Management Entrustment Agreement
This
Agreement amends and restates that certain Management Entrustment Agreement
made
and entered into on November 8, 2006 in Xi’an City, China, by and between the
following parties:
Party
A:
Xi'an
Amorphous Alloy Zhongxi Transformer Co., Ltd
Registered
business address: Xxx Xxxx Industry Tower, No.1 Xin Ke Road, New District,
Xi’an
City
Legal
representative: Yongxing Song
Party
B:
An
Sen
(Xi'an) Power Science & Technology Co., Ltd.
Registered
business address: Xx.00
Xxxxxx 0 Xxxx, Xx-xxxx Industries Development Zone, Xi'an. P. R. of
China
Legal
representative: Xxxxxx Xxxx
WHEREAS:
1.
Party
A is a joint stock limited company registered in Xi’an Shaanxi Province, and
legally existing to date. The number of its business license is 6101001401860.
2.
Party
B is a foreign investment enterprise incorporated and registered in Xi’an City,
Shaanxi Province, People’s Republic of China, and legally existing to date. The
number of its business license is: Qi Du Xxxxx Xi’An Zong Zi Di No. 002433
3.
In
light of Xi’An Amorphous Alloy Science & Technology Co., Ltd, Party A’s real
owner, intention to go public at OTCBB in the United States through Party B’s
parent company, China Power Equipment Inc, (“China Power” hereinafter, a US
company registered in Maryland), in order to let Party B have actual control
of
Party A and realize the consolidation of financial statements, Party A intends
to irrevocably entrust to Party B for its management the right of operation
management of Party A and the responsibilities and authorities of the
shareholders’ meeting and the board of directors of Party A.
4.
Party
B agrees to accept the entrustment of Party A, and to exercise the right of
operation management of Party A and the responsibilities and authorities of
the
shareholders’ meeting and the board of directors of Party A.
5.
Party
A has obtained the approval of its shareholders’ meeting to enter into this
Agreement.
NOW,
THEREFORE,
through
friendly consultation, under the principle of equality and mutual benefits,
in
accordance with the relevant laws and regulations of the People’s Republic of
China, the parties agree to enter into this Agreement and to be bound with
the
terms and conditions as follows:
Article
1
Entrusted Operation
|
1.1
|
Party
A agrees to irrevocably entrust the right of operation management
of Party
A and the responsibilities and authorities of Party A’s shareholders’
meeting and the board of directors to Party B in accordance with
the terms
and conditions of this Agreement. Party B agrees to exercise the
aforesaid
rights and responsibilities in accordance with the terms and conditions
of
this Agreement.The aforesaid rights shall be exclusively entrusted
to
Party B, and Party B shall not transfer the aforesaid rights to any
other
party.
|
|
1.2
|
The
term of the entrusted operation is from the effective date of this
Agreement to the date on which Party B possesses more than 51% of
Party
A’s shares.
|
|
1.3
|
The
purpose of the entrusted operation is: Before Party B possesses the
controlling stock (more than 51%) of Party A, Party B shall be in
charge
of the normal business operations of Party A and perform the
responsibilities and rights of Party A’s shareholders’ meeting and the
board of directors, and Party A shall pay its profit (if any) to
Party B
and Party B shall be responsible to Party A’s loss (if any). During the
term of the entrusted operation, Party B, as the entrusted manager,
shall
provide full management to Party A’s
operations.
|
|
1.4
|
The
contents of the entrusted operation shall include but not limited
to the
following:
|
|
1)
|
Party
B shall be in charge of all aspects of Party A’s operations; nominate and
replace the members of Party A’s board of directors, engage Party A’s
management staff and decide their compensation.
|
|
2)
|
Party
B shall manage and control all the funds of Party A. The account
of Party
A shall be managed and decided solely by Party B. The seals and signatures
for such account shall be the seals and signatures of the personnel
appointed and confirmed by Party B. All the cash of Party A shall
be kept
in this entrusted account shall be handled through this account,
including
but not limited to receipt of all Party A’s business income, current
working capital, recovered account receivables, etc., and the payment
of
all account payables and operation expenses, employee salaries and
asset
purchases, etc.
|
|
3)
|
All
the matters of Party A, including internal financial management,
day-to-day operation, external contact execution and performance,
tax
filing and payment, change of rights and personnel, etc., shall be
controlled and managed by Party B in all
aspects.
