24th May 2006 THE PERSONS NAMED IN SCHEDULE 1 and TRADE MEDIA HOLDINGS LIMITED CALL OPTIONS DEED RELATING TO SHARES IN HC INTERNATIONAL, INC. Herbert Smith LLP

 

1.	INTERPRETATION

1.1	In this Deed, unless the context requires otherwise, terms used herein shall have the same meaning as those used in the Sale and Purchase Agreement save that:

1.2	In this Deed, save where the context otherwise requires:

1.2.1

a reference to a statute or statutory provision shall include a reference to that statute or provision as from time to time consolidated, modified, re-enacted or replaced by any statute or statutory provision; to any repealed statute or statutory provision which it re-enacts (with or without modification); and any subordinate legislation made under the relevant statute;

1.2.2

words in the singular shall include the plural, and vice versa;

1.2.3

the masculine gender shall include the feminine and neutral and vice versa;

1.2.4

a reference to a person shall include a reference to a firm, a body corporate, an unincorporated association or to a person's executors or administrators;

1.2.5

a reference to a Clause, paragraph or Schedule (other than to a schedule to a statutory provision) shall be a reference to a Clause, paragraph, or Schedule (as the case may be) of or to this Deed;

1.2.6

if a period of time is specified and commences from a given day or the day of an act or event, it shall be calculated exclusive of that day;

1.2.7

references to any legal term for any action, remedy, method or judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than Hong Kong be deemed to include what most nearly approximates in that jurisdiction to the Hong Kong legal term;

1.2.8

references to writing shall include any modes of reproducing words in a legible and non-transitory form; and

1.2.9

the headings in this Deed are for convenience only and shall not affect the interpretation of any provision of this Deed.

1.3	The designations adopted in the recitals and introductory statements preceding this Clause apply throughout this Deed and the Schedules.

1.4	Where any obligation in this Deed is expressed to be made, undertaken or given by two or more parties, they shall be jointly and severally liable in respect of it.

1.5	Where any reference to “Completion” is made in this Deed, it shall be construed as “Completion in relation to each exercise of the Option”.

2.	GRANT OF THE OPTIONS

2.1	In consideration of the Grantee agreeing to enter into the Sale and Purchase Agreement and, subject to the completion of the Sale and Purchase Agreement in accordance with its terms,

2.1.1

the Grantors hereby grant to the Grantee an irrevocable and, subject to the terms of this Deed, unconditional right to purchase all (but not part only) of the Option Shares at the Exercise Price (subject to adjustment in Clause 3) at any time during the Option Period; or

2.1.2

if the Grantee, whether by itself or through other entities, makes a general offer for the Shares under the Takeovers Code at a price not less than the Acquisition Price during the Option Period,

(i)	each of the Grantors shall, if required by the Grantee, accept such general offer in relation to the Option Shares, and shall, if required by the Grantee, enter into irrevocable undertakings in the form set out in Schedule 4 (the “Irrevocable Undertaking”) hereof to accept such general offer;

(ii)	if the general offer becomes unconditional, the Grantors shall receive the final offer price in accordance with the terms of the general offer;

(iii)

the Options granted under Clause 2.1.1 shall not be exercised; and

(iv)	subject to Clause 4.4, the Grantee shall exercise the HC Construction Option at the same time,

2.1.3

each of the Grantors irrevocably and unconditionally undertakes not to sell, transfer, dispose of, charge, encumber or otherwise deal with in any way the relevant Option Shares (or any interest therein) which are legally and/or beneficially owned by them during the Option Period, save with the prior written consent of the Grantee.

2.2	Subject to the terms and conditions of this Deed, the Grantors shall, on exercise of the Options, sell or procure the sale of the Option Shares and the Grantee shall purchase the Option Shares, free from any claim, options, charge, lien, equity, encumbrance, rights of

2.3

All rights (save for the voting rights) attached to the Option Shares shall accrue to the Grantee on and from the date of service of an Exercise Notice on each of the Grantors and, following Completion, the Grantors shall account to the Grantee for all dividends or other distributions of the Company declared or paid subsequent to the date of service of the Exercise Notices and shall exercise all voting and other rights at the direction of the Grantee.

2.4

The Grantors shall use reasonable endeavours to procure that, until the exercise or expiry of the Options, the Company shall not, save pursuant to any outstanding undertaking, options granted or given by the Company prior to the date of this Deed (including but not limited to options granted under the Pre-IPO Share Option Scheme and the Share Option Scheme as at the date of this Deed [* Material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 14-b2 of the Securities Exchange Act of 1934, as amended.]), issue any shares, stock or securities or make any alteration in its share capital.

