EXHIBIT 10.14
Translation
CALL OPTION AGREEMENT
BETWEEN
▇▇▇ ▇▇▇ BUSINESS CONSULTING (SHANGHAI) CO., LTD. ("▇▇▇ ▇▇▇")
AND
SHANGHAI WAIGAOQIAO FREE TRADE ZONE DEVELOPMENT CO., LTD. ("WAIGAOQIAO")
Dated this 22nd day of September, 2006
TABLE OF CONTENTS
1. Definitions and Interpretations
2. Granting the Call Option
3. Exercising the Call Option
4. Share Transfer Price and Payment
5. Representations and Warranties
6. Special Undertakings
7. Confidentiality
8. Liability for Breach
9. Effectiveness, Term and Termination
10. Taxes and Expenses
11. Notification
12. Transfer
13. Governing Law and Jurisdiction
14. General Provisions
Exhibit 1
Schedule 2
2/21
CALL OPTION AGREEMENT
This
Call Option Agreement (the "Agreement") was executed and delivered on the
22nd day of September, 2006 by the following parties:
(1) ▇▇▇ ▇▇▇ BUSINESS CONSULTING (SHANGHAI) CO., LTD. ("▇▇▇ ▇▇▇"), a
company with limited liability registered under the laws of the
People's Republic of China, whose registered office is located at
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ District, Shanghai, whose legal
representative is ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (British passport no.
▇▇▇▇▇▇▇▇▇); and
(2) SHANGHAI WAIGAOQIAO FREE TRADE ZONE DEVELOPMENT CO., LTD.
("WAIGAOQIAO"), a company with limited liability registered under the
laws of the People's Republic of China, whose registered office is
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, whose
legal representative is ▇▇▇ ▇▇▇▇-Bin.
(▇▇▇ ▇▇▇ and Waigaoqiao are hereafter referred to individually or respectively
as a "party" and collectively as "parties".)
Whereas:
(1) Waigaoqiao and Shanghai Waigaoqiao (Group) Co., Ltd. ("Waigaoqiao
Group") are both registered shareholders of SCM (to be defined below),
with Waigaoqiao holding 90% and Waigaoqiao Group holding 10%
respectively of the shares of SCM ("SCM shares"); as of the day of the
execution of the Agreement, their respective contribution to SCM's
registered capital and their respective holding of SCM's shares are
listed in Appendix 1 hereby attached;
(2) Waigaoqiao Group holds the 10% SCM shares on behalf of Waigaoqiao in
accordance with the "Entrusted Share Holding Agreement" executed on
December 16, 2005; the beneficial owner of these SCM shares is
Waigaoqiao who is ultimately entitled to all the rights, obligations,
risks and profits associated with the ownership of these shares;
(3) Waigaoqiao and Shanghai Yuan Zhi Advertising Co., Ltd. ("Yuan Zhi")
entered into an equity pledge agreement on September 22, 2006 whereby
the SCM shares were pledged in favor of Yuan Zhi;
(4) With extensive experience in the related business areas and highly
desirable connections, ▇▇▇ ▇▇▇ will undertake a broad range of
business co-operations with SCM; Waigaoqiao deems ▇▇▇ ▇▇▇ an
acceptable business partner in terms of qualifications, business
reputation, operations, financial status and management know-how;
3/21
(5) Once all the conditions provided in Section 2.2 of the Agreement are
satisfied, Waigaoqiao shall agree to transfer the SCM shares it holds
to ▇▇▇ ▇▇▇ in accordance with the provisions of the Agreement;
(6) To implement the above-mentioned transfer of the SCM shares,
Waigaoqiao hereby agrees to unconditionally grant and to ensure that
Waigaoqiao Group unconditionally grants to ▇▇▇ ▇▇▇ an irrevocable and
exclusive call option ("call option"), whereby, upon the satisfaction
of all the conditions provided in Section 2.2 of the Agreement,
Waigaoqiao shall transfer and ensure that Waigaoqiao Group also
transfers to ▇▇▇ ▇▇▇ all or a portion of the SCM shares it holds to
▇▇▇ ▇▇▇ and/or its designee in accordance with the provisions of the
Agreement;
On the basis of voluntariness, equality and mutual benefit, the
parties hereby enter into the following agreements:
4/21
1 DEFINITIONS AND INTERPRETATIONS
1.1 Unless otherwise defined in the Agreement, the following terms shall, when
used in the Agreement, have the meaning set forth therein:
The "Agreement" The Agreement together with all schedules and
appendices as well as any modifications or
transfers (if any) thereof in accordance with
relevant legislations;
"SCM" Shanghai Camera Media Investment Co., Ltd., a
valid and subsisting company with limited
liability and registered under the laws of
Shanghai, whose corporation registration number
is 74729380-9 and whose registered office is
situated at Suite 3B10, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇;
"Registered capital of SCM" On the day of execution of the Agreement, SCM's
registered capital in the amount of
RMB60,000,000 plus any increase in registered
capital as a result of any additional
contribution of capital while the Agreement is
in effect;
"SCM shares" When ▇▇▇ ▇▇▇ exercises its call
option("exercise of option"), as provided in
the Agreement, the specific number of SCM
shares that Waigaoqiao and Waigaoqiao Group
shall transfer to ▇▇▇ ▇▇▇ or its designee,
