EXHIBIT 10.5
Confidential Execution Copy
CALL OPTION AGREEMENT
AMONG
XXXXX XXXXXXX XXXXX
XXXXX XXX XX
SHANGHAI FOCUS MEDIA ADVERTISEMENT CO., LTD.
FOCUS MEDIA TECHNOLOGY (SHANGHAI) CO., LTD.
AND
THE ADVERTISING COMPANIES LISTED IN APPENDIX I
MARCH 28, 2005
CALL OPTION AGREEMENT
This CALL OPTION AGREEMENT (this "AGREEMENT") is entered into in Shanghai of the
People's Republic of China (the "PRC") as of March 28, 2005 by and among the
following Parties:
(1) XXXXX XXXXXXX XXXXX
ADDRESS: Floor 28 Zhaofeng Shimao Tower, 000 Xxxxxxx Xxxx, Xxxxxxxx
IDENTITY CARD NUMBER: 310109730305521
(2) XXXXX XXX XX
ADDRESS: Floor 28 Zhaofeng Shimao Tower, 000 Xxxxxxx Xxxx, Xxxxxxxx
IDENTITY CARD NUMBER: 310106731015081
(3) SHANGHAI FOCUS MEDIA ADVERTISEMENT CO., LTD. (hereinafter "FOCUS MEDIA
ADVERTISEMENT")
REGISTERED ADDRESS: F Room 1003, Xx. 0000, Xxxxxxxxx Xxxx, Xxxxxxxxx
Xxxxxxxx, Xxxxxxxx
LEGAL REPRESENTATIVE: Xxxxx Xxxxxxx Xxxxx
(4) FOCUS MEDIA TECHNOLOGY (SHANGHAI) CO., LTD.( "FOCUS MEDIA TECHNOLOGY")
REGISTERED ADDRESS: E Room 1003, Xx. 0000, Xxxxxxxxx Xxxx, Xxxxxxxxx
Xxxxxxxx, Xxxxxxxx
LEGAL REPRESENTATIVE: Xxxxx Xxxxxxx Xxxxx
(5) THE ADVERTISING COMPANIES LISTED IN APPENDIX I
(Xxxxx Xxxxxxx Xxxxx and Xxxxx Xxx Xx hereinafter shall be individually
referred to as a "PERSONAL SHAREHOLDER" and collectively, the "PERSONAL
SHAREHOLDERS". The Personal Shareholders and Focus Media Advertisement
hereinafter individually referred to as a "SHAREHOLDER" and collectively,
the "SHAREHOLDERS". The Shareholders, Focus Media Technology and the
advertising companies listed in Appendix I hereinafter shall be
individually referred to as a "PARTY" and collectively referred to as the
"PARTIES".)
WHEREAS
(1) Xxxxx Xxx Xx and Focus Media Advertisement are the enrolled shareholders
of the company listed in Section I, Appendix I attached hereto, legally
holding all the equity of the company listed in Appendix I as of the
execution date of this Agreement.
(2) Focus Media Advertisement is the enrolled shareholder of the companies
listed in Section II, Appendix I attached hereto, legally holding the
majority equity of such
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companies (please refer to Section II, Appendix I for specific
shareholding percentage) as of the execution date of this Agreement.
(3) Xxxxx Xxxxxxx Xxxxx and Xxxxx Xxx Xx are the enrolled shareholders of
Focus Media Advertisement, legally holding all the equity in Focus Media
Advertisement, of which Xxxxx Xxxxxxx Xxxxx holding 85% interest and Xxxxx
Xxx Xx holding 15%.
(4) The Shareholders intend to transfer to Focus Media Technology, and Focus
Media Technology is willing to accept, all their respective equity
interest in the Target Companies (as defined below), to the extent not
violating PRC Law.
(5) In order to conduct the above equity transfer, the Shareholders agree to
jointly grant Focus Media Technology an irrevocable call option for equity
transfer (hereinafter the "CALL OPTION"), under which and to the extent
permitted by PRC Law, the Shareholders shall on demand of Focus Media
Technology transfer the Option Equity (as defined below) to Focus Media
Technology and/or any other entity or individual designated by it in
accordance with the provisions contained herein.
(6) Focus Media Advertisement intends to transfer to Focus Media Technology
all of its assets and liabilities to the extent not violating PRC Law. In
order to conduct the above asset transfer, Focus Media Advertisement
agrees to grant Focus Media Technology an irrevocable call option for
assets (hereinafter the "ASSET CALL OPTION"), under which and to the
extent as permitted by PRC Law, Focus Media Advertisement shall on demand
of Focus Media Technology transfer the assets and liabilities to Focus
Media Technology and/or any other entity or individual designated by it in
accordance with the provisions contained herein.
THEREFORE, the Parties hereby have reached the following agreement upon mutual
consultations:
ARTICLE 1 - DEFINITION
1.1 Except as otherwise construed in the context, the following terms in this
Agreement shall be interpreted to have the following meanings:
"PRC LAW" shall mean the then valid laws, administrative regulations,
administrative rules, local regulations, judicial interpretations and other
binding regulatory documents of the People's Republic of China.
"OPTION EQUITY" shall mean, in respect of each of the Shareholders, all of the
equity interest held thereby in the Target Company Registered Capital (as
defined below).
"TARGET COMPANY" shall mean, to Xxxxx Xxxxxxx Xxxxx, Focus Media Advertisement;
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to Xxxxx Xxx Xx, Focus Media Advertisement and/or any and all of the companies
listed in Section I, Appendix I; and to Focus Media Advertisement, any and all
of the companies listed in Appendix I.
"TARGET COMPANY REGISTERED CAPITAL" shall mean the registered capital of Focus
Media Advertisement as of the execution date of this Agreement, i.e.,
RMB50,000,000, and the registered capital of each Target Company as listed in
Appendix I, which shall include any expanded registered capital as the result of
any capital increase within the term of this Agreement.
