BUSINESS OPERATION AGREEMENT

This Business Operation Agreement (hereinafter referred to as “this Agreement”)
is entered into among the following parties in Dalian, People’s Republic of
China (“China” or “PRC”) as of Oct. 12, 2010:

Party A: Dalian Xinding New Material Technology Consultancy Inc., with the
registered address of Rm# 2122, Unit one, No. 112 Youhao Road, Zhongshan
District, Dalian; and the legal representative of Liang Hai-yan;

Party B: Dalian TOFA New Material Development Co., Ltd., with the registered
address of  South area, Lingang Industrial Area of Dalian Economic and
Technology Development Zone, Dalian; and the legal representative of Zheng
Chuan-tao.

Party C: Zheng Chuan-tao, with the address of 2-2-1 No. 63 Shandong Road,
Ganjingzi District, Dalian; and ID number of 210203196104261034.

Party D: Li Zong-li, with the address of 2-11-1 No. 228 Zhongqing Street,
Zhongshan District, Dalian; and ID number of 230827196803054517.

Party E: Liu Pi-jia, with the address of 2-2-3 No. 11 Huadong Road, Ganjingzi
District, Dalian; and ID number of 210211196007190414.
WHEREAS:

1.
Party A is a wholly foreign-owned enterprise duly incorporated and validly
existing under the PRC law, which has the technology expertise and the practical
experience on the R&D, manufacturing of new materials, especially the bimetal
composite materials, and rich experience and professional technicians on that;

2.
Party B is a limited liability company duly incorporated and validly existing
under the PRC law;

3.
Party C is a PRC citizen and the shareholder of Party B, holding 75.7% equity
interests of Party B;

4.
Party D is a PRC citizen and the shareholder of Party B, holding 15.7% equity
interests of Party B;

5.
Party E is a PRC citizen and the shareholder of Party B, holding 8.6% equity
interests of Party B;

6.
The parties hereby agree to further clarify, through this Agreement, the matters
in connection with Party B’s operation pursuant to provisions herein.

NOW, THEREFORE, through friendly negotiations and abiding by the principle of
equality and mutual benefit, the Parties hereby agree as follows:
 
 
 

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1.           To assure the performance of the various 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, Party D and Party E hereby
jointly agree that Party B shall not conduct any transaction which may
materially affects its assets, obligations, rights or the company’s operation
(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 transactions) unless the obtainment of a prior written consent from
Party A, including but not limited to the following contents:

1.1      to borrow money from any third party or assume any debt;

1.2      to sell to or acquire from any third party any asset or right,
including but not limited to any intellectual property right;

1.3      to provide real guarantee for any third party with its assets or
intellectual property rights;

1.4      to assign to any third party its business agreements.

2.           Party C, Party D and Party E, as Party B’s shareholders, further
covenant that

2.1      not sell, transfer, pledge, dispose in any other manners of their
equity interests of Party B or other interests, or not allow to create other
security interests on it without Party A’s prior written consent, except for
Party A and/or its designated person;

2.2      not to approve the shareholders’ resolution which may result in the
Party B’s merger or combination with, buy or investment in, be purchased (other
than Party A or its designated person) any other person without Party A’s prior
written consent;

2.3      not do anything that may materially affect the assets, business and
liabilities of Party B without Party A’s prior written consent; not, upon the
execution of this Agreement, to sale, transfer, mortgage or dispose, in any
other form, any asset, legitimate or beneficial interest of business or income
of Party B, or to approve any other security interest set on it without prior
written consent by Party A;

2.4      not to request Party B or approved at shareholder’s meeting to
distribute dividends or profits to shareholders without Party A’s prior written
consent;

2.5      not to supplement, amend or modify its articles of association, or to
increase or decrease its registered capital, or to change the capital structure
of Party B in any way without Party A’s prior written consent; and

2.6      agree to execute the Power of Attorney attached hereto as requested by
Party A upon the execution of this Agreement and within the term of this
Agreement.
 
 
 

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3.           In order to ensure the performance of the various 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 , Party D and Party E
hereby jointly agree to accept, from time to time, the corporate policy advise
and guidance provided by Party A in connection with the employment and dismissal
of the company’s employees, company’s daily operating, financial management and
so on.

4.           Party B together with its shareholders Party C , Party D and Party
E hereby jointly agree that Party C , Party D and Party E 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 assume such position. In this circumstance, the person
recommended by Party A should comply with the stipulation on the statutory
qualifications of directors, General Manager, chief financial controller, and
other senior officers pursuant to applicable law.

5.           Party B together with its shareholders Party C, Party D and Party E
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 in a timely manner 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.

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
relevant laws, such clause shall be deemed invalid only within the applicable
area of the laws 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
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.         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 required to be disclosed in
accordance with applicable laws or rules or regulations of stock exchange; or
(c) if 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, 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.

11.         This conclusion, validity, performance and interpretation of
Agreement shall be governed by the PRC law.

12.         The parties hereto 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 within
thirty (30) days after such dispute is raised, each party can submit such matter
to Shenyang Arbitration Commission in accordance with its then effective rules.
The arbitration award shall be final conclusive and binding upon both parties.
If there is any dispute is in process of arbitration, other than the matters in
dispute, the Parties shall perform the other rights and obligation pursuant to
this Agreement.

 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 Party A. 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 expiring 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. The original of this Agreement is in five (5) copies, each party holds one
and all original are equally valid.
 
 
 

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IN WITNESS THEREOF each party hereto have caused this Agreement duly executed by
itself or a duly authorized representative on its behalf as of the date first
written above.
 
Party A: Dalian Xinding New Material Technology Consultancy Inc.  (seal)
Authorized Representative:
Name:
Position:
 
Party B: Dalian TOFA New Material Development Co., Ltd.  (seal)
Authorized Representative:
Name:
Position:
 
Party C: Zheng Chuan-tao
Signature:
 
Party D: Li Zong-li
Signature:
 
Party E: Liu Pi-jia
Signature:

 
 
 

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