ranging from a portion to all of the SCM
shares; the specific number of shares shall be
at the discretion of ▇▇▇ ▇▇▇ in compliance with
the relevant China law then in effect, the
provisions of the Agreement and the dictates of
its business considerations;
"Share transfer price" Upon exercise of the call option, all the
considerations that ▇▇▇ ▇▇▇ or its designee
shall yield to Waigaoqiao and/or Waigaoqiao
Group in exchange for the number of SCM shares,
the particulars of which are provided in
Section 4 (Considerations for call option);
"Business permits" All the permits, authorizations, approvals,
filings and registrations required for SCM to
legally and effectively engage in the
production of television programs and
advertising design, production, delivery and
agency as well as all other business operations
carried on by ▇▇▇ ▇▇▇ at the time when ▇▇▇ ▇▇▇
exercises the call option, including but not
limited to: "corporate legal person business
license", "registration with taxation
authorities", "business license for the
production of radio and television broadcasting
programs", "business license for advertising"
and all other relevant permits or licenses
required under the China law then in effect;
5/21
"SCM assets" All the tangible and intangible assets of which
SCM has beneficial ownership or are entitled to
access to, including but not limited to: any
real property, movable property, good will and
intellectual properties such as trade marks,
copyrights, patents, proprietary technologies,
domains, software user licenses;
"Material contracts" All the contracts that SCM is a party thereto
and that have a material effect on the business
or assets of SCM, including but not limited to
"the Agreement on consulting services" that SCM
will enter into with ▇▇▇ ▇▇▇, "the Agreement on
consulting services" that SCM will enter into
with Yuan Zhi, "the Agreement on strategic
cooperations" that SCM entered into on December
18, 2003 with Inner Mongolia TV Station, and
all other contracts that are directly related
to the business activities conducted by SCM in
the area of radio and television programming
and/or advertising and that have a material
effect on the operations of SCM;
"Business day" a day on which Chinese banks normally open for
business and provide banking services to
corporate clients;
"China" People's Republic of China, solely for the
purpose of the Agreement, excluding Hong Kong,
Macau and Taiwan;
"Hong Kong" Hong Kong Special Administrative Region
"Renminbi or RMB" The legal currency of China
"American dollar or USD" The legal currency of United States of America
"China law" China's Constitution, legislations,
administrative regulations, local statues,
ministerial regulations of the State Council,
regulations of local governments and other
legally binding regulatory documents (including
interpretations and guidelines provided by
entities that are authorized to issue such
interpretations and guidelines, such as
judicial interpretations) then in effect;
"%" Percent
1.2 All section references refer to the sections of the Agreement; sub-section
references refer to the sub-sections of the section whose reference occurs
in the immediate context (unless the context requires otherwise).
1.3 In the Agreement, unless expressly defined otherwise, reference to words
importing a gender or neutral words include every gender and references to
6/21
"person", "third party", "third person" include natural person, societies
corporate or non-corporate (other organizations), including government
agencies.
1.4 In the Agreement, unless expressly defined otherwise, any reference to
"day" is to "calendar day", that is, not excluding any statutory holidays
and two-day weekends, a year counts 365 days according to the solar
calendar (leap years count 366 days).
1.5 Unless expressly defined otherwise, "action" includes action and/or
inaction.
1.6 Headings are for convenience only and shall not affect the interpretation
of the Agreement.
1.7 References to any statute or statutory provision shall include any statute
or statutory provision which amends or replaces it and shall include any
normative stipulations made for that statute or statutory provision.
2. GRANTING THE CALL OPTION
2.1 Waigaoqiao hereby agrees, irrevocably and without any additional
requirement, to grant ▇▇▇ ▇▇▇ an exclusive call option whereby, while the
Agreement is in effect and upon the fulfillment of all the conditions
stipulated in Section 2.2, ▇▇▇ ▇▇▇ or its designee shall be entitled to
purchase, at its sole discretion, in the manner and at the price prescribed
in the Agreement, through a single or multiple transactions, the SCM shares
held by Waigaoqiao and/or Waigaoqiao Group; Waigaoqiao shall ensure that
Waigaoqiao Group then transfers the SCM shares to ▇▇▇ ▇▇▇ or its designee
in accordance with the Agreement; ▇▇▇ ▇▇▇ also agrees to accept the call
option in accordance with the terms and conditions of the Agreement.