"TRANSFERRED EQUITY" shall mean the equity of Target Company which Focus Media
Technology has the right to require the Shareholders to transfer to it or its
designated entity or individual when Focus Media Technology exercises its Call
Option (hereinafter the "EXERCISE OF OPTION") in accordance with Article 3.2
herein, the amount of which may be all or part of the Option Equity and the
details of which shall be determined by Focus Media Technology at its sole
discretion in accordance with the then valid PRC Law and from its commercial
consideration.
"TRANSFER PRICE" shall mean all the consideration that Focus Media Technology or
its designated entity or individual is required to pay to the Shareholders in
order to obtain the Transferred Equity upon each Exercise of Option. Upon each
Exercise of Option of any Target Company by Focus Media Technology, all the
Transfer Price that Focus Media Technology or its designated entity or
individual shall pay to the Shareholders shall be calculated by multiplying the
ratio of such Option Equity to the registered capital of such Target Company
with the total amount of the registered capital of such Target Company. If there
exists any regulatory provision with respect to Transfer Price under the then
PRC Law, Focus Media Technology or its designated entity or individual shall be
entitled to determine the lowest price permitted by PRC Law as the Transfer
Price.
"BUSINESS PERMITS" shall mean any approvals, permits, filings, registrations
etc. which Focus Media Advertisement is required to have for legally and validly
operating its advertisement designing, producing, agency, publishing and all
such other businesses, including but not limited to the Business License of the
Corporate Legal Person, the Tax Registration Certificate, the Permit for
Operating Advertising Businesses and such other relevant licenses and permits as
required by the then PRC Law.
"TARGET COMPANY ASSETS" shall mean, in respect of any Target Company, all the
tangible and intangible assets which such Target Company owns or has the right
to use during the term of this Agreement, including but not limited to any
immoveable and moveable assets, and such intellectual property rights as
trademarks, copyrights, patents, proprietary know-how, domain names and software
use rights.
"FOCUS MEDIA DIGITAL" shall mean Focus Media Digital Information Technology
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(Shanghai) Co., Ltd., a limited liability company duly incorporated and validly
existing under PRC law, with its legal address at Xxxx X00 Xxxxx 00, 000 Xxxxxxx
Xxxx, Xxxxxxxx.
"TECHNOLOGY LICENSE AND SERVICE AGREEMENT" shall mean the Technology License and
Service Agreement entered into among each Target Company and Focus Media Digital
dated March 28, 2005.
"BUSINESS COOPERATION AGREEMENT" shall mean the Business Cooperation Agreement
entered into among each Target Company dated March 28, 2005.
"TRADEMARK LICENSE AGREEMENT" shall mean the Trademark License Agreement entered
into among each Target Company, Focus Media Technology and Focus Media
Advertisement dated March 28, 2005.
"MATERIAL AGREEMENT" shall mean an agreement to which any Target Company is a
party and which has a material impact on the businesses or assets of the Target
Company, including but not limited to the Technology License and Service
Agreement among the Target Company and Focus Media Digital, the Trademark
License Agreement between the Target Company and focus Media Technology, the
Business Cooperation Agreement among the Target Company and other Target
Companies and other agreements regarding the Target Company's advertising
business.
"LOAN AGREEMENT" shall mean to Xxxxx Xxxxxxx Xxxxx, the Loan Agreement entered
into between him and Focus Media Technology dated March 28, 2005; and to Xxxxx
Xxx Xx, the Loan Agreement entered into among him, Focus Media Technology and
Focus Media Advertisement dated March 28, 2005.
1.2 The references to any PRC Law herein shall be deemed
(1) to include the references to the amendments, changes, supplements
and reenactments of such law, irrespective of whether they take
effect before or after the formation of this Agreement; and
(2) to include the references to other decisions, notices or regulations
enacted in accordance therewith or effective as a result thereof.
1.3 Except as otherwise stated in the context herein, all references to an
Article, clause, item or paragraph shall refer to the relevant part of
this Agreement.
ARTICLE 2 - GRANT OF CALL OPTION
The Parties agree that the Shareholders exclusively grant Focus Media
Technology hereby irrevocably and without any additional conditions with a
Call Option, under which Focus Media Technology shall have the right to
require the
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Shareholders to transfer the Option Equity to Focus Media Technology or
its designated entity or individual in such method as set out herein and
as permitted by PRC Law. Focus Media Technology also agrees to accept such
Call Option.
ARTICLE 3 - METHOD OF EXERCISE OF OPTION
3.1 To the extent permitted by PRC Law, Focus Media Technology shall have the
sole discretion to determine the specific time, method and times of its
Exercise of Option.
3.2 If the then PRC Law permits Focus Media Technology and/or other entity or
individual designated by it to hold all the equity interest of Target
Company, then Focus Media Technology shall have the right to elect to
exercise all of its Call Option at once, where Focus Media Technology
and/or other entity or individual designated by it shall accept all the
Option Equity from the Shareholders at once; if the then PRC Law permits
Focus Media Technology and/or other entity or individual designated by it
to hold only part of the equity in Target Company, Focus Media Technology
shall have the right to determine the amount of the Transferred Equity
within the extent not exceeding the upper limit of shareholding ratio set
out by the then PRC Law (hereinafter the "SHAREHOLDING LIMIT"), where
Focus Media Technology and/or other entity or individual designated by it
shall accept such amount of the Transferred Equity from the Shareholders.
In the latter case, Focus Media Technology shall have the right to
exercise its Call Option at multiple times in line with the gradual
deregulation of PRC Law on the permitted Shareholding Limit, with a view
to ultimately acquiring all the Option Equity.
