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1
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Party
A constitutes Henan Shuncheng Group Coal Coke Co.,
Ltd. (hereinafter referred to as “Opco ”) and all of its
shareholders holding all issued and outstanding shares of Opco . Under
this Agreement, Opco, Wang Xinshun, Wang Xinming and Cheng Junsheng have
acted collectively as one party to this
Agreement;
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2
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Anyang
Shuncheng Energy Technology Co., Ltd. (hereinafter referred to as “Party B”) is a
wholly-foreign owned enterprise incorporated and existing within the
territory of China in accordance with the law of the People’s Republic of
China, the registration number of its legal and valid Business License is
410500400000623,
and the legal registered address is Tongye Town, Anyang
County.
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3
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Party
A desires to entrust Party B to manage and operate Opco
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4
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Party
B agrees to accept such entrustment and to manage Opco on behalf of Party
A.
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1.1
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Party
A agrees to entrust the management of Opco to Party B pursuant to the
terms and conditions of this Agreement. Party B agrees to manage Opco in
accordance with the terms and conditions of this
Agreement.
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1.2
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The
term of this Entrusted Management Agreement (the “Entrusted Period”) shall
be from the effective date of this Agreement to the earlier of the
following:
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1.3 During
the Entrusted Period, Party B shall be fully and exclusively responsible
for the management of Opco. The management service includes without
limitation the following:
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(1)
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Party
B shall be fully and exclusively responsible for the operation of Opco,
which includes the right to appoint and terminate members of Board of
Directors and the right to hire managerial and administrative personnel
etc. Party A or its voting proxy shall make a shareholder’s resolution and
a Board of Directors’ resolution based on the decision of Party
B.
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(2)
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Party
B has the full and exclusive right to manage and control all cash flow and
assets of Party A. Opco shall open one or more entrusted accounts and/or
designate one or more existing account as entrusted accounts
(collectively, the “Entrusted Accounts”).
Party B has the full and exclusive right to decide the use of the funds in
the Entrusted Accounts. The authorized signature of the Entrusted Accounts
shall be appointed or confirmed by Party B. All of the funds of Opco shall
be kept in the Entrusted Accounts, including but not limited to its
existing working capital and purchase price received from selling its
production equipment, inventory, raw materials and accounts receivable to
Party B (if any), all payments of funds shall be disbursed through the
Entrusted Accounts, including but not limited to the payment of all
existing accounts payable and operating expenses, payment of employees
salaries and purchase of assets, and all revenues from its operation shall
be kept in the Entrusted Accounts.
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(3)
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Party
B shall have the full and exclusive right to control and administrate the
financial affairs and daily operation of Opco, such as entering into and
performance of contracts, and payment of taxes
etc.
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1.4
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Subject
to anything to the contrary stated herein, in consideration of the
services provided by Party B hereunder, Party A shall pay an entrusted
management fee to Party B which shall be equal to the quarterly earnings
before tax (if any) of Opco. The entrusted management fee shall be as
follows: during the term of this agreement, the entrusted management fee
shall be equal to Opco’s estimated earnings before tax, being the
quarterly revenues after deduction of operating costs, expenses and taxes
other than income tax. If the quarterly earnings before tax is zero, Opco
is not required to pay the quarterly entrusted management fee; if Opco
sustains losses, all such losses will be carried over to next quarter and
deducted from next quarter’s entrusted management fee. Both Parties shall
calculate, and Party A shall pay, the quarterly entrusted management fee
within 45 days of end of the preceding quarter. The above quarterly
payment shall be adjusted prior to the filing of Opco’s tax return for
such quarter (the “Quarterly Adjustment”), so as to make the after-tax
profit of Opco of that quarter zero. In addition, the above monthly
payment shall be adjusted after the end of each fiscal year but before the
filing for the yearly tax return (the “Annual Adjustment”), so as to make
the after-tax profit of Opco of that fiscal year
zero.
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1.5
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Party
B shall assume all operation risks out of the entrusted management of Opco
and bear all losses of Opco. If Opco has no sufficient funds to repay its
debts, Party B is responsible for paying off these debts on behalf of
Opco; if Opco’s net assets are lower than its registered capital, Party B
is responsible for funding the
deficit.
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(1)
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to
hand over Opco to Party B for entrusted management as of the effectiveness
date of this Agreement and to make all of business materials together with
Business License and corporate seal of Opco available to Party
B;
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(2)
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Party
A has no right to make any decision regarding Opco’s operations without
the prior written consent of Party
B;
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(3)
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to
have the right to know the business conditions of Opco at any time and
provide proposals;
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(4)
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to
assist Party B in carrying out the entrusted management in accordance with
Party B’s requirement;
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(5)
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to
perform its obligations pursuant to the Shareholders’ Voting Rights Proxy
Agreement, signed by and between Wang Xinshun, Wang Xinming and Cheng
Junsheng and Party B on March 19, 2010 in Anyang, and not to violate the
said agreement;
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(6)
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not
to intervene Party B’s management over Opco in any form by making use of
shareholder’s power;
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(7)
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not
to entrust or grant their shareholders’ rights in Opco to a third party
other than Party B without Party B’s prior written
consent;
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(8)
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not
to otherwise entrust other third party other than Party B to manage Opco
in any form without Party B’s prior written
consent;
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(9)
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not
to terminate this Agreement unilaterally with for any reason whatsoever;
or
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(10)
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to
enjoy other rights and perform other obligations under the
Agreement.
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(1)
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to
enjoy the full and exclusive right to manage Opco
independently;
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(2)
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to
enjoy the full and exclusive right to dispose of all assets of
Opco;
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(3)
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to
enjoy all profits and bear losses arising from Opco’s operations during
the Entrusted Period;
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(4)
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to
appoint all directors of Opco;
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(5)
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to
appoint the legal representative, general manager, deputy general manager,
financial manager and other senior managerial personnel of
Opco;
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(6)
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to
convene shareholders’ meetings of Opco in accordance with the
Shareholders’ Voting Rights Proxy Agreement and sign resolutions of
shareholders’ meetings; and
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(7)
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to
enjoy other rights and perform other obligations under the
Agreement.
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(1)
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has the right to enter into the
Agreement and the ability to perform the
same;
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(2)
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the execution and delivery
of this Agreement by
each party have been duly authorized by all necessary corporate
action;
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(3)
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the execution of this Agreement by
the officer or representative of each party has been duly
authorized；
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(4)
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each party has no other reasons
that will prevent this Agreement from becoming a binding and effective
agreement between both parties after
execution;
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(5)
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the execution and performance of
the obligations under this Agreement will
not:
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