MEMORANDUM OF UNDERSTANDING

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MEMORANDUM OF UNDERSTANDING Powered By Docstoc
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of this announcement.




                              (incorporated in the Cayman Islands with limited liability)
                                               (Stock Code: 2371)

                            MEMORANDUM OF UNDERSTANDING

  SUMMARy

  This announcement is made pursuant to Rule 13.09 of the Listing Rules.

  The Board is pleased to announce that on 2 September 2011 (after trading hours), the Company
  entered into the MOU with the Vendors in relation to the Possible Acquisition, the principal
  terms of which are disclosed in this announcement.

  To the best of the Directors’ knowledge, information and belief after having made all
  reasonable enquiries, each of the Vendors and its ultimate beneficial owner is a third party
  independent of each other and of the Company and its connected persons.

  The Possible Acquisition, if it proceeds, is subject to (among other things) various conditions to
  be agreed by the parties to the MOU and the signing of a legally binding definitive agreement
  among the parties to the MOU.

  Shareholders and potential investors are reminded that discussions in respect of the
  Possible Acquisition are still ongoing and no legally binding definitive agreement has
  been entered into. Accordingly, the Possible Acquisition may or may not be proceeded.
  Shareholders and potential investors are advised to exercise caution when dealing in the
  Shares.

This announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules.

MOU

The Board is pleased to announce that on 2 September 2011 (after trading hours), the Company
entered into the MOU with the Vendors in relation to the Possible Acquisition.




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POSSIBLE ACQUISITION

Assets Involved

Under the MOU, the Company intends to effectively acquire (by itself or through its wholly-owned
subsidiary(ies))(i) the exclusive entitlement to 49% of the economic benefits derived from Hunan
Mobile TV and the rights to manage and operate Hunan Mobile TV; and (ii) 95% equity interest
in Beijing Jiahua of Qingda Tech in which the Vendors are indirectly interested through a series of
contractual arrangements upon completion of the Possible Acquisition (if it materialized).

Hunan Mobile TV is a limited liability company established in the PRC on 13 July 2004 and is
principally engaged in the building, development, operation and management of mobile television
network, the provision of broadcast TV programs, the transmission of multi-media information and
the production, publication, transmission, use and management of television advertisement.

Beijing Jiahua is a limited liability company established in the PRC on 29 October 2010 and is
principally engaged in the development and promotion of arts and culture related activities in the
PRC.

Consideration

Subject to (i) the satisfactory outcome of such due diligence review as the Company considers
necessary and appropriate to conduct and (ii) the support of a valuation report to be issued by
an independent professional valuer appointed by the Company that the valuation of the Assets
Involved is not less than HK$1,363,800,000, the parties to the MOU have in principle agreed that
the consideration payable for the Possible Acquisition would not exceed HK$1,363,800,000 and be
satisfied in the manner set forth below:

(a)   HK$1,333,800,000 to be satisfied by the allotment and issue of a total of 2,600,000,000
      Consideration Shares at the issue price of HK$0.513 each (which represents a 10% discount
      to the closing price of the Shares as quoted on the Stock Exchange on the date of signing of
      the MOU) on the closing of the Possible Acquisition; and

(b)   HK$30,000,000 to be paid in cash within six months after the closing of the Possible
      Acquisition.

The cash portion of the consideration for the Possible Acquisition is expected to be met by the
Group’s internal resources.

The Consideration Shares shall rank equally in all respects with the existing Shares then in issue
on the date of their allotment upon the closing of the Possible Acquisition.

The Consideration Shares represent approximately 139.5% of the existing issued share capital
and 58.2% of the enlarged issued share capital of the Company immediately after the Possible
Acquisition (assuming no other change in the existing issued share capital of the Company).

As at the date of this announcement and to the best of the Directors’ knowledge having made all
reasonable enquiries, each of the Vendors and its associates are not beneficially interested in any
Shares or securities of the Company. In the event of the consummation of the Possible Acquisition
as contemplated under the MOU, each of the Vendors is not expected to become a substantial
shareholder of the Company.

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Conditions to completion of the Possible Acquisition

The Possible Acquisition is expected to be subject to, among other things, various conditions to be
agreed by the parties to the MOU (including the principal conditions stated below) and the signing
of a legally binding definitive agreement by the parties to the MOU:

(i)    satisfactory due diligence review by the Company of matters relating to the Possible
       Acquisition which the Company considers necessary and appropriate to conduct;

(ii)   the transactions contemplated under the Possible Acquisition will not cause any of the
       existing contractual, operational or other arrangements and/or other entitlements which are
       the subject of the Possible Acquisition to be cancelled, terminated, amended in any material
       respect or become illegal;

(iii) the obtaining of all necessary consents, authorizations, waivers and/or other approvals for
      giving effect to the Possible Acquisition; and

(iv) the Possible Acquisition will not trigger a general offer obligation under the Takeovers Code.

Exclusivity

Under the MOU, the Company is granted the exclusive right to negotiate with the Vendors the
detailed terms and conditions of the Possible Acquisition for a period of 90 days (or such later date
as may be mutually agreed by the parties to the MOU) from the date of signing of the MOU.

Binding nature of the MOU

Except for the provisions relating to the Company’s exclusive right to negotiate with the Vendors,
confidentiality, fees and expenses and governing law and jurisdiction in the MOU, the MOU is not
legally binding or definitive and is subject to the signing of a legally binding definitive agreement,
which is expected to be signed by no later than 31 December 2011 (or such later date as the parties
to the MOU may agree).