3.3 At each Exercise of Option by Focus Media Technology, each of the
Shareholders shall transfer their respective equity in the Target Company
to Focus Media Technology and/or other entity or individual designated by
it respectively in accordance with the amount required in the Exercise
Notice stipulated in Article 3.5. Focus Media Technology and other entity
or individual designated by it shall pay the Transfer Price to each of the
Shareholders who has transferred the Transferred Equity for the
Transferred Equity accepted in each Exercise of Option. Focus Media
Technology shall have the right to elect to pay the purchase price by
settlement of certain credits held by it or its affiliates to the
shareholders.
3.4 In each Exercise of Option, Focus Media Technology may accept the
Transferred Equity by itself or designate any third party to accept all or
part of the Transferred Equity.
3.5 On deciding each Exercise of Option, Focus Media Technology shall issue to
the Shareholders a notice for exercising the Call Option (hereinafter the
"EXERCISE NOTICE", the form of which is set out as Appendix II hereto).
The
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Shareholders shall, upon receipt of the Exercise Notice, forthwith
transfer all the Transferred Equity in accordance with the Exercise Notice
to Focus Media Technology and/or other entity or individual designated by
Focus Media Technology in such method as described in Article 3.3 herein.
3.6 The Shareholders hereby severally undertake and guarantee that once Focus
Media Technology issues the Exercise Notice in respect to the specific
Transferred Equity of the Target Company held by it:
(1) it shall immediately hold or request to hold a shareholders' meeting
of the Target Company and adopt a resolution through the
shareholders' meeting, and take all other necessary actions to agree
to the transfer of all the Call Option to Focus Media Technology
and/or other entity or individual designated by it at the Transfer
Price and waive the possible preemption;
(2) it shall immediately enter into an equity transfer agreement with
Focus Media Technology and/or other entity or individual designated
by it for transfer of all the Transferred Equity to Focus Media
Technology and/or other entity or individual designated by it at the
Transfer Price; and
(3) it shall provide Focus Media Technology with necessary support
(including providing and executing all the relevant legal documents,
processing all the procedures for government approvals and
registrations and bearing all the relevant obligations) in
accordance with the requirements of Focus Media Technology and of
the laws and regulations, in order that Focus Media Technology
and/or other entity or individual designated by it may take all the
Transferred Equity free from any legal defect.
3.7 At the meantime of this Agreement, the Shareholders shall respectively
enter into a power of attorney (hereinafter the "POWER OF ATTORNEY", the
form of which is set out as Appendix III hereto), authorizing in writing
any person designated by Focus Media Technology to, on behalf of such
Shareholder, to enter into any and all of the legal documents in
accordance with this Agreement so as to ensure that Focus Media Technology
and/or other entity or individual designated by it take all the
Transferred Equity free from any legal defect. Such Power of Attorney
shall be delivered for custody by Focus Media Technology and Focus Media
Technology may, at any time if necessary, require the Shareholders to
enter into multiple copies of the Power of Attorney respectively and
deliver the same to the relevant government department.
3.8 The payments of the Transferred Price made by Focus Media Technology to
the Personal Shareholders upon each Exercise of Option of a Target Company
shall be first used to repay the relevant loans advanced to the Personal
Shareholders
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under the Loan Agreements.
ARTICLE 4 - ASSET CALL OPTION
Focus Media Advertisement and the Personal Shareholders hereby further
undertake to grant Focus Media Technology irrevocably an option to
purchase assets within the term of this Agreement: to the extent not
violating the mandatory requirements under PRC Law, Focus Media
Advertisement will transfer all of its assets and liabilities to Focus
Media Technology and/or other entity or individual designated by it at the
price equivalent to the registered capital of Focus Media Advertisement
(including any expanded registered capital as the result of any capital
increase within the term of this Agreement.) when required by Focus Media
Technology; Focus Media Technology shall also have the right to elect to
purchase part of the assets/liabilities of Focus Media Advertisement,
under which circumstance the Transfer Price shall be calculated on a
prorata basis accordingly.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
5.1 Each of the Shareholders hereby severally represents and warrants in
respect to it self and the Target Company in which he holds equity as
follows:
5.1.1 Each of the Personal Shareholders is a PRC citizen with full
capacity, with full and independent legal status and legal capacity
to execute, deliver and perform this Agreement, and may act
independently as a litigant party. Each of the Personal Shareholders
has full power and authorization to execute and deliver this
Agreement and all the other documents to be entered into by it in
relation to the transaction referred to herein, and it has the full
power and authorization to complete the transaction referred to
herein.
5.1.2 This Agreement is executed and delivered by Personal Shareholders
legally and properly. This Agreement constitutes the legal and
binding obligations on Personal Shareholders and is enforceable on
it in accordance with its terms and conditions.
5.1.3 The Personal Shareholders are the enrolled legal owner of the Option
Equity as of the effective date of this Agreement, and except the
rights created by this Agreement, the Shareholders' Voting Rights
Proxy Agreement entered into by Personal Shareholders, Focus Media
Technology and their respective Target Company dated March 28, 2005
(the "PROXY AGREEMENT", the Equity Pledge Agreement entered into by
it, Focus Media Technology, the Target Company and Focus Media
Digital dated March 28, 2005 (the "EQUITY PLEDGE AGREEMENT", there
is no lien, pledge, claim and other encumbrances and third party
rights on the Option Equity. In accordance with this Agreement,
Focus Media
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Technology and/or other entity or individual designated by it may,
after the Exercise of Option, obtain the proper title to the
Transferred Equity free from any lien, pledge, claim and other
encumbrances and third party rights.
5.1.4 Target Company shall obtain complete Business Permits as necessary
for its operations upon this Agreement taking effect, and Target
Company shall have sufficient rights and qualifications to operate
within PRC the businesses of advertising and other business relating
to its current business structure. Target Company has conducted its
business legally since its establishment and has not incurred any
cases which violate or may violate the regulations and requirements
set forth by the departments of commerce and industry, tax, culture,
news, quality technology supervision, labor and social security and
other governmental departments or any disputes in respect of breach
of contract.