2.2 The parties acknowledge: upon the fulfillment of the following conditions,
while the Agreement is in effect, ▇▇▇ ▇▇▇ or its designee shall be entitled
but not obligated to exercise, at any time (the timing is entirely at the
discretion of ▇▇▇ ▇▇▇), the call option with Waigaoqiao and/or Waigaoqiao
Group:
(a) ▇▇▇ ▇▇▇ and/or its designee decides to purchase from Waigaoqiao and/or
Waigaoqiao Group all or a portion of the SCM shares and, in accordance
with Section 11 of the Agreement, issues to Waigaoqiao an exercise
notice ("exercise notice"), substantially in the form as provided in
Appendix 2;
(b) The China law does not prohibit ▇▇▇ ▇▇▇ and/or its designee from
purchasing all or a portion of the SCM shares as described in the
exercise notice;
3. EXERCISING THE CALL OPTION
7/21
3.1 In the event ▇▇▇ ▇▇▇ chooses to exercise the call option as prescribed in
Section 2 and the China law then in effect permits ▇▇▇ ▇▇▇ and/or its
designee to be the transferee of all the SCM shares, ▇▇▇ ▇▇▇ may, at its
sole discretion, exercise the call option once or in multiple times whereby
▇▇▇ ▇▇▇ and/or its designee shall be the transferee of all the SCM shares
from Waigaoqiao and/or Waigaoqiao Group; in the event the China law then in
effect permits ▇▇▇ ▇▇▇ and/or its designee to be the transferee of only a
portion of the SCM shares, ▇▇▇ ▇▇▇ shall, at its sole discretion, exercise
the call option once or in multiple times whereby ▇▇▇ ▇▇▇ and/or its
designee shall be the transferee of SCM shares up to the upper limit of
shareholding permitted under the China law then in effect("upper limit of
shareholding"); in the latter scenario, ▇▇▇ ▇▇▇ has the right to continue
the exercise of the call option to the extent and as far as the China law
gradually lifts the upper limit of shareholding until eventually all the
SCM shares have been obtained.
3.2 When exercising the call option as prescribed in Section 3.1, ▇▇▇ ▇▇▇ may,
at its sole discretion, choose the number of SCM shares that the exercise
of the call option shall require of Waigaoqiao and Waigaoqiao Group to
transfer to ▇▇▇ ▇▇▇ and/or its designee; Waigaoqiao shall transfer and
shall ensure that Waigaoqiao Group also transfers to ▇▇▇ ▇▇▇ and/or its
designee the number of SCM shares as specified by ▇▇▇ ▇▇▇. In return, for
the SCM shares transferred upon each exercise of the call option, ▇▇▇ ▇▇▇
and/or its designee shall pay to Waigaoqiao and/or Waigaoqiao Group the
price of share transfer as stipulated in Section 4.1 of the Agreement.
3.3 Upon each exercise of the call option, ▇▇▇ ▇▇▇ may decide to be the
transferee of the SCM shares or it may designate a third party to be the
transferee of the SCM shares.
3.4 Each time it decides to exercise the call option, ▇▇▇ ▇▇▇ shall issue an
exercise notice to Waigaoqiao and/or Waigaoqiao Group; upon receiving the
exercise notice and in compliance with the requirements of the China law
and the provisions of the Agreement, Waigaoqiao shall proceed immediately
and shall ensure that Waigaoqiao Group acts likewise to transfer to ▇▇▇ ▇▇▇
and/or its designee, all at once and as soon as practically possible, the
number of SCM shares specified in the exercise notice.
3.5 Upon ▇▇▇ ▇▇▇ issuing an exercise notice, Waigaoqiao hereby undertakes to:
(1) Take all authorized corporate measures to ensure that Waigaoqiao and
Waigaoqiao Group approve the transfer to ▇▇▇ ▇▇▇ the SCM shares
specified in the exercise notice and, to the extent permitted under
the law, obtain all other permits and approvals (if necessary) as may
be required by the China law then in effect;
(2) Ensure that the top decision-making body within SCM passes resolutions
and take any other necessary actions to approve the transfer by
Waigaoqiao and/or Waigaoqiao Group to ▇▇▇ ▇▇▇ and/or its designee of
the SCM shares specified in the exercise notice;
(3) Proceed itself and ensure that Waigaoqiao Group acts likewise, at the
request of ▇▇▇ ▇▇▇ and in compliance with the China law, to provide to
▇▇▇ ▇▇▇ the necessary support and cooperation including but not
limited to conducting the asset appraisals with regard to the transfer
(if then required), effecting all such procedures as public
announcements, government approvals, registrations and filings,
executing all such
8/21
relevant legal documents as the share transfer agreement with ▇▇▇ ▇▇▇
and/or its designee, in order that the SCM shares specified in the
exercise notice are legally and validly transferred to ▇▇▇ ▇▇▇ and/or
its designee.
