EXCLUSIVE CONSULTING AGREEMENT
EXHIBIT
10.3
This
Exclusive Consulting Agreement (the "Agreement") is entered into as of June
24,
2005, between the following two parties:
PARTY
A: TAIYUAN PUTAI BUSINESS CONSULTING CO., LTD.
LEGAL
ADDRESS: 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
PARTY
B: SHANXI PUDA RESOURCES
CO., LTD.
LEGAL
ADDRESS: 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
WHEREAS,
Party A
is a wholly foreign-owned enterprise registered in The People's Republic
of
China (the "PRC") under the laws of PRC and owns resources to provide business
consulting services;
WHEREAS,
Puda
Investment Holding Limited (“Puda”), an International Business Company
incorporated in the British Virgin Islands, owns all of the registered capital
of Party A;
WHEREAS,
Party B
is a domestic company with exclusively domestic capital registered in the
PRC
and is engaged in the business of coal crushing,
preparation and cleaning (“Business”);
WHEREAS,
Xxxx
Xxxx and Xxxx Xxx together own all of the capital stock of Puda and all of
the
registered capital of Party B, and as such have common control over Puda
and
Party B;
WHEREAS,
Party A
has established a business relationship with Party B by entering into an
Operating Agreement dated as of the same date hereof (“Operating Agreement”) and
a Technology License Agreement dated as of the same date hereof (“License
Agreement”);
WHEREAS,
pursuant to the Operating Agreement and License Agreement between Party A
and
Party B, Party B shall pay Party A certain fees as set forth in the Operating
Agreement and the License Agreement (“Other Fees”);
WHEREAS,
Party B
is an affiliated Chinese entity of Party A; and
WHEREAS,
Party A
desires to be the provider of business consulting and related services to
Party
B, and Party B hereby agrees to accept such business consulting and
services;
NOW
THEREFORE,
the
parties agree as follows:
1. BUSINESS
CONSULTING AND SERVICES; EXCLUSIVITY
| 1.1 |
During
the term of this Agreement, Party A agrees to, as the exclusive business
consulting services provider of Party B, provide the business consulting
services to Party B (which consulting services are more specifically
described in Appendix 1).
|
| 1.2 |
Party
B hereby agrees to accept such business consulting services and Party
A’s
appointment as the exclusive business consulting services provider
of
Party B. Party B further agrees that, during the term of this Agreement,
it shall not utilize any third party to provide such business consulting
services for such above-mentioned business without the prior written
consent of Party A.
|
| 1.3 |
Party
A shall be the sole and exclusive owner of all rights, title and
interests
to any and all intellectual property rights arising from the performance
Party A’s services under this Agreement, including, but not limited to,
any trade secrets, copyrights, patents, know-how, un-patented methods
and
processes and otherwise, whether developed by Party A or Party B
based on
Party A's services provided under this Agreement. Party A and Party
B
understand and agree that the terms and conditions of this Agreement
are
subject to the terms and restrictions of a Technology License Agreement
between Party A and Party B dated as of the same date hereof, as
may be
amended from time to time.
|
2. CONSULTING
FEES
During
the term of this Agreement, Party B shall pay to Party A a consulting fee
(“Fee”) for the services provided by Party A under this Agreement equal to 30%
of Party B’s cash flows from operating activities (“Operating Cash Flow”).
The
Fee
shall be paid monthly by Party B to Party A within 10 days following the
end of
each month based on the Operating Cash Flow for such month as estimated by
Party
A and Party B in good faith (“Estimated Monthly Amount”). Within sixty (60) days
after the end of each fiscal quarter, Party A and Party B shall make a final
determination of the actual Operating Cash Flow for such quarter (“Final
Quarterly Amount”) based on the financial statements of Party B, which have been
reviewed or audited by the Parties’ registered certifying accountant for U.S.
financial reporting purposes (“Accountant”). To the extent the Final Amount is
greater than the Estimated Monthly Amounts for such quarter, the Fee shall
be
adjusted and Party B shall promptly remit to Party A the additional Fee due
and
owing. To the extent the Final Amount is less than the Estimated Monthly
Amounts
for such quarter, the Fee shall be adjusted and Party A shall promptly remit
to
Party B the amount by which the Fee was overpaid.
