Exclusive Option Agreement between Vallant Pictures Entertainment Co., Ltd., XiAn TV Media Inc. and the Shareholders of 100% of XiAn TV Media Inc. dated September 17, 2010

1.  

Party A, a company incorporated under the law of British Virgin Islands and has the expertise in the business of providing consultancy advice and services in relation to the production of television mini-series, features and commercials;

2.  

Party B is a private-owned company incorporated in the People’s Republic of China (“PRC”), 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”). The details of Party B is included in Exhibit 1;

3.  

Chongde Zhang, owner of 37.39% of the equity interest of Xi’an TV Media Inc. desires to become the Party to this Agreement along with the remaining shareholders of Xi’an TV Media Inc. which represents 62.61% of the equity interest of Xi’an TV Media Inc. and have been Parties to the previous Amendment to Exclusive Option Agreement dated December 28, 2009 (each, an “Equity Interest” and collectively the “Equity Interests”);

4.  

A series agreements, including the Business Operating Agreement, Consulting Services Agreement and the Equity Pledge Agreement (collectively the “Said Agreements”), have been entered into by and among the Parties on May 23, 2007, as amended on December 28, 2009 if applicable;

5.  

The Parties are entering into this Amendment to Option Agreement in conjunction with the Said Agreements

1.  

Definition

“Article of Association”

refers to the document describing the purpose, place of business and details of an organization.

 

“China” or “PRC”

refers to the People’s Republic of China and excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.

 

“PRC 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.

2.  

Purchase and Sale of Equity Interest

2.1  

Grant of Rights. Party C (hereafter collectively the “Transferor”) hereby irrevocably grants to Party A an exclusive and conditional option to purchase or cause any person designated by Party A (“Designated Persons”) to purchase, upon foreign investor is permitted by PRC law to hold 51% stake of Party B, at the price specified in Section 2.3 of this Option Agreement, at any time from the Transferor a portion or all of the equity interests held by Transferor in Party B (the “Option”). This Option is deemed exclusive as no Opt ion shall be granted to any third party other than Party A and/or its Designated Persons. The “person” set forth in this clause and this Option Agreement means an individual person, corporation, joint venture, partnership, enterprise, trust or a non-corporation organization.

Exercise of Option. (a) According to the stipulations of PRC laws and regulations, Party A and/or its Designated Persons may exercise the Option by issuing a written notice (the “Notice”) to the Transferor with three (3) days prior notice and specifying the equity interest purchased from Transferor (the “Purchased Equity Interest”) and the manner of purchase. Party C shall execute a share purchase agreement within ten (10) days after receiving the Notice. (b) Party B shall amend its Article of Association in such a way that reflects the purchase of shares upon Party A’s exercise of the Option.

Purchase Price. For Party A and/or its Designated Persons to exercise the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the lowest price permissible under the applicable laws.

2.4  

Under the circumstances that Party B becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business before Party A and/or its Designated Persons exercise the Option, Party C is obliged to transfer to Party A (and/or its Designated Persons) any benefit through liquidation or dissolution of Party B.

2.5  

Under the condition that Party A and each of the shareholders of Party B has executed separate loan agreement(s), and the purpose of the loan is deemed as a shareholder’s loan (“Shareholder Loan”) provided to Party B, the monies collected by the shareholders of Party B under Purchase Price shall be settled with such Shareholder Loan. If the benefits obtained by Party C through liquidation or dissolution of Party B is insufficient to settle all the Shareholder Loan, the Parties hereto agrees to waive the outstanding balance.

3.  

Representations and Warranties.

3.1  

As of the signing date of this Option Agreement, Party B and Party C hereby represent and warrant collectively and respectively to Party A as follows:

3.2  

As of the signing date of this Option Agreement, Party A hereby represents and warrants collectively and respectively to Party C as follows:

4.  

Party A’s remedy upon Party C’s Breach

5.  

Assignment of Agreement

5.1  

Party B and Party C shall not transfer their rights and obligations under this Option Agreement to any third party without the prior written consent of Party A. Party B and Party C hereby agree that Party A shall be able to transfer all of its rights and obligation under this Option Agreement to any third party as its needs (natural person or legal entity) at any time, and such transfer shall only be subject to a written notice sent to Party B, Party C by Party A, and no any further consent from Party B and/or Party C will be required.

6.  

