OPERATING AGREEMENT (English Translation)
EXHIBIT
99.3
(English
Translation)
This
Operating Agreement (this “Agreement”) is dated October 28, 2005 and is entered
into between and among Skystar Bio-Pharmaceutical (Cayman) Holdings Co.,
Ltd., a
company organized under the laws of the Cayman Islands (“Party
A”),
and
Xian Tianxing Bio-Pharmaceutical Co., Ltd. (“Party
B”),
a
company with joint stock limited liability organized under the laws of the
People’s Republic of China (“PRC”),
with
a registered address at Xx. 0, xxxxx 00000, Xxxx Xxx Xxxx, Xxxxx, Xxxxxxx
Xxxxx,
Xxx Xin District, Xi’an, Xxxxxx Xxxxxxxx, Xxxxx 000000, and each of the
shareholders of Party B listed on Appendix 1 (“Shareholders”).
Party
A, Party B, Chairman and Shareholders are collectively referred to in this
Agreement as the “Parties.”
RECITALS
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1.
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Party
A has technological expertise in pharmaceutical, research, development
and
production.
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2.
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Party
B is a pharmaceutical company with joint stock limited liability
duly
incorporated in Beijing under PRC
law.
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3.
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The
Chairman is the chairman and a shareholder of Party B; the Shareholders
are shareholders of Party B. Chairman and Shareholders collectively
own
over 50% of the equity interests of Party B;
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4.
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Party
A has established a business relationship with Party B by entering
into
the “Consulting Services Agreement” (hereinafter referred to as the
“Services
Agreement”);
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5.
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Pursuant
to the above-mentioned agreement between Party A and Party B, Party
B
shall pay certain consulting fees to Party A.
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6.
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The
Parties are entering into this Agreement define and clarify the
relationship between Party A and Party B, relating to Party B’s
operations.
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NOW
THEREFORE,
all
parties of this Agreement hereby mutually agree as follows:
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1.
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Party
A agrees, subject to the satisfaction of the relevant provisions
by Party
B herein, as the guarantor for Party B in the contracts, agreements
or
transactions in connection with Party B’s operation between Party B and
any other third party, to provide full guarantee for the performance
of
such contracts, agreements or transactions by Party B. Party B
agrees, as
a counter-guarantee, to pledge all of its assets, including accounts
receivable, to Party A. According to the aforesaid guarantee, Party
A
wishes to enter into written guarantee agreements with Party B’s
counter-parties thereof to assume liability as the guarantor when
and if
needed; therefore, Party B, the Chairman and Shareholders shall
take all
necessary actions (including but not limited to executing and delivering
relevant documents and filing of relevant registrations) to carry
out the
arrangement of counter-guarantee to Party
A.
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2.
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In
consideration of the requirement of Article 1 herein and assuring
the
performance of the various operation agreements between Party A
and Party
B and the payment of the payables accounts by Party B to Party
A, Party B
together with the Chairman and the Shareholders hereby jointly
agree that
Party B shall not conduct any transaction which may materially
affects its
assets, obligations, rights or the operations of Party B (excluding
the
business contracts, agreements, sell or purchase assets during
Party B’s
regular operation and the lien obtained by relevant counter parties
due to
such agreements) prior written consent of Party A, including but
not
limited to the following:
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2.1
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To
borrow money from any third party or assume any debt;
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2.2
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To
sell, license, transfer, or acquire from or to any third party
any asset
or right, including but not limited to any intellectual property
right;
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2.3
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To
provide any guarantees to any third parties using its assets or
intellectual property rights;
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2.4
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To
assign to any third party and of its business agreements.
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3.
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In
order to ensure the performance of the various operational agreements
between Party A and Party B and the payment of the various payables
by
Party B to Party A, Party B together with the Chairman and the
Shareholders hereby jointly agree to accept, from time to time,
advice
regarding corporate policy advise provided by Party A in connection
with
company’s daily operations, financial management and the employment and
dismissal of the company’s employees.
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4.
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Party
B together with the Chairman and the Shareholders hereby jointly
agree
that the Chairman and the Shareholders shall appoint the person
recommended by Party A as the directors of Party B, and Party B
shall
appoint Party A’s senior managers as Party B’s General Manager, Chief
Financial Officer, and other senior officers. If any of the above
senior
officers leaves or is dismissed by Party A, he or she will lose
the
qualification to take any position in Party B and Party B shall
appoint
other senior officers of Party A recommended by Party A to take
such
position. The person recommended by Party A in accordance with
this
Article herein should comply with the stipulation on the qualifications
of
directors, General Manager, Chief Financial Officer, and other
senior
officers pursuant to applicable law.
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2
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5.
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Party
B together with the Chairman and the Shareholders hereby jointly
agree and
confirm that Party B shall seek the guarantee from Party A first
if it
needs any guarantee for its performance of any contract or loan
of flow
capital in the course of operation. In such case, Party A shall
have the
right but not the obligation to provide the appropriate guarantee
to Party
B on its own discretion. If Party A decides not to provide such
guarantee,
Party A shall issue a written notice to Party B immediately and
Party B
shall seek a guarantee from other third party.
