OPERATING AGREEMENT
Execution
Version
This
Operating Agreement (the "Agreement")
is
entered into as of May 30th,
2008 by
and among the following parties:
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1.
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Legend
Media (Beijing) Consulting Co., Ltd.
 ,
a
company incorporated in the People's Republic of China ("PRC")
with the registered office at Xxxx 000, Xxxxxxxx 0, Xx.0 Xxxxxx Xxxx,
Xxxxxxx Xxxx-xxxx Xxxx, Xxxxxxxxxxx Xxxxxxxx, Xxxxxxx (“Party
A”);
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2.
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Tianjin
Yinse Lingdong Advertising Co., Ltd.
 ,
a
company incorporated in the PRC with the registered office at Xxxx
00-00,
Xxxxx 00, Xxxxxx Xxxxxx, No.189 Nanjin Road, Heping District, Tianjin
(“Party
B”);
and |
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3.
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Ju
Baochun
 ,
a
PRC citizen with ID number of _________________;
Xxx Xxx  ,
a
PRC citizen with ID number of _________________ (collectively
“Party
C”). |
Party
A,
Party B and Party C shall be collectively referred to as the “Parties”
and
each as a “Party”.
WHEREAS:
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(a)
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Party
A is a wholly foreign-owned enterprise
registered;
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(b)
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Party
B is a limited liability company and is approved by competent governmental
authorities to carry on advertising
business;
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(c)
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Ju
Baochun and Xxx Xxx hold 80% and 20% equity interest in Party B,
respectively;
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(d)
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Party
A has established a business relationship with Party B and Party
C by
entering into the Exclusive Technical, Operational, Business Consulting
and Services Agreement (the “TBS
Agreement”);
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(e)
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Pursuant
to the TBS Agreement, Party A agrees to provide all Services reasonably
required by Party B and Party B agrees to pay certain Service Fee
(as
defined in the TBS Agreement) to Party A. However, the relevant payables
have not been fully paid yet and the daily operations of Party B
will have
a material effect on its capacity to pay the payables to Party A;
and
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(f)
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Party
A, Party B and Party C have further reached this Agreement for the
purpose
of securing the performance of the TBS
Agreement.
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NOW
THEREFORE, the Parties have reached the following agreements based on the
principle of equal and mutual benefit:
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1. PROHIBITED
TRANSACTIONS.
Party
B
shall not, and Party C shall cause Party B not to, conduct any transactions
which may have a Business Material Adverse Effect (as defined below) on its
assets, obligations, rights or operations without obtaining the prior written
consent from Party A, including, without limitation:
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a)
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the
borrowing of money from any third party or the assumption of any
debt;
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b)
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the
sale to any third party or the acquisition from any third party of
any
assets, including, without limitation, any intellectual property
rights;
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c)
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the
imposition of any security interests for the benefit of any third
party
through collateralization of its assets;
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d)
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the
assignment to any third party of the agreements entered into by it;
and
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e)
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the
sale, transfer and disposition of any license held by Party
B.
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For
the
purpose of this Agreement, Business Material Adverse Effect means any material
adverse effect on (i) the business, assets, condition (financial or
otherwise), or results of operations of Party B, or (ii) the ability of
Party B to perform its obligations under this Agreement in a timely manner
or to
consummate the transactions contemplated by this Agreement without material
delay. In determining whether there has been a Business Material Adverse Effect,
any event, circumstance, change or effect shall be considered both individually
and together with all other events, circumstances, changes or effects and any
event, circumstance, change or effect that reasonably could be expected to
result in a Business Material Adverse Effect (individually or together with
one
or more other events, circumstances, changes or effects) shall be considered
a
Business Material Adverse Effect, except those acknowledged and agreed by Party
A.
2. INFORMATION
RIGHTS.
To
facilitate an informed decision of Party A with respect to the consent described
in this Article as well as for other operating purposes, Party B and Party
C
shall provide or make available to Party A such information as is reasonably
requested by Party A or its designated person, including, without limitation,
the books and records of Party B.
3. FINANCIAL
SUPERVISION.
Party
B
and Party C hereby jointly agree to, subsequent to the date hereof, (i) submit
the annual budget and monthly cash requirement plan of Party B to Party A for
approval, (ii) any withdrawal of fund from any bank account of Party B shall
require the joint signatures of Ju Baochun and the person designated by Party
A;
and (iii) accept the corporate policies and guidance provided by Party A from
time to time in respect of the appointment and dismissal of senior management,
daily operations and management and financial administrative system of Party
B.
4. PERSONNEL.
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a)
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Party
B and Party C hereby jointly agree to appoint or cause to be appointed
such personnel as are recommended by Party A to be the directors,
general
manager, chief financial officer, or other senior management of Party
B.
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b)
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To
ensure the performance of such arrangement, Party A and Party B agree
to
cause such directors and senior management to enter into employment
agreements with Party B.
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c)
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Ju
Baochun hereby agrees to sign an authorization agreement upon execution
of
this Agreement, by which Ju Baochun will authorize such individual
nominated by Party A to exercise, in its sole discretion, all of
the
voting rights as the shareholder at Party B's shareholders’ meeting
according to applicable laws and the articles of association of Party
B.
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5. INDEMNITY.
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a)
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Both
Party B and Party C shall jointly and severally indemnify and hold
harmless Party A from and against any loss, damage, obligation and
cost
arising out of this Agreement due to the breach of this Agreement
by Party
B and/or Party C.
