Unassociated Document


    

      OPERATING
        AGREEMENT

      


      Date:   Amended
        and Restated on October 10, 2005, to
        be
        retroactively effective as of January 1, 2005

      


      Parties
        of the Agreement:

      


      Party
        A:  Chuangrun
        Media Company Limited    (“HK
        Chuangrun”)

      


      Address:    
        #1403,
        14/F United Publishing Building, King’s Road, North Point, Hong
        Kong

      


      Party
        B:   Guangzhou
        Chuangrun Advertising Co. Ltd.    (“GZ
        Chuangrun”)

      


      Address:    
        168
        Jiangnan Da Dao Zhong, CNOOC Building, #1211, Guangzhou, China

      


      Party
        C:  China
        Media1 Corp.    (“CMDA”)

      


      Address: 
        2020
        Main Street, Suite 500, Irvine, California, USA

      


      Recital:

      


      
        	1.  	
                Both
                  HK Chuangrun and GZ Chuangrun are owned by Mr. Cai Hanxiong. HK
                  Chuangrun
                  has agreements with the Guangzhou New Baiyun Airport for 100 Indoor
                  advertising signage locations and 50 Outdoor advertising signage
                  locations. GZ Chuangrun has an agreement with the Guangzhou MTR
                  for 12
                  station pillar wrap advertising
                  locations.

              


      

      


      
        
          
            
              	2.  	
                      Inan
                        agreement dated December 26, 2004, CMDA acquired the above
                        mentioned
                        contracts from Mr. Cai
                        Hanxiong.

                    


            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	3.  	
                CMDA
                  wishes to appoint GZ Chuangrun as exclusive agent for the above
                  mentioned
                  three advertising contracts, and hereby agrees to the
                  following.

              


      

      


      
        
          	1.  	
                  The
                    Guangzhou New Baiyun Airport agreements for 100 Indoor advertising
                    signage
                    locations and 50 Outdoor advertising signage locations stay under
                    HK
                    Chuangrun, but all benefits revert back to CMDA. In furtherance
                    of the
                    foregoing, for the term of each of the Guangzhou New Baiyun Airport
                    agreements: 

                


        

      

      


      
        (a)    HK
          Chuangrun hereby assigns and transfers to CMDA all revenues generated from
          the
          operations relating to the agreements with the Guangzhou New Baiyun Airport
          for
          100 Indoor advertising signage locations and 50 Outdoor advertising signage
          locations (the “Airport Revenues”). 

         

        (b)    CMDA
          shall cause to be paid from the Airport Revenues all of the operating expenses
          of HK Chuangrun incurred relating to the agreements with the Guangzhou
          New
          Baiyun Airport for 100 Indoor advertising signage locations and 50 Outdoor
          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 Guangzhou New Baiyun Airport
          agreements.

      

      


      
        	2.  	
                The
                  Guangzhou MTR 12 station pillar wrap agreement stays under GZ Chuangrun,
                  but all benefits revert back to CMDA. In furtherance of the foregoing,
                  for
                  the term of Guangzhou MTR 12 station pillar wrap
                  agreement:

              


      

      


      (a )    GZ
        Chuangrun hereby assigns and transfers to CMDA all revenues generated from
        the
        operations relating to the Guangzhou MTR 12 station pillar wrap agreement
        (the
“MTR Revenues”). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)    CMDA
        shall cause to be paid from the MTR Revenues all of the operating expenses
        of GZ
        Chuangrun incurred relating to the Guangzhou MTR 12 station pillar wrap
        agreement (the “MTR Expenses”), including, but not limited to, trade accounts
        payable, real property lease obligations, employee obligations, and taxes.
        

       

      (c)    CMDA
        shall use the MTR Revenues collected to pay the MTR Expenses until the
        expiration of the Guangzhou MTR 12 station pillar wrap
        agreement.

      


      
        
          
            	3.  	
                    GZ
                      Chuangrun is appointed exclusive agent for all of HK Chuangrun
                      projects
                      and the Guangzhou MTR project. GZ Chuangrun and HK Chuangrun
                      will form a
                      joint venture in Guangzhou after CMDA has received funding,
                      to facilitate
                      management of the
                      projects.

                  


          

        

      

      
        
           

          
            	4.  	
                    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:

                  


          

        

      

       

      (A)    2005
        January to end of December, US$ 1.5 million.

       

      (B)    2006
        January to end of December, US$ 2.0 million.

       

      (C)    2007
        and thereafter yearly January to end of December, US$ 3
        million.

      


      
        	5.  	
                The
                  above management fee is payable in 12 equal monthly
                  installments.

              


      

      


      
        	6.  	
                The
                  above management fee only includes the 100 Indoor and 50 Outdoor
                  signs at
                  the Guangzhou New Baiyun International Airport and the 12 Guangzhou
                  MTR
                  stations.

              


      

      


      
        	7.  	
                GZ
                  Chuangrun will implement the following commission
                  schedule:

              


      

      


      (A)    Commission
        ratio for 2005:

       

      (i)    New
        Direct Advertising Clients 15%

       

      (ii)    Direct
        through Advertising Company 10%

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      (iii)   Existing
        Company Clients 5%

      


      (B)    Commission
        ratio for 2006 and thereafter:

      


      (i)    New
        Direct Advertising Clients 10%

       

      (ii)   Direct
        through Advertising Company 5%

       

      (iii)   Existing
        Company Clients 3%

      


      
        	8.  	
                As
                  the Chief Executive Officer and largest shareholder of CMDA, Mr.
                  Cai
                  Hanxiong will do his utmost to protect CMDA’s interest and act as guardian
                  of this agreement.

              


      

      


      
        	9.  	
                All
                  other matters will be decided by the board of directors of both
                  parties.

              


      

      


      This
        Agreement is amended and restated on this 10th
        day
        of October, 2005 and is retroactively effective as of January 1,
        2005.

       

      
        	 	 	 	 
	 /s/
                Cai Hanxiong	 	 	 /s/ Cai Hanxiong
	
                
(HK
                Chuangrun)	 	 	
                
(GZ
                Chuangrun)
	(Cai
                Hanxiong, Legal Rep.)	 	 	(Cai
                Hanxiong, Legal Rep.)


      

       

      


      
        	
              	 	 	 
	 /s/ Ernest Cheung	 	 	 
	
                
(China
                Media1 Corp.)	 	 	
              
	(Ernest
                Cheung, Director)