Loan and Share Purchase Agreement - Xinhua Finance Media Ltd. and Sino Investment Holdings Ltd.
XINHUA FINANCE MEDIA LIMITED
AND
SINO INVESTMENT HOLDINGS LIMITED
(collectively, the Investors)
AND
SUNGOLDEN LIMITED
(Vendor)
----------
LOAN AND SHARE PURCHASE AGREEMENT
IN RESPECT OF SHARES IN THE CAPITAL OF
UPPER STEP HOLDINGS LIMITED
----------
28 FEBRUARY 2006
Hong Kong
<PAGE>
THIS LOAN AND PURCHASE AGREEMENT (this "AGREEMENT") is made on the 28th day of
February 2006
BETWEEN
1. XINHUA FINANCE MEDIA LIMITED, a company incorporated under the laws of the
Cayman Islands with registration number 157511 and a registered address at
Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town,
Grand Cayman, Cayman Islands, British West Indies ("XFM");
2. SINO INVESTMENT HOLDINGS LIMITED, a company incorporated under the laws of
the Commonwealth of the Bahamas with registration number 141019B and a
registered address at Charlotte House, Charlotte Street, P.O. Box N-341,
Nassau, Bahamas ("SINO") (and XFM and Sino shall collectively be referred
to as the "INVESTORS"); and
3. SUNGOLDEN LIMITED, a company incorporated under the laws of Hong Kong with
registration number 508977 and a registered address of Room 2204A, Bank of
America Tower, 12 Harcourt Road, Central, Hong Kong (the "VENDOR").
WHEREAS
A. The Vendor holds all of the beneficial interests in the Offshore Group.
B. XFM desires to provide a loan to the Company and the Company desires to
receive a loan from XFM subject to the terms and conditions set out in this
Agreement and the Loan Agreement (as defined below).
C. XFM and Sino desire to purchase and the Vendor wishes to sell to XFM and
Sino the interests in that number of the Sale Shares (as defined below) as
set forth opposite to the Investor's name on Schedule A hereto through the
sale of certain shares in certain of the Offshore Group for the Purchaser
Price as set forth in Schedule A hereto subject to the terms and conditions
set out in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth herein, the Investors, the Company and the Vendor do hereby agree as
follows:
1. DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings:
"ACCORD GROUP" means Accord Group Investments Limited, a company
incorporated under the laws of the British Virgin Islands with registration
number 661868 and a
-1-
<PAGE>
registered address at P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;
"ACCORD GROUP SHAREs" shall have the meaning set forth in Clause 5.1;
"ACCORD GROUP STRUCTURE AGREEMENT" shall have the meaning set forth in
Clause 5.3;
"AFFILIATES" of a specified Person means any other Person that, directly or
indirectly, through one or more intermediaries, Controls, is Controlled by,
or is under common Control with, such specified Person or, in the case of a
natural Person, such Person's spouse, parents and descendants (whether by
blood or adoption and including stepchildren
"ANCILLARY SHARE AGREEMENTS" means each of the following share purchase
agreements to effect the transactions contemplated herein:
(a) the share purchase agreements between XFM and Honour Rise in respect
of the purchase of 70 shares in the capital of the Company;
(b) the share purchase agreements between Sino and Hing Yee in respect of
the purchase of 60 shares representing all of the issued shares in the
capital of Quality Idea;
(c) the share purchase agreements between Sino and Tai Mou in respect of
the purchase of 45 shares in the capital of the Company;
(d) the share purchase agreements between Sino and Tai Mou in respect 80
shares in Fine Power representing all of the issued shares in the
capital of Fine Power; and
(e) the share purchase agreements between XFM and Tai Mou in respect of 25
shares in the capital of the Company;
"BOARD" means the board of directors of the Company;
"BSG" means Beijing Shiji Guangnian Limited Co., a company incorporated
under the laws of the PRC with registration No. 77156888-4 and an address
at 8100, #18, Jianshe Road, Kaixuan Avenue, Liang Township, Fangshan
District, Beijing;
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday and Friday on
which banks in Hong Kong or the PRC are required or permitted by laws to be
open;
"CHINA LEAD" means China Lead Profits Limited, a company incorporated under
the laws of the British Virgin Islands with registration number 674588 and
a registered address at P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;
"CLOSING" shall have the meaning provided in Clause 4.3;
"CLOSING DATE" shall have the meaning provided in Clause 4.3;
-2-
<PAGE>
"CLOSING DELIVERABLE AGREEMENTS" shall have the meaning provided in Clause
4.4(k);
"COMPANY") means Upper Step Holdings Limited, a company incorporated under
the laws of the British Virgin Islands with registration number 678363 and
a registered address at P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;
"COMPANY SALE SHARES" means, collectively, the Honour Rise Sale Shares and
Tai Mou Sales Shares;
"COMPANY SHARES" means ordinary shares each with a par value of US$1.00 in
the capital of the Company;
"CONSENT" means any consent, approval, permit, license, order, or
authorization of or registration, declaration, or filing with or exemption
by Governmental Entity;
"CONTROL", "CONTROLS", "CONTROLLED" (or any correlative term) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management of a Person, whether through the ownership of
voting securities, by contract, credit arrangement or proxy, as trustee,
executor, agent or otherwise. For the purpose of this definition, a Person
shall be deemed to Control another Person if such first Person, directly or
indirectly, owns or holds more than 50% of the voting equity interests in
such other Person;
"DIRECTORS" mean the members from time to time of the Board;
"DISCLOSURE LETTER" means a letter described as such to be prepared by the
Vendor and delivered to the Investors simultaneously with the execution of
this Agreement;
"ENCUMBRANCE" means and includes any interest or equity of any person
(including, without prejudice to the generality of the foregoing, any right
to acquire, option or right of pre-emption) or any mortgage, charge,
pledge, lien or assignment or any other encumbrance, priority or security
interest or arrangement of whatsoever nature over or in the relevant
property;
"FINANCIAL STATEMENTS" means the result of the financial due diligence
conducted by Grant Thornton in respect of the financial condition of SCM
prepared for by the Investors and delivered to the Vendor;
"FINE POWER" means Fine Power Limited, a company incorporated under the
laws of the British Virgin Islands with registration number 687687 and a
registered address at P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;
"FINE POWER SALE SHARES" shall have the meaning provided in Clause 4.1(d);
"FIRST PAYMENT" means the net amount of US$10,000,000 to be paid as part of
the Purchase Price in accordance with Clause 4.2(a);
-3-
<PAGE>
"FIRST PAYMENT DATE" means the date on which the First Payment is made;
"GOVERNMENTAL ENTITY" means any court, regulatory body, administrative
agency or commission or other governmental authority or instrumentality,
whether domestic or foreign;
"GROUP" means, collectively, the members of the Offshore Group and the PRC
Group;
"GROUP STRUCTURE AGREEMENTS" means the contracts, agreements and documents
as set out in Schedule B;
"HING YEE" means Hing Yee Service Limited, a company incorporated under the
laws of the British Virgin Islands with registration number 675865 and a
registered address at P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;
"HONG KONG" means the Hong Kong Special Administrative Region of the PRC;
"HONOUR RISE" means Honour Rise Services Limited, a company incorporated
under the laws of the British Virgin Islands with registration number
686228 and a registered address at P.O. Box 957, Offshore Incorporations
Centre, Road Town, Tortola, British Virgin Islands;
"HONOUR RISE SALE SHARES" shall have the meaning provided in Clause 4.1(a);
"IMTV" means Inner Mongolia TV Station, an entity established under the
laws of the People's Republic of China and an address at No. 55 Xia Hua Da
Jie, Hu He Hao Te, Inner Mongolia;
"INDEMNIFIED PARTY" shall have the meaning provided in Clause 12.4;
"INDEMNIFYING PARTY" shall have the meaning provided in Clause 12.4;
"INVESTOR CONTROLLED COMPANIES" shall mean the Company, China Lead, the
WFOE and the PRC Company;
"LICENSED INTELLECTUAL PROPERTY" means any and all license rights granted
to SCM in any third party intellectual property or other proprietary or
personal rights, including any and all of the following that are licensed
to SCM anywhere in the world: (1) trademarks, trade names, service marks
and trade dress, and all goodwill associated with trademarks, trade names,
service marks and trade dress; (2) patents; (3) mask works; (4) utility
models; (5) domain names; (6) copyrights and copyrightable works; (7)
databases; (8) graphics; (9) schematics; (10) marketing, sales and user
data; (11) technology; (12) trade secrets, including confidential know-how,
inventions, specifications and processes; (13) computer software programs
of any kind (in both source and object code form); (14) application
programming interfaces; (15) protocols; and (16) any renewal, extension,
reissue, continuation or division rights, applications and/or registrations
for any of the foregoing;
-4-
<PAGE>
"LOAN" means the loan in the amount of US$2,000,000 to be made by XFM to
the Company in accordance with Clause 3;
"LOAN AGREEMENT" means the agreement to be entered into between XFM (as
lender), the Company (as borrower) in respect of the Loan;
"MATERIAL ADVERSE CHANGE" means any event or circumstance that occurs which
might reasonably be expected to have a material adverse effect on the
prospects, business, operations or financial condition of the Group or SCM
taken as a whole or that would materially affect the ability of any of the
companies in the Group or any Person who is a party to any of the Group
Structure Agreements to perform its material obligations under any of the
Group Structure Agreements;
"NOMINEE 1" means Wan Jun, a PRC national and holder of PRC identity card
no. 310107198001034018;
"NOMINEE 2" means Li Guang Jie, a PRC national and holder of PRC identity
card no. 410327770810141;
"NOMINEES" means, collectively, Nominee 1 and Nominee 2;
"OFFSHORE GROUP" means, collectively, the Company, China Lead, Fine Power,
Hing Yee, Honour Rise, Quality Idea, and Tai Mou;
"OWNED INTELLECTUAL PROPERTY" means any and all of the following that are
owned (including joint ownership) or held by SCM anywhere in the world: (1)
trademarks, trade names, service marks and trade dress, and all goodwill
associated with trademarks, trade names, service marks and trade dress; (2)
patents; (3) mask works; (4) utility models; (5) domain names; (6)
copyrights and copyrightable works; (7) databases; (8) graphics; (9)
schematics; (10) marketing, sales and user data; (11) technology; (12)
trade secrets, including confidential know-how, inventions, specifications
and processes; (13) computer software programs of any kind (in both source
and object code form); (14) application programming interfaces; (15)
protocols; and (16) any renewal, extension, reissue, continuation or
division rights, applications and/or registrations for any of the
foregoing;
"PERSON" or "PERSONS" means any natural person, corporation, company,
association, partnership, organization, business, firm, joint venture,
trust, unincorporated organization or any other entity or organization, and
shall include any governmental authority;
"PRC" means the People's Republic of China;
"PRC COMPANY" means Shanghai Yuanzhi Advertising Co., Ltd., a company to be
established in the PRC, the details of which are set out in Schedule C;
"PRC COMPANY CONTROLLING DOCUMENTS" means the agreements and documents duly
executed or to be executed by and among WFOE, the Nominees and/or the PRC
Company in the form and content as set forth in Schedule L;
-5-
<PAGE>
"PRC GROUP" means, collectively, the PRC Company and the WFOE;
"PREPAYMENT" means the total amount of US$1,500,000 previously paid to SCM
by Sino;
"PURCHASE PRICE" means the amount set out in Clause 4.2;
"QUALITY IDEA" means Quality Idea Limited, a company incorporated under the
laws of the British Virgin Islands with registration number 688392 and a
registered address at P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;
"QUALITY IDEA SALE SHARES" shall have the meaning provided in Clause
4.1(c);
"RADIO PRICE" means the amount of US$1,500,000 previously paid to BSG by
the Investors through Accord Group;
"RELATED AGREEMENTS" means the Loan Agreement, the Ancillary Share
Agreements, the Group Structure Agreements the PRC Company Controlling
Documents and all other agreements contemplated in this Agreement;
"SALE SHARES" means the Company Shares to be purchased by each of XFM and
Sino under this Agreement, as set forth in Schedule A;
"SCA" means the strategic co-operation agreement executed between SCM and
IMTV in December 2003 as supplemented by a supplemental agreement dated 30
November 2005;
"SCM" means Shanghai Camera Media Investment Co., Ltd., a company
incorporated under the laws of the PRC with registration No. 3101052005872
and an address at 3B10, 168 Tianshan Road, Changning District, Shanghai;
"SCM INTELLECTUAL PROPERTY" means, collectively, the Owned Intellectual
Property and the Licensed Intellectual Property;
"SECOND PAYMENT" means the amount of US$10,000,000 to be paid as part of
the Purchase Price in accordance with Clause 4.2 (b);
"SECOND PAYMENT DATE" means the date on which the Second Payment is made;
"SUBSIDIARY" means a corporation, partnership, limited liability company,
or other entity of which such corporation or entity directly or indirectly
owns or controls voting securities or other interests that are sufficient
to elect a majority of the Board of Directors or other managers of such
corporation, partnership, limited liability company or other entity;
"TAI MOU" means Tai Mou Services Limited, a company incorporated under the
laws of the British Virgin Islands with registration number 675903 and a
registered address at
-6-
<PAGE>
P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British
Virgin Islands;
"TAI MOU SALE SHARES" shall mean collectively the Tai Mou Sale Shares - XFM
and the Tai Mou Sale Shares - Sino;
"TAI MOU SALE SHARES - SINO" shall have the meaning provided in Clause
4.1(b);
"TAI MOU SALE SHARES - XFM" shall have the meaning provided in Clause
4.1(e);
"US$" and "US DOLLARS" means the lawful currency of the United States of
America;
"VENDOR CONTROLLED COMPANIES" shall mean Fine Power, Hing Yee, Honour Rise,
Quality Idea, Tai Mou and SCM;
"WFOE" means Jia Luo Business Consulting (Shanghai) Co., Ltd., a wholly
foreign owned enterprise established in the PRC as a wholly-owned
subsidiary of the Company, the details of which are set out in Schedule C;
"WGQ" means Shanghai Wai Gao Qiao Free Trade Zone Development Co., Ltd.
