tod_ex10x3.htm


    Exhibit 10.3

    
 

    OPERATING
AGREEMENT

     

    This
Operating Agreement (this “Agreement”) is dated
January 27, 2010, and is entered into in Yixing City, Jiangsu Province, People’s
Republic of China (“PRC” or “China”) by and between Yixing Dragon Path
Environment Technology Limited (“Party A”), Jiangsu
Zhenyu Environmental Protection Technology Co. Ltd. (“Party B”), and
shareholders holding 100% outstanding shares of Party B (the “Shareholders of Party
B” or “Party
C”).  Party A, Party B, and Party C are each referred to in
this Agreement as a “Party” and
collectively as the “Parties.”

    


    


    RECITALS

    


    1.           Party
A, a company incorporated in the PRC as a foreign invested enterprise, has the
expertise in the business of consulting;

    


    2.           Party
B is a company incorporated in China, and is engaged in the technical research,
development and design of the equipments for environmental pollution prevention
and control; manufacturing and sales of the equipments for water-pollution
prevention and control, building-use heat insulating materials and glass fiber
reinforced plastic products; contractor of the environmental engineering; import
or export of various products and technology on behalf of this company itself or
as the agent of others (except those products or technology limited or
prohibited by the state) (the “Business”);

    


    3.           The
undersigned Shareholders of Party B collectively own 100% of the equity
interests of Party B;

    


    4.           Party
A has entered into a Consulting Services Agreement with Party B (hereinafter
“Consulting Services
Agreement”) to establish a business relationship;

    


    5.           Pursuant
to that certain Consulting Services Agreement between Party A and Party B dated
January 27, 2010, Party B is obligated to make regular payments of consulting
services fee to Party A during the term of the Consulting Services
Agreement.  However, no payment has yet been made, and Party B’s daily
operation has a material effect on its ability to make such payments to Party A;
and

    


    6.           The
Parties are entering into this Agreement to clarify certain matters in
connection with Party B’s operations.

    


    NOW THEREFORE, all Parties of
this Agreement hereby agree as follows through negotiations:

    


    1.           Party
A agrees, subject to Party B’s agreement to relevant provisions of this
Agreement, to be Party B’s guarantor in connection with the contracts,
agreements and transactions executed between Party B and any other third party,
and to provide full guarantee for the performance of such contracts, agreements
or transactions by Party B.  Party B agrees, as a counter-guarantee,
to pledge all of its relevant assets, including accounts receivable, to Party
A.  Pursuant to such guarantee arrangement, Party A wishes to enter
into written guarantee agreements with Party B’s counter-parties thereof, to
assume the guarantee liability as the guarantor when applicable.  As
such, Party B and Party C shall take all necessary actions (including, but not
limited to, executing relevant documents and proceeding with relevant
registrations) to carry out the counter-guarantee arrangements provided by Party
A thereof.

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.           In
consideration of Article 1 herein and to assure the performance of the various
arrangements between Party A and Party B, and the payment of the accounts
payable by Party B to Party A, Party B and the Party C hereby jointly agree that
Party B shall not, without the prior written consent of Party A, conduct any
transactions which may materially affect the assets, obligations, rights or the
operations of Party B (excluding proceeding with Party B’s normal business
operation and the lien obtained by relevant counter parties due to such
agreements).  Such transactions shall include, without limitation, the
following:

    


    
      	
              2.1     
      

            	
              To
      borrow money from any third party or assume any
  debt;

            


    

     

    
      	
              2.2     
      

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

            


    

     

    
      	
              2.3   
       

            	
              To
      provide any guarantees to any third parties using its assets or
      intellectual property rights; or

            


    

     

    
      	
              2.4   
       

            	
              To
      assign to any third party its business
  agreements.

            


    

    


    3.           In
order to ensure the performance of the various operation agreements between
Party A and Party B and the payments of various accounts payable by Party B to
Party A, Party B and Party C hereby jointly agree to accept the corporate
policies provided by Party A in connection with Party B’s daily operations,
financial management and the employment and dismissal of Party B’s
employees.

    


    4.           Party
B and Party C hereby jointly agree that Party C shall appoint the members
recommended by Party A as the Directors of Party B, and shall appoint members of
Party A’s senior management as Party B’s General Manager, Chief Financial
Officer, and other senior officers.  If any member of such senior
management leaves or is dismissed by Party A, he or she will lose the
qualification to take any position with Party B, and Party B shall appoint
another member of Party A’s senior management to take such position, as
recommended by Party A.  The person recommended by Party A in
accordance with this section shall have the qualifications of a Director,
General Manager, Chief Financial Officer, and/or other relevant senior officers
pursuant to applicable laws.

    


    5.           Party
B, together with the Party C, hereby jointly agree and confirm that Party B
shall first seek guarantee from Party A if Party B requires any guarantee for
its performance of any contract or loan in the course of its business
operation.  Under such circumstances, Party A shall have the right,
but not the obligation, to provide the appropriate guarantee to Party B at its
sole discretion.  If Party A decides not to provide such guarantee,
Party A shall issue a written notice to Party B immediately and Party B shall
seek a guarantee from other third party.