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b)
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Party
A shall indemnify and hold harmless Party B and Party C from and
against
any loss, damage, obligation and cost arising out of this Agreement
due to
the breach of this Agreement by Party
A.
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c)
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This
Article 5 shall survive the termination or expiration of this Agreement
with respect to any breach occurred prior to such termination or
expiration.
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6. EFFECTIVE
DATE AND TERM.
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a)
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This
Agreement shall be executed and come into effect as of the date first
set
forth above.
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b)
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The
term of this Agreement is ten (10) years, unless otherwise earlier
terminated pursuant to the terms and conditions of this Agreement.
Upon
the expiration, the term of this Agreement shall be renewed automatically
for another ten (10) years unless any Party provides in writing that
it
does not wish to renew this Agreement.
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c)
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Party
A may review this Agreement on an annual basis and, in its sole
discretion, determine whether any amendment to this Agreement is
necessary
or desirable in response to the change of circumstances or business
conducted by Party B
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7. TERMINATION.
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7.1
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This
Agreement shall expire on the date due unless this Agreement is renewed
as
set forth above.
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7.2
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Articles
4 and 6 shall survive after the termination or expiration of this
Agreement.
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8. SETTLEMENT
OF DISPUTES.
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a)
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Any
dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity
hereof
shall be resolved through consultation. Such consultation shall begin
immediately after one Party hereto has delivered to the other Parties
hereto a written request for such consultation. If within thirty
(30) days
following the date on which such notice is given the dispute cannot
be
resolved, the dispute shall be submitted to arbitration upon the
request
of either Party with notice to the
other.
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b)
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All
disputes arising out of or in connection with this Agreement shall
be
submitted to the Hong Kong International Arbitration Centre (the
“HKIAC”)
for arbitration in Hong Kong, which shall be conducted in accordance
with
HKIAC’s arbitration rules in effect at the time of applying for
arbitration. The language of the arbitration shall be in English.
The
arbitration award shall be final and binding upon the Parties and
shall be
enforceable in accordance with its terms.
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c)
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During
the period when a dispute is being resolved, the Parties shall in
all
other respects continue their performance of this Agreement other
than the
matter(s) in dispute.
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9. FORCE
MAJEURE.
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a)
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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
performing this Agreement by Force Majeure shall inform the other
party,
without delay, of the alternative approaches for the performance
of this
Agreement.
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b)
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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, Parties shall agree
to resume
performance of this Agreement with their best efforts.
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10. NOTICES.
All
notices, demands or other communications given hereunder (a) shall be
deemed to have been duly given and received (i) upon personal delivery,
(ii) if by facsimile, when confirmation of its error-free transmission has
been recorded by the sender's fax machine, or (iii) the second succeeding
business day after deposit with UPS or other equivalent air courier delivery
service, unless the notice is held or retained by the customs service, in which
case the date shall be the fifth succeeding business day after such deposit
and
(b) must be in writing and delivered personally, by a recognized courier
service, by a recognized overnight delivery service, by facsimile or by
registered or certified mail, postage prepaid, at the following addresses (or
to
the attention of such other Person or such other address as any party may
provide to the other parties by notice in accordance with this
Article):
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If
to
Party A, to:
Address:
Room 601-602, Tower C, Baoding Center, XX.0, XxxxXxXxXxxxx Xxxxxx,
Xxxxxxxx
Xxxxxxxx, Xxxxxxx
Facsimile
No: 010-67082707
Attn:
Shao Changjian
If
to
Party B or Party C, to
Address:
Room 0-0-000, Xxxxxxxx Xxxxx, Xx. 0 Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx.
Facsimile
No: 010-66126396
Attn:
Ju
Baochun
11. NO
ASSIGNMENT.
None
of
the Parties may assign any of its rights or obligations under this Agreement
to
any party without the prior written consent of the other Parties.
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. GOVERNING
LAW.
This
Agreement shall be governed by and construed in accordance with the PRC laws.
14. LANGUAGE.
This
Agreement is executed in both English and Chinese, with equal validity and
legal
effect. Each Party acknowledges that it has reviewed both versions and that
they
are substantially the same in all material respects.
15. NO
THIRD PARTY BENEFICIARY.
This
agreement shall only be binding upon the parties hereto and their respective
permitted successors and transferees, without giving any beneficiary right
to
any third party.
16. HEADINGS.
The
captions, titles and headings included in this Agreement are for convenience
only, and do not affect this Agreement’s construction or
interpretation.
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[SIGNATURE
PAGES FOLLOW]
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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
LEGEND
MEDIA (BEIJING) CONSULTING CO., LTD.
(chop)
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Signature:
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/s/
XXXXXXX XXX XXX
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Name:
XXXXXXX
XXX XXX
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Title:
LEGAL
REPRESENTATIVE
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PARTY
B
TIANJIN
YINSE LINGDONG ADVERTISING CO., LTD.
(chop)
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Signature:
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/s/
JU BAOCHUN
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Name:
JU
BAOCHUN
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Title:
LEGAL
REPRESENTATIVE
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PARTY
C
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Signature:
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/s/
JU BAOCHUN
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Name:
JU
BAOCHUN
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Signature:
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/s/
XXX XXX
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Name:
XXX
XXX
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[SIGNATURE
PAGE OF THE OPERATING AGREEMENT]
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