1.2 Interpretation. In this Agreement:
(a) the headings are inserted for convenience only and shall not affect
the construction of this Agreement;
(b) references to statutory provisions shall be construed as references to
those provisions as amended or re-enacted or as their application is
modified by other statutory provisions (whether before or after the
date hereof) from time to time and shall include any provisions of
which they are re-enactments (whether with or without modification);
(c) all time and dates in this Agreement shall be Hong Kong time and dates
except where otherwise stated;
(d) unless the context requires otherwise, words incorporating the
singular shall include the plural and vice versa and words importing a
gender shall include every gender; and
(e) references herein to Clauses, Recitals and Schedules are to clauses
and recitals of and schedules to this Agreement.
1.3 Recitals, Schedules. All Recitals and Schedules form part of this Agreement
and shall have the same force and effect as if expressly set out in the
body of this Agreement and any reference to this Agreement shall include
the Recitals and Schedules.
1.4 Joint Obligations. Warranties, covenants, indemnities or other obligations
expressed in this Agreement to be given by more than one party shall be
deemed to be given by such parties on a joint and several basis unless
otherwise expressly provided for.
-7-
<PAGE>
2. OVERVIEW OF INVESTMENT
2.1 The total investment amount to be invested by the Investors is
US$25,000,000 to be made as follows:
(i) the Prepayment and the Radio Price totalling US$3,000,000 shall be
credited as a deposit against the total amount to be invested;
(ii) the Loan in the amount of US$2,000,000 shall be made in
accordance with the terms of Clause 3; and
(iii) the amount of US$20,000,000 shall be paid by the Investors to
the Vendor in accordance with Clause 4.
2.2 For the avoidance of doubt, under no circumstances will the Vendor be
liable to repay any of the Prepayment or the Radio Price, whether or not
this Agreement is terminated or rescinded.
3. LOAN
3.1 Loan. Subject to the terms and conditions set out in this Agreement, XFM
(relying on the representations, warranties, agreements, covenants,
undertakings and indemnities hereinafter referred to) agrees with the
Company to provide the Loan to the Company on the following terms and the
terms of the Loan Agreement:
Repayment: Only with the unanimous agreement of all the shareholders of
the Company
Interest: 0%
Default: In the event that WGQ does not disburse the full amount of the
Loan it receives in accordance with Clause 3.3(f) within 2
working days then the Loan shall become immediately due and
repayable.
3.2 Drawdown. The Loan Agreement shall be entered into the day following the
Closing Date and the full amount of the Loan shall be transferred to the
Company or as the Company directs in accordance with the Loan Agreement by
wire transfer immediately following such execution of the Loan Agreement
subject to fulfilment or waiver of all the conditions set out in Clause 11
and the other terms and conditions of this Agreement.
3.3 Use of Loan. The Vendor and the Investors agree, covenant and undertake do
all things as may be required, and to procure that all Persons under their
respective Control (and for the avoidance of doubt, the Nominees shall be
deemed to be Controlled by the Investors) to do all such things so that the
Loan is disbursed as follows:
-8-
<PAGE>
(a) the entire amount of the Loan received by the Company shall be paid to
China Lead for the subscription of 99 shares in China Lead;
(b) the entire amount of the Loan received by China Lead under Clause
3.3(a) shall be paid to the WFOE as a capital contribution;
(c) the entire amount of the Loan received by the WFOE under Clause 3.3(b)
shall be lent to each of Nominee 1, Nominee 2 and PRC Company as
follows:
i. a loan in the amount of RMB51,000 to Nominee 1; and
ii. a loan in the amount of RMB49,000 to Nominee 2; and
iii. a loan of the balance of the Loan after deducting the loans under
(i) and (ii) above to PRC Company;
(d) the entire amounts of the Loan received by the Nominees shall be paid
to the PRC Company, as follows:
i. RMB51,000 by Nominee 1 as its capital contribution for the PRC
Company; and
ii. RMB49,000 by Nominee 2 as its capital contribution for the PRC
Company;
(e) the entire amount of the Loan received by the PRC Company under Clause
3.3(c)(iii) and 3.3(d) shall be lent by the PRC Company to the WGQ;
and
(f) the entire amount of the Loan proceeds received by the WGQ under
Clause 3.3(e) shall be injected into SCM as working capital.
4. SALE AND PURCHASE OF SALE SHARES
4.1 Sale. Subject to the terms and conditions set out in this Agreement, the
Investors (relying on the representations, warranties, agreements,
covenants, undertakings and indemnities hereinafter referred to) agree with
the Vendor to purchase at Closing, and the Vendor agrees to sell and cause
to be sold to the Investors at Closing, direct and indirect interests in
the Sale Shares through the acquisition of shares in the following members
of the Offshore Group for the Purchase Price with effect from the Closing
Date free from all options, liens, charges, pledges, claims, agreements,
encumbrances, equities and other third party rights of any nature
whatsoever and together with all rights of any nature whatsoever now or
hereafter attaching or accruing to them including all rights to any
dividends or other distribution declared, paid or made in respect of them
after the Closing Date:
(a) 70 Company Shares ("HONOUR RISE SALE SHARES") representing 14% of the
total issued capital of the Company held by Honour Rise (a
wholly-owned subsidiary of the Vendor) to XFM for the aggregate
purchase price of
-9-
<PAGE>
US$6,257,895 being comprised of payments of US$3,757,895 and
US$2,500,000 on the First Payment Date and Second Payment Date
respectively;
(b) 45 Company Shares ("TAI MOU SALE SHARES - SINO") representing 9% of
the total issued capital of the Company by held by Tai Mou, (a
wholly-owned subsidiary of the Vendor) to Sino for the aggregate
purchase price of US$2,799,035 being comprised of payments of
US$1,191,892 and US$1,607,143 on the First Payment Date and Second
Payment Date respectively;
(c) 60 shares in the capital of Quality Idea (the "QUALITY IDEA SALE
SHARES") representing 100% of the total issued capital of Quality Idea
which holds 60 Company Shares representing 12% of the total issued
capital of the Company held by Hing Yee (a wholly-owned subsidiary of
the Vendor) to Sino for the aggregate purchase price of US$3,732,046
being comprised of payments of US$ 1,589,189 and US$2,142,857 on the
First Payment Date and Second Payment Date respectively;
(d) 80 shares in the capital of Fine Power (the "FINE POWER SALE SHARES")
representing 100% of the total issued capital of Fine Power which
holds 80 Company Shares representing 16% of the total issued capital
of the Company by Tai Mou, (a wholly-owned subsidiary of the Vendor)
to Sino for the aggregate purchase price of US$4,976,062 being
comprised of payments of US$ 2,118,919 and US$2,857,143 on the First
Payment Date and Second Payment Date respectively; and
(e) 25 Company Shares ("TAI MOU SALE SHARES - XFM") representing 5% of the
total issued capital of the Company by held by Tai Mou, (a
wholly-owned subsidiary of the Vendor) to XFM for the aggregate
purchase price of US$2,234,962 being comprised of payments of
US$1,342,105 and US$892,857 on the First Payment Date and Second
Payment Date respectively.
The Vendor shall procure that the transfers of shares contemplated under
each of the Ancillary Shares Agreements are completed by the parties
thereto (except for Sino and XFM) in accordance with their respective terms
and the terms of this Agreement. In the event that there is any discrepancy
between the terms of the Ancillary Shares Agreements and this Agreement,
the terms of this Agreement shall prevail.
4.2 Purchase Price. The aggregate purchase price for the interests in the Sale
Shares shall be US$20,000,000 (the "PURCHASE PRICE") payable as follows:
(a) US$10,000,000 payable as to US$3,392,857 by XFM and US$6,607,143 by
Sino by wire transfer (the "FIRST PAYMENT") in accordance with Clause
4.7 and the applicable Ancillary Share Agreements; and
(b) US$10,000,000 payable as to US$3,392,857 by XFM and US$6,607,143 by
Sino by wire transfer (the "SECOND PAYMENT") in accordance with Clause
4.8 and the applicable Ancillary Share Agreements.
-10-
<PAGE>
4.3 Closing. Subject to confirmation from the Vendor and the Investors that the
conditions set out in Clause 11 have been satisfied or if permissible,
waived, the purchase and sale of the Sale Shares (the "CLOSING") shall take
place on 28 February 2006 at the offices of Richard Wang & Co. at 18th
Floor, Union Building, 100 Yanan Road East, Shanghai, PRC, or at such other
time and place as the Investors and the Vendor all agree in writing. The
date and time of the Closing are herein referred to as the "CLOSING DATE".
The Investors shall not be obliged to make the Loan or purchase the Sale
Shares unless all the conditions set forth in Clause 11 are fulfilled or
waived by the Investors. Without prejudice to any other remedies available
to the Investors, the Investors may defer Closing until all conditions set
forth in Clause 11 are fulfilled or waived.
4.4 The Vendor's Closing Obligations. Upon Closing the Vendor shall:
(a) deliver or procure to be delivered to each Investor:
(i) the following documents in respect of the Company Sale Shares:
(A) duly completed and signed transfers of the applicable
Company Sale Shares by the registered holders thereof in
favour of the Investor or as it may direct together with the
share certificates representing the applicable Sale Shares;
(B) all powers of attorney or other authorities under which the
transfers of the applicable Sale Shares have been executed;
(C) such waivers or consents as the Investor may require
enabling the Investor or its nominee(s) to be registered as
the holders of the applicable Sale Shares;
(D) such other documents as may be required to give to the
Investor good title to the applicable Sale Shares and to
enable the Investor or its nominees to become the registered
holders thereof;
(E) certified copy of the updated register of members of the
Company;
(ii) the following documents in respect of the Quality Idea Sale
Shares:
(A) duly completed and signed transfers of the applicable
Quality Idea Sale Shares by the registered holders thereof
in favour of Sino or as it may direct together with the
share certificates representing the applicable Quality Idea
Sale Shares;
(B) all powers of attorney or other authorities under which the
transfers of the applicable Quality Idea Sale Shares have
been executed;
-11-
<PAGE>
(C) such waivers or consents as the Investor may require
enabling Sino or its nominee(s) to be registered as the
holders of the applicable Quality Idea Sale Shares;
(D) such other documents as may be required to give to Sino good
title to the applicable Quality Idea Sale Shares and to
enable Sino or its nominees to become the registered holders
thereof;
(iii) the following documents in respect of the Fine Power Sale
Shares:
(A) duly completed and signed transfers of the applicable Fine
Power Sale Shares by the registered holders thereof in
favour of Sino or as it may direct together with the share
certificates representing the applicable Fine Power Sale
Shares;
(B) all powers of attorney or other authorities under which the
transfers of the applicable Fine Power Sale Shares have been
executed;
(C) such waivers or consents as the Investor may require
enabling Sino or its nominee(s) to be registered as the
holders of the applicable Fine Power Sale Shares;
(D) such other documents as may be required to give to Sino good
title to the applicable Fine Power Sale Shares and to enable
Sino or its nominees to become the registered holders
thereof;
(iv) written confirmation that the Vendor is not aware of any matter
or thing which is in breach of or inconsistent with any of the
representations, warranties and undertakings herein contained;
(v) all books and records of Quality Idea and Fine Power; and
(vi) such other papers and documents as the Investor may reasonably
require;
(b) cause a board meeting of the Company to be held at which the Directors
shall approve the transfers to the Investors or its nominee(s) and
their registration as members of the Company in respect of applicable
number of Company Sale Shares;
(c) cause a board meeting of Honour Rise to be held at which the directors
of Honour Rise shall approve the transfers of the Honour Rise Sale
Shares to XFM or its nominee(s);
(d) cause a board meeting of Hing Yee to be held at which the directors of
Hing Yee shall approve the transfers of the Quality Idea Sale Shares
to Sino or its nominee(s);
-12-
<PAGE>
(e) cause a board meeting of Quality Idea to be held at which the
directors of Quality Idea shall approve the transfer of the Quality
Idea Sale Shares to Sino and its registration as members of Quality
Idea in respect of the Quality Idea Sale Shares;
(f) cause a board meeting of Tai Mou to be held at which the directors of
Tai Mou shall approve the transfers of the Tai Mou Sale Shares and the
Fine Power Sale Shares to Sino and XFM as appropriate or their
nominee(s);
(g) cause a board meeting of Fine Power to be held at which the directors
of Fine Power shall approve the transfer of the Fine Power Sale Shares
to Sino and its registration as members of Fine Power in respect of
the Fine Power Sale Shares;
(h) cause to appoint such persons as the Investors may nominate to be
validly appointed as directors of Fine Power and such other person
acting as director of Fine Power to resign as director prior to or at
Closing;
(i) cause to appoint such persons as the Investors may nominate to be
validly appointed as directors of Quality Idea and such other person
acting as director of Quality Idea to resign as director prior to or
at Closing;
(j) cause to appoint such persons as the Investors may nominate to be
validly appointed as additional directors and management team of SCM;
(k) deliver to the Investors the following agreements (the "CLOSING
DELIVERABLE AGREEMENTS"):
(i) the duly executed counterparts of the Ancillary Share Agreements
dated the Closing Date; and
(ii) the duly executed Group Structure Agreements (except for the loan
agreement between WGQ and PRC Company, and the share pledge
agreement between WGQ and PRC Company).
by the Vendor or Persons under the Control of the Vendor.