    


     

    2


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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, including, but not limited to, the
Consulting Services Agreement.

    


    7.           Any
amendment to this Agreement shall be made in writing.  The amendments
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 provision or provisions of this Agreement shall be held to be invalid,
illegal, unenforceable or in conflict with the laws and regulations of the
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

    


    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
if necessary 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.           The
Parties of this Agreement shall acknowledge and ensure the confidentiality of
all oral and written materials exchanged relating to this
Agreement.  No Party shall disclose the confidential information to
any other third party without the other Party’s prior written approval, unless:
(a) it was in the public domain at the time it was communicated (unless it
entered the public domain without the authorization of the disclosing Party);
(b) the disclosure was in response to the relevant laws, regulations, or stock
exchange rules; or (c) the disclosure was required by any of the Party’s legal
counsel or financial consultant for the purpose of the transaction of this
Agreement.  However, such legal counsel and/or financial consultant
shall also comply with the confidentiality as stated hereof.  The
disclosure of confidential information by employees or hired institutions of the
disclosing Party is deemed to be an act of the disclosing Party, and such
disclosing Party shall bear all liabilities of the breach of
confidentiality.  If any provision of this Agreement is found by a
proper authority to be unenforceable or invalid such unenforceability or
invalidity shall not render this Agreement unenforceable or invalid as a
whole.

    


    11.           This
Agreement shall be governed and construed in accordance with PRC
law.

    


    12.           The
Parties shall strive to settle any disputes arising from the interpretation or
performance of this Agreement through amicable negotiations.  If such
dispute cannot be settled, any Party may submit such dispute to China
International Economic and Trade Arbitration Commission (“CIETAC”) for
arbitration. There shall be three (3) arbitrators.  Party B shall
select one (1) arbitrator and Party A shall select one (1) arbitrator, and both
arbitrators shall be selected within thirty (30) days after giving or receiving
the demand for arbitration.  Such arbitrators shall be freely
selected, and the Parties shall not be limited in their selection to any
prescribed list.  The chairman of the CIETAC shall select the third
arbitrator.  If a Party does not appoint an arbitrator who consents to
participate within thirty (30) days after giving or receiving the demand for
arbitration, the relevant appointment shall be made by the chairman of the
CIETAC. The arbitration shall abide by the rules of CIETAC, and the arbitration
proceedings shall be conducted in Beijing, China in English.  The
judgment of the arbitration shall be final and binding upon the
Parties.

     

     

    3


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    13.           This
Agreement shall be executed by a duly authorized representative of each Party as
of the date first written above and becomes effective
simultaneously.

     

    14.           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 shall commence from the effective date and shall last for
the maximum period of time permitted by law unless early terminated in
accordance with the relevant provisions herein or by any other agreements
reached by all Parties. Within the term of the Agreement, if Party A shall
terminate this Agreement (including any extension of such term) or if this
Agreement shall terminate due to any other reason, this Agreement shall be
terminated upon the 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 expiration date unless it is renewed in
accordance with the relevant provisions herein.  During the effective
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 giving a thirty (30) day
prior written notice to Party B.

    


    
      	
              17.  

            	
              This
      Agreement has been executed in six (6) duplicate originals in
      English.  Each Party has received one (1) original, and all
      originals shall be equally valid.

            


    

    


    


    


    


    


    


    [SIGNATURE
PAGE FOLLOWS]

     

     

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    IN WITNESS WHEREOF this
Agreement is duly executed by each Party or its legal
representatives.

     

    
       

      


      
        	
                PARTY A:

              	
                Yixing
      Dragon Path Environment Technology
Limited

              


      

       

       

      Legal/Authorized
Representative:  /s/ LI Boping

      Name: LI
Boping

      Title:
Executive Director

       

      
 

      
        	
                PARTY B:

              	
                Jiangsu
      Zhenyu Environmental Protection Technology Co.
  Ltd.

              


      

       

       

      Legal/Authorized
Representative:  /s/ LI Boping

      Name: LI
Boping

      Title:
Executive Director

      


      



    

    


    


    


    


    
 

     

     

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    SIGNATURE PAGE FOR
SHAREHOLDERS OF PARTY B

    


    SHAREHOLDERS
OF PARTY B:

    


     

    
 

    

       

      
        	LI Boping	 


      

      LI
Boping

    

    ID Card
No.:320223196212216178

    Owns
71.15% of Jiangsu Zhenyu Environmental Protection Technology Co.
Ltd.

     

    
 

    
       

      
        	/s/ DING
      Qinfen	 


      
DING
Qinfen

    ID Card No.:
320223196301176163

    Owns
22.63% of Jiangsu Zhenyu Environmental Protection Technology Co.
Ltd.

     

    
 

    
       

      
        	/s/ LI
    Panhong	 


      

    

    LI
Panhong

    ID Card
No.: 320223193712276173

    Owns
6.22% of Jiangsu Zhenyu Environmental Protection Technology Co.
Ltd.

    


     

     

     

     

     

     

    
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