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 Tongda Equipment and Technology Development Co., Ltd., with the
registered address of  Youjia Village, Xinzhaizi Street, Ganjingzi District,
Dalian; and the legal representative of Wang Yu-kai.

Party C: Wang Yu-kai, with the address of 1-3-3 No. 22 Jinxin Road, Ganjingzi
District, Dalian; and ID number of 21020419621229143X.

Party D: Wang Di, with the address of No. 2-5 Shenyang Road, Xigang District,
Dalian; and ID number of 210204198211055784.

Party E: Fei Li-zhi, with the address of 1-2-2 No.11 Jinghui Street, Ganjingzi
District, Dalian; and ID number of 210211195401121421.
 
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 equipment for 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 51% equity
interests of Party B;

4.
Party D is a PRC citizen and the shareholder of Party B, holding 41.2% equity
interests of Party B;

5.
Party E is a PRC citizen and the shareholder of Party B, holding 7.8% 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.

 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.

 
 
 

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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.

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.

 
 
 

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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 Tongda Equipment and Technology Development Co., Ltd. (seal)
Authorized Representative:
Name:
Position:
 
Party C: Wang Yu-kai
Signature:
 
Party D: Wang Di
Signature:
 
Party E: Fei Li-zhi
Signature:

 
 
 

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