OPERATING AGREEMENT
This
Operating Agreement (this “Agreement”)
is
dated December 28, 2005, and is entered into in Shanghai, China by and among
Haie Hi-tech Engineering (Hong Kong) Company Limited, with a registered address
at FLAT/RM B 20/F Public Bank Centre, 120 Des Voeux Road Central, HK, China
(“Party A”), Shanghai Xin Ye Environmental Protection Engineering Technology
Co., Ltd. with a registered address at, 0xx
Xxxxx,
Xx.000 Xx Xxxx Xxxx, Xxxxxxxx, Xxxxx (“Party B”), and shareholders holding 100%
outstanding shares of Party B (the “Shareholders of Party B” or “Party C”).
Party A and Party B, and Shareholders of Party B are referred to collectively
in
this Agreement as the “Parties.”
RECITALS
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1.
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Party
A, a limited company incorporated under law of Hong Kong, has the
expertise in the business of Engineering and
Investment;
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2.
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Party
B is a limited company incorporated in China, and is engaged in technical
services and business consultation in specific areas of energy resources,
environmental protection facilities and computer science, the sale
of
chemical raw materials and productsøhazardous
substance exclusively÷(the
“Business”)
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3.
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The
undersigned Shareholders of Party B collectively own over 100% 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 a certain amount of money to Party A. However, the relevant
payable account has not been paid yet and the daily operation of
Party B
will have a material effect on its capacity to pay such payable account
to
Party A;
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6.
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The
Parties are entering into this Agreement to clarify matters in connection
with Party B’s operations.
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NOW
THEREFORE,
all
parties of this Agreement hereby agree as follows through mutual negotiations:
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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
the counter-guarantee, to pledge all of its assets, including accounts
receivable, to Party A. According to the aforesaid guarantee arrangement,
Party A wishes to enter into written guarantee contracts with Party
B’s
counter-parties thereof to assume the guarantee liability as the
guarantor
when it needs; therefore, Party B and Party C shall take all necessary
actions (including but not limited to execute relevant documents
and
transact relevant registrations) to carry out the arrangement of
counter-guarantee to Party A.]
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1
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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 its shareholders Party C 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) unless the obtainment of a prior written consent from
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 to or acquire from 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 its business agreements.
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3.
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In
order to ensure the performance of the various operation agreements
between Party A and Party B and the payment of the various payables
by
Party B to Party A, Party B together with its shareholders Party
C 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 its shareholders Party C hereby jointly agree that
Party C
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 its shareholders Party C 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
relevant laws, such clause shall be deemed invalid only within the
applicable area of the Laws 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 as it needs 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 from other
parties unless 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 whatever this Agreement is
void,
amended, cancelled, terminated or unable to perform.
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11.
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This
Agreement shall be governed by and construed in accordance with PRC
law.
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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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3
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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 on
the date
of execution.
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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 four (4) duplicate originals in English,
each Party has received one (1) duplicate original, and all originals
shall be equally valid.
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[SIGNATURE
PAGE FOLLOWS]
4
[Signature
Page]
IN
WITNESS WHEREOF
both
parties hereto have caused this Agreement to be duly executed by their legal
representatives and duly authorized representatives on their behalf as of the
date first set forth above.
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PARTY
A:
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Haie
Hi-tech Engineering (Hong Kong) Company Limited
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Legal/Authorized
Representative: /s/ WU
Qinghuan
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Name:
WU Qinghuan
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Title:
Director
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PARTY
B:
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Shanghai
Xin Ye Environmental Protection Engineering Technology Co., Ltd.
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Legal/Authorized
Representative: /s/ WU
Qinghuan
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Name:
WU Qinghuan
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Title:
Executive Director
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5
SIGNATURE
PAGE FOR SHAREHOLDERS OF PARTY B
PARTY
C:
SHAREHOLDERS
OF PARTY B:
/s/
WU
Qinghuan
By:
WU
Qinghuan
PRC
ID
Card No.:
320112194610111693
Shares
of
Shanghai Xin Ye Environmental Protection Engineering Technology Co., Ltd. owned
by WU Qinghuan:
100%
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