Notwithstanding
anything to the contrary contained in this Agreement, for each fiscal year
of
Party B, (i) in the event that 30% of Party’s B Net Income (as defined below)
for the fiscal year is less than the Fee for such fiscal year, the Fee shall
be
adjusted such that it shall be equal to 30% of Party B’s Net Income for such
fiscal year, and (ii) in the event that 30% of Party B’s Net Income is greater
than the Fee for such fiscal year, the Fee shall be increased such that it
shall
be equal to 30% of Party B’s Net Income for such fiscal year.
For
the
purposes of this Agreement, the
determination and calculation of Operating Cash Flow and Net Income shall
made
in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”)
as reflected on Party B’s U.S. GAAP financial statements, which have been
reviewed or audited by the Accountant, before giving effect to the Fee paid
or
payable under this Agreement and the Other Fees paid or payable under the
Operating Agreement and License Agreement. Any disputes with respect to the
determination or calculation of the Fee, Net Income or Operating Cash Flow
shall
be resolved by the Accountant, and such determination shall be final.
3. REPRESENTATIONS
AND WARRANTIES
3.1 PARTY
A
HEREBY REPRESENTS AND WARRANTS AS FOLLOWS:
|
3.1.1
|
Party
A is a wholly foreign owned enterprise duly registered and validly
existing under the laws of the PRC and is authorized to engage
in the
business of consulting services.
|
|
3.1.2
|
Party
A has full right, power, authority and capacity and all consents
and
approvals of any other third party and government necessary to
execute and
perform this Agreement, which shall not be against any enforceable
and
effective laws or contracts.
|
|
3.1.3
|
Once
this Agreement has been duly executed by both parties, it will
constitute
a legal, valid and binding agreement of Party A and is enforceable
against
it in accordance with its terms upon its
execution.
|
-2-
3.2 PARTY
B
HEREBY REPRESENTS AND WARRANTS AS FOLLOWS:
| 3.2.1 |
Party
B is a domestic company with exclusively domestic capital duly
registered
and validly existing under the laws of the PRC and is authorized
to engage
in the Business.
|
| 3.2.2 |
Party
B has full right, power, authority and capacity and all consents
and
approvals of any other third party and government necessary to
execute and
perform this Agreement, which shall not be against any enforceable
and
effective laws or contracts.
|
| 3.2.3 |
Once
this Agreement has been duly executed by both parties, it will
constitute
a legal, valid and binding agreement of Party B and is enforceable
against
it in accordance with its terms upon its
execution.
|
4. CONFIDENTIALITY
| 4.1 |
Party
B agrees to use all reasonable means to protect and maintain the
confidentiality of Party A's confidential data and information
acknowledged or received by Party B by accepting the exclusive
consulting
and services from Party A (collectively the “Confidential Information").
Party B shall not disclose or transfer any Confidential Information
to any
third party without Party A's prior written consent. Upon termination
or
expiration of this Agreement, Party B shall, at Party A's option,
deliver
any and all documents, information or software containing any of
such
Confidential Information to Party A or destroy it or delete all
of such
Confidential Information from any memory devices, and cease to
use
them.
|
| 4.2 |
Section
4.1 shall survive after any amendment, expiration or termination
of this
Agreement.
|
5. INDEMNITY
Party
B
shall indemnify and hold harmless Party A from and against any loss, damage,
obligation and cost arising out of any litigation, claim or other legal
procedure against Party A resulting from the contents of the business consulting
and services demanded by Party B under this Agreement.
6. EFFECTIVE
DATE AND TERM
| 6.1 |
This
Agreement shall be executed and come into effect as of the date
first set
forth above. The term of this Agreement is ten (10) years, unless
earlier
terminated as set forth in this Agreement.
|
| 6.2 |
This
Agreement shall be automatically renewed for additional ten (10)
year
periods upon the expiration of the initial term hereof or any renewal
term, unless this Agreement has been previously terminated as provided
herein.
|
7. TERMINATION
| 7.1 |
Early
Termination
|
During
the initial term of this Agreement or any renewal term, Party B shall not
terminate this Agreement. Notwithstanding the above stipulation, Party A
shall
have the right to terminate this Agreement at any time by issuing a thirty
days’
prior written notice to Party B.