|
|
4)
|
Party
B shall enjoy all the other responsibilities and rights enjoyed by
Party
A’s shareholders’ meeting in accordance with the Company Law and the
articles of association of Party A, including but not limited to
the
following:
|
| a. |
Deciding
Party A’s operation principles and investment
plan;
|
| b. |
Discussing
and approving the report of the board of
directors;
|
| c. |
Discussing
and approving the report of the
supervisor;
|
| d. |
Discussing
and approving the annual financial budget and settlement
plan;
|
| e. |
Discussing
and approving the profit distribution plan and the loss compensation
plan;
|
| f. |
Resolving
on the increase or decrease of the registered
capital;
|
| g. |
Resolving
on the issuance of the corporate
bond;
|
| h. |
Resolving
on the matters including merger, division, change of corporate form,
dissolution and liquidation of the
company;
|
| i. |
Amending
the articles of association;
|
|
|
j. |
Other
responsibilities and rights provided by Party A’s articles of association.
|
|
5)
|
Party
B enjoys all the other responsibilities and rights enjoyed by Party
A’s
board of directors in accordance with the Company Law and the articles
of
association of Party A, including but not limited to the
following:
|
|
a.
|
Convening
the shareholders’ meeting and report to the shareholders’
meeting;
|
|
b.
|
Executing
the resolution of the shareholders’
meeting;
|
|
c.
|
Deciding
the company’s operation plan and investment
scheme;
|
|
d.
|
Composing
the annual financial budget and settlement
plan;
|
|
e.
|
Formulating
the profit distribution plan and the loss compensation
plan;
|
|
f.
|
Formulating
the plans regarding to the increase or decrease of the registered
capital
and the issuance of the corporate
bond;
|
|
g.
|
Formulating
the plans regarding to the matters including merger, division,
change of
corporate form and dissolution of the
company;
|
|
h.
|
Deciding
on the establishment of the internal management structure of the
company;
|
|
i.
|
Formulating
the basic rules and regulations of the
company;
|
|
j.
|
Other
responsibilities and rights provided by Party A’s articles of association
|
|
6)
|
The
said entrustment is irrevocable and shall not be withdrawn, unless
the
Agreement is terminated.
|
|
1.5
|
The
Fee of Entrusted Operation: For the performance of the entrusted
matters
provided under this Agreement, Party A shall pay an entrustment fee
to
Party B, which shall be Party A’s total profit (if any) after deduction of
necessary expenses. If the net amount is zero or negative after the
aforesaid calculation, Party A shall not pay any entrustment fee,
and the
loss of the given month shall be deducted in the following months’
entrustment fee. Party A and Party B shall calculate and settle each
month’s entrustment fee payable by Party A within 10 days after the end
of
that month.
|
|
1.6
|
The
Assumption of the Entrustment Risk: Party B shall assume all the
operation
risks in association with the management of Party A entrusted to
it. Party
B shall be responsible for any loss incurred to Party A’s operation. If
Party A’s cash is not enough to pay its debt, Party B is liable to pay the
debt; if the loss leads to a net asset less than the registered capital,
Party B shall be liable to make up for the
deficiency.
|
| 1.7 |
The
restriction of share transfer: during the period of entrustment,
Party B
shall not transfer the shares owned by shareholders of Party A. Party
A
shall not transfer the shares without Party B’ written consent, except the
shares transfer to Xi’An Amorphous Alloy Science & Technology Co.,
Ltd.
