TECHNICAL
CONSULTANCY & SERVICES AGREEMENT
[translation]
THIS
TECHNICAL CONSULTANCY & SERVICES AGREEMENT (this “
Agreement ”) is dated May 23, 2007, and is entered
into in Xi’an City of China
(1)
Vallant Pictures Entertainment Co., Ltd. , with a registered
address at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British
Virgin Islands (“ Party A ”),
(2)
Xi’an TV Media Inc ., with a registered address at
Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei
Road, Xi’an City, China (“ Party B
”),.
Party A and
Party B are referred to collectively in this Agreement as the
“ Parties ”.
RECITALS
（
1
）
Party A, a
company limited by shares and incorporated under law of British
Virgin Islands and has the expertise in providing consultancy
advice and services in relation to the production of television
mini-series, features and commercials;
（
2
）
Party B, a
private-owned limited company incorporated in Xi’an City of
China and is engaged in the business of (1) production and
distribution of television mini-series, features and commercials;
(2) production and agency service of printed and outdoor
advertisements; (3) planning and organization cultural events and
arts performance; (4) agency and training of artists; (5) design
and production of stage performance; (6) leasing of lightings,
sound and filming facilities; (7) information technology network
construction, operation and maintenance; (8) development and
construction of studios as tourism facilities (the “
Business ”);
（
3
）
The
Parties desire that Party A provide to Party B technical
consultancy and services in relation to production and distribution
of television mini-series, features and commercials; and Party A is
entitled to a compensation that is equivalent to the net profit of
Party B as audited under US GAAP;
（
4
）
In
order to ensure that Party B will perform its obligations under
this Agreement, and in order to provide an additional mechanism for
the Party A to enforce its rights to collect the Consulting
Services Fees from Party B, over a simple majority of the
shareholders of Party B agree to pledge their equity interest in
Party B as security for the performance of the obligations of Party
B under this Agreement and the payment of Consulting Services Fees
under this Agreement;
（
5
）
The
Parties are entering into this Agreement to set forth the terms and
conditions under which Party A shall provide consultancy and
related services to Party B and hence to ensure that the
wholly-owned shareholder of Party A may enforce its rights to
control the business of Party B.
NOW
THEREFORE, the Parties
agree as follows:
1.1 Unless
otherwise stipulated in this Agreement, the following terms shall
have the following meanings:
“
Business Day ,” shall mean the part of
a day during which the businesses of banks in China are
operating, usually from 9 am to 6 pm Monday through
Friday;
“
China Laws ” shall means the laws and regulations
promulgated by the National People’s Congress, State Council,
State Commissions of the People’s Republic of China,
including all the interim measures, regulations and
notices.
“
Force Majeure Events ” shall mean causes beyond a
party's reasonable control and occurring without its fault or
negligence, including, without limitation, Acts of God, wars,
insurrections and/or any other cause beyond the reasonable control
of the party whose performance is affected
“
PRC ” means the People’s Republic of China and
excluding Hong Kong Special Administrative Region, Macau Special
Administrative Region and Taiwan;
“ US
GAAP ” shall be the Generally Accepted Accounting
Principle of the United States of America;
1.2
Representation and Warranties . All the Parties
represent to the other party that:
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it is
incorporated in accordance with the law in its respective
incorporation place;
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it is legally
capable to enter into this Agreement and perform the obligation
hereto;
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its signing
party is fully authorized;
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execution of
this Agreement shall not violate any of its business license,
article of association, by-laws, or any laws and regulations, or
other contracts;
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to its best
knowledge, there is no court notice, orders or suggestions that may
adversely affect its performance of its obligation under this
Agreement
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it has fully
disclosed to the other party with respect to any governmental
policy that may adversely affect its performance of its obligation
under this Agreement;
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it has not
become bankruptcy or insolvent or is the subject of proceedings or
arrangements for liquidation or dissolution;
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2. RETENTION
AND SCOPE OF SERVICES
2.1
Exclusive Services Provider . During the term of this
Agreement, Party A shall be the exclusive provider of the services
set forth below. Party B shall not seek or accept similar services
from other providers unless the prior written approval is obtained
from Party A.
2.2
Services . Party B hereby agrees to retain the services of
Party A, and Party A accepts such appointment, to provide to Party
B services in relation to the current and proposed operations of
Party B’s business in the PRC upon the terms and conditions
of this Agreement. The services subject to this Agreement shall
include, without limitation: (a) market intelligence and audience
preference research to support the production of movie and
television mini-series; (b) advisory and assistance relating to
films investment; (c) advisory on mini-series and film screenplay
creation, principle photography and other related production and
planning; (d) collect sales income and service fees on behalf of
Party B; (e) advice and assistance in relation to the staffing of
Party B, including assistance in the recruitment, employment,
training and secondment of management personnel, administrative
personnel and staff of Party B; (f) advice and assistance relating
to development of technology and provision of consultancy services,
particularly as related to the television mini-series production
technology; and (g) such other advice and assistance as may be
agreed upon by the Parties.
2.3 For
the purpose of this Agreement, Party B agree to hire the staff in
PRC necessary for Party A to fulfill its obligation as stipulated
under this Agreement; and Party B shall be responsible for the cost
(including basic salary, subsidy, commission and social insurance)
of such staffing.
3.1
Copyrights Related to the Services . Party B shall own all
copyrights of television mini-series and films developed in the
course of providing Services, or derived from the provision of the
Services. Party A shall be entitled to the profit derived as Party
B utilize such copyrights.
3.2
Copyrights Ownership . Party B is responsible to hold the
copyrights of the mini-series and films derived f