2.5	The Grantors waive and agree to procure the waiver of any restrictions on transfer (including pre-emption rights) which may exist in relation to the Option Shares under the memorandum and/or articles of association of the Company or otherwise.

2.6

The Grantee shall not be obliged to complete the purchase of the Option Shares unless all Grantors complete the sale of all the Option Shares set out in an Exercise Notice simultaneously and unless (save as provided in Clause 4.4) the sale of the Beijing Huicong Option Equity Interests pursuant to exercise of the HC Construction Option is completed simultaneously with Completion.

2.7

The Grantee shall not make a general offer under the Takeovers Code at an offer price less than the Acquisition Price at any time during the Option Period. The Options under Clause 2.1.1 and the right under Clause 2.1.2 shall lapse and cease to have any effect if the Grantee, whether by itself or through other entities, makes a general offer for the Shares at a price less than the Acquisition Price during the Option Period.

3.	ADJUSTMENT TO EXERCISE PRICE

3.1	The Exercise Price shall from time to time be adjusted as follows:

3.1.1

Consolidation or Subdivision:

3.1.2

Bonus issue of Shares:

3.1.3

Capital distribution:

3.1.4

Rights Issues of Shares:

3.1.5

Issues at less than Acquisition Price:

3.1.6

Issues of Convertible Securities:

3.1.7

Other Events:

3.2	Any adjustment to the Exercise Price shall not involve an increase in the Exercise Price (except upon any consolidation of the Shares pursuant to this Clause).

3.3	Every adjustment to the Exercise Price shall be certified in writing by the Financial Adviser. Notice of any adjustments, including the new Exercise Price and the effective date

4.	EXERCISE OF THE OPTIONS

4.1	The Grantee may exercise the Options by giving an Exercise Notice to each of the Grantors. The Exercise Notices may be given by the Grantee at any time during the Option Period in respect of all (but not part only) of the Option Shares.

4.2	Subject to Clause 4.4 hereof, the Options shall be exercised and completed simultaneously with the exercise of the HC Construction Option.

4.3

At any time after the completion of the Sale and Purchase Agreement and prior to the giving of the Exercise Notice, the Grantee (and any person authorised by it) shall be entitled to conduct such enquiries, investigations and due diligence reviews of the business, affairs, operations and financial position of the Group as the Grantee in its absolute discretion deems necessary, desirable or appropriate and the Grantors shall use their reasonable endeavours to, subject to Clause 7.1 hereof and the Grantee executing a confidentiality undertaking in favour of the Company (if required by the Company) on substantially the same terms set out in Clause 7.1, procure that the Grantee and any persons authorised by it shall on giving reasonable prior notice and during normal office hours be given full access to the employees, premises, plant, machinery, books of account, records and documents of the Company and each of its subsidiaries as the Grantee may reasonably request.

4.4

Prior to exercise of the Options or exercise of the Purchaser's right to require the Grantors to accept a general offer for the Shares under Clause 2.1.2(i) as the case may be , the Grantee shall use its reasonable endeavours to obtain from the SFC a ruling (the “SFC Ruling”) under the Takeovers Code as to whether exercise of the HC Construction Option is subject to Rule 25 of the Takeovers Code and if applicable, to apply for SFC consent under Rule 25 of the Takeovers Code; and

4.4.1

if the SFC Ruling is that the HC Construction Option will not breach Rule 25 of the Takeovers Code, the Options (and the right under Clause 2.1(i)) may only be exercised if the HC Construction Option is exercised and completed simultaneously;

4.4.2

if the SFC Ruling is that the exercise of the HC Construction Option will breach Rule 25 of the Takeovers Code (or if there are conditions to consent specified in the SFC Ruling ), the Options and the right under Clause 2.1.2(i) shall cease to be conditional upon exercise or completion of the HC Construction Option and accordingly may be exercised and completed independently of the HC Construction Option.

4.5	The Grantee shall use its reasonable endeavours to keep the Warrantors notified of the progress of the SFC Ruling before applying for and after obtaining the SFC Ruling.

4.6	The fee payable to the SFC in obtaining the SFC Ruling shall be shared as to half by the Grantee and as to half by the Warrantors.

4.7	The Grantee has the right, but not the obligation, to give the Exercise Notice and/or to complete the sale and purchase of the Option Shares.