3.6 Waigaoqiao hereby commits itself to this undertaking: to implement the
transactions contemplated in the Agreement, any other legal documents that
Waiguoqiao and Waigaoqiao Group will sign pursuant to the Agreement
(including but not limited to the share transfer agreement stipulated in
Section 3.5) shall not contradict the provisions of the Agreement or that
impose any other restrictions other than those already provided in the
Agreement.
4. SHARE TRANSFER PRICE AND PAYMENT
4.1 In accordance with the Agreement, to purchase the SCM shares held by
Waigaoqiao and Waigaoqiao Group, ▇▇▇ ▇▇▇ shall pay the share transfer price
as defined below (contingent on the situation that applies):
(a) In the event that the China law does not require an asset appraisal of
the SCM shares and/or SCM assets,
Total share transfer price = RMB 15,500,000;
If ▇▇▇ ▇▇▇ decides to purchase only a portion of the SCM shares, then
the share transfer price for purchasing the SCM shares each time shall
be determined using the following formula:
Price for each share transfer = equivalent of RMB 15,500,000 x
(proposed number of SCM shares to be purchased / the total number of
SCM shares)
(b) In the event that the China's law requires an asset appraisal of the
SCM shares and/or SCM assets and that the appraised value is no more
than RMB 15,500,000,
Total share transfer price = RMB 15,500,000;
If ▇▇▇ ▇▇▇ decides to purchase only a portion of the SCM shares, then
the share transfer price for purchasing the SCM shares each time shall
be determined using the following formula:
Price for each share transfer = equivalent of RMB 15,500,000 x
(proposed number of SCM shares to be purchased / the total number of
SCM shares)
9/21
(c) Unless the parties agreed otherwise, in the event that the China's law
requires an asset appraisal of the SCM shares and/or SCM assets and
that the appraised value is more than RMB 15,500,000,
Total share transfer price = Total appraised value of SCM assets
If ▇▇▇ ▇▇▇ decides to purchase only a portion of the SCM shares, then
the share transfer price for purchasing the SCM shares each time shall
be determined using the following formula:
Price for each share transfer = total appraised value of SCM assets x
(proposed number of SCM shares to be purchased / the total number of
SCM shares).
4.2 ▇▇▇ ▇▇▇ may decide, at its sole discretion and to the extent permissible
under the law, to deliver to Waigaoqiao the share transfer price in cash in
the amount of the share transfer price and/or having a third party release
Waigaoqiao from an indebtedness owed to this said third party and that is
equal in value to the share transfer price.
5. REPRESENTATIONS AND WARRANTIES
5.1 Waigaoqiao hereby provides the following representations and warranties to
▇▇▇ ▇▇▇: up to the date of execution of the Agreement,
(a) Waigaoqiao is a duly established company limited liability registered and
subsisting under the laws of the People's Republic of China with full
capacities for civil rights and civil acts, full legal rights and capacity
to enter into and execute the Agreement as well as all other documents to
be executed in connection with the transactions contemplated in the
Agreement, full legal rights and capacity to undertake the legal
obligations and responsibilities as set forth in the Agreement, and full
capacity to enter legal proceedings as an independent subject.
(b) Waigaoqiao has legally and duly executed and delivered the Agreement, which
constitutes a legal, valid and binding agreement of Waigaoqiao, enforceable
in accordance with the terms hereof.
(c) The capital contribution corresponding to the SCM shares has been fully,
timely and legally paid to SCM; Waigaoqiao and Waigaoqiao Group have fully
paid all the taxes and fees that should be paid as a result of obtaining
the SCM shares.
(d) Waigaoqiao is the only person that has the ultimate legal title to the SCM
shares free and clear of any trusts, custodies, liens, pledges, claims or
other guarantees and third party encumbrances, except for the Agreement and
the pledge of SCM
10/21
shares that has been disclosed by Waigaoqiao to ▇▇▇ ▇▇▇. As set forth in
the Agreement, upon exercise of the call option, ▇▇▇ ▇▇▇ and/or its
designee shall have valid and complete title to the SCM shares free and
clear of any trusts, custodies, liens, pledges, claims or other guarantees
and third party encumbrances.
(e) The execution and delivery of the Agreement by Waigaoqiao and the
performance by Waigaoqiao Group of the provisions in the Agreement do not
violate or contravene any applicable China law, listing rules, industry
norms, any contracts that they are parties to and that are legally binding
on their assets, any court orders, any judgments of arbitration tribunals
or any decisions by administrative authorities.
