or created over or affecting all or
any part of the business or assets of Leisen. There are also no agreements or
undertakings for the provision or creation of any of the above, nor are there any
persons who claim to be entitled to any of the above interests.

	 	(G)	 	All vehicles and office equipment used by Leisen in relation to its business
are repaired and maintained properly and operated normally, and can be used for the
business of Leisen.

 

26

 

16. Intellectual Property Rights

(A) Leisen does not use any name other than its company name.

	 	(B)	 	Leisen owns or has the right to use any intellectual property rights and
business information that are being used for the Target Business or that are necessary
to meet the requirements of current plans and proposals.

	 	(C)	 	All fees and steps in connection with the renewal, application and other formal
registration that are necessary for the maintenance, protection and enforcement of
intellectual property rights of Leisen have been paid or adopted, or will be paid or
adopted according to plans.

	 	(D)	 	The intellectual property rights owned by Leisen are valid, existing and
enforceable, and are not subject to any mortgages, options, third parties’ rights or
other rights.

	 	(E)	 	All permits involving intellectual property rights and business information,
and all agreements entered into by Leisen in relation thereto will not be terminated
due to the change of ownership or control of Leisen.

	 	(F)	 	Leisen and, to the best of knowledge of the Exiting Shareholders, any third
parties do not violate any permits or agreements which are currently used for the
purpose of the business, and which are of significance to the Target Business and
relate to any intellectual property rights.

	 	(G)	 	Leisen is under no obligation to grant any licences or sub-licences or to make
transfer in respect of any intellectual property rights or business information owned
or used by Leisen.

	 	(H)	 	To the best of knowledge of the Existing Shareholders, no third parties are
infringing or using without authorization or have infringed or used without
authorization any intellectual property rights or business information owned or used by
Leisen.

	 	(I)	 	To the best of knowledge of the Existing Shareholders, no activities, business
information and intellectual property rights of Leisen constitute and have constituted
any infringement or unauthorized use of third parties’ intellectual property rights or
business information.

	 	(J)	 	To the best of knowledge of the Existing Shareholders, the intellectual
property rights and business information of Leisen are not the subject of any
litigations, objections or administrative proceedings.

 

27

 

	 	(K)	 	To the best of knowledge of the Existing Shareholders, the Confidential
Information of Leisen has not been disclosed or otherwise made known to any third
parties without requiring the third parties to perform the obligation of
confidentiality.

	 	(L)	 	Leisen is not a party to any confidentiality or other agreement that restricts
the freedom to use or the disclosure of its business information, nor does it assume
any obligations that restrict the freedom to use or the disclosure of its business
information, which might have material adverse effect on the business of Leisen.

	 	(M)	 	Currently, the operation of Leisen does not give rise to the obligations to pay
any fees for using intellectual property right or similar payment.

17. Information Technologies

	 	(A)	 	Leisen is the sole legal and beneficial owner of all its information
technologies. Such information technologies are not subject to any liens, mortgages,
third parties’ rights or other rights.

	 	(B)	 	All information technologies owned or used by Leisen or in its name are in good
operating conditions, and have been maintained in accordance with good industry
practices.

	 	(C)	 	The information technologies and domains owned or used by Leisen are not the
subject of any litigations or other disputes or claims. To the best of knowledge of
the Existing Shareholders, no litigations, disputes or claims in relation to any
information technologies or domains owned or used by Leisen are expected or likely to
occur.

	 	(D)	 	The business or operation of Leisen has not been materially interfered due to
one of the following events: (a) any breach of the security regulations relating to any
information technologies, (b) malfunction of any information technologies (whether it
is due to any breakdown, virus, defects or other reasons), insufficient capacity, or
failure to meet the required standards in other aspects, or (c) malfunction,
interruption or defective operation of any information technologies due to the
occurrence or processing of one or more dates. There exists no circumstances which are
likely or expected to give rise to any such interference.

	 	(E)	 	Leisen is the legal and beneficial owner of all information technologies and
business information that are necessary or required for the operation of its business
in a manner used currently or at any time within one year prior to the date of this
Agreement, and for the performance or implementation of any existing contracts,
undertakings, plans or proposals, or the party which has the contractual rights to use
such information technologies; such contractual rights will not be directly or
indirectly affected due to any transaction contemplated under this Agreement.

 

28

 

	 	(F)	 	Leisen has not disclosed any source programs to any third parties; no source
programs relating to proprietary software have been disclosed or otherwise made known
to any third parties.

	 	(G)	 	Leisen is not a party to any agreements or arrangements that restrict the
freedom to use or the disclosure of any source programs relating to any proprietary
software, nor does it assume any obligations that restrict the freedom to use or the
disclosure of any source programs relating to any proprietary software.

18. Employees

	 	(A)	 	Leisen does not have any employees who have not been disclosed to Future Noah.