4.5 The Investors' Closing Obligations. Upon Closing, or in the case of Clause
4.5(c), on the day following the Closing Date, each Investor (as
applicable) shall:
(a) deliver to the Vendor or such other party as the Vendor directs in
accordance with this Agreement the Loan Agreement and Ancillary Share
Agreements duly executed by the Investors;
(b) pay the amount of the First Payment by wire transfer according to
Ancillary Share Agreements;
(c) pay the amount of the Loan by wire transfer according to the Loan
Agreement;
-13-
<PAGE>
(d) cause to appoint such persons as the Vendor may nominate to be validly
appointed as additional directors and management of China Lead;
(e) cause to appoint such persons as the Vendor may nominate to be validly
appointed as additional directors and management of the WFOE;
(f) cause to appoint such persons as the Vendor may nominate to be validly
appointed as additional directors and management of the PRC Company;
(g) deliver to the Vendor or such other party as the Vendor directs in
accordance with this Agreement the counterparts of Group Structure
Agreements and PRC Company Controlling Documents duly executed by
Investor or Investor Controlled Companies or the Nominees, provided
that if the PRC Company has not yet been incorporated before Closing
and therefore any of such agreement can not be executed and delivered
on Closing Date, then Investors shall procure the PRC company and the
Nominees to execute and deliver such documents as soon as practicable
after PRC company has been incorporated and in any event within 5
business Days of its incorporation; and
(h) perform the closing obligation with respect to Accord Group Share
under Clause 5.2.
4.6 Payment of Second Payment. The Investors shall pay to the Vendor the Second
Payment on the earlier of 31 October, 2006 and the closing date of any
subsequent financing for the Company in accordance with the terms of this
Agreement and the applicable Ancillary Share Agreements. If the conditions
set out in Clause 11.2 have been met and the Investors default in making
the Second Payment when due, or the conditions set out in Clause 11.2 has
not been satisfied before Second Payment Date due to Investors or Investor
Controlled Companies or the Nominee, and Investors fail to make the Second
Payment within 2 days after written notice from the Vendor of such default
then the Investors and Vendor shall do, and shall procure all Persons under
their respective Control to transfer from the Investors to the Vendor or
its nominee such number of Shares as represents the part of the total
investment amount of US$25,000,000 not paid on a pro-rata basis at nil
consideration.
4.7 Deferral of Closing.
(a) Without prejudice to any other remedies available to the Investors, if
any provision of Clause 4.4 has not been complied by the Vendor on the
Closing Date (except if Vendor's failure to comply is caused by
Investors, any member of the Investor Controlled Companies or the
Nominees), the Investors may:
(i) proceed to Closing so far as practicable (without prejudice to
its rights hereunder); or
(ii) rescind its obligations to make the Loan and purchase the
interests in the Sale Shares under this Agreement without
prejudice to any other
-14-
<PAGE>
remedy and without incurring any liability to the Vendor or the
Company.
(b) Without prejudice to any other remedies available to the Vendor, if
any provision of Clause 4.5 has not been complied by the Investors on
the Closing Date (except if the Investors' failure to comply is caused
by Vendor or any member of the Vendor Controlled Companies), the
Vendor may:
(i) proceed to Closing so far as practicable (without prejudice to
its rights hereunder); or
(ii) rescind its obligations to transfer the interests in the Sale
Shares under this Agreement and rescind any agreement entered
into by WGQ and/or SCM on the one part and any member of the
Group on the other part without prejudice to any other remedy and
without incurring any liability to the Investors or other members
of the Group.
4.8 Further Covenants. The Vendor hereby irrevocably undertake to the Investors
to sign or procure the due execution of all such further documents required
to be signed by the Vendor or members of the Group Controlled by the Vendor
as are necessary to vest in the Investors and the Group all such property
and rights as are intended to be vested in them by or pursuant to this
Agreement and the Group Structure Agreements. The relevant expenses shall
be borne by the relevant signing parties. Investors hereby irrevocably
undertake to the Vendor to sign and to procure the due execution of all
such further documents required to be signed by the Investors or any member
of the Group Controlled by the Investors as are necessary to vest in the
Group all such property and rights as are intended to be vested in the
Group by or pursuant to this Agreement and the Group Structure Agreements.
The relevant expenses shall be borne by the relevant signing parties.
4.9 Prepayment. The Vendor hereby acknowledges that Sino paid the Prepayment to
SCM prior to the execution of this Agreement.
4.10 Board of Directors. Each of the parties hereto shall do and shall procure
to be done all actions necessary to ensure that the Board and the board of
directors of each Subsidiary of the Company shall be comprised of 5
Directors, three of which shall be nominated by the Investors and 2 of
which shall be nominated by the Vendor.
4.11 Limitation on Transfer of Shares. None of the parties to this Agreement
shall sell, give, assign, hypothecate, pledge, encumber, grant a security
interest in or otherwise dispose of (whether by operation of law or
otherwise) (each a "TRANSFER") any Shares or any right, title or interest
therein or thereto, except to an Affiliate of such party or in connection
with fundraising activities of the Investors and in accordance with the
memorandum and articles of association of the Company and any attempt to
transfer any Shares or any rights thereunder in violation of the preceding
sentence shall be null and void ab initio.
-15-
<PAGE>
5 TRANSFER OF THE ACCORD GROUP SHARES AND REPRESENTATIONS AND WARRANTIES IN
RESPECT OF ACCORD GROUP
5.1 Transfer of the Accord Group Shares. In consideration of the Vendor
entering into this Agreement and procuring the Vendor Controlled Companies
to enter into the Related Agreements, the Investors agree to procure the
shareholders of Accord Group to transfer to Honour Rise such number of
shares in Accord Group representing 20% of total issued capital of the
Accord Group (the "ACCORD GROUP SHARES") at nil consideration on or before
Closing Date.
5.2 The Investors' obligations with respect to Accord Group Shares on Closing
Date are as follows:
(a) deliver or procure to be delivered the following documents in respect
of the Accord Group Shares:
(A) duly completed and signed transfers of the Accord Group Shares by
the registered holders thereof in favour of the Honour Rise or as
it may direct together with the share certificates representing
the applicable Sale Shares;
(B) all powers of attorney or other authorities under which the
transfers of the Accord Group Shares have been executed;
(C) such waivers or consents as the Honour Rise may require enabling
Honour Rise or its nominee(s) to be registered as the holders of
the applicable Sale Shares;
(D) such other documents as may be required to give to the Honour
Rise good title to the applicable Sale Shares and to enable the
Honour Rise or its nominees to become the registered holders
thereof;
(E) certified copy of the updated register of members of the Accord
Group;
(b) cause a broad meeting of the Accord Group to be held at which the
directors shall approve the transfers to Honour Rise or its nominee(s)
and their registration as members of the Accord Group in respect of
applicable member of Accord Group.
5.3 Representations, warranties and covenants in respect of Accord Group
The Investors represent, warrant and covenant to the Vendor that:
(a) Accord Group and relevant parties have entered into a series
agreements and documents ("ACCORD GROUP STRUCTURE AGREEMENTS"),
pursuant to which (i) Accord Group are able to exert effective Control
over BSG (including its Subsidiaries), (ii) a substantial portion of
economic benefits of BSG (including its Subsidiaries) will be
transferred to Accord Group; (iii) Accord
-16-
<PAGE>
Group (or its 100% wholly-owned subsidiaries) has an exclusive option
to purchase all equity interests in BSG when and to the extent
permitted by PRC law and
(b) without Vendor's prior written consent, Accord Group Structure
Agreement shall not have been revised in any material respects.
6. TRANSFER OF BENEFITS NOT INDICATED IN FINANCIAL STATEMENTS
6.1 The Investors agree and undertake to procure to be transferred to the
Vendor or its nominee all accounts receivable or other benefits of SCM
whenever collected in respect of work done, services provided or actions
completed prior to Closing that are not disclosed in the Financial
Statements. Such transfer shall be done as soon as practicable after such
amounts or benefits are collected by SCM from time to time. The Investors
shall procure that all reasonable commercial steps are taken to recover any
such amounts.
6.2 The benefit of all accounts receivable and any other benefits whatsoever or
howsoever arising from after services provided or actions completed by SCM
after Closing shall be solely for the benefit of SCM irrespective of
whether they were disclosed in the Financial Statements.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS IN RESPECT OF THE VENDOR
CONTROLLED COMPANIES
Save as set out in the Disclosure Letter, the Vendor represent and warrant
to each of the Investors that the following statements are true and correct
as of the date of this Agreement:
7.1 The Offshore Group. In respect of each of the Vendor Controlled Companies
(excluding SCM):
(a) Organization, Standing, and Power. It is a company duly organized,
validly existing, and in good standing under the laws of
incorporation, has all requisite corporate power and authority to
carry on its businesses, and is duly qualified and in good standing to
do business in each jurisdiction in which it conducts business. It has
made available to the Investors complete and correct copies of its
articles of incorporation, bylaws, registers and/or other
organizational documents ("OFFSHORE CHARTER DOCUMENTS") of it, in each
case, as amended to the date hereof.
(b) Corporate Records. Its minute books and corporate records, complete
and correct copies of which have been made available to the Investors,
contain correct and complete records of all proceedings and actions
taken at all meetings of, or effected by written consent of, its
shareholders and its board of directors, and all original issuances
and subsequent transfers, repurchases, and cancellations of its
shares.
-17-
<PAGE>
(c) Capital Structure.
(i) Immediately prior to and following Closing its issued share
capital will be as set out in Schedule C and D respectively.
(ii) There are no options, warrants, calls, conversion rights,
commitments, agreements, contracts, restrictions, or rights of
any character to which it is a party or by which it may be bound
obligating company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares, or obligating it to
grant, extend or enter into any such option, warrant, call,
conversion right, commitment, agreement, contract, understanding,
restriction, arrangement or right. It does not have outstanding
any bonds, debentures, notes or other indebtedness.
(d) Subsidiaries. It does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or
other business entity, and is not a participant in any joint venture,
partnership, or similar arrangement, except as set out in Schedule C.
Its particulars as set out in Schedule C are true and accurate in all
respects and the percentage of its share capital shown therein as
owned or controlled by it is beneficially owned and clear of all
Encumbrances. There is no agreement or arrangement in force which
calls for the present or future issue or sale of, or grant to any
person the right (whether conditional or otherwise) to call for the
issue, sale or transfer of any of its share or loan capital (including
any of its option, notes, warrants or other securities or rights
convertible or ultimately convertible into shares or equity
interests).
(e) Authority. The execution, delivery, and performance of all Related
Agreements to be entered into by it have been duly authorized by all
necessary action of its board. Certified copies of the resolutions
adopted by its board approving the Related Agreements and transactions
contemplated hereby and thereby have been provided to the Investors.
(f) Execution. It has duly and validly executed and delivered the Related
Agreements, and the Related Agreements constitute valid, binding, and
enforceable obligations of it in accordance with their terms, except
to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
(g) Compliance with Laws and Other Instruments. It holds, and at all times
has held all licenses, permits, and authorizations from all
governmental entities necessary for the lawful conduct of its business
pursuant to all applicable statutes, laws, ordinances, rules, and
regulations of all such authorities having jurisdiction over it or any
part of its operations. There are no violations or claimed violations
of any such license, permit, or authorization, or any such statute,
law, ordinance, rule or regulation.