(f) To the best knowledge of Waigaoqiao, the SCM shares are not a subject of
any pending or threatened suit, legal proceeding or claim by any court or
arbitration tribunal, or of any administrative proceeding, measure or claim
by any government agency; there is no suit, arbitration, judicial action,
administrative measures or other situations that have a material adverse
effect on the financial status of Waiggaoqiao or Waigaoqiao Group or on
their capacity to undertake the obligations hereunder such that Waigaoqiao
or Waigaoqiao Group will be unable to maintain their legal holding of the
SCM shares.
(g) SCM is a valid and subsisting company with limited liability and is
registered under the laws of the People's Republic of China with full
independent status and capacity as a legal entity, capable of entering
legal proceedings as an independent subject.
(h) To the best knowledge of Waigaoqiao, SCM or its assets are not involved in
any pending or threatened suit, legal proceeding or claim by any court or
arbitration tribunal, or of any administrative proceeding, measure or claim
by any government agency, except for those suits, legal proceedings or
claims that would not have a material adverse effect on the financial
status of SCM.
(i) From its establishment up to the execution of the Agreement, SCM has
conducted its business in full compliance with the law, without any
violation or potential violation of the regulations and requirements
enforceable by government agencies such as business and commerce
administration, taxation, radio and TV broadcasting, advertising, quality
and technical oversight, labor and social security, and without any
contract breach or dispute, except as those that would not have a material
adverse effect on the financial status of SCM.
(j) SCM is in possession of all the licenses, permits or authorizations
required for its operations. SCM has full rights and qualifications to
engage, within China, in the production of radio and television programs,
advertising design, production, and agency as well as all other activities
within the scope of its current business operation.
11/21
5.2 Waigaoqiao hereby assures ▇▇▇ ▇▇▇ that the above representations and
warranties are all true, complete and accurate without any omissions,
misleading information or errors.
6. SPECIAL UNDERTAKINGS
6.1 In order to maintain and increase the value of SCM shares, to the extent
within its control, Waigaoqiao hereby assures ▇▇▇ ▇▇▇ of the following
undertakings:
(a) While the Agreement is in effect, adopt all necessary measures to
ensure that SCM obtains and renews in a timely fashion all required
business licenses, permits and authorizations and that all such
business licenses, permits and authorizations remain valid.
(b) While the Agreement is in effect, without obtaining in advance the
written consent of ▇▇▇ ▇▇▇:
(i) Waigaoqiao shall not proceed and shall ensure that Waigaoqiao
Group does not proceed to dispose in any manner of all or a
portion of the SCM shares or to involve any of the SCM shares in
any trust, custody, pledge or third party encumbrance, except for
that Waigaoqiao Group may transfer to Waigaoqiao all or a portion
of the SCM shares under its name without obtaining in advance the
written consent of ▇▇▇ ▇▇▇;
(ii) Waigaoqiao shall not proceed and shall ensure that Waigaoqiao
Group does not proceed to increase or decrease the registered
capital of SCM;
(iii) Waigaoqiao shall not proceed and shall ensure that Waigaoqiao
Group does not proceed to dispose of or to cause SCM management
to dispose of any material assets of SCM;
(iv) Waigaoqiao shall not proceed and shall ensure that Waigaoqiao
Group does not proceed to terminate or cause SCM management to
terminate any material contract to which SCM is a party (the
range of such material contracts shall be determined then by ▇▇▇
▇▇▇ on a reasonable basis), or to enter into any contracts that
are in conflict with any existing material contracts, or to
consummate any transactions of which the considerations, in a
single transaction or accumulated over a period of three
consecutive months, exceeds 5% of the net asset value then of
SCM;
(v) Waigaoqiao shall not proceed and shall ensure that Waigaoqiao
Group does not proceed to cause SCM to declare or actually
distribute any profit, bonus, dividend or interest that are
available for distribution;
12/21
(vi) Waigaoqiao shall not proceed and shall ensure that Waigaoqiao
Group does not proceed to amend the articles of association of
SCM; and
(vii) Ensure that SCM does not provide or obtain any loans, or provide
any guarantee or undertake any pledges, or assume any liabilities
outside of its normal course of business.
(c) Ensure that SCM remains valid and subsists without being terminated,
merged, split-up, liquidated or dissolved.
(d) While the Agreement is in effect, exert its utmost to develop the
business of SCM and ensure its legal and normal operation without
acting in any way that would be detrimental to SCM's assets, good will
or the validity of its business license.
(e) Subsequent to sufficient consultation with ▇▇▇ ▇▇▇ and proceeding in
line with the opinions acceptable to ▇▇▇ ▇▇▇, pass and adopt internal
resolutions of SCM (include but not limited to election and
appointment of SCM directors, if necessary).