5.2 Focus Media Advertisement hereby represents and warrants in respect to it
self and the Target Company in which it holds equity as follows:
5.2.1 Focus Media Advertisement is a limited liability corporation duly
registered and validly existing under PRC Law, with independent
status as a legal person; Focus Media Advertisement has full and
independent legal status and legal capacity to execute, deliver and
perform this Agreement, and may act independently as a subject of
actions.
5.2.2 Focus Media Advertisement has full power and authorization to
execute and deliver this Agreement and all the other documents to be
entered into by it in relation to the transaction referred to
herein, and it has the full power and authorization to complete the
transaction referred to herein.
5.2.3 This Agreement is executed and delivered by Focus Media
Advertisement legally and properly. This Agreement constitutes legal
and binding obligations on it.
5.2.4 Focus Media Advertisement is the enrolled legal shareholder of the
Option Equity when this Agreement comes into effect, except the
rights created by this Agreement, the Proxy Agreement, the Equity
Pledge Agreement, there is no lien, pledge, claim and other
encumbrances and third party rights on the Option Equity. In
accordance with this Agreement, Focus Media Technology and/or other
entity or individual designated by it may, upon the Exercise of
Option, obtain the proper title to the Transferred Equity free from
any lien, pledge, claim and other encumbrances and third party
rights.
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5.2.5 Target Company shall obtain complete Business Permits as necessary
for its operations upon this Agreement taking effect, and Target
Company shall have sufficient rights and qualifications to operate
within PRC the businesses of advertising and other business relating
to its current business structure. Target Company has conducted its
business legally since its establishment and has not incurred any
cases which violate or may violate the regulations and requirements
set forth by the departments of commerce and industry, tax, culture,
news, quality technology supervision, labor and social security and
other governmental departments or any disputes in respect of breach
of contract.
5.2.6 The remaining shareholders of the Target Companies set out in
Section II, Appendix I hereto have given written approvals regarding
the content of this Agreement and have irrevocably undertaken, upon
the Exercise of Option by Focus Media Advertisement of Option Equity
in accordance with this Agreement, to respectively waive possible
rights of preemption and offer necessary assistance.
5.3 Focus Media Technology hereby represents and warrants as follows:
5.3.1 Focus Media Technology is a company with limited liability properly
registered and legally existing under PRC Law, with an independent
status as a legal person. Focus Media Technology has full and
independent legal status and legal capacity to execute, deliver and
perform this Agreement and may act independently as a subject of
actions.
5.3.2 Focus Media Technology has full power and authorization to execute
and deliver this Agreement and all the other documents to be entered
into by it in relation to the transaction referred to herein, and it
has the full power and authorization to complete the transaction
referred to herein.
ARTICLE 6 - UNDERTAKINGS BY THE SHAREHOLDERS
6.1 The Shareholders hereby individually undertake within the term of this
Agreement that it must take all necessary measures to ensure that Target
Company is able to obtain all the Business Permits necessary for its
business in a timely manner and all the Business Permits remain in effect
at any time.
6.2 The Shareholders hereby individually undertake within the term of this
Agreement that without the prior written consent by Focus Media
Technology,
6.2.1 no Shareholders shall transfer or otherwise dispose of any Option
Equity
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or create any encumbrance or other third party rights on any Option
Equity;
6.2.2 it shall not increase or decrease the Target Company Registered
Capital or cast affirmative vote regarding the aforesaid increase
or decrease in registered capital;
6.2.3 it shall not dispose of or cause the management of Target Company
to dispose of any of the Target Company Assets (except as occurs
during the arm's length operations);
6.2.4 it shall not terminate or cause the management of Target Company to
terminate any Material Agreements entered into by Target Company,
or enter into any other Material Agreements in conflict with the
existing Material Agreements;
6.2.5 it shall not individually or collectively cause each Target Company
to conduct any transactions that may substantively affect the
asset, liability, business operation, equity structure, equity of a
third party and other legal rights (except those occurring during
the arm's length operations or daily operation, or having been
disclosed to and approved by Focus Media Technology in writing);
6.2.6 it shall not appoint or cancel or replace any executive directors
or members of board of directors (if any), supervisors or any other
management personnel of Target Company to be appointed or dismissed
by the Shareholders;
6.2.7 it shall not announce the distribution of or in practice release
any distributable profit, dividend or share profit or cast
affirmative votes regarding the aforesaid distribution or release;
6.2.8 it shall ensure that Target Company shall validly exist and prevent
it from being terminated, liquidated or dissolved;
6.2.9 it shall not amend the Articles of Association of Target Company or
cast affirmative votes regarding such amendment;
6.2.10 it shall ensure that Target Company shall not lend or borrow any
money, or provide guarantee or engage in security activities in any
other forms, or bear any substantial obligations other than on the
arm's length basis; and
6.2.11 If it acquires any equity interest of a new advertising company
other than the Target Company within the term of this Agreement and
such
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new advertising company's business relies on the technical license
and service provided by Focus Media Technology and/or Focus Media
Digital, it shall grant Focus Media Technology Transferred Option in
respect to the equity interest held by it in such advertising
company subject to and upon the same terms and conditions of this
Agreement.
6.3 The Shareholders hereby individually undertake that it must make all its
efforts during the term of this Agreement to develop the business of
Target Company, and ensure that the operations of Target Company are legal
and in compliance with the regulations and that it shall not engage in any
actions or omissions which might harm the Target Company Assets or its
credit standing or affect the validity of the Business Permits of Target
Company.