-18-
<PAGE>
(h) Corporate Governance. Neither the execution and delivery of and
Related Agreements nor the performance by it of its obligations under
the Related Agreements will (i) conflict with or result in any breach
of its Offshore Charter Documents; (ii) require any Consent, (iii)
conflict with, result in a breach or default of, or give rise to any
right of termination, cancellation or acceleration or result in the
creation of any lien, charge, encumbrance, or restriction upon any of
the properties or assets of it or its shares under, any law, statute,
rule, regulation, judgment, decree, order, government permit, license
or order or any mortgage, indenture, note, license, trust, agreement
or other agreement, instrument or obligation to which it is a party.
(i) No Liabilities and No Business Activities. Save as contemplated under
this Agreement, the Loan Agreement and the Ancillary Share Agreements,
it has no liabilities of any nature howsoever arising, is not involved
in any litigation whether as plaintiff or defendant, has no assets and
is not carrying on any business of any nature.
(j) No Contracts. Save as contemplated under this Agreement, the Loan
Agreement and the Ancillary Share Agreements, it has not entered into
any agreement, contract, legal arrangement or documentation of any
type or nature.
7.2 SCM. In respect of SCM:
(a) Organization, Standing, and Power. SCM is a company duly organized,
validly existing, and in good standing under the laws of the PRC, have
all requisite corporate power and authority to carry on its
businesses, and is duly qualified and in good standing to do business
in each jurisdiction in which it conducts business. SCM has made
available to the Investors complete and correct copies of the SCM's
articles of incorporation ("SCM CHARTER DOCUMENTS"), in each case, as
amended to the date hereof.
(b) Corporate Records. The complete and correct copies of the minute books
and corporate records of SCM which has been filled with Shanghai
Industry and Commerce Bureau Changning Branch have been made available
to the Investors and are materially complete, correct and accurate.
(c) Capital Structure.
(i) Immediately prior to Closing the capital structure of SCM shall
be as set out in Schedule C and, specifically, SCM is a
wholly-owned subsidiary of the WGQ where Shanghai Waigaoqiao
(Group) Limited holds 10% of the equity interest in SCM on trust
for the WGQ.
(ii) There are no options, warrants, calls, conversion rights,
commitments, agreements, contracts, restrictions, or rights of
any character to which SCM or WGQ is a party or by which SCM may
be bound obligating to issue, deliver or sell, or cause to be
issued, delivered or sold, additional equity interest, or
obligating SCM to grant, extend or enter into any
-19-
<PAGE>
such option, warrant, call, conversion right, commitment,
agreement, contract, understanding, restriction, arrangement or
right. SCM has outstanding any bonds, debentures, notes or other
indebtedness.
(iii) WGQ is the sole owner of all interests in and to SCM free and
clear of all Encumbrances and, except any rights in favour of the
Investors, the WFOE or the PRC Company created in this Agreement
and the Related Agreements, no other party has any rights, now
existing or contingent, whether or not exercised or claimed and
whether or not by exercise of the power of any Governmental
Entity, to any interest in SCM.
(d) Subsidiaries. SCM does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or
other business entity, and is not a participant in any joint venture,
partnership, or similar arrangement, except as set out in Schedule C.
The particulars of SCM set out in Schedule C are true and accurate in
all respects and the percentage of the equity interest shown therein
as owned or controlled by any party is beneficially owned free from
any Encumbrance, save as contained in the Group Structure Agreements.
Save as expressly provided in the Group Structure Agreements, there is
no agreement or arrangement in force which calls for the present or
future issue or sale of, or grant to any person the right (whether
conditional or otherwise) to call for the issue, sale or transfer of
any share or loan capital of SCM (including any option, notes,
warrants or other securities or rights convertible or ultimately
convertible into shares or equity interests in SCM).
(e) Compliance with Laws and Other Instruments. SCM holds all material
licenses, permits, and authorizations from all governmental entities
necessary for the lawful conduct of its business pursuant to all
applicable statutes, laws, ordinances, rules, and regulations of all
such authorities having jurisdiction over it or any part of its
operations including without limitation the Radio and TV Program
Production and Operation Permit, issued by the Shanghai Administration
of Culture, Radio, Film and TV numbered Hu Zi No. 062 with a scope of
operation limited to the production and distribution of TV programs
and for a term from August 1, 2005 to July 31, 2007 or the failure to
obtain such licenses shall have a Material Adverse Change on the
business or assets of SCM.
(f) Corporate Governance. Neither the execution and delivery of Related
Agreements nor the performance by SCM of its obligations under the
Related Agreements will (i) conflict with or result in any breach of
the SCM Charter Documents; (ii) require any Consent by any
Governmental Entity, (iii) conflict with, result in a breach or
default of, or give rise to any right of termination, cancellation or
acceleration or result in the creation of any lien, charge,
encumbrance, or restriction upon any of the properties or assets of
SCM or equity interest in SCM under any law, statute, rule,
regulation, judgment, decree, order, government permit, license or
order or any mortgage, indenture, note, license, trust, agreement or
other agreement, instrument or obligation to which a SCM is a party.
-20-
<PAGE>
(g) Technology and Intellectual Property Rights.
(i) Schedule E contains a list of SCM Intellectual Property which
includes the following:
(A) all patents, domain names, trademarks, trade names, trade
dress and service marks, and any applications and
registrations for any of the foregoing, that is included in
the Owned Intellectual Property;
(B) all registered copyrights, and applications for registered
copyrights for any Owned Intellectual Property;
(C) all material products and services that currently are
published and/or offered by SCM, or that are currently under
development by SCM and scheduled to be commercially released
or offered within six (6) months of the Closing Date;
(D) all material licenses and sublicenses of Owned Intellectual
Property;
(E) all Licensed Intellectual Property (other than license
agreements for standard "shrink wrapped, off the shelf,"
commercially available, third party products used by SCM)
and any sublicenses thereto; and
(F) any material obligation of exclusivity, non-competition,
non-solicitation, first negotiation or "most favoured
nation" or "equally favoured nation" (e.g., obligating SCM
to provide terms as favourable or more favourable as granted
to others) to which SCM is subject under any agreement that
does not fall within the ambit of (D) or (E) in this
paragraph.
(ii) SCM owns or has the right to use all SCM Intellectual Property
used or held for use in the conduct of its business without any
conflict with the rights of others. All products and technology
that have been or currently are published and/or offered by SCM
or are under development by SCM, and all products and/or
technology underlying any and all services that have been or
currently are offered by SCM or are under development by SCM is
either: (1) owned by such SCM, (2) in the public domain, or (3)
rightfully used by the SCM pursuant to a valid written license or
other agreement.
(iii) SCM is not, as a result of the execution or delivery of the
Group Structure Agreements, nor performance of SCM's obligations
under the Group Structure Agreements will SCM be in violation of
any license, sublicense or other agreement relating to the SCM
Intellectual Property or of any non-disclosure agreement to which
SCM is a party or otherwise bound.
-21-
<PAGE>
(iv) SCM is not obligated to provide any financial consideration or
other consideration to any third party, nor is any third party
otherwise entitled to any financial consideration or other
consideration, with respect to any exercise of rights by SCM or
its successors in the SCM Intellectual Property.
(v) SCM's use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any Owned
Intellectual Property by SCM or its licensees does not infringe,
misappropriate or violate any copyright, patent, trade secret,
trademark, service mark, trade name, firm name, logo, trade
dress, database right, moral rights, rights to use likeness,
other intellectual property rights, right of privacy, right of
publicity or right in personal or other data of any person.
Further, the use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights in
any Licensed Intellectual Property or any other authorized
exercise of rights in or to Licensed Intellectual Property by SCM
or their licensees does not infringe, misappropriate or violate
any copyright, patent, trade secret, trademark, service mark,
trade name, firm name, logo, trade dress, moral right, database
right, other intellectual property right, right of privacy, right
of publicity or right in personal or other data of any person.
Further, the distribution, licensing, sublicensing, sale, or
other provision of products and services by SCM or its resellers
or licensees does not infringe, misappropriate or violate any
copyright, patent, trade secret, trademark, service mark, trade
name, firm name, logo, trade dress, moral right, database right,
other intellectual property right, right of privacy, right of
publicity or right in personal or other data of any person.
(vi) No action, suit or proceeding (i) challenging the validity,
enforceability, or ownership by SCM of any of Owned Intellectual
Property or (ii) to the effect that the use, reproduction,
modification, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Owned
Intellectual Property by SCM or its licensees infringes,
misappropriate or violates any intellectual property or other
proprietary or personal right of any person is pending or is
threatened by any person. Further, no claim to the effect that
the distribution, licensing, sublicensing, sale or other
provision of products and services by SCM or its resellers or
licensees infringes, misappropriates or violates any intellectual
property or other proprietary or personal right of any person is
pending or, to the knowledge of WGQ and the Vendor, is threatened
by any person. There is no unauthorized use, infringement or
misappropriation of any of Owned Intellectual Property by any
third party, employee or former employee to the best knowledge of
the Vendor.
(vii) No other party has any security interests in any SCM
Intellectual Property.
-22-
<PAGE>
(viii) SCM has secured from all parties who have created any portion
of, or otherwise have any rights in or to, Owned Intellectual
Property, other than employees of SCM whose work product was
created by them entirely within the scope of their employment by
SCM and constitutes work made for hire owned by SCM, valid
written assignments or licenses of any such work or other rights
to SCM that are enforceable by SCM and has made available true
and complete copies of such assignments or licenses to the
Investors.
(ix) SCM owns all right, title and interest in and to all data SCM
collect from or discloses about users of its products and
services. SCM's practices regarding the collection and use of
consumer personal information are in accordance in all respects
with applicable laws and regulations of all jurisdictions in
which SCM operates.
(x) No officer, director, stockholder or employee of SCM, nor any
spouse, or relative thereof, owns directly or indirectly, in
whole or in part, any SCM Intellectual Property.
(h) Financial Statements. There are no liabilities, claims or obligations
of any nature in excess of US$5,000, whether absolute, contingent,
anticipated or otherwise, whether due or to become due, that are not
shown in the Financial Statements.
(i) Accounts Receivable. All of the accounts receivable shown on in the
Financial Statements as of the Closing Date will have arisen out of
bona fide transactions of SCM in the ordinary course of business and
have been collected or are good and collectible in the aggregate
recorded amounts thereof (less the allowance for doubtful accounts
also appearing in such Financial Statements and net of returns and
payment discounts allowable by SCM's policies) and can reasonably be
anticipated to be paid in full without outside collection efforts
within ninety (90) days of the due date.
(j) Taxes.
(i) SCM has timely filed (or caused to be filed) all tax returns
("RETURNS") required to be filed by it. All taxes required to be
paid (whether or not shown on any Return) in respect of the
periods covered by such Returns ("RETURN PERIODS") have been paid
or fully accrued up until Closing. SCM has not requested or been
granted any extension of time to file any Return. The Vendor has
made available to the Investors true and correct copies of all
Returns, and all material correspondence with any taxing
authority.
(ii) No deficiencies or adjustments for any tax of SCM has been
claimed, proposed or assessed or threatened in writing and not
paid. There is currently no claim outstanding by an authority in
a jurisdiction where SCM does not file Returns that SCM is or may
be subject to taxation
-23-
<PAGE>
by that jurisdiction. SCM is not subject to any pending or
threatened tax audit or examination. SCM has not entered into any
agreements, waivers or other arrangements in respect of the
statute of limitations in respect of its taxes or Returns.
(iii) For the purposes of this Agreement, the terms "tax" and "taxes"
shall include all taxes, assessments, duties, tariffs,
registration fees, and other governmental charges in the nature
of taxes including, all income, franchise, property, production,
sales, use, payroll, license, windfall profits, value added,
severance, withholding, excise, gross receipts and other taxes,
as well as any interest, additions or penalties relating thereto
and any interest in respect of such additions or penalties.
(iv) There are no liens for taxes upon the assets of SCM except for
taxes that are not yet payable. SCM has withheld all taxes
required to be withheld in respect of wages, salaries and other
payments to all employees, officers and directors and any taxes
required to be withheld from any other person and has timely paid
all such amounts withheld to the proper taxing authority.
(k) Absence of Certain Changes and Events. Since the date of the Financial
Statements, there has not been:
(i) Any transaction involving more than US$1,000 entered into by SCM
other than in the ordinary course of business;
(ii) Any declaration, payment, or setting aside of any dividend or
other distribution to or for any of the holders of any equity
interest;
(iii) Any termination, modification, or rescission of, or waiver by
SCM of rights under, any contract having or reasonably likely to
have a Material Adverse Change on the business of SCM;
(iv) Any discharge or satisfaction by SCM of any lien or encumbrance,
or any payment of any obligation or liability (absolute or
contingent) other than liabilities shown on the Financial
Statements and liabilities incurred since the date of the
Financial Statements in the ordinary course of business;
(v) Any mortgage, pledge, imposition of any security interest, claim,
encumbrance, or other restriction created on any of the assets,
tangible or intangible, of SCM having or reasonably likely to
have a Material Adverse Change on the business of SCM;
(vi) Any settlement amount of any claim, dispute, suit, proceeding or
investigation regarding SCM; or
(vii) Any event or condition resulting in a Material Adverse Change on
the business of SCM.