4.8

After the giving of any Exercise Notice, the Grantee and the relevant Grantor(s) shall enter into formal sale and purchase agreement(s) containing such terms as the Grantor(s) and the Grantee may mutually agree within 15 days of the date of the Exercise Notice. If the said parties fail to execute formal sale and purchase agreement(s) in respect of the relevant Option Shares, the Grantee shall have the right at its absolute discretion (but not the obligation) to proceed with the purchase of the Option Shares upon the remaining terms of this Deed, and the Grantors shall be obliged to sell the Option Shares in accordance with Clause 6.

4.9	[* Material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 14-b2 of the Securities Exchange Act of 1934, as amended.]

5.	WARRANTIES AND UNDERTAKINGS

5.1	Each Individual Grantor warrants and represents that he or she has full power and authority to execute and deliver this Deed and to consummate the transactions contemplated under this Deed.

5.2	Each Grantor (other than the Individual Grantors) warrants and represents to the Grantee in the terms of the Warranties in paragraph 1 of Schedule 2 severally to the extent relating to the Option Shares owned by it as set out in Schedule 1.

5.3	Each Grantor warrants and represents to the Grantee in the terms of the Warranties in paragraph 2 of Schedule 2 (and in respect of paragraphs 2.1 and 2.2, severally and only to the extent relating to the Option Shares owned by it as set out in Schedule 1).

5.4	Each Warrantor warrants and represents to the Grantee in the terms of the Warranties in paragraphs 3 to 5 in Schedule 2.

5.5

The Grantors shall procure that the Warranties (save for the Warranties in paragraph 5 of Schedule 2, where relates only to the date of this Deed,) are true and accurate at all times up to and including Completion by reference to the facts and circumstances then subsisting and, for this purpose, such Warranties shall be deemed to be repeated at all times up to and including Completion as if any express or implied reference therein to the date of this Deed shall be replaced by a reference to the time at which such Warranty is deemed to be repeated.

5.6

The Grantee shall be entitled to claim both before and after Completion that any of the Warranties is or was untrue or misleading or has or had been breached even if the Grantee discovered or could have discovered on or before entering into this Deed and before Completion that the Warranty in question was untrue or misleading or had been breached and Completion shall not in any way constitute a waiver of any of the Grantee's rights.

5.7	The Grantee shall not, prior to the exercise or expiry of the Option Period and (if appropriate) Completion, transfer, dispose of, charge, pledge or encumber in any way its interests in any of the Option Shares.

5.8	The Warrantors shall use reasonable endeavours to procure that until the exercise or expiry of the Options and (if appropriate) Completion and save with the prior consent of the Grantee (which consent shall not be unreasonably withheld or delayed):

5.9

The Warrantors undertake to indemnify and keep indemnified at any time and from time to time the Grantee on demand from and against all claims, liabilities, losses, costs and expenses which the Grantee may suffer or incur or which may be made against the Grantee either before or after Completion in respect of any breach of the undertakings or indemnities in this Clause 5.

5.10	The total liability of each of the Grantors under this Deed shall not exceed the aggregate price for the Option Shares to be received by the respective Grantors .

5.11	Each of the Grantors shall have no liability under this Deed:

5.11.1

unless, in the case of any particular claim, the amount thereof shall exceed HK$1,000,000; or

5.11.2

until the aggregate amount of all valid claims which could otherwise be made under this Deed shall exceed HK$3,000,000,

5.12	The liability of each of the Grantors to the Grantee hereunder shall:

5.12.1

in relation to any of the Warranties on Taxation, cease upon expiry of 7 years from the date of Completion; and

5.12.2

in relation to any of the other Warranties or other indemnities, cease upon the earlier of the expiry of 2 years from the date of Completion.

6.	COMPLETION

6.1

Completion of the sale and purchase of the relevant Option Shares in relation to the exercise of the Options in full shall, subject to Clause 4.4, take place simultaneously with the completion of the sale and purchase of the Beijing Huicong Option Equity Interests under the HC Construction Option Deed at such time not later than 30 days after the date of the Exercise Notice or 5 Business Days after the exercise of the HC Construction Option becomes unconditional (excluding such conditions relating to the sale and purchase of the Option Shares), whichever is the later, and at such place in Hong Kong as may be specified in the Exercise Notice or otherwise notified by the Grantee.