6.2 In order to maintain and increase the value of SCM shares to the extent
within its control, ▇▇▇ ▇▇▇ hereby assures Waigaoqiao of the following
undertakings:
(a) While the Agreement is in effect, adopt all necessary measures to
assist Waigaoqiao to ensure that SCM obtains and renews in a timely
fashion all required business licenses, permits and authorizations and
that all such business licenses, permits and authorizations remain
valid.
(b) Assist Waigaoqiao to ensure that SCM remains valid and subsists
without being terminated, merged, divided, liquidated or dissolved.
(c) While the Agreement is in effect, exert its utmost to assist
Waigaoqiao to develop the business of SCM and ensure its legal and
normal operation without acting in any way that would be detrimental
to SCM's assets, good will or the validity of its business license.
(d) Never require Waigaoqiao to engage in any activities that contravene
the provisions of Section 6.1.
6.3 ▇▇▇ ▇▇▇ acknowledges that, notwithstanding the provisions of Section 6.1,
Waigaoqiao shall not be held liable to ▇▇▇ ▇▇▇ if the violation by
Waigaoqiao of the undertakings set forth in Section 6.1 is directly
attributable to ▇▇▇ ▇▇▇ or its affiliates. Waigaoqiao acknowledges that,
notwithstanding the provisions of Section 6.2, ▇▇▇ ▇▇▇ shall not be held
liable to Waigaoqiao if the violation by Jia
13/21
Luo of the undertakings set forth therein is directly attributable to
Waigaoqiao or its affiliates.
7. CONFIDENTIALITY
7.1 Each Party shall keep the Agreement and its terms confidential and shall
not disclose to any other party the content herein or make any press
release or public disclosure in any form regarding the transactions
contemplated herein; the foregoing shall not prohibit any disclosure: (i)
required by law or regulations governing the exchange of securities; (ii)
of any information that has entered the public domain not as a result of a
breach of contract by the party making the disclosure; (iii) to
shareholders of one party, attorneys, accountants, investment consultants
or other agents of the Parties assisting the Parties in connection with the
transactions contemplated herein; or (iv) for which a written consent by
the other party has been obtained in advance.
7.2 Notwithstanding other provisions herein, the validity of this section shall
survive the cessation or termination of the Agreement.
8. LIABILITY FOR BREACH
8.1 Other than the breach of contract by Waigaoqiao in the event of default on
the covenants, presentations, warranties or undertakings as set forth in
the Agreement, Waigaoqiao shall also be deemed in violation of the
Agreement if the following occurs:
(a) The acceleration clause is invoked when Waigaoqiao or Waigaoqiao Group
defaults on any external loans, pledges, compensations, undertakings or
other liabilities, or otherwise finds itself unable to honor its
obligations when due; or Waigaoqiao or Waigaoqiao Group is unable to settle
material liabilities that arise from tort, profits acquired improperly and
without a lawful basis, or acts as manager or provider of services in order
to protect another person's interests when not legally or contractually
obligated, such that ▇▇▇ ▇▇▇ has reason to believe that it constitutes a
material adverse effect or a threat thereof on the capacity of Waigaoqiao
or Waigaoqiao Group to fulfill their obligations under the Agreement;
(b) A material adverse change has occurred in the assets of Waigaoqiao or
Waigaoqiao Group such that ▇▇▇ ▇▇▇ has reason to believe that it
constitutes a material adverse effect or a threat thereof on the capacity
of Waigaoqiao or Waigaoqiao Group to fulfill their obligations under the
Agreement;
(c) Bankruptcy, dissolution, split-up, reorganization, liquidation, suspension
of business license for Waigaoqiao or Waigaoqiao Group have been imposed
from outside or initiated from within, or a material threat thereof;
14/21
(d) Bankruptcy, dissolution, split-up, reorganization, liquidation, suspension
of business license for SCM have been imposed from outside or initiated
from within, or a material threat thereof, except for when it is directly
attributable to ▇▇▇ ▇▇▇ or its affiliates; or
(e) Any of the permits, authorizations, filings and registrations required for
SCM to conduct its normal range of business (including but not limited to
its business license for the production of radio and television
broadcasting programs, business license for advertising) has been cancelled
or suspended or there is a material restriction to or weakening of the
legal capacity for SCM to conduct its normal range of business, except for
when it is directly attributable to ▇▇▇ ▇▇▇ or its affiliates.
8.2 Should any party ("the breaching party") fails to fulfill its obligations
under the Agreement, on the condition that the other party's
("non-defaulting party") other rights under the Agreement are not affected,
the breaching party shall assume the responsibilities for breach of
contract in accordance with the provisions of the Agreement and applicable
laws, including but not limited to actual performance, providing remedies
and compensating the non-defaulting party for damages.
8.3 The termination or dissolution of the Agreement does not absolve any party
from the liabilities that were assumed under the Agreement prior to or at
the time of the termination or dissolution, nor does it affect the rights
of any party to seek compensation from the other party for breach of
contract prior thereto.