-24-
<PAGE>
(l) Leases in Effect; Real Estate. All real property leases and subleases
to which any SCM is a party and any amendments or modifications
thereof are listed in Schedule F (each a "LEASE" and, collectively,
the "LEASES"). SCM has a valid leasehold interest under such Leases.
There are no existing defaults, and SCM has not received or given any
written notice of default or claimed default with respect to any Lease
and there is no event that with notice or lapse of time, or both,
would constitute a default thereunder. All real property occupied by
SCM is subject to a written lease. SCM holds no interest in real
property other than the Leases.
(m) Personal Property. SCM has valid title, free and clear of all title
defects, security interests, pledges, options, claims, liens, and
encumbrances of any nature whatsoever to all inventory, receivables,
furniture, machinery, equipment, and other personal property, tangible
or otherwise, reflected on the Financial Statements, except for
acquisitions and dispositions since the date of the Financial
Statements in the ordinary course of business and not exceeding
US$1,000.
(n) Litigation and Other Proceedings. Save as set out in the Disclosure
Letter and as would not have a Material Adverse Change on the business
or assets of SCM, none of SCM nor any of its past or present officers,
directors, or employees, is a party to any pending or, threatened
action, suit, labour dispute (including any union representation
proceeding), proceeding, investigation, or discrimination claim in or
by any court or governmental board, commission, agency, department, or
officer, or any arbitrator, arising from the actions or omissions of
SCM or affecting any properties, assets or capital of SCM, nor is
there any reasonable basis for any such action, suit, labour dispute,
proceeding, investigation or discrimination claim, or, in the case of
an individual, from acts in his or her capacity as an officer,
director, employee, agent or contractor of SCM. SCM is not a named
party to any order, writ, judgment, decree, or injunction.
(o) No Defaults. SCM is and has not received written notice that it would
be with the passage of time, in default or violation of any term,
condition, or provision of (i) its SCM Charter Documents; (ii) any
judgment, decree, or order to which SCM is a named party; or (iii) any
loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license, or other instrument to which SCM is now a
party or by which it or any of its properties or assets is bound,
except for defaults and violations which have been cured or,
individually or in the aggregate, would not have a Material Adverse
Change on the business of SCM.
(p) Major Contracts. Except for the agreements set out in Schedule G (the
"SCM MATERIAL CONTRACTS" SCM is not a party to or bound by:
(i) Any employment contract or arrangement providing for annual
salary in excess of $30,000 with any officer or employee or with
any
-25-
<PAGE>
consultant or director providing for annual compensation in
excess of $30,000;
(ii) Any plan or contract or arrangement, written or oral, providing
for bonuses, pensions, deferred compensation, retirement
payments, profit-sharing, severance, acceleration of vesting of
benefits, payments upon change of control events, or the like;
(iii) Any joint venture contract or arrangement or any other agreement
that has involved or is expected to involve a sharing of profits;
(iv) Reseller or distribution agreement, volume purchase agreement,
corporate end user sales or service agreement, reproduction or
replication agreement or manufacturing agreement in which the
amount involved exceeds annually, $50,000 or pursuant to which
SCM has granted or received manufacturing rights, most favoured
nation pricing provisions, or exclusive marketing, reproduction,
publishing or distribution rights related to any product, group
of products or territory;
(v) Any agreement, franchise, or indenture where the amount of
consideration payable thereunder is greater than $50,000 in any
year during the term of such agreement, franchise or indenture
and which has not been terminated or performed in its entirety
and not renewed which may be, by its terms, terminated, impaired,
or adversely affected by reason of the execution of this
Agreement and the Related Agreements, Closing, or the
consummation of the transactions contemplated;
(vi) Any license, permit, or authorization which has not been
terminated or performed in its entirety and not renewed which may
be, by its terms, terminated, impaired, or adversely affected by
reason of the execution of this Agreement and the Related
Agreements, the Closing or the consummation of the transactions
contemplated;
(vii) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other
entities or indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee, or otherwise which individually is
in the amount of $5,000 or more; or
(viii) Any contract containing covenants purporting to limit SCM's
freedom to compete in any line of business in any geographic
area.
All SCM Material Contracts are valid and in full force and effect
and SCM has not, nor has any other party thereto, breached any
material provisions of, or entered into default in any material
respect under the terms thereof other than such beaches or defaults
that have been cured or that would not cause a Material Adverse Change
to the assets or business of SCM. The
-26-
<PAGE>
Vendor has made available to the Investors a copy of each SCM Material
Contract specified in Schedule G together with all amendments,
material written waivers or other material written changes thereto.
(q) Assets. SCM has legal and beneficial ownership of all assets owned,
possessed or used by SCM as indicated in the Financial Statements free
and clear of any Encumbrances. No other Person owns any such property
and assets which are being used by SCM except for the Leased Property
and personal property leased by SCM pursuant to the SCM Material
Contracts.
(r) Business. The SCA is in full force and effect and there exists no
breach, default or non-compliance thereunder by any party and IMTV has
not alleged any default on the part of SCM and has not notified SCM or
the Vendor of any intention to terminate the SCA. To the best
knowledge of the Vendor, Schedule H contains all of the landing rights
agreements to which IMTV is a party and through which SCM will have
exclusive access to the markets referred to in them, all of which
agreements are in full force and effect and unamended, except for
certain landing rights agreements which have been amended or
terminated without any material adverse effect on the business of SCM.
(s) Material Relations. None of the parties to any of the SCM Material
Contracts have terminated or in any way expressed to SCM any intent to
reduce the amount of or terminate its business with SCM in the future.
(t) Insurance and Banking Facilities. Schedule I contains a complete and
correct list of (i) all contracts of insurance or indemnity of SCM in
force at the date of this Agreement (including name of insurer or
indemnitor, agent, annual premium, coverage, deductible amounts, and
expiration date) and (ii) the names and locations of all banks in
which SCM has accounts or safe deposit boxes, the designation of each
such account and safe deposit box, and the names of all persons
authorized to draw on or have access to each such account and safe
deposit box. All premiums and other payments due from SCM with respect
to any such contracts of insurance or indemnity have been paid, and
there are no act, or failures to act that has or might cause any such
contract to be cancelled or terminated. All known claims for insurance
or indemnity have been presented.
(u) Employees. SCM has no written or oral contract of employment or other
employment agreement with any of its employees (including any
contracts relating to the temporary use or loaning of employees) that
are not terminable at will by SCM without payment of severance or
termination payments or benefits. Except as would not have a Material
Adverse Change on the business or assets of SCM, SCM is not a party to
any pending or threatened labour dispute concerning SCM's business or
employment practices or the subject of any organizing drive, labour
grievance or petition to certify a labour union. SCM has complied with
all applicable laws, treaties, ordinances, rules, and regulations and
requirements relating to the employment of labour. Except as would not
have a Material Adverse Change on the business or assets of SCM, there
are no claims pending or to the best of the knowledge of the Vendor,
-27-
<PAGE>
threatened to be brought against SCM, in any court or administrative
agency by any former or current SCM employees. SCM has made all
required contributions under the laws of the PRC in respect of wages,
salaries and other payments to all employees, officers and directors
and has timely paid all such amounts to the proper PRC authority
except as would not have a Material Adverse Change on the business or
assets of SCM.
(v) Certain Agreements. Neither the execution and delivery of this
Agreement and the Related Agreements nor the performance of its
obligations contained in them will: (i) result in any payment by SCM
(including severance, unemployment compensation, parachute payment,
bonus or otherwise) becoming due to any director, employee, or
independent contractor of SCM under any employee benefit plan,
agreement, or otherwise, (ii) increase any benefits otherwise payable
under any employee benefit plan or agreement, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(w) Guarantees and Suretyships. SCM has no powers of attorney outstanding
and SCM has no obligations or liabilities (absolute or contingent) as
guarantor, surety, co-signer, endorser, co-maker, or otherwise
respecting the obligations or liabilities of any person, corporation,
partnership, joint venture, association, organization, or other entity
other than as an endorser of negotiable instruments in the ordinary
course of business.
(x) Absence of Questionable Payments. None of SCM nor any of its
respective Affiliates, directors, officers, agents, employees or other
persons acting on its behalf, has used any corporate or other funds
for unlawful contributions, payments, gifts, or entertainment, or made
any unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or
unrecorded funds. None of SCM nor any of its respective Affiliates,
directors, officers, agents, employees or other persons acting on
their behalf, has accepted or received any unlawful contributions,
payments, gifts, or expenditures.
7.3 General
(a) The Group Structure Agreements. In respect of the parties or persons
under the Control of the Vendor (i) Each of the Group Structure
Agreements has been duly executed by the parties thereto, are in full
force and effect and constitutes the valid and legally binding
obligation of the parties thereto, enforceable in accordance with its
terms, except (1) as limited by applicable bankruptcy, insolvency,
reorganisation, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (2) as limited
by laws relating to the availability of specific performance,
injunctive relief, or other equitable principles; and (3) save as
disclosed otherwise in the Disclosure Letter. (ii) The execution,
delivery and performance of each of the Group Structure Agreements by
the parties thereto do not conflict with or violate any existing and
publicized law, regulation or governmental order in the PRC, save as
disclosed otherwise in any of the Disclosure Letter. (iii) The
-28-
<PAGE>
execution, delivery and performance of each of the Group Structure
Agreements by the parties thereto do not and will not require any
consent, approval, authorization or other order of, action by, filing
with or notification to, any governmental authority in the PRC or, if
any such consent, approval, authorization, order, action, filing or
notification is required, they have been obtained or made or will be
obtained or made prior to the Closing, save as disclosed otherwise in
any of the Legal Opinions.
(b) The Closing Deliverable Agreements. On or before Closing, each of the
Closing Deliverable Agreements will have been duly executed by the
parties thereto which are under the Control of the Vendor and, as at
Closing, will be in full force and effect and will constitute the
valid and legally binding obligations of the parties thereto which are
under the Control of the Vendor, enforceable in accordance with their
terms at Closing.
(c) Full Disclosure. (i) The Vendor is not aware of any facts which could
materially adversely affect it, any member of the Group, SCM or which
are likely in the future to materially adversely affect any of them
and which have not been disclosed by or on behalf of the Vendor or
Vendor controlled Companies in connection with or pursuant to this
Agreement (except if such facts are caused by any member of the
Investor Controlled Companies or the Nominees). (ii) No representation
or warranty in this Agreement, nor any statement or certificate
furnished or to be furnished to the Investors pursuant to or in
connection with this Agreement contains or will contain any untrue
statement of material fact, or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading.
(d) Reliance. The representations and warranties are made by the Vendor
with the knowledge and expectation that the Investors are placing
reliance thereon.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS IN RESPECT OF THE INVESTOR
CONTROLLED COMPANIES
8.1 The Investors represent and warrant to the Vendor that the following
statements are true and correct in respect of the Investor Controlled
Companies as of the date of this Agreement:
(a) Organization, Standing, and Power. It is a company duly organized,
validly existing, and in good standing under the laws of
incorporation, has all requisite corporate power and authority to
carry on its businesses, and is duly qualified and in good standing to
do business in each jurisdiction in which it conducts business. It has
made available to the Vendor complete and correct copies of its
articles of incorporation, bylaws, registers and/or other
organizational documents of it, in each case, as amended to the date
hereof.
(b) Corporate Records. Its minute books and corporate records, complete
and correct copies of which have been made available to the Vendor,
contain correct and complete records of all proceedings and actions
taken at all
-29-
<PAGE>
meetings of, or effected by written consent of, its shareholders and
its board of directors, and all original issuances and subsequent
transfers, repurchases, and cancellations of its shares.
(c) Capital Structure.
(i) Prior to and immediately following Closing its issued share
capital will be as set out in Schedule C and Schedule D
respectively.
(ii) There are no options, warrants, calls, conversion rights,
commitments, agreements, contracts, restrictions, or rights of
any character to which its is a party or by which it may be bound
obligating company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares, or obligating it to
grant, extend or enter into any such option, warrant, call,
conversion right, commitment, agreement, contract, understanding,
restriction, arrangement or right. It does not have outstanding
any bonds, debentures, notes or other indebtedness.
(d) Subsidiaries. It does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or
other business entity, and is not a participant in any joint venture,
partnership, or similar arrangement, except as set out in Schedule C.
Its particulars as set out in Schedule C are true and accurate in all
respects and the percentage of its share capital shown therein as
owned or controlled by it is beneficially owned and clear of all
Encumbrances. There is no agreement or arrangement in force which
calls for the present or future issue or sale of, or grant to any
person the right (whether conditional or otherwise) to call for the
issue, sale or transfer of any of its share or loan capital (including
any of its option, notes, warrants or other securities or rights
convertible or ultimately convertible into shares or equity
interests).
