Exhibit 10.1
 
EXCLUSIVE TECHNICAL CONSULTING SERVICE AGREEMENT

THIS EXCLUSIVE TECHNICAL CONSULTING SERVICE AGREEMENT (the “Agreement”) is made
and entered into by and between the following parties as of February 11, 2011 in
Shandong, the People’s Republic of China (“China” or the “PRC”):

Party A: Tengzhou City Yangshi Keguang Electronics Co., Ltd.

Registered Address: No. 1, Zhidali Rd, Tengzhou Economic Development Zone,
Shandong Province

Party B: Shandong Zhidali Industrial Co., Ltd.
Registered Address: No. 1, Zhidali Rd., Tengzhou Economic Development Zone
 
Each of Party A and Party B shall be hereinafter referred to as a “Party”
respectively, and as the “Parties” collectively.

WHEREAS,

1.
Party A, a wholly foreign-owned enterprise duly established and validly existing
under the laws of the PRC, possesses professional knowledge, facilities,
resources and skills to provide Party B with technical consulting services
relevant to the development and operation of Party B’s business.

2.
Party B, a limited liability company duly established and validly existing under
the laws of the PRC, agrees to accept the technical consulting services provided
by Party A in accordance with this Agreement.

 
NOW THEREFORE, through mutual discussion, the Parties have agreed as follows:

1.
Technical Consulting Services; Exclusivity

 
1.1
During the term of this Agreement, Party A shall provide the following technical
consulting services to Party B in accordance with this Agreement:
       
(i)
Provision of technology information and materials related to Party B’s business
development and operation, the contents of which may be enhanced or diminished
during the performance of this Agreement and upon mutual agreement to address
each Party’s requirements; and
       
(ii)
Training of technical and managerial personnel for Party B and provision of
required training documents, and the provision of technologists and managerial
personnel to Party B as necessary to provide related technology and training
services.

 
1.2
Party B hereby agrees to accept the technical consulting services provided by
Party A. Party B further agrees that, during the term of this Agreement, it
shall not accept technical consulting and services from any other party without
the prior written consent of Party A.

 
 
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1.3
Party A shall be the sole and exclusive owner of all right, title and interests
to any and all intellectual property rights arising from the performance of this
Agreement, including but not limited to, copyrights, patent, know-how and
commercial secrets, whether such intellectual property is developed by Party A
or Party B.

2.
Consulting Fee

 
2.1
As consideration for the services provided by Party A under this Agreement,
Party B shall pay an annual consulting fee to Party A equal to 80% of Party B’s
annual net profit (the “Consulting Fee”).

 
2.2
Party A agrees to reimburse Party B for all necessary expenses related to the
performance of this Agreement before Party B pays such Consulting Fee, including
but not limited to, travel expenses, expert fees, printing fees and mail costs.

 
2.3
Party A also agrees to reimburse Party B for taxes (not including income tax),
customs and other expenditures related to Party B’s performance of this
Agreement.

 
2.4
Party B shall pay such Consulting Fee to Party A on a semi-annual basis, with
any over- or underpayment by Party B to be reconciled once the annual net profit
of Party B is determined at the end of Party B’s fiscal year. During the term of
this Agreement, Party B shall make payments of the Consulting Fee to the bank
account described in Section 2.5 below within three (3) working days after each
semi-year end, and the Parties shall complete any reconciliation payment within
three (3) days after the determination described in Section 2.5 below. In the
event that Party B should fail to make timely payment of the Consulting Fee or
other necessary expenses in accordance with this Agreement, Party B shall pay a
late fee to Party A based on one percent (1%) compound annual interest of the
payment amount then due, from the date of such nonpayment until payment is made
in full.