REASONS FOR THE POSSIBLE ACQUISITION

The Directors are of the view that the Possible Acquisition, if materialized, represents a strategic,
high growth opportunity that enhances and provides synergies to the Group’s existing capabilities
in the outdoor advertising and TV drama production businesses in the PRC. The Possible
Acquisition is also a step forward for the Group’s development of its cross-media platform. With
the leadership development of the core businesses of the Group of outdoor advertising and TV
drama production, all other media businesses under the Group’s cross-media platform will benefit
from this unique synergy. The Group would then be in a better position to serve its customers in the
rapidly evolving PRC media industry. Last but not least, the Possible Acquisition (if consummated)
would provide an excellent opportunity to widen the Group’s income stream and generate better
revenues and profits for the Group.

The terms of the MOU were arrived at after arm’s length negotiation between the parties to
the MOU. The Directors consider that the terms of the MOU are fair and reasonable and in the
interests of the Company and the Shareholders as a whole.




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INFORMATION ON THE GROUP

The Group is principally engaged in (i) the provision of advertising and consultancy services in
respect of placing advertisements on the outdoor billboards and LED screens of the Group to
advertisers and advertising agencies; and (ii) the provision of third party operational supporting
system software and hardware.

INFORMATION ON THE VENDORS

The Vendors comprise seven entities incorporated in the British Virgin Islands. To the best of the
Directors’ knowledge, information and belief after having made all reasonable enquiries, each of
the Vendors and its ultimate beneficial owner is a third party independent of each other and of the
Company and its connected persons.

GENERAL

Shareholders and potential investors are reminded that discussions in respect of the Possible
Acquisition are still ongoing and no legally binding definitive agreement has been entered
into. Accordingly, the Possible Acquisition may or may not be proceeded. If the Possible
Acquisition is materialized, it would constitute a very substantial acquisition for the Company
under Chapter 14 of the Listing Rules. The Company will keep the Shareholders informed
of any development and, where necessary, make further announcement(s), as and when
appropriate, in compliance with the applicable Listing Rules. Shareholders and potential
investors are advised to exercise caution when dealing in the Shares. Further announcement
in respect of the Possible Acquisition will be made by the Company should any legally
binding definitive agreement be entered into as and when appropriate in accordance with the
applicable Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms have the following
meanings:

“associate(s)”                  has the meaning ascribed to it in the Listing Rules

“Assets Involved”               (i) the exclusive entitlement to 49% of the economic benefits
                                derived from Hunan Mobile TV and the rights to manage and
                                operate Hunan Mobile TV; and (ii) 95% equity interest in Beijing
                                Jiahua of Qingda Tech in which the Vendors are indirectly
                                interested through a series of contractual arrangements upon
                                completion of the Possible Acquisition (if it materialized)

“Board”                         the board of Directors

“Beijing Jiahua”                                               (Beijing Jia Hua Xin Guang
                                Cultural Media Company Limited*), a limited liability company
                                established in the PRC

“connected person(s)”           has the same meaning ascribed to it under the Listing Rules




                                                4
“Consideration Shares”   a total of 2,600,000,000 Shares to be allotted and issued to the
                         Vendors at the issue price of HK$0.513 per Share in partial
                         payment of the consideration upon completion of the Possible
                         Acquisition (if it proceeds)

“Director(s)”            the director(s) of the Company

“Group”                  the Company and its subsidiaries

“Hong Kong”              the Hong Kong Special Administrative Region of the People’s
                         Republic of China

“Hunan Mobile TV”                                              (Hunan Mobile Television
                         Company Limited*), a limited liability company established in the
                         PRC

“Listing Rules”          the Rules Governing the Listing of Securities on the Stock
                         Exchange

“MOU”                    the memorandum of understanding dated 2 September 2011
                         entered into between the Vendors and the Company in relation to
                         the Possible Acquisition

“Possible Acquisition”   the possible acquisition of the Assets Involved by the Company
                         (itself or through its wholly-owned subsidiary(ies)) from the
                         Vendors

“PRC”                    the People’s Republic of China, which for the purpose of
                         this announcement, excludes Hong Kong, the Macau Special
                         Administrative Region of the PRC and Taiwan

“Qingda Tech”                                         (Beijing Qing Da Tong Zhi Shu
                         Kong Technology Company Limited*), a limited liability company
                         established in the PRC

“Share(s)”               ordinary share(s) of HK$0.10 each in the share capital of the
                         Company

“Shareholder(s)”         holder(s) of Share(s)

“Stock Exchange”         The Stock Exchange of Hong Kong Limited

“Takeovers Code”         the Hong Kong Code on Takeovers and Mergers

“Vendors”                (1) Passion Win Limited, (2) Headway Capital Group Limited, (3)
                         Luxury Play Group Limited, (4) Glorywide Group Limited, (5)
                         Electronic-Rays Limited, (6) Western Gold International Ltd and
                         (7) Victor Bell Limited




                                         5
“HK$”                                  Hong Kong dollars, the lawful currency of Hong Kong

“%”                                    per cent.

                                                                   By Order of the Board
                                                            China Oriental Culture Group Limited
                                                                           Li Qing
                                                                      Executive Director

Hong Kong, 2 September 2011

As at the date of this announcement, the Board comprises Mr. Chen Fu Ju, Mr. Li Qing and Mr. Yan
Dake being executive Directors; Ms. Ng Siu Lai being non-executive Director; and Mr. Leung Siu
Kee, Mr. Zhao Yong and Mr. Li Zhong being the independent non-executive Directors.

*   For identification purposes only




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