(e) Authority. The execution, delivery, and performance of this Agreement
and all Related Agreements to be entered into by it have been duly
authorized by all necessary action of its board. Certified copies of
the resolutions adopted by its board approving this Agreement, the
Related Agreements and transactions contemplated hereby and thereby
have been provided to the Vendor.
(f) Execution. It has duly and validly executed and delivered the Related
Agreements and the Related Agreements constitute valid, binding, and
enforceable obligations of it in accordance with their terms, except
to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
(g) Compliance with Laws and Other Instruments. It holds, and at all times
has held all licenses, permits, and authorizations from all
governmental entities necessary for the lawful conduct of its business
pursuant to all applicable
-30-
<PAGE>
statutes, laws, ordinances, rules, and regulations of all such
authorities having jurisdiction over it or any part of its operations.
There are no violations or claimed violations of any such license,
permit, or authorization, or any such statute, law, ordinance, rule or
regulation.
(h) Corporate Governance. Neither the execution and delivery of Related
Agreements nor the performance by it of its obligations under the
Related Agreements will (i) conflict with or result in any breach of
its charter documents; (ii) require any Consent, (iii) conflict with,
result in a breach or default of, or give rise to any right of
termination, cancellation or acceleration or result in the creation of
any lien, charge, encumbrance, or restriction upon any of the
properties or assets of it or its shares under, any law, statute,
rule, regulation, judgment, decree, order, government permit, license
or order or any mortgage, indenture, note, license, trust, agreement
or other agreement, instrument or obligation to which it is a party.
(i) No Liabilities and No Business Activities. Save as contemplated under
the Related Agreements, it has no liabilities of any nature howsoever
arising, is not involved in any litigation whether as plaintiff or
defendant, has no assets and is not carrying on any business of any
nature.
(j) No Contracts. Save as contemplated under this Agreement and the
Related Agreements, it has not entered into any agreement, contract,
legal arrangement or documentation of any type or nature.
8.2 General
(a) The Group Structure Agreements. In respect of the parties or persons
under the Control of the Investor (i) Each of the Group Structure
Agreements and PRC Company Controlling Documents that has been duly
executed by the parties thereto, are in full force and effect and
constitutes the valid and legally binding obligation of the parties
thereto, enforceable in accordance with its terms, except (1) as
limited by applicable bankruptcy, insolvency, reorganisation,
moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (2) as limited by laws
relating to the availability of specific performance, injunctive
relief, or other equitable principles. (ii) The execution, delivery
and performance of each of the Group Structure Agreements and PRC
Company Controlling Documents by the parties thereto do not conflict
with or violate any existing and publicized law, regulation or
governmental order in the PRC. (iii) The execution, delivery and
performance of each of the Group Structure Agreements by the parties
thereto do not and will not require any consent, approval,
authorization or other order of, action by, filing with or
notification to, any governmental authority in the PRC or, if any such
consent, approval, authorization, order, action, filing or
notification is required, they have been obtained or made or will be
obtained or made prior to the Closing.
(b) Deliverable Agreements. On or before Closing, each of the Group
Structure Agreements will have been duly executed by the parties
thereto which are
-31-
<PAGE>
under the Control of the Investor and, as at Closing, will be in full
force and effect and will constitute the valid and legally binding
obligations of the parties thereto which are under the Control of the
Investor, enforceable in accordance with their terms at Closing.
(c) Full Disclosure. (i) The Investor is not aware of any facts which
could materially adversely affect it, any member of the Group, SCM or
which are likely in the future to materially adversely affect any of
them and which have not been disclosed by or on behalf of the
Investors or Investor controlled Companies in connection with or
pursuant to this Agreement (except if such facts are caused by any
member of the Vendor Controlled Companies). (ii) No representation or
warranty in this Agreement, nor any statement or certificate furnished
or to be furnished to the Vendor pursuant to or in connection with
this Agreement contains or will contain any untrue statement of
material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading.
(d) Reliance. The representations and warranties are made by the Investors
with the knowledge and expectation that the Vendor is placing reliance
thereon.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE VENDOR
The Vendor hereby represents, warrants and covenants to each of the
Investors that each of the following statements is true:
9.1 Organisation and Qualification. It is a person or a legal entity duly
organised and validly existing under the laws of its jurisdiction of
incorporation.
9.2 Authorisation and Authority. It has taken all corporate or other action
required to authorise, and has duly authorised, the execution, delivery and
performance of this Agreement and upon due execution and delivery the same
will constitute its legal, valid and binding obligations enforceable in
accordance with its terms.
9.3 Power and Authority. It has full power and authority to make the covenants
and representations referred to herein and to sale the Sale Shares and to
execute, deliver and perform this Agreement.
9.4 Compliance with Laws and Other Instruments. It holds, and at all times has
held all licenses, permits, and authorizations from all governmental
entities necessary for the lawful conduct of its business pursuant to all
applicable statutes, laws, ordinances, rules, and regulations of all such
authorities having jurisdiction over it or any part of its operations.
There are no violations or claimed violations of any such license, permit,
or authorization, or any such statute, law, ordinance, rule or regulation,
except for those violations which will not cause Material Adverse Change to
the business or assets of SCM.
-32-
<PAGE>
9.5 Corporate Governance. Neither the execution and delivery of this Agreement
and Related Agreements nor the performance by it of its obligations under
this Agreement and Related Agreements will (i) conflict with or result in
any breach of its charter documents; (ii) require any Consents by
Governmental Entity, (iii) conflict with, result in a breach or default of,
or give rise to any right of termination, cancellation or acceleration or
result in the creation of any lien, charge, encumbrance, or restriction
upon any of the properties or assets of it or its shares under, any law,
statute, rule, regulation, judgment, decree, order, government permit,
license or order or any mortgage, indenture, note, license, trust,
agreement or other agreement, instrument or obligation to which it is a
party.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTORS
Each of the Investors hereby represents, warrants and covenants to the
Vendor that each of the following statements is true:
10.1 Organisation and Qualification. It is a person or a legal entity duly
organised and validly existing under the laws of its jurisdiction of
incorporation.
10.2 Authorisation. It has taken all corporate or other action required to
authorise, and has duly authorised, the execution, delivery and performance
of this Agreement and upon due execution and delivery the same will
constitute its legal, valid and binding obligations enforceable in
accordance with its terms.
10.3 Power and Authority. It has full power and authority to make the covenants
and representations referred to herein and to make the Loan and to purchase
the Sale Shares and to execute, deliver and perform this Agreement.
10.4 Compliance with Laws and Other Instruments. It holds, and at all times has
held all licenses, permits, and authorizations from all governmental
entities necessary for the lawful conduct of its business pursuant to all
applicable statutes, laws, ordinances, rules, and regulations of all such
authorities having jurisdiction over it or any part of its operations.
There are no violations or claimed violations of any such license, permit,
or authorization, or any such statute, law, ordinance, rule or regulation.
10.5 Corporate Governance. Neither the execution and delivery of this Agreement
and Related Agreements nor the performance by it of its obligations under
this Agreement and Related Agreements will (i) conflict with or result in
any breach of its charter documents; (ii) require any Consents by
Governmental Entity, (iii) conflict with, result in a breach or default of,
or give rise to any right of termination, cancellation or acceleration or
result in the creation of any lien, charge, encumbrance, or restriction
upon any of the properties or assets of it or its shares under, any law,
statute, rule, regulation, judgment, decree, order, government permit,
license or order or any mortgage, indenture, note, license, trust,
agreement or other agreement, instrument or obligation to which it is a
party.
-33-
<PAGE>
11. CONDITIONS OF THE INVESTORS' AND VENDOR'S OBLIGATIONS AT CLOSING AND TO
PAYMENT OF SECOND PAYMENT
11.1 Closing Date. The obligations of the Investors and the Vendor under this
Agreement are subject to the satisfaction or waiver, on or before the
Closing Date of each of the following:
(a) Representations and Warranties. The representations and warranties
contained in Clauses 7, 8, 9 and 10 shall be true on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.
(b) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all
documents incidental thereto shall be reasonably satisfactory in form
and substance to all parties, and all parties shall have received all
such counterpart original and certified or other copies of such
documents as it may reasonably request.
(c) Performance. The Group and SCM shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement
and the Group Structure Agreements that are required to be performed
or complied with by it on or before Closing.
(d) Establishment of the Group. The companies in the Group shall have been
established in all respects to the satisfaction of the parties and all
governmental approvals for the establishment and operation of the same
shall have been obtained.
(e) Equity interests of SCM. The entire equity interests of SCM are owned
by WGQ free and clear of any Encumbrance (of which 10% is held by
Shanghai Wai Gao Qiao (Group) Limited for and on behalf of WGQ) and
all governmental approvals of the same shall have been obtained.
(f) Sale and Purchase of SCM. The WGQ and WFOE shall have entered into a
call option agreement in the form and substance as set out in Schedule
J for all of the WGQ's interests in and to SCM.
(g) Service Agreements. SCM shall have entered into services agreements in
the form and substance as set out in Schedule K with each of the
Vendor, PRC Company and WFOE.
(h) IMTV. IMTV shall have all Consents, landing rights as described in
Schedule H (except that some land rights may be terminated or amended
provided such termination or revision would not have a Material
Adverse Change on the business of SCM) and all other assets and
commercial rights necessary for SCM to carry out its business as set
out in the Financial Statements. The SCA between IMTV and SCA is in
full force and effect and there has been no
-34-
<PAGE>
material amendment to the SCA and there has been no material breaches
thereunder by any party.
11.2 At Second Payment Date. The obligations of the Investors making the Second
Payment under Clause 4 of this Agreement shall be subject to the
satisfaction or waiver of each of the following on the date that the Second
payment is made:
(a) Conditions under Clause 11.1. The conditions set out under Clauses
11.1(b), 11.1(c) (in respect of SCM only) and 11.1(e)-(h) in relation
to the Vendor with references to the Closing Date construed as
references to the date that the Second Payment is to be made having
been satisfied or waived.
(b) Continuation and Validity of SCA. The SCA being valid, binding among
the parties thereto and unamended and nothing having been done that
may result in its termination or invalidity for any reason.
11.3 If the PRC Company has not yet been incorporated and is required to execute
and deliver documents prior to or at Closing then the PRC Company shall
execute and deliver such documents as soon as practicable after it has been
incorporated and in any event within 5 Business Days of its incorporation.
12. INDEMNITY
12.1 Indemnity of Investors. The Vendor will indemnify and will keep indemnified
and save harmless each of the Investors from and against:
(a) any and all losses, claims, damages (including lost profits,
consequential damages, interest, penalties, fines and monetary
sanctions) liabilities and costs incurred or suffered by the Investors
by reason of, resulting from, in connection with, or arising in any
manner whatsoever out of the breach of any warranty, representation or
covenant or the inaccuracy of any representation made in respect of
any Vendor Controlled Company by the Vendor contained or referred to
in this Agreement in connection therewith including, but not limited
to, any diminution in the value of the assets of and any payment made
or required to be made by the Investors and any costs and expenses
incurred as a result of such breach provided that the indemnity
contained in this Clause 12..1 shall be without prejudice to any other
rights and remedies available to the Investors; or
(b) the nonfulfillment or breach of any covenant, undertaking, agreement
or other obligation of any member of the Vendor Controlled Companies
to any of the Group Structure Agreements;
(c) save as disclosed in the Financial Statements, any and all losses,
claims, damages (including lost profits, consequential damages,
interest, penalties, fines and monetary sanctions) liabilities and
costs incurred or suffered by any of the Vendor Controlled Companies
by reason of, resulting from, in connection with, or arising in any
manner whatsoever out of or from any action, inaction or omission
prior to Closing including, but not limited to, any
-35-
<PAGE>
diminution in the value of the assets of any of the Vendor Controlled
Companies and any payment made or required to be made by the Vendor
Controlled Companies and any costs and expenses incurred as a result
of such breach provided that the indemnity contained in this Clause
12.1 shall be without prejudice to any other rights and remedies
available to the Investors
provided that the Vendor shall have no liability to indemnify the Investors
for any losses arising directly as a result of (i) any competent
governmental authority in the PRC shall have issued any order, decree or
ruling or takes any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement or the proposed
business and operation of the Group or the Group Structure Agreements; or
(ii) such indemnity arises from the actions or inactions of the Investor or
Persons under the Control of the Investors.
