Business Operations Agreement
This
Business Operations Agreement (this “Agreement”) is entered into as
of
December 7, 2007, in Xinghe County, Inner Mongolia, People’s Republic of China
(“PRC”) by and among the following parties:
Party
A:
|
Xinghe
Yongle Carbon Co., Ltd. (兴和县永乐碳素有榰狝任公司)
|
Address:
|
Xx.
00, Xxxxxxx Xxxxxx, Xxxxx, Xxxxxx County, Wulanchabu,
|
Inner
Mongolia,
PRC
Legal
Representative:
|
Xx.
Xxx Aihu
|
Party
B:
|
Xinghe
Xingyong Carbon Co., Ltd.
(兴和兴永碳素有榰公司)
|
Address:
|
Xicheng
Wai, Chengguan town,
Xinghe County, Inner Mongolia, X.X.
Xxxx
|
Legal
Representative:
|
Xx.
Xxx Dengyong
|
Party
C:
Xx.
Xxx Dengyong (梍登永)
ID
No.
|
152627550418003:
|
Address:
|
Xx.
00, Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxxxx town,
Xinghe County, Inner Mongolia, PRC
|
Mr.
Du Benhua (杜本华)
ID
No.
|
152627195301180018
|
Address:
|
Xx.
00, Xxxxx xxxxx, Xxxxxxxxx xxxx,
Xxxxxx County,
Wulanchabu, Inner Mongolia, PRC
|
WHEREAS:
1.
|
Party
A is a wholly foreign-owned enterprise duly
incorporated and existing in the
PRC;
|
2.
|
Party
B is a limited liability company duly incorporated and registered
in the
PRC;
|
3.
|
A
business relationship has been established between Party A and
Party B by
entering into Exclusive
Technical Consulting and Services Agreement, under
which Party B shall make various payments to Party A, and subsequently
the
daily operation of Party B will have a material impact on its
payment
capacity to Party A.; and
|
4.
|
Members
of Party C, are shareholders of Party B (the “Shareholders of Party B”),
among which Jin Dengyong owns 98% equity interest, and Du Benhua
owns2%
equity interest in Party B.
|
1
All
Parties through friendly negotiation in the principle of equality and mutual
benefits, hereby jointly agree the following:
1.
|
Non-action
Obligation
|
In
order
to ensure Party B’s performance of the agreements between Party A and Party B
and all its obligations to Party A, Party
C
hereby jointly confirm and agree that Party B will not conduct any transaction
which may materially affect its assets, business, employment, obligations,
rights or the company’s operation unless a prior written consent from Party A or
a third party appointed by Party A, including but not limited to the following
contents, has been obtained:
1.1
|
To
conduct any business which is beyond the normal business scope
of Party B
or conduct business in a way which is inconsistent with the past
practices
or in an abnormal way;
|
1.2
|
To
borrow money or incur any debt from any third
party;
|
1.3
|
To
change or dismiss any directors or to dismiss and replace any senior
management officers;
|
1.4
|
To
sell to or acquire from any third party or dispose of in any other
way any
assets or rights having a value in excess of RMB200,000 Yuan, including
but not limited to any intellectual property
rights;
|
1.5
|
To
provide guarantee of the obligations of any third party with its
assets or
intellectual property rights or to provide any other guarantee
or to place
its assets under any other
encumbrance;
|
1.6
|
To
amend the Articles of Association of the company or to change its
scope of
business;
|
1.7
|
To
change the normal business process or modify any material
bylaws;
|
1.8
|
To
assign rights and obligations under this Agreement to any third
party;
|
1.9
|
To
materially adjust the business operation model, marketing strategy,
operation guidance or client
relationship;
|
1.10
|
To
distribute any dividend in any
form;
|
1.11
|
To
increase compensation payable to any executive officers or senior
management; and
|
1.12
|
To
engage in any activity not permitted by the laws of the
PRC.
|
2
2.