6.2	At Completion, the following business shall be transacted:

6.2.1

the relevant Grantor(s) shall deliver or cause to be delivered to the Grantee duly executed instrument of transfer(s) and sold notes in respect of the relevant Option Shares as set out in the Exercise Notice in favour of the Grantee or its specified nominee accompanied by the share certificate(s) for the relevant Option Shares or, where applicable, procure its designated CCASS Participant to give irrevocable delivery instruction to effect a book entry settlement of the Option Shares in accordance with the General Rules and the Operational Procedures to the credit of the stock accounts of the CCASS Participants of the Grantee in accordance with the instructions provided to the Grantor by the Grantee prior to Completion;

6.2.2

the Grantee shall pay to the Grantors by electronic funds transfer to the Grantors’ respective bank accounts (as notified to the Grantee prior to such payment) an amount equal to the aggregate Exercise Price for such Option Shares; and

6.2.3

the Grantors shall procure that the directors of the Company shall approve the transfers of the Option Shares for registration and the entry of the transferee(s) in the register of members of the Company, in each case subject only to the transfers being subsequently presented duly stamped.

6.3	If any of the Grantors defaults (“Defaulting Grantor”) in transferring the relevant Option Shares:

6.3.1

the Grantee shall be deemed to be the duly appointed agent and attorney of the Defaulting Grantor with full irrevocable power to execute, complete and deliver in the name of and on behalf of the Defaulting Grantor a sale and transfer of the relevant Option Shares to the Grantee or its nominee;

6.3.2

the Grantee may request the Company to enter the name of the Grantee or its nominee in the register of members as the holder of the relevant Option Shares; and

6.3.3

the Grantee shall forthwith pay the aggregate Exercise Price into a separate bank account in the Grantee's name and, when the Defaulting Grantor shall deliver up its certificate or certificates for the relevant Option Shares to the Grantee, the Grantors shall thereupon be paid the aggregate Exercise Price, without interest and less any sums owed to the Grantee by the Grantors.

7.

GENERAL

7.1

Each party (including their representatives and authorised persons) shall, and shall use their reasonable endeavours to procure the Company that it shall, at all times keep confidential and not directly or indirectly make or allow any disclosure or use to be made of any information in its possession or otherwise obtained pursuant to this Deed relating to any other party, the Company and each of its subsidiaries or to the existence or subject matter of this Deed, except:

7.1.1

to the extent required by law or any regulatory body;

7.1.2

where the information is already disclosed in the public domain otherwise than pursuant to or arising from a breach by the Grantee or any Grantor (including their representatives and authorised persons) of its confidentiality undertaking under this Clause; or

7.1.3

with the consent of the other party (which consent shall not be unreasonably withheld).

7.2

Any announcement or circular required to be disclosed or issued by law or any regulatory body (including the SFC and the Stock Exchange) shall only be made or issued after consultation with the other parties and after taking into account the reasonable requirements of the other parties as to the contents of such announcement or circular. No party may assign (whether absolutely or by way of security and whether in whole or in part), transfer, mortgage, charge or otherwise dispose in any manner whatsoever of the benefit of this Deed and no party may sub-contract or delegate in any manner whatsoever its performance under this Deed except with the prior written consent of the other parties.

7.3	In the event of an assignment pursuant to Clause 7.2, the original contracting party remains liable to procure the performance of the obligations under the agreement by the assignee.

7.4

Each of the parties confirms that this Deed, represents the entire understanding, and constitutes the whole agreement, in relation to its subject matter and supersedes any previous agreement between the parties with respect thereto and, without prejudice to the generality of the foregoing, excludes any warranty, condition or other undertaking implied at law or by custom.

7.5	If any provision or part of this Deed is void or unenforceable due to any applicable law, it shall be deemed to be deleted and the remaining provisions of this Deed shall continue in full force and effect.

7.6

The Grantors shall after exercise of the Options execute all such deeds and documents and do all such things as the Grantee may reasonably require for perfecting the transactions intended to be effected under or pursuant to this Deed and for giving the Grantee the full benefit of the provisions of this Deed, including vesting in the Grantee the legal and beneficial title to the Option Shares.

7.7	The rights and remedies of the parties shall not be affected by the giving of any indulgence by any other party or by anything whatsoever except a specific waiver or release in writing and any such waiver or release shall not prejudice or affect any other rights or remedies of the parties.

7.8	This Deed may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which when executed and delivered shall be an original but all the counterparts together constitute one instrument.

7.9	No variation of this Deed (or any of the documents referred to in it) shall be valid unless it is in writing (which, for this purpose, does not include e-mail) and signed by or on behalf of each of the parties to this Deed.