12.2 Indemnity of the Vendor. The Investors will indemnify and will keep
indemnified and save harmless the Vendor from and against:
(a) any and all losses, claims, damages (including lost profits,
consequential damages, interest, penalties, fines and monetary
sanctions) liabilities and costs incurred or suffered by the Vendor by
reason of, resulting from, in connection with, or arising in any
manner whatsoever out of the breach of any warranty, representation or
covenant or the inaccuracy of any representation in respect of the
Investor Controlled Companies in connection therewith provided that
the indemnity contained in this Clause 12.2 shall be without prejudice
to any other rights and remedies available to the Vendor; or
(b) The nonfulfillment or breach of any covenant, undertaking, agreement
or other obligation of any Investor Controlled Company and the
Nominees to any of the Group Structure Agreements
provided that the Investors shall have no liability to indemnify the Vendor
for any losses arising directly as a result of (i) any competent
governmental authority in the PRC shall have issued any order, decree or
ruling or takes any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement or the proposed
business and operation of the Group or the Group Structure Agreements; or
(ii) such indemnity arises from the actions or inactions of the Vendor or
Persons under the Control of the Vendor.
12.3 Costs. For the purposes of this Clause 12, "costs" includes lawyers' (on a
solicitor and his own client's basis) and accountants' fees and expenses,
court costs and all other out-of-pocket expenses.
12.4 Survival of Indemnification. The representations and warranties of the
parties to this Agreement and the rights to indemnification under this
Agreement with respect thereto will survive Closing.
12.5 Third Party Claims. A party entitled to indemnification hereunder (an
"INDEMNIFIED PARTY") shall notify promptly the indemnifying party (the
"INDEMNIFYING PARTY") in writing of the commencement of any action or
proceeding with respect to which a
-36-
<PAGE>
claim for indemnification may be made pursuant to this Agreement. In case
any claim, action or proceeding is brought against an Indemnified Party and
the Indemnified Party notifies the Indemnifying Party in writing of the
commencement thereof, the Indemnifying Party shall be entitled to
participate therein and to assume the defense thereof, to the extent that
it chooses, with counsel reasonably satisfactory to such Indemnified Party,
and after notice from the Indemnifying Party to such Indemnified Party that
it so chooses, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that (i) if the
Indemnifying Party fails to take reasonable steps necessary to defend
diligently the action or proceeding within twenty (20) calendar days after
receiving notice from such Indemnified Party that the Indemnified Party
reasonably believes it has failed to do so; or (ii) if such Indemnified
Party who is a defendant in any claim or proceeding which is also brought
against the Indemnifying Party reasonably shall have concluded that there
may be one or more legal defenses available to such Indemnified Party which
are not available to the Indemnifying Party; or (iii) if representation of
both parties by the same counsel is otherwise inappropriate under
applicable standards of professional conduct, then, in any such case, the
Indemnified Party shall have the right to assume or continue its own
defense as set forth above (but with no more than one firm of counsel for
all Indemnified Parties in each jurisdiction), and the Indemnifying Party
shall be liable for any expenses therefor.
12.6 Settlement of Claims. No Indemnifying Party shall, without the written
consent of the Indemnified Party, effect the settlement or compromise of,
or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Party is an actual or
potential party to such action or claim) unless such settlement, compromise
or judgment (i) includes an unconditional release of the Indemnified Party
from all liability arising out of such action or claim, (ii) does not
include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any Indemnified Party and (iii) does not
include any injunctive or other non-monetary relief.
13. TERMINATION
13.1 Termination. This Agreement may be terminated at any time prior to Closing:
(a) by any of the Investors if, between the date hereof and Closing: (i)
there is a Material Adverse Change caused by the Vendor's breach of
any provision of this Agreement or the Related Agreements, (ii) any
representations and warranties made by the Vendor as contained in this
Agreement shall not have been materially true and correct when made,
(iii) the Vendor shall not have complied in all material respects with
the covenants or agreements contained in this Agreement to be complied
with by it or (iv) SCM or any Vendor Controlled Company who is a party
to any of the Group Structure Agreements makes a general assignment
for the benefit of creditors, or any proceeding shall be instituted by
or against SCM or any Vendor Controlled Company seeking to adjudicate
it bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or
-37-
<PAGE>
composition of its debts under any law related to bankruptcy,
insolvency or reorganization;
(b) by the Vendor if, between the date hereof and Closing: (i) any
representations and warranties made by the Investors contained in this
Agreement shall not have been materially true and correct when made,
(ii) the Investors shall not have complied in all material respects
with the covenants or agreements contained in this Agreement to be
complied with by it or (iii) the Investors, the Investor Controlled
Companies or the Nominees make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against the
Investors, the Investor Controlled Companies or the Nominees in
question seeking to adjudicate the Investors, the Investor Controlled
Companies or the Nominees in question bankrupt or insolvent, or
seeking liquidation, winding up or reorganization, arrangement,
adjustment, protection, relief or composition of its debts under any
law related to bankruptcy, insolvency or reorganization;
(c) by the Investors or the Vendor in the event that any competent
governmental authority in the PRC shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement
or the proposed business and operation of the Group or the Group
Structure Agreements; or
(d) by the mutual written consent of the Investors and the Vendor.
13.2 Effect of Termination. In the event of termination of this Agreement as
provided in Clause 13.1 this Agreement shall forthwith become void provided
that nothing herein shall relieve any party hereto from liability for any
breach of this Agreement.
14. CONFIDENTIALITY AND NON-DISCLOSURE
14.1 Non-Disclosure of Terms. The terms and conditions of this Agreement and the
Related Agreements, including their existence, shall be considered
confidential information and shall not be disclosed by any party hereto to
any third party except in accordance with the provisions set forth below;
provided that such confidential information shall not include any
information that is in the public domain other than by the breach of the
confidentiality obligations hereunder.
14.2 Press Releases, Etc. Any press release issued by any party hereto or any
member of the Group in relation to this Agreement shall be approved in
advance in writing by the each Party to this Agreement, whose consent shall
not be unreasonably withheld. No other announcement regarding any of the
terms set out in this Agreement or the Related Agreements in a press
release, conference, advertisement, announcement, professional or trade
publication, mass marketing materials or otherwise to the general public
may be made without the prior written consent of each Party to this
Agreement, whose consent shall not be unreasonably withheld.
-38-
<PAGE>
14.3 Permitted Disclosures. Notwithstanding the foregoing, any party may
disclose any of the terms set out this Agreement and the Related Agreements
to its current or bona fide, employees, bankers, lenders, partners,
accountants and attorneys and other professional advisers, in each case
only where such persons or entities are under appropriate non-disclosure
obligations.
14.4 Legally Compelled Disclosure. In the event that any party is requested or
becomes legally compelled (including without limitation, pursuant to
securities laws and regulations) to disclose the existence or terms of this
Agreement or the Related Agreements in contravention of the provisions of
this Clause 14., such party (the "DISCLOSING PARTY") shall provide the
other parties (the "NON-DISCLOSING PARTIES") with prompt written notice of
that fact and use all reasonable efforts to seek (with the cooperation and
reasonable efforts of the other parties) a protective order, confidential
treatment or other appropriate remedy. In such event, the Disclosing Party
shall furnish only that portion of the information which is legally
required and shall exercise reasonable efforts to keep confidential such
information to the extent reasonably requested by any Non-Disclosing Party.
If disclosure is required then to the extent that disclosure of the Related
Agreements complies such disclosure requirement then this Agreement shall
remain confidential.
14.5 Other Information. The provisions of this Clause 14. shall be in addition
to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by any of the parties hereto with respect
to the transactions contemplated hereby.
15. MISCELLANEOUS
15.1 Survival of Warranties. The representations, warranties and covenants
contained in or made pursuant to this Agreement shall survive the execution
and delivery of this Agreement and Closing and shall in no way be affected
by any investigation of the subject matter thereof made by or on behalf of
the Investors.
15.2 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
15.3 Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of Hong Kong.
15.4 Arbitration. Any dispute, controversy or claim arising out of or relating
to this Agreement or the Related Agreements, or the breach, termination or
invalidity thereof, shall be settled shall be settled as follows:
(a) For disputes involving only PRC domestic companies, in accordance with
the China International Economic and Trade Arbitration Committee,
Shanghai Commission.
-39-
<PAGE>
(b) For disputes involving a party other than a Person incorporated or
resident in the PRC the parties will negotiate in good faith a
resolution to the dispute, provided that if no agreement is reached
then the parties agree that such disputes shall be settled in
accordance with the UNICITRAL Arbitration Rules in Hong Kong as
present in force in the manner set out in the following:
(i) The procedures of this Clause 14.4(b) may be initiated by a
written notice (a "DISPUTE NOTICE") given by one party (a
"CLAIMANT") to the other, but not before thirty (30) days have
passed during which the parties have been unable to reach a
resolution. The Dispute Notice shall be accompanied by (i) a
statement of the Claimant describing the dispute in reasonable
detail and (ii) documentation, if any, supporting the Claimant's
position on the dispute. Within twenty (20) days after the other
party's (the "RESPONDENT") receipt of the Dispute Notice and
accompanying materials, the dispute shall be resolved by binding
arbitration in Hong Kong under the UNCITRAL Arbitration Rules.
All arbitration procedures pursuant to this paragraph (a) shall
be confidential and treated as compromise and settlement
negotiations and shall not be admissible in any arbitration or
other proceeding.
(ii) The parties shall agree on a single arbitrator to resolve the
dispute. If the Parties fail to agree on the designation of an
arbitrator within a twenty (20)-day period the Hong Kong
International Arbitration Centre shall be requested to designate
the single arbitrator. If the arbitrator becomes disabled,
resigns or is otherwise unable to discharge the arbitrator's
duties, the arbitrator's successor shall be appointed in the same
manner as the arbitrator was appointed.
(iii) Any award arising out of arbitration (i) shall be binding and
conclusive upon the parties; (ii) shall be limited to a holding
for or against a party, and affording such monetary remedy as is
deemed equitable, just and within the scope of this Agreement;
(iii) may not include special, indirect, incidental,
consequential, special, punitive or exemplary damages or
diminution in value; (iv) may in appropriate circumstances
include injunctive relief; and (v) may be entered in a court.
(iv) Arbitration shall not be deemed a waiver of any right of
termination under this Agreement, and the arbitrator is not
empowered to act or make any award other than based solely on the
rights and obligations of the parties prior to termination in
accordance with this Agreement.
(v) The arbitrator may not limit, expand or otherwise modify the
terms of this Agreement.
(c) Each party shall bear its own expenses incurred in any arbitration or
litigation, but any expenses related to the compensation and the costs
of the arbitrator shall be borne equally by the parties to the
dispute.
-40-
<PAGE>
(d) If any action or proceeding is commenced to construe or enforce this
Agreement or the rights and duties of the parties hereunder, then the
party prevailing in that action, and any appeal thereof, shall be
entitled to recover its attorney's fees and costs in that action or
proceeding, as well as all costs and fees of any appeal or action to
enforce any judgment entered in connection therewith.
15.5 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15.6 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
15.7 Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon postal
service delivery, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such
party on the signature page hereof or by facsimile at the facsimile number
set out on the signature page hereof, or at such other address or facsimile
number as such party may designate by ten (10) days' advance written notice
to the other parties.
15.8 Expenses. Each of the parties hereto shall be responsible for its own costs
and expenses incurred in the preparation, negotiation and execution of this
Agreement.
15.9 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if
such provision was so excluded and shall be enforceable in accordance with
its terms.
15.10 Language. This Agreement shall be executed in both the English and Chinese
languages and in the event of any discrepancy between the two versions the
parties hereto shall negotiate in good faith to resolve the discrepancy
provided that if such good faith negations do not resolve in a resolution
then the English version of this Agreement shall prevail.
- EXECUTION PAGE FOLLOWS -
-41-
<PAGE>
EXECUTION
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE INVESTOR
For and on behalf of XINHUA FINANCE MEDIA LIMITED
By: /s/ Fredy Bush
---------------------------------
Name: Fredy Bush
Title: Director
Address of the Investor:
Century Yard, Cricket Square, Hutchins Drive, PO Box 2681
GT, George Town, Grand Cayman, British West Indies
Telephone: __________________________
Facsimile: __________________________
-42-
<PAGE>
THE INVESTOR
For and on behalf of SINO INVESTMENT HOLDINGS LIMITED
By: /s/ Shelley Sean Singhal
---------------------------------
Name: Shelley Sean Singhal
Title: Authorized signatory
Address of the Investor:
Charlotte House, Charlotte Street, PO Box N-341, Nassau,
Bahamas.