9. EFFECTIVENESS, TERM AND TERMINATION
9.1 Upon execution by all the parties or their authorized agent, the Agreement
shall come into force on the date first written in this document.
9.2 Unless otherwise provided herein, the Agreement shall automatically
terminate upon the transfer of all SCM shares to ▇▇▇ ▇▇▇ and/or its
designee in accordance with the provisions of the Agreement (the transfer
being deemed consummated when all procedures required under the China law
are completed).
10. TAXES AND EXPENSES
10.1 The parties hereto shall each bear their respective expenses and costs in
connection with the consultation, drafting and finalization of the
Agreement as well as all the transactions contemplated herein or any
related legal, financial, business or other affairs.
10.2 Any tax required or imposed under the China law and any duties due to the
government that arise as a result of or in connection with the Agreement
shall be borne by the taxpayers as defined by applicable China law.
15/21
11. NOTIFICATION
11.1 Any notice required under the Agreement shall be in writing and in the
Chinese language; any notice to the other party by any party hereto, if
delivered by courier, EMS or pre-paid registered mail, shall be delivered
to the following address (or the addressee notifies the addresser in
writing five days in advance of an alternative address); if transmitted by
facsimile, shall be transmitted to the following facsimile numbers of the
addressee:
If intended for ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇ BUSINESS CONSULTING (SHANGHAI) CO., LTD.
Address: 3905-09 Gang ▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
Postal Code: 200030
Facsimile Number: 86 21 6448 4956
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
If intended for Waigaoqiao
SHANGHAI WAIGAOQIAO FREE TRADE ZONE DEVELOPMENT CO., LTD.
Address: Building 51, Block ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Postal Code: 200120
Facsimile Number: 86 21 5058 0515
Attention: ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇
11.2 To avoid any confusion, for delivery by courier, the notice shall be deemed
delivered when it reaches the above address; for delivery by facsimile, the
notice shall be deemed delivered when the facsimile signal recognizing
reception is received but the original notice should be sent by post or
courier after the successful transmittal of the facsimile; for delivery by
EMS or pre-paid registered mail, the notice shall be deemed delivered 48
hours after it is dispatched (if sent out of the country, the notice shall
be deemed delivered 10 days after it is dispatched). For proof of delivery,
it suffices to show that the notice in question was appropriately
addressed, dispatched or posted (as the case may be).
16/21
12. TRANSFER
12.1 Waigaoqiao hereby acknowledges: ▇▇▇ ▇▇▇ has the right to transfer, at its
sole discretion, all or part of its rights and/or obligations under the
Agreement without having to obtain the written consent of Waigaoqiao,
provided that ▇▇▇ ▇▇▇ informs Waigaoqiao of the transfer in question within
a reasonable time frame after the completion of the transfer.
12.2 Without the written consent in advance from ▇▇▇ ▇▇▇, Waigaoqiao shall not
transfer its rights and/or obligations under the Agreement.
13. GOVERNING LAW AND JURISDICTION
13.1 The Agreement shall be construed in accordance with and governed by the
laws of the People's Republic of China.
13.2 The parties hereto hereby irrevocably acknowledge: any disputes, claims or
controversies among the parties arising out of or in connection with the
Agreement shall be resolved through friendly consultation as a first
resort; in the event the dispute resolution through consultation proves
unsuccessful, the parties shall then refer the dispute to the Shanghai
Commission, China International Economic and Trade Arbitration Commission
and submit themselves to the arbitration rules of the said Commission in
effect at the time of application for arbitration; the judgment of the
arbitration tribunal is final and binding on the parties hereto and may be
executed in any judicial court or administrative agency with appropriate
competence.
14. GENERAL PROVISIONS
14.1 ▇▇▇ ▇▇▇ and Waigaoqiao agree to further complete, execute, deliver and
perform what is reasonably requested by any party and to ensure that
related persons act likewise with regard to additional measures such as
taking actions, executing documents or delivering documents, in order that
the transactions contemplated in the Agreement may be consummated smoothly.
14.2 Time is of a critical factor of the Agreement.
14.3 No content herein shall be deemed to constitute, for any purpose, a
partnership between the parties, nor shall any party be deemed, for any
purpose, an agent of any other party; no party has been empowered with nor
shall any party exercise any rights or authorization to create for any
other party, for any purpose, any obligations or liabilities (including
acting on behalf of or in the name of any other party to make
presentations, pledges or warranties).
14.4 Without the written consent and execution in advance by the parties
referencing the particulars of the Agreement, any modification, amendment
and revision
17/21
regarding the provisions herein or the parties' rights and obligations
hereof (including but not limited to any modification, amendment and
revision that may be recommended based upon the review or opinion of
Chinese government agencies) shall be null and void.