 
2.5
Party B shall open and maintain a separate bank account for payment of the
Consulting Fee and any other payments under this Agreement. Within ninety (90)
calendar days after each fiscal year end, Party B shall furnish a written report
of its net profit for such fiscal year end to Party A to reconcile the
Consulting Fee. Party A is entitled to appoint its own employee, PRC accountant
or international accountant to review or audit Party B’s account books to verify
the amount of the Consulting Fee and in relation to the services provided
hereunder. Any fees payable to such an accountant shall be paid by Party A.
Party B shall provide any and all documents, account books, records, materials
and information, as well as necessary assistance to the employee or accountant
designated by Party A. The audit report issued by Party A’s employee shall be
final and conclusive unless Party B gives written objection within seven
(7) days after receiving such report. An audit report issued by Party A’s
appointed accountant shall be deemed final and conclusive. Party A is entitled
to serve Party B with a written request for payment of any deficient amount at
any time after receiving the audit report confirming the amount of the
Consulting Fee. Party B shall pay within seven (7) days after receiving the
notice in accordance with Section 2.4.

 
 
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3.
Representations and Warranties

 
3.1
Representations and Warranties of Party A

Party A hereby represents and warrants as follows:

 
3.1.1
Party A is a company that is duly registered, validly existing under the laws of
the PRC and is authorized to enter into this Agreement.
       
3.1.2
Party A has the power to enter into and perform this Agreement in accordance
with its charter and organizational documents as well as its business scope, and
has taken all necessary action to obtain all consents and approvals necessary to
execute and perform this Agreement, and the execution and performance of this
Agreement by Party A does not and will not result in any violation of
enforceable or effective laws or contractual limitations.

 
3.1.3
Upon execution, this Agreement shall constitute the legal, valid and binding
obligation of Party A and may be enforceable in accordance with the terms
hereof.

 
3.2
Representations and Warranties of Party B
          Party B hereby represents and warrants as follows:

 

 
3.2.1
Party B is a company that is duly registered, validly existing under the laws of
the PRC and is authorized to enter into this Agreement.

 
3.2.2
Party B has the power to execute and perform this Agreement in accordance with
its charter and organizational documents as well as its business scope, has
taken all necessary action to obtain all consents and approvals necessary to
execute and perform this Agreement, and the execution and performance of this
Agreement by Party B does not and will not result in any violation of
enforceable or effective laws or contractual limitations.

 
3.2.3
Upon its execution, this Agreement shall constitute the legal, valid and binding
obligation of Party B, enforceable against it in accordance with the terms
hereof.

4.
Confidentiality

 
4.1
Party B agrees to use all reasonable and best efforts to protect and maintain
the confidentiality of Party A’s confidential information received in connection
with this Agreement. Party B shall not disclose, grant or transfer such
confidential information to any third party. Upon termination of this Agreement
Party B shall, upon Party A’s request, destroy or return to Party A any
documents, materials or software containing any such confidential information,
shall completely delete any such confidential information from any memory
devices and shall not use or permit any third party to use such confidential
information.

 
 
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4.2
Pursuant to this Agreement, the term “confidential information” shall mean any
technical information or business operation information which is unknown to the
public, can bring about economic benefits, has practical utility and about which
a Party has adopted secret-keeping measures.

 

 
4.3
Both Parties agree that the provisions of Article 4 shall survive
notwithstanding the alteration, revocation or termination of this Agreement.

 
5.
Indemnities

 

 
5.1
Party B shall indemnify Party A against any loss, damage, liability or expenses
suffered or incurred by Party A as a result of or arising out of any litigation,
claim or compensation request relating to the technical consulting services
provided by Party A to Party B under this Agreement.

 
6.
Effectiveness and Term of this Agreement

 

 
6.1
This Agreement shall be executed and come into effect as of the date first set
forth above. The term of this Agreement shall be 20 years unless earlier
termination as set forth in this Agreement or upon the mutual written agreement
of the Parties hereto.

 

 
6.2
This Agreement may be extended prior to termination for one or more 20 year
terms upon written notice by Party A, provided such extension is permitted by
law and subject to the approval of the registration administration for the
extension of Party B’s business duration. The parties will cooperate to renew
this Agreement if such renewal is legally permitted at the time.

 
7.
Termination of the Agreement

 

 
7.1
The Agreement shall terminate automatically on the expiration date unless it is
otherwise renewed in accordance with this Agreement.