Telephone: __________________________
Facsimile: __________________________
-43-
<PAGE>
THE VENDOR
For and on behalf of SUNGOLDEN LIMITED
By: /s/ Zhang Guan Ming
---------------------------------
Name: Zhang Guan Ming
Title: Director
Address of the Vendor:
Room 2204A, Bank of America Tower, 12 Harcourt Road,
Central, Hong Kong
Telephone: __________________________
Facsimile: __________________________
-44-
<PAGE>
SCHEDULE A
DETAILS OF SALE SHARES
NET AMOUNT NET AMOUNT
DIRECT/ NO. OF PAYABLE ON THE PAYABLE ON THE
NAME OF INVESTOR INDIRECT SHARES FIRST PAYMENT DATE SECOND PAYMENT DATE
---------------- -------- ------ ------------------ -------------------
Xinhua Finance Media Limited Direct 70 US$2,500,000 US$2,500,000
Xinhua Finance Media Limited Direct 25 US$892,857 US$892,857
Sino Investments Holdings Limited Direct 25 US$1,607,143 US$1,607,143
Sino Investments Holdings Limited Through 60 US$2,142,857 US$2,142,857
Quality
Idea
Sino Investments Holdings Limited Through 80 US$2,857,143 US$2,857,143
Fine
Power
--- ------------- -------------
TOTAL: 280 US$10,000,000 US$10,000,000
=== ============= =============
-45-
<PAGE>
SCHEDULE B
GROUP STRUCTURE AGREEMENTS
1. Consulting agreement entered into between WFOE and SCM
2. Advertising services agreement between PRC Company and SCM
3. Call-option agreement between WGQ and WFOE
4. Loan agreement among PRC Company, WGQ and the relevant bank with respect of
a loan
-46-
<PAGE>
SCHEDULE C
CORPORATE DETAILS OF THE GROUP PRIOR TO CLOSING
OFFSHORE GROUP
NAME UPPER STEP HOLDINGS LIMITED
DATE AND PLACE OF INCORPORATION 28 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 500 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Fine Power Limited 80
Honour Rise Services Limited 290
Quality Idea Limited 60
Tai Mou Services Limited 70
---
TOTAL: 500
===
DIRECTOR Clifford Ng
COMPANY SECRETARY King Secretaries Limited
NAME CHINA LEAD PROFITS LIMITED
DATE AND PLACE OF INCORPORATION 1 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 1 ordinary share
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Upper Step Holdings Limited 1
DIRECTOR Clifford Ng
-47-
<PAGE>
NAME FINE POWER LIMITED
DATE AND PLACE OF INCORPORATION 5 December 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 80 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Tai Mou Services Limited 80
DIRECTOR Zhang Guan Ming
NAME HING YEE SERVICE LIMITED
DATE AND PLACE OF INCORPORATION 9 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 65 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Sungolden Limited 65
DIRECTOR Zhang Guan Ming
NAME HONOUR RISE SERVICES LIMITED
DATE AND PLACE OF INCORPORATION 25 November 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 280 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Sungolden Limited 280
DIRECTOR Zhang Guan Ming
-48-
<PAGE>
NAME QUALITY IDEA LIMITED
DATE AND PLACE OF INCORPORATION 9 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 60 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Hing Yee Service Limited 60
DIRECTOR Zhang Guan Ming
NAME TAI MOU SERVICES LIMITED
DATE AND PLACE OF INCORPORATION 9 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 150 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Sungolden Limited 150
DIRECTOR Zhang Guan Ming
ONSHORE GROUP
NAME JIA LUO BUSINESS CONSULTING (SHANGHAI) CO.,
LTD. (WFOE)
DATE AND PLACE OF INCORPORATION 28 February 2006, PRC
REGISTERED ADDRESS Room 240, No. 227 Long, Ru Shan Lu, Pudong New
District, Shanghai, PRC
REGISTERED CAPITAL US$3,200,000
-49-
<PAGE>
SHAREHOLDER NAME SHAREHOLDING
---- ------------
China Lead Profits Limited 100%
LEGAL REPRESENTATIVE Graham Anton Earnshaw
NAME SHANGHAI YUANZHI ADVERTISING CO., LTD.
(To be established)
DATE AND PLACE OF INCORPORATION PRC
REGISTERED CAPITAL RMB100,000
SHAREHOLDER NAME SHAREHOLDING
---- ------------
Li Guang Jie 49%
Wan Jun 51%
LEGAL REPRESENTATIVE Wan Jun
DIRECTORS (1) Li Guang Jie
(2) Wan Jun
NAME SHANGHAI CAMERA MEDIA INVESTMENT CO., LTD.
DATE AND PLACE OF INCORPORATION 21 February 2003, PRC
REGISTERED ADDRESS 3B10, 168 Tianshan Road, Changning District,
Shanghai, PRC
REGISTERED CAPITAL RMB60,000,000
SHAREHOLDER NAME SHAREHOLDING
---- ------------
WGQ 90%
WGQ Group 10%
LEGAL REPRESENTATIVE Zhang Guan Ming
BUSINESS SCOPE Real Equity Investment (unless otherwise
specified ), enterprise investment consulting,
enterprise investment management, enterprise
image building, computer design and
production(except for advertisement),
multi-media production, conference service,
exhibition services, design, distribution and
agency of advertisements, TV program
production and distribution (operate by permit
where administrative order is required)
-50-
<PAGE>
List of companies in which SCM holds equity interest
SCM
NAME SHAREHOLDING REMARKS
---- ------------ -------
Shanghai Zhisheng Enterprise 80%
Planning Co., Ltd.
Beijing Camera Zhisheng Advertising 100% Ju Peili and Xia Huai hold
Co., Ltd. a total of 20% of the
equity interest on behalf
of SCM
Shanghai Mongshi Culture Media 51%
Co., Ltd.
Hunan Xiaoying Camera Investment 85%
Co., Ltd.
-51-
<PAGE>
CORPORATE DETAILS OF THE GROUP FOLLOWING CLOSING
OFFSHORE GROUP
NAME UPPER STEP HOLDINGS LIMITED
DATE AND PLACE OF INCORPORATION 28 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 500 ordinary shares
NUMBER OF
ORDINARY
SHAREHOLDER NAME SHARES
---- ---------
Fine Power Limited 80
Honour Rise Services Limited 220
Quality Idea Limited 60
Sino Investment Holdings Limited 185
Xinhua Finance Media Limited 95
---
TOTAL: 500
===
DIRECTORS Fredy Bush
Dennis Pelino
Shelly Singhal
COMPANY SECRETARY King Secretaries Limited
NAME CHINA LEAD PROFITS LIMITED
DATE AND PLACE OF INCORPORATION 1 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 1 ordinary share
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Upper Step Holdings Limited 1
DIRECTOR Shelly Singhal
-52-
<PAGE>
NAME FINE POWER LIMITED
DATE AND PLACE OF INCORPORATION 5 December 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 80 ordinary shares
NUMBER OF
ORDINARY
SHAREHOLDER NAME SHARES
---- ---------
Sino Investment Holdings Limited 80
DIRECTOR Shelly Singhal
NAME HING YEE SERVICE LIMITED
DATE AND PLACE OF INCORPORATION 9 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 65 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Sungolden Limited 65
DIRECTOR Zhang Guan Ming
NAME HONOUR RISE SERVICES LIMITED
DATE AND PLACE OF INCORPORATION 25 November 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 280 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Sungolden Limited 280
DIRECTOR Zhang Guan Ming
-53-
<PAGE>
NAME QUALITY IDEA LIMITED
DATE AND PLACE OF INCORPORATION 9 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 60 ordinary shares
NUMBER OF
ORDINARY
SHAREHOLDER NAME SHARES
---- ---------
Sino Investment Holdings Limited 60
DIRECTOR Shelly Singhal
NAME TAI MOU SERVICES LIMITED
DATE AND PLACE OF INCORPORATION 9 September 2005, British Virgin Islands
REGISTERED ADDRESS P.O. Box 957, Offshore Incorporations Centre,
Road Twon, Tortola, British Virgin Islands
AUTHORISED CAPITAL US$50,000 divided into 50,000 shares of par
value US$1.00
ISSUED CAPITAL 150 ordinary shares
NUMBER OF
SHAREHOLDER NAME ORDINARY SHARES
---- ---------------
Sungolden Limited 150
DIRECTOR Zhang Guan Ming
ONSHORE GROUP
NAME JIA LUO BUISNESS CONSULTING (SHANGHAI) CO.,
LTD. (WFOE)
DATE AND PLACE OF INCORPORATION 28 February 2006, PRC
REGISTERED ADDRESS Room 240, No. 227 Long, Ru Shan Lu, Pudong New
District, Shanghai, PRC
-54-
<PAGE>
REGISTERED CAPITAL US$3,200,000
SHAREHOLDER NAME SHAREHOLDING
---- ------------
China Lead Profits Limited 100%
LEGAL REPRESENTATIVE Graham Anton Earnshaw
NAME SHANGHAI YUANZHI ADVERTISING CO., LTD.
(To be established)
DATE AND PLACE OF INCORPORATION PRC
REGISTERED CAPITAL RMB100,000
SHAREHOLDER NAME SHAREHOLDING
---- ------------
Li Guang Jie 49%
Wan Jun 51%
LEGAL REPRESENTATIVE Wan Jun
DIRECTORS (1) Li Guang Jie
(2) Wan Jun
NAME SHANGHAI CAMERA MEDIA INVESTMENT CO., LTD.
DATE AND PLACE OF INCORPORATION 21 February 2003, PRC
REGISTERED ADDRESS 3B10, 168 Tianshan Road, Changning District,
Shanghai, PRC
REGISTERED CAPITAL RMB60,000,000
SHAREHOLDER NAME SHAREHOLDING
---- ------------
WGQ 90%
WGQ Group 10%
LEGAL REPRESENTATIVE Zhang Guan Ming
BUSINESS SCOPE Real Equity Investment (unless otherwise
specified), enterprise investment consulting,
enterprise investment management, enterprise
image building, computer design and
production(except for advertisement),
multi-media production, conference service,
exhibition services, design, distribution and
agency of advertisements, TV program
production and distribution (operate by permit
where administrative order is required)
-55-
<PAGE>
SCHEDULE E
SCM INTELLECTUAL PROPERTY
1. Copyright with respect of television series "Qi Wu Shi"
2. Copyright with respect of television series "Chuan Yue Ji Qing"
3. Copyright with respect of television series "Zhang Da Cheng Ren"
4. Copyright with respect of television series "Hong Se Tian Wang"
5. Copyright with respect of the movie "Jiu Ming"
-56-
<PAGE>
SCHEDULE F
SCM LEASES
[List of Leases of SCM]
-57-
<PAGE>
SCHEDULE G
SCM MATERIAL CONTRACTS
[List of Material Contracts of SCM]
-58-
<PAGE>
SCHEDULE H
IMTV LANDING RIGHTS
[List of Landing Rights of IMTV]
-59-
<PAGE>
SCHEDULE I
INSURANCE AND BANK
[List of insurance and bank accounts of SCM and SCM Beijing Branch]
-60-
<PAGE>
SCHEDULE J
Please refer to exhibit 10.14 for the executed version of the agreement.
-61-
<PAGE>
SCHEDULE K
FORM OF CONSULTING AGREEMENT
Please refer to exhibit 10.12 for the executed version of the agreement.
-62-
<PAGE>
SCHEDULE L
PRC COMPANY CONTROLLED DOCUMENTS
NOMINEE 1
1. Secured Promissory Note issued by Nominee 1 in favour of WFOE
2. Equity Pledge Agreement amongst Nominee 1, WFOE and PRC Company
representing pledge of 49% of equity interest in PRC Company by Nominee 1
in favour of WFOE
3. Exclusive Equity Purchase Option Agreement between Nominee 1 and WFOE
4. Equity transfer agreement signed in blank by Nominee 1
5. Authorisation letter signed in blank by Nominee 1
6. Subrogation Agreement amongst Nominee 1, WFOE and PRC Company
7. Authorisation letter signed in blank by Nominee 1 approving appointment of
attorney
8. Waiver to be signed in blank by Nominee 1 for right of first refusal for
Nominee 2's equity interest in PRC Company
9. Letter of resignation to be signed in blank by Nominee 1 for acting as
director of PRC Company
10. Letter of resignation to be signed in blank by Nominee 1 for acting as
legal representative of PRC Company
11. Shareholders' resolution to be signed in blank approving resignation of
Nominee 1 as director
12. Shareholders' resolution to be signed in blank approving resignation of
Nominee 1 as legal representative
NOMINEE 2
1. Secured Promissory Note issued by Nominee 2 in favour of WFOE for loan of
RMB49,000
2. Equity Pledge Agreement amongst Nominee 2, WFOE and PRC Company
representing pledge of 51% of equity interest in PRC Company by Nominee 2
in favour of WFOE
3. Exclusive Equity Purchase Option Agreement between Nominee 2 and WFOE
4. Equity transfer agreement signed in blank by Nominee 2
5. Authorisation letter signed in blank by Nominee 2
6. Subrogation Agreement amongst Nominee 2, WFOE and PRC Company
7. Authorisation letter signed in blank by Nominee 2 approving appointment of
attorney
-63-
<PAGE>
8. Waiver to be signed in blank by Nominee 2 for right of first refusal for
Nominee 1's equity interest in PRC Company
9. Letter of resignation to be signed in blank by Nominee 2 for acting as
director of PRC Company
10. Shareholders' resolution to be signed in blank approving resignation of
Nominee 2 as director
PRC COMPANY AND WFOE
1. Consulting agreement between PRC Company and WFOE
-64-