Effective Date and Term

6.1  

This Agreement shall take effect on the signing date of this Agreement and shall remain in full force and effect until Party B becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business, unless early termination occurs (a) when Party A fully exercises the Option; (b) if Party B becomes bankrupt or insolvent.

7.  

Miscellaneous.

7.1  

Notices. Notices or other communications required to be given by any party pursuant to this Option Agreement shall be written in English and Chinese and delivered personally or sent by registered mail or postage prepaid mail or by a recognized courier service or by facsimile transmission to the address of relevant each party or both parties set forth below or other address of the party or of the other addressees specified by such party from time to time. The date when the notice is deemed to be duly served shall be determined as the follows: (a) a notice delivered personally is deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly served the tenth (10th) day after the date when the air registered mail with postage prepaid has been sent out (as is shown on the postmark), or the fourth (4th) day after the delivery date to the internationa lly recognized courier service agency; and (c) a notice sent by facsimile transmission is deemed duly served upon the receipt time as is shown on the transmission confirmation of relevant documents.

7.2  

Applicable Law; Arbitration. (a) The execution, validity, construing and performance of this Option Agreement and the resolution of disputes under this Option Agreement shall be governed by the laws of PRC. (b) The parties shall strive to settle any dispute arising from the interpretation or performance, or in connection with this Agreement through friendly consultation. In case no settlement can be reached through consultation within thirty (30) days, each party can submit such matter to the Beijing Headquarter of China International Economic and Trade Arbitration Commission for arbitration in accordance with its arbitration rules in force at the date of this Agreement including such addition to its arbitration rules as are therein contained. Any resulting arbitration award shall be final conclusive and binding upon the parties. (c) During the period when a di spute is being resolved, the Parties shall in all other respects continue their implementation of this Option Agreement

7.3  

Change of Governing Laws. Under the circumstances that existing PRC Laws are amended or new PRC Laws become effective (“Change of Governing Laws”): (a) if such Change of Governing Laws are in favor to any Parties, the concerned party shall have the right to apply for the preference treatment as stipulated in such amendment or changes; and (b) if the Change of Governing Laws result in adverse effect to the rights of any party, the concerned party shall have the right to apply for the wavier to such amendment or changes, or the Parties shall negotiate for a remedy to the adverse effect due to the Change of Governing Laws.

7.4  

Severability. If any provision of this Option Agreement is judged as invalid or non-enforceable according to relevant Laws, the provision shall be deemed invalid only within the applicable laws and regulations of the PRC, and the validity, legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through fairly consultation, replace those invalid, illegal or non-enforceable provisions with valid provisions that may bring the similar economic effects with the effects caused by those invalid, illegal or non-enforceable provisions.

7.5  

Wavier. The failure to exercise or delay in exercising a right or remedy under this Agreement shall not constitute a waiver of the right or remedy or waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy

7.6  

Successor. This Agreement shall bind and benefit the successor of each Party and the transferee allowed by each Party.

7.7  

Entire Agreement. Notwithstanding the Article 5 of this Option Agreement, the Parties acknowledge that this Option Agreement constitutes the entire agreement of the Parties with respect to the subject matters therein and supercede and replace all prior or contemporaneous agreements and understandings, whether orally or in writing.

7.8  

Amendment, Modification and Supplement. Any amendment and supplement to this Option Agreement shall only be effective is made by the Parties in writing.

7.9  

Language and Copies. This Agreement has been executed in English in three (3) duplicate originals; each Party holds one (1) original and each duplicate original shall have the same legal effect.

Legal Authorized Representative

Li Bin

Director

Legal Authorized Representative

Dean Li

Director

Yong Gai

Owns 4.67% of Xi’an TV Media Inc.

Dean Li

Owns 57.94% of Xi’an TV Media Inc.

Chongde Zhang

Owns 37.39% of Xi’an TV Media Inc.

Company Name:

Xi’an TV Media Inc

 

Registered Address:

Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei Road, Xi’an City, China

 

Nature of Corporation:

PRC company limited by shares

 

Registered Capital:

RMB 107,000,000

 

Shareholders:

(a) Dean Li injected RMB 62,000,000 and take up 57.94% of registered capital;

(b) Yong Gai injected RMB 5,000,000 and take up 4.67% of registered capital;

(c) Chongde Zhang injected RMB 40,000,000 and take up 37.39% of registered capital;

 

Scope of Business:

(1) investment and management of television programs and movies; (2) creation of screenplay and scripts; (3) planning, filming, production and distribution of TV series and movies; (4) real estate agency