6.4 Without limiting the generality of Article 6.3 above, considering the fact
that each Shareholder of each Target Company sets aside all the equity
interest held thereby in each Target Company as security to secure the
performance by each Target Company of the obligations under the Technology
License and Service Agreement, the Business Cooperation Agreement and the
Trademark License Agreement, the performance of such Shareholder of the
obligations under the Proxy Agreement, and the performance of each
Personal Shareholder of his obligations under the Loan Agreements, the
Shareholder undertakes to, within the term of this Agreement, make full
and due performance of any and all of the obligations on the part thereof
under the Proxy Agreement and the Loan Agreement, and to procure the full
and due performance of each Target Company of any and all of its
obligations under the Technology License and Service Agreement, the
Business Cooperation Agreement and the Trademark License Agreement, and
warrants that no adverse impact on exercising the rights under this
Agreement by Focus Media Technology will be incurred due to the breach by
the Shareholder of the Proxy Agreement and the Loan Agreements or the
breach of the Target Company of the Technology License and Service
Agreement, the Business Cooperation Agreement and the Trademark License
Agreement. Personal Shareholders
6.5 Focus Media Advertisement undertakes that, before its Exercise of Option
and acquire all equity of Focus Media Advertisement, Focus Media
Advertisement shall not do the following:
6.5.1 Sell, transfer, mortgage or dispose by other way any assets,
business, revenue or other legal rights of its own or any Target
Company, or permit creating any encumbrance or other third party's
interest on such assets, business, revenue or other legal rights
(except as occurs during the arm's length or operations or daily
operation, or as is disclosed to Focus Media Technology and approved
by Focus Media Technology in writing);
6.5.2 conduct any transactions that may substantively affect the asset,
liability, business operation, equity structure, equity of a third
party and other
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legal rights (except those occurring during the arm's length
operations or daily operation, or having been disclosed to Focus
Media Technology and approved by Focus Media Technology in writing);
6.5.3 release any dividend or share profit to the Personal Shareholders or
cause the Target Company to do so in any form.
ARTICLE 7 - CONFIDENTIALITY
7.1 Notwithstanding the termination of this Agreement, the Shareholders shall
be obligated to keep in confidence the following information (hereinafter
collectively the "CONFIDENTIAL INFORMATION"):
(i) information on the execution, performance and the contents of this
Agreement;
(ii) the commercial secret, proprietary information and customer
information in relation to Focus Media Technology known to or
received by it as the result of execution and performance of this
Agreement; and
(iii) the commercial secrets, proprietary information and customer
information in relation to Target Company known to or received by it
as the shareholder of Target Company.
The Shareholders may use such Confidential Information only for the
purpose of performing its obligations under this Agreement. No
Shareholders shall disclose the above Confidential Information to any
third parties without the written consent from Focus Media Technology, or
they shall bear the default liability and indemnify the losses.
7.2 Upon termination of this Agreement, both Shareholders shall, upon demand
by Focus Media Technology, return, destroy or otherwise dispose of all the
documents, materials or software containing the Confidential Information
and suspend using such Confidential Information.
7.3 Notwithstanding any other provisions herein, the validity of this Article
shall not be affected by the suspension or termination of this Agreement.
ARTICLE 8 - TERM OF AGREEMENT
8.1 This Agreement shall take effect as of the date of formal execution by the
Parties. For each Shareholder, this Agreement shall terminate in respect
to such Shareholder when all the Option Equity of all the Target Company
held by him is legally transferred under the name of Focus Media
Technology and/or other entity or individual designated by it in
accordance with the provisions of this Agreement.
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8.2 After termination of this Agreement in respect to such Shareholder
according to Article 8.1 above, this Agreement continues to be fully valid
in respect to other Shareholders.
ARTICLE 9 - NOTICE
9.1 Any notice, request, demand and other correspondences made as required by
or in accordance with this Agreement shall be made in writing and
delivered to the relevant Party.
9.2 The abovementioned notice or other correspondences shall be deemed to have
been delivered when it is transmitted if transmitted by facsimile or
telex; it shall be deemed to have been delivered when it is delivered if
delivered in person; it shall be deemed to have been delivered five (5)
days after posting the same if posted by mail.
ARTICLE 10 - LIABILITY FOR BREACH OF CONTRACT
10.1 The Parties agree and confirm that, if any party (hereinafter the
"DEFAULTING PARTY") breaches substantially any of the provisions herein or
omits substantially to perform any of the obligations hereunder, or fails
substantially to perform any of the obligations under this Agreement, such
a breach or omission shall constitute a default under this Agreement
(hereinafter a "DEFAULT"), then non-defaulting Party shall have the right
to require the Defaulting Party to rectify such Default or take remedial
measures within a reasonable period. If the Defaulting Party fails to
rectify such Default or take remedial measures within such reasonable
period or within ten (10) days of non-defaulting Party's notifying the
Defaulting Party in writing and requiring it to rectify the Default, then
non-defaulting Party shall have the right at its own discretion to select
any of the following remedial measures:
(1) to terminate this Agreement and require the Defaulting Party to
indemnify it for all the damage; or
(2) mandatory performance of the obligations of the Defaulting Party
hereunder and require the Defaulting Party to indemnify it for all
the damage.
10.2 Without limiting the generality of Article 10.1, any breach of the Proxy
Agreement, the Equity Pledge Agreement or the Loan Agreement shall be
deemed as having constituted the breach by such Shareholder of this
Agreement; and any breach by Target Company of any provision in the
Technology License and Service Agreement, the Business Cooperation
Agreement or Trademark License Agreement, if attributable to the failure
of any Shareholder to perform the obligations thereof under Article 6.4
hereof,
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shall be deemed as having constituted the breach by such Shareholder of
this Agreement.
10.3 The Parties agree and confirm that in no circumstances shall the
Shareholders request the termination of this Agreement for any reason,
except otherwise stipulated by law or this Agreement.
10.4 Notwithstanding any other provisions herein, the validity of this Article
shall stand disregarding the suspension or termination of this Agreement.