	 	(B)	 	No disputes exist nor are there any outstanding or possible disputes between
Leisen and any trade unions or other organizations that are formed for similar
purposes. Moreover, Leisen is not a party to any collective bargaining agreements or
other arrangements (whether they are binding or not).

	 	(C)	 	There are no acts or circumstances of Leisen that are in violation of the laws
and regulations with regard to labor and employment.

	 	(D)	 	To the best of knowledge of the Existing Shareholders, no employees or other
personnel (whether existing or former) threaten to make any claims against Leisen, nor
do any other persons threaten to make any claims against Leisen in respect of any
employees or other personnel (whether existing or former), for any accidents, injuries,
unpaid salaries, overtime pay, severance payment, contributions to social security
funds, holidays or any other matters resulting or arising from the employment or
engagement by Leisen of such employees or other personnel (whether existing or former).
In addition, there are no outstanding claims of this kind.

19. Taxation

Leisen has legally submitted all tax returns that shall be submitted by it in accordance
with the requirements of the relevant taxation authorities, and such tax returns are
complete and correct in all material respects. Leisen has legally paid all taxes payable
(whether they are shown in tax returns) or made appropriate provisions in its financial
statements in accordance with the requirements of the relevant taxation authorities. There
are no tax guarantees which are ordered by the relevant taxation authorities to provide for
any assets or property of Leisen, save for those guarantees relating to payable taxes that
are outstanding. Leisen meets the requirements of the relevant taxation authorities that
are applicable to it or its business (including but not limited to any conditions of
preferential tax treatment granted); and to the best of knowledge of the Existing
Shareholders, no governments or regulatory authorities will impose or have reasons to impose
on Leisen any additional taxes for the period for which tax returns are or have been
required to submit. Leisen does not have:

	 	(i)	 	any disputes or complaints relating to any tax liabilities that
have been asserted or put forward by any governments or regulatory authorities;
or

	 	(ii)	 	to the best of knowledge of the original shareholders, any
warning concerning the disputes or complaints of any tax liabilities as
reasonably expected.

 

29

 

20. Tax Declaration, Disputes, Records and Requests

	 	(A)	 	Leisen has submitted and provided to any taxation authorities all appropriate
tax returns and information required by them by itself or through others.

	 	(B)	 	As at the date of this Agreement, there are no tax obligations that are
outstanding or, to the best of knowledge of the Existing Shareholders, are expected to
occur, which would allow any taxation authorities to recover from Leisen any taxes
(including fines or interests), nor are there any disputes or disagreements with any
taxation authorities regarding the provision of any preferential tax treatments to
Leisen, and there are no circumstances which are likely to give rise to any such
disputes or disagreements.

21. Insurance

To the best of knowledge of the Existing Shareholders, all major assets of Leisen that can
be and are required to be insured pursuant to the industry practices (which specifically
refer to real estate and vehicles) have been insured against those risks that shall
generally be insured in accordance with applicable PRC laws and the industry practices.

22. Incentive Mechanism

There are no share options or other similar performance-based incentive arrangements
(including stock appreciation right schemes) for any employees (or former employees) or
directors (or former directors) or advisers (or former advisers) or underwriters (or former
underwriters) of Leisen, nor are there any arrangements affecting any such personnel.

23. No State-owned Assets

Leisen does not have any state-owned assets, and therefore are not required to carry out the
evaluation of state-owned assets in any form as required by the PRC laws and regulation for
the purpose of facilitating the completion of the transaction.

24. No Undisclosed Business

Leisen has not conducted any business that has not been disclosed to Future Noah.

25. Commercial Practices in Compliance with Laws

None of the Existing Shareholders, Leisen, their Affiliates and any other persons who act
for the above Parties (i) willfully violate any applicable laws and orders; and (ii) make
any inappropriate payment to government officers to obtain any commercial
benefits or advantages in respect of the transaction under this Agreement or other matters.

 

30

 

Part B

Future Noah represents and warrants to the Existing Shareholders for itself:

	 	(A)	 	Future Noah is a company duly incorporated. It has full legal rights, all
requisite corporate power and authority, and have taken all corporate actions required
to execute and deliver this Agreement, fully perform its obligations under such
documents and to complete the transaction hereunder

	 	(B)	 	This Agreement, once executed and delivered by the Parties hereto, constitutes
its lawful, valid and binding obligations and is enforceable against it pursuant to its
terms.

	 	(C)	 	This Agreement and the transaction under this Agreement have been approved by
way of resolution at a shareholders’ general meeting of Future Noah.

	 	(D)	 	The execution and delivery by Future Noah of this Agreement and the performance
of its obligations hereunder will:

	 	(i)	 	not violate any provisions of its memorandum or articles of
association; and

	 	(ii)	 	not violate any legal instrument binding on it nor constitute
the non-performance of its obligations under such legal instruments; and

	 	(iii)	 	not violate orders, judgments or decrees of any court or
government authorities binding on it.

 

31

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