OPTION AGREEMENT
This
Option Agreement (this “ Agreement
”) is dated December 23, 2007, and is entered into in
Beijing, China between Orient Come Holdings Limited, a company
incorporated under the laws of the British Virgin Islands,
located at Room 810, Block C2, Oriental Plaza, No. 1 Chang An
Street, Beijing, China 100738 (“ Party A
”), and Beijing K's Media Advertising Ltd. Co., a
limited liability company organized under the laws of the PRC
(“ Party B
”), with a registered address at Room 211, No. 31, Yan
Xi Street, Yan Xi Economic Zone, Huai Rou District, Beijing,
China, and shareholders holding 100% outstanding shares of
Party B (the “ Shareholders
” or " Party C
"). Party A and Party B, and Shareholders are referred to
collectively in this Agreement as the “ Parties
.”
RECITALS
1.
Party A is a company incorporated under the laws of the
British Virgin Islands, which has the expertise in the
business of media and media placements;
2.
Party B is a company incorporated in Beijing, China, and is an
emerging outdoor media company, which will place
advertisements that contain premium bands in KTV nightclubs
(the “Business”);
3.
Party C are the
Shareholders of Party B. Party C has the ownership of 100% equity
interests in Party B (each, an “ Equity
Interest ” and collectivel
y the “
Equity
Interests ” );
4.
A series of
agreements such as the Business Cooperation Agreement (the
“ Service
Agreement ” ) have been entered into by
Parties A and B as of December 23 , 2007;
5.
An Equity Pledge
Agreement (the “ Pledge Agreement”
) has been ent
ered into b
y the Parties as of
December 23 ,
2007;
6.
The Parties are
entering into this Option Agreement in conjunction with the Pledge
Agreement, Consulting Services Agreement and related
agreements.
NOW, THEREFORE , the Parties to this Agreement hereby agree
as follows:
1.
Purchase and Sale of Equity Interest .
1.1
Grant of Rights . Party C (hereafter collectively the
“ Transferor
”) hereby irrevocably grants to Party A an option to purchase
or cause any person designated by Party A(“Designated
Persons”) to purchase, to the extent permitted under PRC Law,
according to the steps determined by Party A, at the price
specified in Section 1.3 of this Agreement, at any time from the
Transferor a portion or all of the equity interests held by
Transferor in Party B (the “ Option
”). No Option shall be granted by Transferor to any third
party other than Party A and/or the Designated Persons. Party B
hereby agrees to the granting of the Option by Party C to Party A
and/or the Designated Persons. The "person” set forth in this
clause and this Agreement means an individual, corporation, joint
venture, partnership, enterprise, trust or a non-corporation
organization.
1.2
Exercise of Rights . According to the stipulations of PRC
laws and regulation, Party A and/or the Designated Persons may
exercise Option by issuing a written notice (the “
Notice
”)to the Transferor and specifying the equity interest
purchased from Transferor (the "Purchased Equity
Interest ”) and the manner of purchase.
1.3
Purchase Price . For Party A
to exercise the Option, the purchase price of the Purchased Equity
Interest (“ Purchase Price
”) shall be One Hundred Dollars ($100.00), unless the
applicable PRC laws and regulations require appraisal of the equity
interests or stipulate other restrictions on the purchase price of
equity interests.
1.4
Transfer of the Purchased Equity Interest. Upon each exercise of
the Option rights under this Agreement :
1.4.1
Party B shall convene a shareholders' meeting upon request by the
Transferor, and Transferor agrees to call such meeting. During the
me eting, the
resolutions shall be proposed, approving the transfer of the
appropriate Equity Interest to Party A and/or the Designated
Persons;
1.4.2
The Transferor shall, upon the terms and conditions of this
Agreement and the Notice related to the Purchased Equi
ty Interest, enter
into Equity Interest purchase agreement in a form reasonably
acceptable to Party A, with Party A and/or the Designated Persons
(as applicable);
1.4.3
The related parties shall execute all other requisite contracts,
agreements or documents, obt ain all requisite approval and
consent of the government, conduct all necessary actions, without
any security interest, transfer the valid ownership of the
Purchased Equity Interest to Party A and/or the Designated Persons,
and cause Party A and/or the De s ignated Persons to be the
registered owner of the Purchased Equity Interest. In this clause
and this Agreement, “ Security Interest”
means any mortgage,
pledge, the right or interest of the third party, any purchase
right of equity interest, right of acqui s ition, right of first refusal,
right of set-off, ownership detainment or other security
arrangements, however, it does not include any security interest
created under the Equity Pledge Agreement.