ARTICLE 11 - MISCELLANEOUS
11.1 This Agreement shall be prepared in the Chinese language in twenty-one ()
original copies, with each involved Party holding one (1) copy hereof.
11.2 The formation, validity, execution, amendment, interpretation and
termination of this Agreement shall be subject to PRC Law.
11.3 Any disputes arising hereunder and in connection herewith shall be settled
through consultations among the Parties, and if the Parties cannot reach
an agreement regarding such disputes within thirty (30) days of their
occurrence, such disputes shall be submitted to China International
Economic and Trade Arbitration Commission Shanghai Branch for arbitration
in Shanghai in accordance with the arbitration rules of such Commission,
and the arbitration award shall be final and binding on all Parties.
11.4 Any rights, powers and remedies empowered to any Party by any provisions
herein shall not preclude any other rights, powers and remedies enjoyed by
such Party in accordance with laws and other provisions under this
Agreement, and the exercise of its rights, powers and remedies by a Party
shall not preclude its exercise of its other rights, powers and remedies
by such Party.
11.5 Any failure or delay by a Party in exercising any of its rights, powers
and remedies hereunder or in accordance with laws (hereinafter the
"PARTY'S RIGHTS") shall not lead to a waiver of such rights, and the
waiver of any single or partial exercise of the Party's Rights shall not
preclude such Party from exercising such rights in any other way and
exercising the remaining part of the Party's Rights.
11.6 The titles of the Articles contained herein shall be for reference only,
and in no circumstances shall such titles be used in or affect the
interpretation of the provisions hereof.
11.7 Each provision contained herein shall be severable and independent from
each
15
of other provisions, and if at any time any one or more articles herein
become invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions herein shall not be affected as
a result thereof.
11.8 Upon execution, this Agreement shall substitute any other legal documents
previously executed by the Parties on the same subject. As of the
execution date of this Agreement, the agreements listed in Appendix IV
hereto terminate.
11.9 Any amendments or supplements to this Agreement shall be made in writing
and shall take effect only when properly signed by the Parties to this
Agreement. Notwithstanding the preceding sentence, considering that the
rights and obligations of each of the Shareholders hereunder are
independent and severable from each other, in case the amendment or
supplement to this Agreement is intended to have impact upon one of the
Shareholders, such amendment or supplement requires the approval of such
Shareholder only and it is not required to obtain the approval from the
other ones of the Shareholders (to the extent the amendment or supplement
do not have impact upon such other Shareholders).
11.10 Without prior written consent by Focus Media Technology, the Shareholders
shall not transfer to any third party any of its right and/or obligation
under this Agreement, Focus Media Technology shall have the right to
transfer to any third party designated by it any of its right and/or
obligation under this Agreement after notice to the Shareholders.
11.11 This Agreement shall be binding on the legal successors of the Parties.
11.12 Notwithstanding any provision to the contrary in this Agreement, in case
of the event stipulated under Article 6.2.10, the relevant Shareholder
shall, upon request by Focus Media Technology, procure that such new
advertising company should be included as a Target Company defined
hereunder and that the all the equity interest held by such Shareholder in
such new advertising company shall become the Option Equity defined
hereunder, by signing the acknowledgement letter in substantially the form
attached hereto as Appendix V. Considering that the rights and obligations
of each of the Shareholders hereunder are independent and severable from
each other, the arrangement procuring that the equity interest in such new
advertising company becoming the Option Equity will have no impact on the
rights or obligations of the other Shareholders, the above arrangement
requires written confirmation of Focus Media Technology and the relevant
Shareholder only. The other Shareholders hereto hereby grant irrevocable
and unconditional waiver in respect to such arrangement, and further
acknowledge that the relevant Shareholder should not be obligated to
obtain approval from them when he or it make the equity interest held by
him or it Option Equity.
16
[The remainder of this page is left blank]
17
(Execution Page)
IN WITNESS HEREOF, the following Parties have caused this Call Option Agreement
to be executed as of the date and in the place first here above mentioned.
XXXXX XXXXXXX XXXXX
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
XXXXX XXX XX
Signature by: /s/ Xxxxx Xxx Xx
-----------------
SHANGHAI FOCUS MEDIA ADVERTISEMENT CO., LTD.
(chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
FOCUS MEDIA TECHNOLOGY (SHANGHAI) CO., LTD.
(chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
SHANGHAI FOCUS MEDIA ADVERTISING AGENCY CO., LTD.
(Company Chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
SICHUAN FOCUS MEDIA ADVERTISING AGENCY CO., LTD.
(Company chop)
18
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
ZHEJIANG RUIHONG FOCUS MEDIA CULTURE COMMUNICATIONS CO., LTD.
(Company chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
CHONGQING GEYANG MEDIA CULTURE COMMUNICATIONS CO., LTD.
(Company chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
CHANGSHA FOCUS MEDIA CENTURY ADVERTISING CO., LTD.
(Company chop)
Signature by: /s/ Du Kang
------------
Name: Du Kang
Position: Authorized Representative
QINGDAO FOCUS MEDIA ADVERTISING AGENCY CO., LTD.
(Company chop)
Signature by: /s/ Xxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxx
Position: Authorized Representative
DALIAN FOCUS MEDIA ADVERTISING AGENCY CO., LTD.
(Company chop)
19
Signature by: /s/ Xxx Xxxxx
--------------
Name: Xxxxx Xxx
Position: Authorized Representative
YUNNAN FOCUS MEDIA CO., LTD.
(Company chop)
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
WUHAN GESHI FOCUS MEDIA ADVERTISING CO., LTD.
(Company chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
SHANGHAI QIANJIAN ADVERTISING CO., LTD.
(Company chop)
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
GUANGZHOU FUKE ADVERTISING CO., LTD.