-3-
| 7.2 |
Survival.
|
Article
4
and 5 shall survive after the termination or expiration of this
Agreement.
8. SETTLEMENT
OF DISPUTES
The
parties shall strive to settle any dispute arising from the interpretation
or
performance in connection with this Agreement through friendly negotiation.
In
case no settlement can be reached through negotiation, except as provided
in
Article 2, each party can submit such matter to China International Economic
and
Trade Arbitration Commission (the "CIETAC"). The arbitration shall follow
the
current rules of CIETAC, and the arbitration proceedings shall be conducted
in
English and shall take place in Hong Kong. The arbitration award shall be
final
and binding upon the parties and shall be enforceable in accordance with
its
terms.
9. FORCE
MAJEURE
| 9.1 |
Force
Majeure, which includes acts of governments, acts of nature, fire,
explosion, typhoon, flood, earthquake, tide, lightning, war, means
any
event that is beyond the party's reasonable control and cannot
be
prevented with reasonable care. However, any shortage of credit,
capital
or finance shall not be regarded as an event of Force Majeure.
The
affected party who is claiming to be not liable to its failure
of
fulfilling this Agreement by Force Majeure shall inform the other
party,
without delay, of the approaches of the performance of this Agreement
by
the affected party.
|
| 9.2 |
In
the event that the affected party is delayed in or prevented from
performing its obligations under this Agreement by Force Majeure,
only
within the scope of such delay or prevention, the affected party
will not
be responsible for any damage by reason of such a failure or delay
of
performance. The affected party shall take appropriate means to
minimize
or remove the effects of Force Majeure and attempt to resume performance
of the obligations delayed or prevented by the event of Force Majeure.
After the event of Force Majeure is removed, both parties agree
to resume
performance of this Agreement with their best
efforts.
|
10. NOTICES
Notices
or other communications required to be given by any party pursuant to this
Agreement shall be written in English and shall be deemed to be duly given
when
it is 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
the relevant party or parties set forth below.
Party
A:
Taiyuan Putai Business Consulting Co., Ltd.
000
Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
Party
B:
Shanxi Puda Resources Co., Ltd.
000
Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
11. NO
ASSIGNMENT OR SUBLICENSE BY THE LICENSEE
Party
A
and Party B may not assign their rights or obligations under this Agreement
to
any third party without the prior written consent of the other
party.
-4-
12. SEVERABILITY
Any
provision of this Agreement that is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that any other provision of this
Agreement invalid or unenforceable in any other jurisdiction.
13. AMENDMENT
AND SUPPLEMENT
Any
amendment and supplement of this Agreement shall come into force only after
a
written agreement in the English language is signed by both parties. The
amendment and supplement duly executed by both parties shall be part of this
Agreement and shall have the same legal effect as this Agreement.
14. GOVERNING
LAW
This
Agreement shall be governed by and construed in accordance with the PRC
laws.
15. LANGUAGE
This
Agreement is executed in English only, and the executed English language
Agreement shall prevail in all cases. This Agreement may be executed in
counterparts, each of which shall constitute one and the same agreement,
and by
facsimile or electronic signature.
[Reminder
of this page intentionally left blank.]
-5-
IN
WITNESS THEREOF,
the
parties hereto have caused this Agreement to be duly executed on their behalf
by
a duly authorized representative as of the date first set forth
above.
PARTY
A: TAIYUAN PUTAI BUSINESS CONSULTING CO., LTD
By:
/s/ Zhao Xxxx
Xxxx
Ming, Chairman and CEO
PARTY
B: SHANXI PUDA RESOURCES CO., LTD.
By:
/s/ Zhao Xxxx
Xxxx
Ming, Chairman and CEO
-6-
APPENDIX
1: DESCRIPTION OF BUSINESS CONSULTING AND SERVICES
| 1. |
providing
business consulting on the Business of Party
B;
|
| 2. |
providing
business consulting on management, marketing, and business planning
of
Party B;
|
| 3. |
training
of managerial personnel of Party B; and
|
| 4. |
providing
other business consultation and services that Party B may reasonably
request.
|
-7-
