TECHNICAL CONSULTANCY & SERVICES AGREEMENT
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 ”.
（ 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:
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