OPERATING AGREEMENT (English Translation)
(English
Translation)
This
Operating Agreement (this “Agreement”)
is
dated August 25, 2006, and is entered into in Xi’an, China between Shiming
(Xi’an) Enterprise Management & Consulting Co., Ltd. a company incorporated
under the laws of the People’s Republic of China, , located at Xx. 0,
00xx
Xxxxx,
Xxxxxx 0xx
Xxxx,
Xxxxxx Security Plaza, Xi’an High Tech and New Technology Development Zone,
Xi’an, Shaanxi Province,, China 710075, (“Party
A”),
and
Shaanxi Shiming Science & Technology Joint Stock Co., Ltd., a joint stock
limited liability company organized under the laws of the PRC (“Party
B”),
with
a registered address at Xx. 0, 00xx
Xxxxx,
Xxxxxx 0xx
Xxxx,
Xxxxxxx Security Plaza, Xi’an High Tech and New Technology Development Zone,
Xi’an, Shaanxi Province, China 710075, and shareholders holding over 95%
outstanding shares of Party B (the “Shareholders of Party B”). Party A and Party
B, and Shareholders of Party B are referred to collectively in this Agreement
as
the “Parties.”
RECITALS
|
1.
|
Party
A is a company incorporated in Xi’an, China under the laws of the People’s
Republic of China, which has the technological expertise in development
and sales of consumer electronics;
|
|
2.
|
Party
B is a high tech company incorporated in Xi’an, China, and is engaged in
development and sales of consumer electronics, and through its majority
owned subsidiary, Shenzhen Seathan Technology Co., Ltd. (“Seathan
Technology”), designs and manufactures high-definition televisions and
computer monitors (the “Business”);
|
|
3.
|
The
undersigned Shareholders of Party B collectively own over 95% of
the
equity interests of Party B;
|
|
4.
|
Party
A has established a business relationship with Party B by entering
into
the “Consulting Services Agreement” dated August 25, 2006 (hereinafter
referred to as the “Services
Agreement”),
and Party B’s daily operations will have a material effect on its ability
to pay the fees payable to Party A;
|
|
5.
|
Pursuant
to the above-mentioned agreement between Party A and Party B, Party
B
shall pay certain consulting fees to Party A.
|
|
6.
|
The
Parties are entering into this Agreement to further define and clarify
the
relationship between Party A and Party B, relating to Party B’s
operations.
|
NOW
THEREFORE,
all
parties of this Agreement hereby mutually agree as follows:
|
1.
|
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 Band Shareholders of Party B 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.
|
|
2.
|
In
consideration of the requirement of Article 1 herein and assuring
the
performance of the Services Agreement between Party A and Party B
and the
payment of the payables accounts by Party B to Party A, Party B together
with the Shareholders of Party B hereby jointly and severally 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:
|
|
|
2.1
|
To
borrow money from any third party or assume any debt;
|
|
|
2.2
|
To
sell, license, transfer, or acquire from or to any third party any
asset
or right, including but not limited to any plant, equipment, real
property
or personal property, or any intellectual property right;
|
|
|
2.3
|
To
provide any guarantees to any third parties using its assets or
intellectual property rights or to provide any guaranty for any third
party obligations;
|
|
|
2.4
|
To
assign to any third party any agreements related to the Business.
|
|
|
2.5
|
To
engage in any other business consulting agreements with any third
party or
to engage in any other business activities other than the Business.
|
|
3.
|
In
order to ensure the performance of the Services Agreement between
Party A
and Party B and the payment of the various payables by Party B to
Party A,
Party B together with the Shareholders of Party B hereby jointly
and
severally agree to accept, from time to time, operation guidance
set by
Party A on, including but not limited to, business and marketing
strategies, business planning, business operation guidance, the
appointment and dismissal of its directors and officers, the hiring
and
firing employees, its daily operation of the Business, and its financial
and budgeting system.
|
2
|
4.
|
Party
B together with the Shareholders of Party B hereby jointly and severally
agree that and the Shareholders of Party B 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.
|
|
5.
|
Party
B together with the Shareholders of Party B hereby jointly and severally
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.
|
|
6.
|
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.
|
|
7.
|
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.
|
|
8.
|
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.
|
|
9.
|
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.
|
|
10.
|
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 of Party B 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.
|
3
|
11.
|
This
Agreement shall be governed by and construed in accordance with the
laws
of the PRC.
|
|
12.
|
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.
|
|
13.
|
This
Agreement shall be executed by a duly authorized representative of
each
party as of the date first written above and become effective
simultaneously.
|
|
14.
|
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.
|
|
15.
|
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.
|
|
16.
|
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.
|
|
17.
|
This
Agreement has been executed in duplicate originals, each Party has
received one (1) duplicate original, and all originals shall be equally
valid. This Agreement has both an English version and a Chinese version.