1.5
Payment.
The payment of the Purchase Price shall be determined by the consultation of Party A
and/or the Designated Persons with the Transferor according to the
applicable laws at the time of exercise of the
Option.
2.
Promises Relating to Equity Interest .
2.1
Promises Related to Party B . Party B and Party C hereby
promis e:
2.1.1
Without prior written consent by Party A, not, in any form, to
supplement, change or renew the Articles of Association of Party B,
to increase or decrease registered capital of the corporation, or
to change the structure of the registered capital in any
other
forms;
2.1.2
According to
customary fiduciary standards applicable to managers with respect
to corporations and their shareholders, to maintain the existence
of the corporation, prudently and effectively operate the
business;
2.1.3
Without prior written consent by Party A, not, upon the
execution of this Agreement, to sell, transfer, mortgage or
dispose, in any other form, any asset, legitimate or beneficial
interest of business or income of Party B, or encumber or approve
any encumbrance or imposition of any s e curity interest on Party A's
assets;
2.1.4
Without prior written notice by Party A, not issue or provide any
guarantee or permit the existence of any debt, other than (i) the
debt arising from normal or daily business but not from borrowing;
and (ii) the debt di sclosed to Party A and obtained
the written consent from Party A;
2.1.5
To normally operate all business to maintain the asset value of
Party B, without taking any action or failing to take any action
that would result in a material adverse effect on the
busines s or
asset value of Party B;
2.1.6
Without prior written consent by Party A, not to enter into any
material agreement, other than agreements in the ordinary course of
business (for purposes of this paragraph, if the amount of the
Agreement involves an amount tha t exceeds a hundred thousand Yuan
(RMB 100,000) the agreement shall be deemed
material);
2.1.7
Without prior written
consent by Party A, not to provide loan or credit loan to any
others;
2.1.8
Upon the request of Party A, to provide all materials of operation
and fina nce
relevant to Party B;
2.1.9
To Purchase and hold the insurance from an insurance company
accepted by Party A, the insurance amount and category shall be the
same with those held by the companies in the same industry or
field, operating the similar business an d owning the similar properties
and assets as Party B;
2.1.10
Without prior written
consent by Party A, not to cause Party B to merge or associate with
any person, or acquire or invest in any person;
2.1.11
To notify Party A of the occurrence or the potential
occurrence of
the litigation, arbitration or administrative procedure related to
the assets, business and income of Party B;
2.1.12
To cause Party B to maintain and preserve all its assets, and to
execute all requisite or appropriate documents, take all requisite
or approp riate actions, and pursue all
appropriate claims, or make requisite or appropriate pleas for all
claims;
2.1.13
Without prior written
notice by Party A, not to assign equity interests to shareholders
in any form;
2.1.14
According to the request of Party A, to appoint an
y person designated
by Party A to be the directors of Party B.
2.2
Promises Related to Transferor . Party C hereby
promises:
2.2.1
Without prior written consent by Party A, not, upon the execution
of this Agreement, to sell, transfer, mortgage or dispose in any
other form any
legitimate or beneficial interest of equity interest, or to approve
any other security interest set on it, with the exception of the
pledge set on the equity interest of the Transferor subject to
Equity Pledge Agreement;
2.2.2
Without the prior written notice by Party A, not to decide
or support or execute any shareholder resolution at any shareholder
meeting of Party B that approves any sale, transfer, mortgage or
dispose of any legitim
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