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6.
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In
the event that any of the agreements between Party A and Party
B
terminates or expires, Party A shall have the right but not the
obligation
to terminate all agreements between Party A and Party B including
but not
limited to the Services Agreement.
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7.
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Any
amendment and supplement of this Agreement shall be made in writing.
The
amendment and supplement duly executed by all parties shall be
deemed as a
part of this Agreement and shall have the same legal effect as
this
Agreement.
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8.
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If
any clause hereof is judged as invalid or non-enforceable according
to
applicable laws, such clause shall be deemed invalid only with
respect to
the affected clauses, and without affecting other clauses hereof
in any
way.
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9.
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Party
B shall not assign its rights and obligations under this Agreement
to any
third party without the prior written consent of Party A. Party
B hereby
agrees that Party A may assign its rights and obligations under
this
Agreement at its discretion and such transfer shall only be subject
to a
written notice sent to Party B by Party A, and no any further consent
from
Party B will be required.
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10.
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All
parties acknowledge and confirm that any oral or written materials
communicated pursuant to this Agreement are confidential documents.
All
parties shall keep secret of all such documents and not disclose
any such
documents to any third party without prior written consent (except
the
written consent of the Shareholders shall not be required) from
other
parties except under the following conditions: (a) such documents
are
known or shall be known by the public (excluding the receiving
party
discloses such documents to the public without authorization);
(b) any
documents disclosed in accordance with applicable laws or rules
or
regulations of stock exchange; (c) any documents required to be
disclosed
by any party to its legal counsel or financial consultant for the
purpose
of the transaction of this Agreement by any party, and such legal
counsel
or financial consultant shall also comply with the confidentiality
as
stated hereof. Any disclosure by employees or agencies employed
by any
party shall be deemed the disclosure of such party and such party
shall
assume the liabilities for its breach of contract pursuant to this
Agreement. This Article shall survive termination of this Agreement.
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11.
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This
Agreement shall be governed by and construed in accordance with
the laws
of the PRC.
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3
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12.
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The
parties shall strive to settle any dispute arising from the interpretation
or performance of this Agreement through friendly consultation.
In case no
settlement can be reached through consultation, each party can
submit such
matter to China International Economic and Trade Arbitration Commission
(“CIETAC”)
for arbitration in accordance with its rules of CIETAC. The arbitration
proceedings shall take place in Beijing and shall be conducted
in Chinese.
Any resulting arbitration award shall be final and conclusive and
binding
upon all the parties.
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13.
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This
Agreement shall be executed by a duly authorized representative
of each
party as of the date first written above and become effective
simultaneously.
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14.
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Notwithstanding
Article 13 hereof, the parties confirm that this Agreement shall
constitute the entire agreement of the Parties with respect to
the subject
matters therein and supersedes and replaces all prior or contemporaneous
verbal and written agreements and
understandings.
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15.
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The
term of this agreement is ten (10) years unless early termination
occurs
in accordance with relevant provisions herein or in any other relevant
agreements reached by all parties. This Agreement may be extended
only
upon Party A’s written confirmation prior to the expiration of this
Agreement and the extended term shall be determined by the Parties
hereto
through mutual consultation. During the aforesaid term, if Party
A or
Party B is terminated at expiration of the operation term (including
any
extension of such term) or by any other reason, this Agreement
shall be
terminated upon such termination of such party, unless such party
has
already assigned its rights and obligations in accordance with
Article 9
hereof.
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16.
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This
Agreement shall be terminated on the expiration date unless it
is renewed
in accordance with the relevant provision herein. During the valid
term of
this Agreement, 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 (30) days
prior
written notice to Party B.
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17.
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This
Agreement has been executed in duplicate originals, each Party
has
received one (1) duplicate original, and all originals shall be
equally
valid.
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[SIGNATURE
PAGE FOLLOWS]
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SIGNATURE
PAGE
IN
WITNESS WHEREOF
each
party hereto has caused this Agreement duly executed by itself or a duly
authorized representative on its behalf as of the date first written above.
PARTY
A:
Skystar
Bio-Pharmaceutical (Cayman)
Holdings
Co., Ltd.
By:
/s/
Xxxxxxx Xx
Name:
Lu,
Weibing
Title:
Chairman
PARTY
B:
Xian
Tianxing Bio-Pharmaceutical
Co.,
Ltd.
By:
/s/
Xxxxxxx Xx
Name:
Lu,
Weibing
Title:
Chairman
CHAIRMAN:
/s/
Xxxxxxx Xx
____________________________________
Xxxxxxx
Xx
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SIGNATURE
PAGE FOR SHAREHOLDERS
SHAREHOLDERS:
[SIGNATURES
PAGES FOR SHAREHOLDERS FOLLOWS]
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