|
Article
2
Rights and Obligations of the Parties
2.1 During
the term of the entrusted operation, the rights and obligations of Party A
shall
include:
|
1)
|
After
the execution of this Agreement, the management of Party A shall
be handed
over to Party B. Party A’s board of directors shall, within 5 days after
the effective date of this Agreement, deliver Party A’s seals and
financial materials (including but not limited to balance sheet,
profit
and loss statement, cash flow statement and any attachments, relevant
right certificates and other proprietary and operation documents)
to Party
B to ensure that Party B could exercise its operation management
rights in
all aspects after taking over the management of Party A and could
set up
financial records accordingly;
|
|
2)
|
During
the term of the entrusted operation, without Party B’s consent, Party A
and its shareholders’ meeting and board of directors shall not make any
decision on Party A’s operations, and they shall not intervene with Party
B’s entrusted management activities in any
form;
|
|
3)
|
During
the term of the entrusted operation, Party A’s board of directors shall
have the obligation to cooperate with Party B in accordance with
Party B’s
request to ensure the stability and consistency of the
operation;
|
|
4)
|
To
entrust the authorities of the shareholders’ meeting and the board of
directors to Party B;
|
|
5)
|
To
timely pay the entrustment fee to Party
B;
|
|
6)
|
Without
Party B’s consent, Party A shall not entrust any third party other than
Party B in any form to manage Party A’s
businesses;
|
|
7)
|
The
board of directors and shareholders meeting of Party A shall issue
necessary documents for the purpose of accomplishing the management
by
Party B;
|
|
8)
|
Party
A shall not unilaterally early terminate this Agreement for any
reason.
|
|
9)
|
Other
rights and obligations of Party A provided under this Agreement.
|
2.2 During
the term of the entrusted operation, the rights and obligations of Party B
shall
include:
|
1)
|
Party
B shall enjoy independent and comprehensive management right over
Party
A’s operations;
|
|
2)
|
Party
B shall have the right to adjust the organizational structure and
the
personnel placement of Party A based on the needs of the
management;
|
|
3)
|
Party
B shall have the right to dispose of all the assets on the books
of Party
A on the execution day of this Agreement, and Party can B dispose
of any
of the aforesaid assets without any prior consent of Party
A;
|
|
4)
|
Party
B shall be entitled to all of the Party A’s income after deducting
necessary expenses.
|
|
5)
|
Party
B shall timely take over of Party
A;
|
|
6)
|
Party
B shall carry out all the responsibilities and rights entrusted to
it
under this Agreement in good faith and with honesty and trustworthiness,
and shall pay reasonable attention to the entrusted matters and notify
Party A timely of relevant matters;
|
|
7)
|
Party
B shall act in good faith and consult with Party A in regards to
the
handling of matters not covered by this
Agreement;
|
|
8)
|
Other
obligations shall be performed by Party B under this Agreement.
|
Article
3
Warranties and Representations
Each
party shall warrant and represent to the other party, on the execution day
of
this Agreement, that:
| 1) |
Each
party shall have the right to enter into this Agreement, and the
ability
to perform this Agreement;
|
| 2) |
In
order to execute and perform this Agreement, each party has gone
through
the necessary internal decision-making procedures and obtained the
approval;
|
| 3) |
Each
party has duly authorized its representative to execute this
Agreement;
|
| 4) |
Each
party shall not have any reason of its own that will encumber the
effectiveness of this Agreement from the effective date and become
binding
on such party;
|
| 5) |
The
execution of this Agreement and the performance of the obligations
hereunder will NOT:
|
|
a)
|
violate
the business license, articles of association or any other similar
documents of that party;
|
|
b)
|
violate
the laws and regulations of China or the government authorization
or
permit;
|
|
c)
|
violate
any other contracts or agreements to which that party is a party
(or is
bound), or lead to that party’s breach of contract under such contracts or
agreements.
|
Article
4
Effect of the Agreement
This
Agreement shall be valid upon the subscription of both parties’ legal
representatives or duly authorized representatives and the affixture of both
parties’ corporate seals.
Article
5
Liability of Beach of the Agreement
After
the
effectiveness of this Agreement, apart from the situation described in Article
6
of this Agreement, either party’s violation of any provisions under this
Agreement shall constitute a breach of this Agreement and thus be liable to
compensate the non-breaching party for any damages that may arise
thereof.
Article
6
Force Majeure
Either
party’s failure to perform the obligations or part of the obligations of this
Agreement due to a force majeure event shall not be deemed as a breach of the
agreement; however, the non-performing party shall timely provide effective
evidence of the force majeure event to the other party, and the parties shall
discuss a settlement plan through consultation.
Article
7
The Governing Law
The
execution, effectiveness, interpretation, performance and dispute resolution
of
this Agreement shall be governed by the laws and regulations of
China.
Article
8
Dispute Resolution
Any
dispute arising under this Agreement shall be first settled by the parties
through friendly consultation. If the dispute cannot be settled through
consultation, either party is entitled to submit the dispute to the people’s
court that has jurisdiction over the dispute .