7.10	The parties shall pay their own costs in connection with the preparation and negotiation of this Deed and any matter contemplated by it (including but not limited to their respective stamp duty, SFC transaction levy and Stock Exchange trading fee, if any).

7.11

No delay or failure by a party to exercise or enforce (in whole or in part) any right provided by this Deed or by law shall operate as a release or waiver, or in any way limit that party's ability to further exercise or enforce that, or any other, right. A waiver of any breach of any provision of this Deed shall not be effective, or implied, unless that waiver is in writing and is signed by the party against whom that ▇▇▇▇▇▇ is claimed.

7.12

The parties acknowledge and agree that in the event of a default by any party in the performance of their respective obligations under this Deed, the non-defaulting parties shall have the right to obtain specific performance of the defaulting party's obligations. Such remedy to be in addition to any other remedies provided under this Deed or at law.

8.

NOTICES

8.1	A notice (including any approval, consent or other communication) in connection with this Deed and the documents referred to in it:

8.1.1

must be in writing;

8.1.2

must be left at the address of the addressee or sent by pre-paid first class post (airmail if posted to or from a place outside Hong Kong) to the address of the addressee or sent by facsimile to the facsimile number of the addressee in each case

8.1.3

The relevant details of each party at the date of this Deed are:

8.1.4

for the avoidance of doubt, must not be sent by electronic mail.

8.2	In the absence of evidence of earlier receipt, any notice shall take effect from the time that it is deemed to be received in accordance with Clause 8.3 below.

8.3	Subject to Clause 8.4 below, a notice is deemed to be received:

8.3.1

in the case of a notice left at the address of the addressee, upon delivery at that address;

8.3.2

in the case of a posted letter, on the third day after posting or, if posted to or from a place outside Hong Kong, the seventh day after posting; and

8.3.3

in the case of a facsimile, on production of a transmission report from the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the recipient.

8.4	A notice received or deemed to be received in accordance with Clause 8.3 above on a day which is not a Business Day or after 5 p.m. on any Business Day, according to local time in the place of receipt, shall be deemed to be received on the next following Business Day.

8.5	A notice given or document supplied to [* Material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 14-b2 of the Securities Exchange Act of 1934, as amended.] in accordance

8.6	Each party undertakes to notify the other parties by notice served in accordance with this Clause if the address specified herein is no longer an appropriate address for the service of notices.

9.	GOVERNING LAW

9.1	This Deed shall be governed by, and construed in accordance with, Hong Kong law.

9.2	Each party irrevocably agrees for the benefit of the Grantee that the Courts of Hong Kong shall have non-exclusive jurisdiction in relation to any claim, dispute or difference concerning this Deed and any matter arising therefrom.

9.3	Each party irrevocably waives any right that it may have to object to an action being brought in those Courts, to claim that the action has been brought in an inconvenient forum, or to claim that those Courts do not have jurisdiction.

9.4

The submission to the jurisdiction of the Courts of Hong Kong shall not (and shall not be construed so as to) limit the right of the Grantee to bring legal proceedings in any other court of competent jurisdiction including without limitation the courts having jurisdiction by reason of the Grantee's domicile. Legal proceedings by the Grantee in any one or more jurisdictions shall not preclude legal proceedings by it in any other jurisdiction, whether by way of substantive action, ancillary relief, enforcement or otherwise.

9.5

The Grantee hereby appoints Publishers Representatives Limited, with correspondence address at c/o 22nd Floor, Vita Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (Attention: Legal Department), as its agent to accept service of legal process on its behalf. The Grantee hereby irrevocably agrees that if its process agent ceases to have an address in Hong Kong or ceases to act as its process agent, it shall appoint a new process agent acceptable to the other Parties and will deliver to each of the other parties to this Agreement within 14 days a copy of written acceptance of appointment by the new process agent.

9.6

Each Grantor hereby irrevocably appoints [* Material omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 14-b2 of the Securities Exchange Act of 1934, as amended.] as its/her/his agent to accept service of legal process on its/her/his behalf. Each Grantor irrevocably agrees that if its/her/his process agent ceases to have an address in Hong Kong or ceases to act as its/her/his process agent, it/she/he shall appoint a new process agent acceptable to the other Parties and will deliver each of the other parties to this Deed within 14 days a copy of written acceptance of appointment by the new process agent.

9.7

Subject to Clauses 9.5 and 9.6, each party agrees that without preventing any other mode of service, any document in an action (including, but not limited to, any writ of summons or other originating process or any third or other party notice) may be served on any party by being delivered to or left for that party at its address for service of notices under