Both versions are equally authentic. Where a comparison of the authentic
texts of both versions of this Agreement discloses a difference in
meaning, the meaning which best reconciles the texts, having regard
to the
object and purpose of this Agreement shall be
adopted.
|
[SIGNATURE
PAGE FOLLOWS]
4
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: | Shiming (Xi’an) Enterprise Management & Consulting Co., Ltd. | |
| /s/ Xxxxxxx Xxxx | ||
| Chairman | ||
| PARTY B: | ||
| Shaanxi Shiming Science & Technology Joint Stock Co., Ltd. | ||
| /s/ Xxxxxxx Xxxx | ||
| President |
5
SIGNATURE
PAGE FOR SHAREHOLDERS OF PARTY B
| SHAREHOLDERS OF PARTY B: | |||
| Shaanxi Meixian Shiming Non-Ferrous Metallurgy Co., Ltd. (“Meixian”) | |||
| Shares of Shiming Company owned by Meixian 38000000 | |||
| /s/ Xxxxxxx Xxxx | |||
| President | |||
| /s/ Xxxxxxx Xxxx | |||
| Xxxxxxx Xxxx (PRC ID Card No.: 610326570221061) | |||
| Shares of Shiming Company owned by Xxxxxxx Xxxx: 12900000 | |||
| /s/ Nairang Liu | |||
| Nairang Liu (PRC ID Card No.: 610326631127043) | |||
| Shares of Shiming Company owned by Nairang Liu: 3470000 | |||
| /s/ Liehua Wang | |||
| Liehua Wang (PRC ID Card No.: 610421541129002) | |||
| Shares of Shiming Company owned by Liehua Wang: 3408800 | |||
| /s/ Genyun Qu | |||
| Genyun Qu (PRC ID Card No.: 000000000000000) | |||
| Shares of Shiming Company owned by Genyun Qu: 2930000 | |||
| /s/ Xxx Xxxx | |||
| Xxx Xxxx (PRC ID Card No.: 000000000000000) | |||
| Shares of Shiming Company owned by Xxx Xxxx: 2720000 | |||
6
| /s/ Xxxxxx Xx | |||
| Xxxxxx Xx (PRC ID Card No.: 610102621205358) | |||
| Shares of Shiming Company owned by Xxxxxx Xx: 435000 | |||
| /s/ Xxx Xxx | |||
| Xxx Xxx (PRC ID Card No.: 51012619720106140X) | |||
| Shares of Shiming Company owned by Xxx Xxx: 435000 | |||
| /s/ Xxx Xxx | |||
| Xxx Xxx (PRC ID Card No.: 51012619720106140X) | |||
| Shares of Shiming Company owned by Xxx Xxx: 435000 | |||
| /s/ Cunhu Yang | |||
| Cunhu Yang (PRC ID Card No.: 610104196210016177) | |||
| Shares of Shiming Company owned by Cunhu Yang: 362400 | |||
| /s/ Xxxxxx Xxx | |||
| Xxxxxx Xxx (PRC ID Card No.: 610124510805001) | |||
| Shares of Shiming Company owned by Xxxxxx Xxx: 271800 | |||
| Attorney-in-fact for certain shareholders of Party B: | |||
| Shiming (Xi’an) Enterprise Management & Consulting Co., Ltd. | |||
| /s/ Xxxxxxx Xxxx | |||
| By: Xxxxxxx Xxxx | |||
| As attorney-in-fact pursuant to that certain Power of Attorney, Shareholders’ Voting Rights, Proxy Agreement and Covenant Not to Xxx dated January 15, 2006 | |||
7