(Company chop)
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
ZHUHAI FOCUS MEDIA CULTURE COMMUNICATIONS CO., LTD.
(Company chop)
20
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
NANJING FOCUS MEDIA ADVERTISING AGENCY CO., LTD.
(Company chop)
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
TIANJIN FOCUS MEDIA TONGSHENG ADVERTISING CO., LTD.
(Company chop)
Signature by: /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
HEBEI TIANMA WEIYE ADVERTISING CO., LTD.
(Company chop)
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
XIAMEN FOCUS MEDIA ADVERTISING CO., LTD.
(Company chop)
Signature by : /s/ Xxxxx Xxxxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxxxx Xxxxx
Position: Authorized Representative
XI'AN FOCUS MEDIA INFORMATION COMMUNICATION CO., LTD.
(Company chop)
Signature by: /s/ Xxxxxxx Xxxxx
------------------
21
Name: Xxxxxxx Xxxxx
Position: Authorized Representative
22
APPENDIX I:
SECTION I-BASIC INFORMATION OF THE TARGET COMPANIES HELD JOINTLY BY XXXXX XXX
XX AND FOCUS MEDIA ADVERTISEMENT
Registered Registered Legal Equity
Company Name Address Capital Representative Structure
------------------------------------- ------------------------- ------------ ------------------- ------------------------------
Qingdao Focus Advertising Agency Co., Xxxx 0 Xxxxx 00 Xx. 00, XXX000,000 Junyan Xxxxx Xxxxx Xxx Xx: 10%
Ltd. Donghai Road South Focus Media Advertisement: 90%
District
Changsha Focus Media Century No. 692 Middle Furong RMB500,000 Kang Du Xxxxx Xxx Xx: 10%
Advertising Co., Ltd. Road, Changsha Focus Media Advertisement: 90%
Dalian Focus Media Advertising Agency Xx. 00 Xxxxxxxx Xxxx, XXX000,000 Haobo Xxx Xxxxx Xxx Xx: 10%
Co., Ltd. Zhongshan District Dalian Focus Media Advertisement: 90%
Guangzhou Fuke Advertising Co., Ltd. Xxxx 00 Xxxxx 00 Youyage RMB1,000,000 Xxxxx Xxxxxxx Xxxxx Xxxxx Xxx Xx: 10%
Tianyu Gardern No. 158 Focus Media Advertisement: 90%
Middle Linhe Road,
Guangzhou
Zhuhai Focus Media Culture Room 801 Floor 8 Post RMB500,000 Xxxxx Xxxxxxx Xxxxx Xxxxx Xxx Xx: 10%
Communication Co., Ltd. Tower No. 1072 Xiangzhou Focus Media Advertisement: 90%
Xxxxxxxxx Xxxx, Xxxxxx
00
Xxxxxxxx Focus Room A65 RMB1,000,000 Xxxxx Xxxxxxx Xxxxx Xxxxx Xxx Xx: 10%
Media Advertising Floor 28 No. 369 Focus Media
Agency Co., Ltd. Jiangsu Road Shanghai Advertisement: 90%
Municipality
Shanghai Qianjian Advertising Xxxx 000 Xx. 000 Huashan RMB2,000,000 Xxxxx Xxxxxxx Xxxxx Xxxxx Xxx Xx: 10%
Co. Ltd. Road Gaoqiao Town Pudong Focus Media Advertisement: 90%
New Area, Shanghai
Municipality
24
SECTION II-BASIC INFORMATION OF OTHER TARGET COMPANIES HELD BY FOCUS MEDIA
ADVERTISEMENT
Company Name Registered Address Registered Capital Legal Representative Equity Structure
------------ ------------------ ------------------ -------------------- ----------------
Yunnan Focus Media Co., Ltd. Xxxx 00 Xxxxx 00 Xxxxxxxx XXX0,000,000 Xxxxx Xxxxxxx Xxxxx Hujun: 10.5%
SOHOB Yinhai International Focus Media
Flat, Kunming Advertisement: 90%
Nanjing Focus Media Advertising Room 2317 Keyuan Hotel Nanjing RMB500,000 Xxxxx Xxxxxxx Xxxxx Xxxx Xxxx: 10.5%
Agency Co., Ltd. High-tech Development Zone Focus Media
Advertisement: 90%
Wuhan Geshi Focus Media Advertising Room 0000 Xxxxx Xxxxx Xx. 000 XXX0,000,00 Xxxxx Xxxxxxx Xxxxx Junxun Zhang: 17.5%
Co., Ltd. Jiefang Avenue, Wuhan Xxxxxxxx Xxxx: 3.75%
Xxxxxxxx Xxxx: 3.75%
Focus Media
Advertisement: 75%
Sichuan Focus Media Advertising 0-0-0-000 Xx. 000 Xxxxx Xxxxx XXX0,000,000 Xxxxx Xxxxxxx Xxxxx Xxxxxxx Song: 10%
Agency Co., Ltd. Road Wuhou District Chengdu Focus Media
Advertisement: 90%
Tianjin Focus Media Tongshen Room 6-4-301 Xinda Gardern RMB500,000 Xxxxx Xxxxxxx Xxxxx Xxxx Xxx: 20%
Advertisement Co., Ltd. Baiti Road Nankai District Focus Media
Tianjin Advertisement: 80%
Chongqin Geyang Focus Media Culture 25-3-4 Building A RMB1,000,000 Xxxxx Xxxxxxx Xxxxx Xxxxxxx Xx: 14%
Communications Co., Ltd. Xxxxxxxxxxxxx Xx. 0 Xxxxxxxx Xxxxxxx Li: 13%
Road Yuzhong District Xxxxxx Xxx: 13%
25
Focus Media
Advertisement: 60%
Zhejiang Ruihong Focus Media Culture Xxxx 000 Xxxxxxxx X XXX0,000,000 Xxxxx Xxxxxxx Xxxxx Xxxxxxxx Xxxx: 20%
Communications Co., Ltd. Huanglongshiji Plaza No. 1 Focus Media
Hangda Road, Hangzhou Advertisement: 80%
Hebei Tianma Weiye Advertising Co., Xxxx 0000 Xxxxx Xxxxx Xx. 00 XXX0,000,000 Xxxxx Xxxxxxx Xxxxx Focus Media
Ltd. Shibeixiao Street, Shijiazhuang Advertising: 10%
Focus Media
Advertisement: 90%
Xiamen Focus Media Advertising Co., Room 13D Guomao Tower South RMB1,200,000 Xxxxx Xxxxxxx Xxxxx Focus Media