|
Management
of Operation and Arrangements of
Personnel
|
2.1
|
Party
B together with Party C hereby jointly agree to accept and strictly
enforce the proposals in respect of the employment and dismissal
of its
employees, the daily business management and financial management,
etc.,
provided by Party A from time to
time.
|
2.2
|
Party
B together with Party C hereby jointly agree that the Shareholders
of
Party B shall only appoint candidates designated by Party A as
the
directors of Party B in accordance with the procedures regulated
by laws
and regulations and the Article of Association of the company,
and cause
the chosen directors to elect Party A’s president candidate as President
of the company, and Party B shall engage Party A’s
nominees as Party B’s
General Manager, Chief Financial Officer, and other senior officers.
|
2.3
|
In
case of departure of any of the above officers from Party A by
reason of
quitting or being dismissed, such officer will lose the qualification
to
undertake any positions in Party B and therefore the Shareholders
of Party
B shall dismiss such officer and appoint other nominees of Party
A to
assume such positions.
|
2.4
|
For
the purpose of Article 2.3, the Shareholders of Party B shall take
all
necessary inside and outside procedures to accomplish the above
dismissal
and engagement.
|
2.5
|
The
Shareholders of Party B hereby agree, simultaneously with the execution
of
this Agreement, to sign Power of Attorney, according to which the
Shareholders of Party B will irrevocably authorize personnel designated
by
Party A to exercise their shareholders’ rights and their full voting
rights as shareholders at Party B’s shareholders’ meetings. The
Shareholders of Party B further agree to replace the authorized
persons
appointed in the above mentioned Power of Attorney at any time
at the
request of Party A. The power of attorney is
irrevocable.
|
3.
|
Other
Agreements
|
3.1
|
In
the event that any of the agreements between Party A and Party
B
terminates or expires, Party A is entitled to terminate all agreements
between Party A and Party B including but not limited to the Exclusive
Technical Consulting and Services
Agreement.
|
3.2
|
Whereas
the business relationship between Party A and Party B has been
established
through the Exclusive Technical Consulting and Services Agreement
and
other agreements and the daily business operations of Party B shall
bear a
material impact on its capacity to make the payments due to Party
A, the
Shareholders of Party B jointly agree that they will immediately
and
unconditionally pay or transfer to Party A any bonus, dividends
or any
other incomes or benefits (regardless of the forms) obtained from
Party B
as the shareholders of Party B at the time when such payables occur
and
provide all necessary documents or take all necessary actions required
by
Party A to realize such payment or transfer
.
|
3
4.
|
Entire
Agreement and Amendments
|
4.1
|
This
Agreement together with all the other agreements and/or documents
mentioned or explicitly included in this Agreement dated the date
of this
Agreement will be part of the whole agreement concluded in respect
of the
matters in this Agreement and shall replace all other prior oral
and
written agreements, contracts, understandings and communications
among all
the parties in relation to this
matters.
|
4.2
|
Any
amendment and supplement to this Agreement shall take effect only
after it
is executed by all Parties. The amendment and supplement duly executed
shall be part of this Agreement and shall have the same legal effect
as
this Agreement.
|
5.
|
Governing
Law
|
The
execution, validity, performance and interpretation and the resolution of
disputes of this Agreement shall be governed by and construed in accordance
with
the PRC laws.
6.
|
Dispute
Resolution
|
6.1
|
The
parties shall strive to settle any dispute arising from the interpretation
or performance through negotiation in good faith. In case no settlement
can be reached through consultation, each party can submit such
dispute to
China International Economic and Trade Arbitration Commission (“CIETAC”)
for arbitration in accordance with the current rules of CIETAC.