14.5 The Agreement constitutes the only and entire agreement of the Parties
hereto regarding the subject matter hereof, and supersedes any form of
offer, undertaking, covenant, arrangement, presentation, intention,
expression or understanding pertaining to the transactions contemplated
herein prior to the execution of the agreement.
14.6 Any party's waiver, suspension or incapacity of exercising certain rights
does not reduce, remove or restrict the party's rights granted hereby and
the right to ▇▇▇ the other party in a court of law; any party's abstention
from exercising its rights regarding another party's breach of contract
shall not be construed as never seeking recourse against the breaching
party; a single or partial exercise of any rights hereunder or seeking
recourse does not restrict or affect the party to further exercise the said
right or seeking recourse or exercising any other rights.
14.7 The rights, interests and/or claims granted or included herein may be
accumulative and superimposed, any party exercising the rights, interests
and/or claims granted or included herein is not excluded from possessing,
exercising and claiming any rights, remedy and/or damage granted under
applicable law.
14.8 If at any time, any provision herein is declared by any court of law,
arbitration tribunal or authority with judicial competence to be null,
illegal, unenforceable or non-executable in any way, to the extent
permissible under applicable law, the said provision shall be deemed
deleted from the Agreement whilst the other provisions herein remain valid,
legal and enforceable or executable without being affected in any manner
and shall continue to be valid and enforceable.
14.9 The Agreement shall bind and inure to the benefit of the respective
successors, assigns and/or acceptable transferees, regardless whether the
parties or the said successors, assigns and transferees have changed their
names, organizational structure, competent departments or organizational
nature.
14.10 The Agreement is composed in the Chinese language, in three (3)
duplicates, each having equal legal force, one copy to be held by each
party, one copy to be held by SCM.
14.11 The parties hereto may execute the Agreement jointly or separately; the
said Agreement signed either jointly or separately shall be deemed to be
equally valid, the Agreement shall come into force upon proper execution by
the parties or their authorized representatives; the agreements separately
executed by each party shall constitute the entire agreement.
(The rest of the page is blank.)
18/21
SIGNATURE PAGE
On the date shown on the cover page of the Agreement, signed by Parties hereto
or their respective authorized representatives
By ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ BUSINESS CONSULTING (SHANGHAI) CO., LTD.
[Company chop of ▇▇▇ ▇▇▇ Business Consulting (Shanghai) Co., Ltd.]
Signature:
--------------------------
Title: legal representative
Signature of witness:
--------------------------------
By ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇
SHANGHAI WAIGAOQIAO FREE TRADE ZONE DEVELOPMENT CO., LTD.
[Company chop of Shanghai Waigaoqiao Free Trade Zone Development Co., Ltd.]
Signature:
--------------------------
Title: legal representative
Signature of witness: /s/
--------------------------------
19/21
EXHIBIT 1
PROFILE OF SCM
Company name: Shanghai Camera Media Investment Co., Ltd.
Registered address: 3B10 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇
Registered capital: RMB 60,000,000
Legal representative: ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇
Shareholding structure:
Name of shareholder Capital contribution (RMB) % of total shares
------------------- -------------------------- -----------------
Waigaoqiao RMB54,000,000 90%
Waigaoqiao Group RMB 6,000,000 10%
Total RMB 60,000,000 100%
20/21
SCHEDULE 2
FORM OF EXERCISE NOTICE
To: SHANGHAI WAIGAOQIAO FREE TRADE ZONE DEVELOPMENT CO., LTD.
Whereas:
On September __, 2006, your company and our company executed "
Call Option
Agreement"("Agreement") covenanting that, upon the fulfillment of all the
conditions as set forth in Section 2.2 of the Agreement, your company shall
transfer to our company or any third party designated by our company all or a
portion of the Shanghai Camera Media Investment Co., Ltd.("SCM") shares held by
your company.
Therefore, our company hereby issues to your company the notice below:
(1) Our company wishes to exercise the call option as per the Agreement such
that [our company]/our company's designee [name of company/individual]
shall be the transferee of SCM shares held by your company representing
_____% of SCM's registered capital;
(2) It is requested that your company complete, within ____ business days after
receipt of this notice, the relevant legal procedures in accordance with
Section 4.5 of the
call option agreement.
(3) It is requested that your company shall cause SCM to amend, within ____
business days after receipt of this notice, the SCM Articles of Association
and commence revising the registration with the industry and commerce
administrative authorities (if needed) in order that the said SCM shares
are transferred to [our company]/our company's designee [name of
company/individual].
SINCERELY YOURS,
▇▇▇ ▇▇▇ BUSINESS CONSULTING (SHANGHAI) CO., LTD.
Authorized representative:
-------------
Date:
----------------------------
21/21