Article
9
Confidentiality
|
9.1
|
The
parties agree and shall cause their relevant personnel to keep strict
confidence of all the terms and conditions of this Agreement and
all the
matters of the entrusted operation that have access to. They shall
not
disclose the aforesaid information to any third party unless it is
required by the explicit provision of law, or the instruction of
judicial
or governmental agencies or with consent of the other party, otherwise,
the disclosing party shall bear the relevant legal
consequences.
|
|
9.2
|
The
confidentiality obligation of the parties shall survive the termination
of
this Agreement.
|
Article
10 Severability of the Clauses
| 10.1 |
If
any clause of this Agreement is invalidated or non-enforceable due
to the
provisions of laws or regulations, this clause is invalid while all
other
clauses shall remain in full force and effect and binding upon both
parties.
|
| 10.2 |
In
the event the aforesaid situation occurs, the parties shall, through
friendly consultation, agree upon supplemental clause to replace
the
invalid clause at their earliest possible
time.
|
Article
11 Non-waiver of Rights
| 11.1 |
If
one party fails or delays to exercise a certain right provided under
this
Agreement, such failure or delay shall not constitute the waiver
of such
right by that party.
|
| 11.2 |
If
one party fails to require the other party to perform a certain obligation
provided under this Agreement, such failure shall not constitute
the
waiver by that party of the right to require the other party to perform
at
a later time.
|
| 11.3 |
If
one party violates any clause of this Agreement and obtains a waiver
of
liability from the non-violating party, such waiver shall not constitute
the waiver of liability by the non-violation party over the violations
by
the other party at a later time or of other clauses of this
Agreement.
|
Article
12 No Transfer
Unless
otherwise provided in this Agreement, without the prior written consent of
the
other party, one party shall not transfer or entrust this Agreement or any
right
or obligation under this Agreement to a third party, nor shall one party provide
any guarantee to a third party or do other similar things.
Article
13 Miscellaneous
| 13.1 |
Any
supplemental agreements entered into by the parties after the effective
date of this Agreement shall be an effective part of this Agreement
and
have the same legal effect as this Agreement. If there is any discrepancy
between the supplemental agreement and this Agreement, the supplemental
agreement shall prevail.
|
| 13.2 |
This
Agreement is written in Chinese This Agreement is executed in six
official
copies, each party shall have two official copies and the remaining
shall
be retained for the government procedure
purpose.
|
| 13.3 |
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on
this date first above written.
|
(NO
CONTEXT BELOW)
(SIGNATURE
PAGE)
Party
A:
Xi'
an
Amorphous Alloy Zhongxi Transformer Co., Ltd
Legal
representative:
(or
authorized representative)
Party
B:
An
Sen
(Xi’an) Power Science & Technology Co., Ltd.
Legal
representative:
(or
authorized representative)
Statement
As
the
shareholder of Xi'
an
Amorphous Alloy Zhongxi Transformer Co., Ltd,
I agree
that Xi'
an
Amorphous Alloy Zhongxi Transformer Co., Ltd signs
the
Management Entrustment Agreement with An
Sen
(Xi’an) Power Science & Technology Co., Ltd.,
which
irrevocably entrusts An
Sen
(Xi’an) Power Science & Technology Co., Ltd.
for its
management the right of operation management of
Xi' an
Amorphous Alloy Zhongxi Transformer Co., Ltd and the right from me according
to
the laws and the company’s articles of association. Furthermore, I promise I
will not transfer my shares of Xi' an Amorphous Alloy Zhongxi Transformer Co.,
Ltd to anybody other than Xi’An
Amorphous Alloy Science & Technology Co., Ltd.
Stated
by:
|
Song
Xxxxxxx
|
Xxx
junming
|
|
|
|
|
Xv
Xxxxx
|
Xxxx
Xxxxxxx
|
|
|
|
|
Xxx
Xxx
|
Xxx
Xxxx
|
|
|
|
|
Xxxxx
Xxx
|
Xxxx
Xxxxxx
|
|
|
|
|
Xxx
Xxxxx
|
Xx
Xinzheng
|
Zhejiang
lvneng Electric Xx.Xxx. (Seal
| April 24, 2008 |