Ltd. Xxxxx Road Advertising: 10%
Focus Media
Advertisement: 90%
Xi'an Focus Media Culture Roon 1810 Xx. 00 Xxxxxx Xxxx RMB1,000,000 Xxxxxxx Xxxxx Focus Media
Communication Co., Ltd. Gaoxin District, Xi'an Advertisement: 90%
Xxxxxxx Xxxxx: 10%
26
APPENDIX II:
FORMAT OF THE OPTION EXERCISE NOTICE
To: [Name of the Shareholder(s)]
As our company and you/your company and other relevant parties signed an Call
Option Agreement as of [date] (hereinafter the "OPTION AGREEMENT"), and reached
an agreement that you/your company shall transfer the equity you/your company
hold in [name of the Target Company](hereinafter the "TARGET COMPANY") to our
company or any third parties designated by our company on demand of our company
to the extent as permitted by PRC Law and regulations,
Therefore, our company hereby gives this Notice to you/your as follows:
Our company hereby requires to exercise the Call Option under the Option
Agreement and [our company]/[name of company/individual] designated by our
company shall accept the equity you/your company hold accounting for ______% of
[name of the Target Company] Registered Capital (hereinafter the "PROPOSED
ACCEPTED EQUITY"). You/Your company is required to forthwith transfer all the
Proposed Accepted Equity to [our company]/[name of designated
company/individual] upon receipt of this Notice in accordance with the agreed
terms in the Option Agreement.
Best regards,
FOCUS MEDIA TECHNOLOGY (SHANGHAI) CO., LTD.
(Chop)
Authorized Representative: ____________
Date: ____________
27
APPENDIX III:
FORM OF THE POWER OF ATTORNEY
I/The company, __________________, hereby irrevocably entrust __________________
[with his/her identity card number of __________________], as the authorized
representative of me/the company, to sign the Equity Transfer Agreement and
other relevant legal documents between me and ______________ regarding the
Equity Transfer of [name of the Target Company]
Signature: _______________
Date: ___________________
28
APPENDIX IV:
LIST OF PRIOR EXECUTED CALL OPTION AGREEMENTS
Parties Involved Execution Date Target Company
--------------------------- ------------------ ---------------------------------------
1 (1) Xxxxx Xxxxxxx Xxxxx, April 26, 2004
Yuanzhe Fu, Xxxxxx Xxx,
Xxxxx Xxx Xx Shanghai Focus Media Advertisement Co.,
(2) Focus Media Technology Ltd.
(Shanghai) Co., Ltd.
2 (1) Xxxxx Xxxxxxx Xxxxx Novernver 3, 2004 Chongqing Geyang Focus Media Culture
(2) Focus Media Technology Communiacations Co., Ltd.
(Shanghai) Co., Ltd.
3 (1) Xxxxx Xxxxxxx Xxxxx Xxxxxxxxx 0, 0000 Xxxxxxxx Xxxxxxx Focus Media Culture
(2) Focus Media Technology Communications Co., Ltd.
(Shanghai) Co., Ltd.
4 (1) Xxxxx Xxx Xx September 29, 2004 Dalian Focus Media Advertising Agency
(2) Focus Media Technology Co., Ltd.
(Shanghai) Co., Ltd.
5 (1) Xxxxx Xxx Xx September 30, 2004 Qingdao Focus Media Advertising Agency
(2) Focus Media Technology Co., Ltd.
(Shanghai) Co., Ltd.
6 (1) Xxxxx Xxx Xx October 20, 2004 Changsha Focus Media Century
(2) Focus Media Technology Advertising Co., Ltd.
(Shanghai) Co., Ltd.
7 (1) Xxxxx Xxx Xx Novermber 3, 2004 Shanghai Qianjian Advertising Co., Ltd.
(2) Focus Media Technology
(Shanghai) Co., Ltd.
29
APPENDIX V:
ACKNOWLEDGEMENT LETTER
I[name] (ID Card number:______)/This company (registered address ), as an
independent party, hereby agree to grant Focus Media Technology (Shanghai) Co.,
Ltd.(hereinafter the "FOCUS MEDIA TECHNOLOGY ") with an irrevocable equity Call
Option (hereinafter "CALL OPTION") in respect to [ ]% of the equity share of [ ]
(hereinafter the "NEW TARGET COMPANY") held by me/this company. Once this
Acknowledgement Letter is executed by me/this company, the New Target Company
and the newly increase equity share begin to be the "Target Company" and "Option
Equity" defined under the Call Option Agreement (hereinafter the "CALL OPTION
AGREEMENT") entered into between me/this company, Focus Media Technology and
other relevant parties dated March 28, 2005; and I/this company immediately make
the same representations and warranties in respect to the New Target Company and
relevant equity Call Option as I/this company made under the Call Option
Agreement in respect to the defined Target Company and Call Option.
[NAME OF THE SHAREHOLDER/NAME OF THE COMPANY]
Signature:_________
[(chop)
Name
Position: Authorized Representative]
FOCUS MEDIA TECHNOLOGY (SHANGHAI) CO., LTD.
(chop)
Signature:_________
Name
Position: Authorized Representative
30
