OPERATING AGREEMENT
Date: September 8, 2006
Parties of the Agreement:
Party A: Guangzhou Titan Media Company Limited ("Titan Media")
Address: 12/F Aerospace Skyscraper, Shenzhen, China
Party B: Guangzhou Chuangrun Advertising Co. Ltd. ("GZ Chuangrun")
Address: 168 Jiangnan Da Dao Zhong, CNOOC Building, 12/F,
Guangzhou, China
Party C: China Media1 Corp. ("CMDA")
Address: 142 - 757 West Hastings St., Suite 328, Vancouver,
B.C. Canada V6C 1A1
Recital:
1. The legal owner of Titan Media is Mr. Jing Liang. Titan Media has
signed an 8 year agreement with Chengdu International Airport for 32
scrolling advertising signs. The owner of GZ Chuangrun is Mr.
Hanxiong Cai. CMDA is a Nevada incorporated company listed on the
NASD OTCBB. Mr. Hanxiong Cai is its Chairman and Mr. Ernest Cheung
is its President.
2. Titan Media understands that the Chengdu International Airport
contract was arranged by Chuangrun and Mr. Cai as compensation for
the potential loss of revenue for the Guangzhou Baiyun International
Airport contracts at a cost of US$ 1.00 to CMDA. Titan will attempt
to re-sign the Guangzhou contracts and offer to CMDA on a first
right of refusal basis at a cost agreeable to both parties. CMDA is
responsible for the deposit for the new Chengdu International
Airport contract and Chuangrun is responsible for the old Guangzhou
Baiyun International Airport contract.
3. In an agreement dated September 8, 2006, CMDA acquired the above
mentioned contract from Titan Media.
4. Titan Media and CMDA wishes to appoint GZ Chuangrun as exclusive
agent for the above mentioned advertising contract, and hereby
agrees to the following.
Hereby agrees as follows:
1. The Chengdu International Airport agreement for 32 advertising
signage locations stay under Titan Media, but all benefits revert
back to CMDA. In furtherance of the foregoing, for the term of the
Chengdu International Airport agreement:
(a) Titan Media hereby assigns and transfers to CMDA all revenues
generated from the operations relating to the agreement with
the Chengdu International Airport for the 32 advertising
signage locations (the "Airport Revenues").
(b) CMDA shall cause to be paid from the Airport Revenues all of
the operating expenses of GZ Chuangrun incurred relating to
the agreement with the Chengdu International Airport for the
32 advertising signage locations (the "Airport Expenses"),
including, but not limited to, trade accounts payable, real
property lease obligations, employee obligations, and taxes.
(c) CMDA shall use the Airport Revenues collected to pay the
Airport Expenses until the expiration of each of the Chengdu
International Airport agreements.
2. CMDA will pay the following management fees to GZ Chuangrun as
compensation for GZ Chuangrun acting as agent for CMDA. The
management fee includes all daily operating expenses, but does not
include project deposits and upfront fees, 20% of advertising
revenues up to a total all airport aggregate of $2.5 million in 2006
and $3 million each calendar year thereafter.
3. The above management fee is payable every quarter end.
4. The above management fee only includes the Chengdu International
Airport for the 32 advertising signage locations.
5. As the Chairman of the Board and largest shareholder of CMDA, Mr.
Cai Hanxiong will do his utmost to protect CMDA's interest and act
as guardian of this agreement.
6. All other matters will be decided by the board of directors of all
parties.
SIGNATURES
This Agreement is signed this 8th day of September, 2006 and is effective
immediately.
/s/ Jing Liang
- ---------------------------
Titan Media
Jing Liang, Legal Representative
/s/ Hanxiong Cai
- ---------------------------
GZ Chuangrun
Hanxiong Cai, Legal Representative
/s/ Ernest Cheung
- ---------------------------
China Media1 Corp.
Ernest Cheung, President