OPERATING
AGREEMENT

    


    This
Operating Agreement (this “Agreement”) is dated April 2, 2010, and is entered
into in Dachang Hui Autonomous County, Hebei Province, People’s Republic of
China (“PRC” or “China”) by and among Hebei Anbang Investment Consultation
Co., Ltd. (“Party A”) and Dachang Hui Autonomous County Baosheng Steel
Products Co., Ltd. (“Baosheng Company” or “Party B”), and the shareholders
holding 100% of the issued and outstanding equity interests 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 investment
enterprise, specializes in the research and development of ferrous metal
products and consulting of enterprise management and
investment;

    


    2. Party
B is engaged in a variety of production of ferrous products (collectively
the “Business”), including the process and sale of the cold rolled steel
strip, cold rolled steel coil, high frequency welded pipe and tin plates;
import and export of steel materials.

    


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

    


    4. Party
A has established a business relationship with Party B pursuant to that
certain Consulting Services Agreement dated April 2, 2010 (hereinafter
“Consulting Services Agreement”);

    


    5.
Pursuant to that the Consulting Services Agreement, 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 in order to ensure Party B’s ability
to meet its obligations under the Consulting Services Agreement, including
payment of consulting services fee.

    


    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 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 may, pursuant to Section 5, enter into
written guarantee agreements with Party B’s counter-parties to assume guarantor
liability, upon which Party B and Party C shall take all necessary actions
(including, but not limited to, executing relevant documents and commencing
relevant registrations) to carry out the counter-guarantee arrangements to be
provided to Party A.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    2. In
consideration of Section 1 herein and to ensure the performance of the
various arrangements between Party A and Party B, including related payment
obligations of 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
proceedings). 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 further ensure Party B’s performance of the various arrangements
between Party A and Party B, including related payment obligations of 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 such individuals
as recommended by Party A to be 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 other position with Party B, and Party B shall appoint
another member of Party A’s senior management as recommended by Party A to take
such position. The person recommended by Party A in accordance with this section
shall have the qualifications necessary to be a Director, General Manager, Chief
Financial Officer, and/or other relevant senior officers pursuant to applicable
laws.

    


    5. Party
B, together with 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.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    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 and Party C shall not assign its rights and obligations under this Agreement
to any third party without the prior written consent of Party A. Party B
and Party C hereby agree 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 and Party C by Party A, and no any further
consent from Party B or Party C will be required.

    


    10. The
Parties hereby acknowledge and agree 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 agents of any
Party is deemed to be an act of such Party, and such 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. The arbitration shall abide by the current rules of CIETAC, and the
arbitration proceedings shall be conducted in Shanghai, China in Chinese. The
judgment of the arbitration shall be final and binding upon the
Parties.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    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 is twenty (20) years unless early terminated in
accordance with the relevant provisions herein or by any other agreements
reached by all Parties. The term may only be extended upon Party A’s written
confirmation prior to the expiration of this Agreement and the extended
term shall be determined by the Parties hereto through
mutual negotiations.

    


    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, neither Party B nor Party C may terminate this
Agreement. 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 and Party
C.

    


    17. This
Agreement has been executed in four (4) duplicate originals in English. Each
Party has received one (1) original, and all originals shall be equally
valid.

    


    [SIGNATURE
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