 

 
7.2
Throughout the term of this Agreement, Party B may not terminate this Agreement
absent of gross negligence, bankruptcy, fraud or illegal action on the part of
Party A. Notwithstanding the above, Party A may terminate this Agreement by
providing written notice to Party B thirty (30) days before such termination.

 

 
7.3
The rights and obligations of both Parties under Article 4 and Article 5 of this
Agreement shall survive after the termination of this Agreement.

 
8.
Dispute Settlement

 

 
8.1
The Parties shall strive to settle any dispute arising from the interpretation
or performance, or in connection with this Agreement through mutual negotiation.
In case no settlement can be reached through negotiation, either Party may
submit such dispute to the China International Economic and Trade Arbitration
Committee for arbitration according to its then effective arbitration rules. The
arbitration shall be held in Beijing, PRC. The arbitration proceedings shall be
conducted in Chinese. The arbitration award shall be final and binding upon the
Parties.

 
 
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9.
Force Majeure

 
9.1
A “Force Majeure Event” means any event which is out of the control of each
party and that would be unavoidable or insurmountable even if the Party affected
by such event paid reasonable attention to it. Force Majeure Events shall
include, but not be limited to, government actions, natural disasters, fire,
explosion, typhoons, floods, earthquakes, tide, lightning or war. However, any
lack of credit, assets or financing shall not be deemed a Force Majeure Event.

 

 
9.2
If the fulfillment of this Agreement is delayed or prevented due to a Force
Majeure Event as defined above, the Party affected by such a Force Majeure Event
shall be free from any obligation to the extent of the delay or holdback. The
Party claiming the occurrence of a Force Majeure Event shall provide the other
Party with the steps of fulfilling the obligations of this Agreement.

 

 
9.3
Performance under this Agreement shall be suspended during the existence of such
Force Majeure Event, provided the Party claiming the existence of the Force
Majeure Event has notified the other Party of the existence of such Force
Majeure Event and has used reasonable best efforts to perform under the
Agreement. Both Parties further agree to use reasonable best efforts to resume
performance of this Agreement if the reason for exemption has been corrected or
remedied.

 
10.
Notices

 

 
10.1
Any notice or other communication under this Agreement shall be in Chinese and
be sent to the addresses first written above or other addresses as may be
designated from time to time by hand delivery or mail or facsimile. Any notice
required or given hereunder shall be deemed to have been served: (a) on the same
date if sent by hand delivery; (b) on the tenth date after posting if sent by
air-mail, (c) on the fourth date if sent by professional hand delivery which is
acknowledged worldwide; and (d) the receipt date displayed on the transmission
confirmation notice if sent by facsimile.

 
11.
Assignment

 

 
11.1
Party B may not assign or transfer any rights or obligations under this
Agreement to any third party without prior written consent from Party A. Party B
hereby agrees that Party A may assign and transfer its rights and obligations
under this Agreement, and no any further consent from Party B will be required.

 
12.
Severability

 

 
12.1
If any of the terms of this Agreement are invalid, illegal or unenforceable, the
validity and enforceability of the other terms hereof shall nevertheless remain
unaffected.

 
 
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13.
Amendments and Supplement

 

 
13.1
Any amendment or supplement of this Agreement shall be effective only if it is
made in writing and signed by both Parties hereto. The amendment or supplement
duly executed by the Parties hereto shall be made a part of this Agreement and
shall have the same legal effect as this Agreement.

 
14.
Governing Law

 

 
14.1
The execution, effectiveness, construction, performance, amendment and
termination of this Agreement and the resolution of disputes hereunder shall be
governed by the laws of China.

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IN WITNESS THEREOF each party hereto has caused this Agreement to be duly
executed by itself or a duly authorized representative on its behalf as of the
date first written above.
 
Party A: Tengzhou City Yangshi Keguang Electronics Co., Ltd.
       
 
By:
   
Name:
Yang Zhiqiang
    Title:
Chief Executive Officer
         
Party B: Shandong Zhidali Industrial Co., Ltd
          By:  
 
Name:
Yang Zhiqiang
    Title:
Chief Executive Officer
 

 
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