The
arbitration proceedings shall take place in Beijing and shall be
conducted
in Chinese. The arbitration award shall be final and binding upon
all
parties.
|
6.2
|
Each
Party shall continue to perform its obligations in good faith according
to
the provisions of this Agreement except for the matters in
dispute.
|
7.
|
Notice
|
7.1
|
Notices
for the purpose of exercising the rights and performing the obligations
hereunder shall be in writing and be delivered by personal delivery,
registered or mail or postage prepaid mail, recognized express
service or
by facsimile transmission to the address of the relevant party
or parties
set forth below.
|
Party
A:
|
Xinghe
Yongle Carbon Co.,
Ltd.
|
Party
A:
|
Xinghe
Yongle Carbon Co., Ltd.
|
Address:
|
Xx.
00, Xxxxx xxxxx, Xxxxxxxxx Xxxx, Xxxxxx County, Wulanchabu, Inner
Mongolia, PRC
|
Fax:
|
0000-0000000
|
Tel:
|
0000-0000000
|
Attention:
|
Xx.
Xxx Aihu
|
4
Party
B:
|
Xinghe
Xingyong Carbon Co., Ltd.
|
Address:
|
Xicheng
Wai, Chengguan town,
Xinghe County, Inner Mongolia, P.R.
China
|
Fax:
|
0000-0000000
|
Tel:
|
0000-0000000
|
Attention:
|
Xx.
Xxx Dengyong
|
Party
C:
|
Xx.
Xxx
Dengyong
Address:
|
Xx.
00, Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxxxx town,
Xinghe County, Inner Mongolia, PRC
|
Fax:
|
0000-0000000
|
Tel:
|
00000000000
|
Mr.
Du
Benhua
Address:
|
No.
49, Xxxxx xxxxx, Chengguan town,
Xinghe County,
Wulanchabu, Inner Mongolia, PRC
|
Fax:
|
0000-0000000
|
Tel:
|
00000000000
|
Any
notice by facsimile transmission or e-mail shall be effective only if the
recipient acknowledges receipt.
8.
|
Effect,
Term and Other About This
Agreement
|
8.1
|
Any
written consent, suggestion, appointment or other decisions which
have
material effects on Party B’s daily business operations involved in this
Agreement shall adopted by the board of directors of Party A.
|
8.2
|
This
Agreement will take effect upon execution by duly authorized
representatives of all parties and the term of this Agreement will
last
until Party A is dissolved according to the PRC laws, unless Party
A
terminates this Agreement pursuant to Article
8.3.
|
8.3
|
Party
B and the Shareholders of Party B shall not terminate this Agreement
within the term of this Agreement while Party A is entitled to
terminate
this Agreement any time by issuing a written notice to Party B
and the
Shareholders of Party B 30 days prior to the
termination.
|
5
8.4
|
In
case any term or provision in this Agreement is regarded as illegal
or can
not be enforced in accordance with the applicable law, it shall
be deemed
to be deleted from this Agreement and be null and void, and this
Agreement
shall be treated as without it from the very beginning. However,
the rest
of the provisions will remain effective. The parties shall replace
the
deleted provisions with lawful, effective and mutually acceptable
ones
through negotiations.
|
8.5
|
Any
non-exercise of any rights, powers or privileges hereunder shall
not be
deemed as a waiver thereof. Any single or partial exercise of such
rights,
powers or privileges shall not exclude one party from exercising
any other
rights, powers or privileges.
|
IN
WITNESS WHEREOF
the
parties hereto have caused this Agreement to be duly executed on their behalf
by
duly authorized representatives as of the Effective Date first written
above.
6
(No
text
on this page, Signature page to Business Operations Agreement)
Party
A: Xinghe Yongle Carbon Co., Ltd.
(Stamp)
/s/
Wei Aihu
Authorized
Representative:
Xx. Xxx
Aihu
Party
B: Xinghe Xingyong Carbon Co., Ltd.
(Stamp)
/s/
Jin Dengyong
Authorized
Representative:
Xx. Xxx
Dengyong
Party
C:
Xx.
Xxx Dengyong
Signature:
/s/
Jin Dengyong
Mr.
Du Benhua
Signature:
/s/
Du Benhua
7