Document:

Unassociated Document

    OPERATING
      AGREEMENT

    

    This
      Operating Agreement (this “Agreement”)
      is
      dated December 28, 2005, and is entered into in Shanghai, China by and among
      Haie Hi-tech Engineering (Hong Kong) Company Limited, with a registered address
      at FLAT/RM B 20/F Public Bank Centre, 120 Des Voeux Road Central, HK, China
      (“Party A”), Shanghai Xin Ye Environmental Protection Engineering Technology
      Co., Ltd. with a registered address at, 5th
      Floor,
      No.268 Qu Yang Road, Shanghai, China (“Party B”), and shareholders holding 100%
      outstanding shares of Party B (the “Shareholders of Party B” or “Party C”).
      Party A and Party B, and Shareholders of Party B are referred to collectively
      in
      this Agreement as the “Parties.”

    

    RECITALS

    

    
      	
              1.

            	
              Party
                A, a limited company incorporated under law of Hong Kong, has the
                expertise in the business of Engineering and
                Investment;

            

    

    

    
      	
              2.

            	
              Party
                B is a limited company incorporated in China, and is engaged in technical
                services and business consultation in specific areas of energy resources,
                environmental protection facilities and computer science, the sale
                of
                chemical raw materials and productsøhazardous
                substance exclusively÷(the
                “Business”)

            

    

    

    
      	
              3.

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

            

    

    

    
      	
              4.

            	
              Party
                A has established a business relationship with Party B by entering
                into
                the “Consulting Services Agreement” (hereinafter referred to as the
                “Services Agreement”); 

            

    

    

    
      	
              5.

            	
              Pursuant
                to the above-mentioned agreement between Party A and Party B, Party
                B
                shall pay a certain amount of money to Party A. However, the relevant
                payable account has not been paid yet and the daily operation of
                Party B
                will have a material effect on its capacity to pay such payable account
                to
                Party A; 

            

    

    

    
      	
              6.

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

            

    

    

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

    

    
      	
              1.

            	
              [Party
                A agrees, subject to the satisfaction of the relevant provisions
                by Party
                B herein, as the guarantor for Party B in the contracts, agreements
                or
                transactions in connection with Party B’s operation between Party B and
                any other third party, to provide full guarantee for the performance
                of
                such contracts, agreements or transactions by Party B. Party B agrees,
                as
                the counter-guarantee, to pledge all of its assets, including accounts
                receivable, to Party A. According to the aforesaid guarantee arrangement,
                Party A wishes to enter into written guarantee contracts with Party
                B’s
                counter-parties thereof to assume the guarantee liability as the
                guarantor
                when it needs; therefore, Party B and Party C shall take all necessary
                actions (including but not limited to execute relevant documents
                and
                transact relevant registrations) to carry out the arrangement of
                counter-guarantee to Party A.]

            

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
              2.

            	
              In
                consideration of the requirement of Article 1 herein and assuring
                the
                performance of the various operation 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 hereby jointly agree that
                Party B
                shall not conduct any transaction which may materially affects its
                assets,
                obligations, rights or the operations of Party B (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
                agreements) unless the obtainment of a prior written consent from
                Party A,
                including but not limited to the following:

            

    

    

    
      	
               

            	
              2.1

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

            

    

    

    
      	
               

            	
              2.2

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

            

    

    

    
      	
               

            	
              2.3

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

            

    

    

    
      	
               

            	
              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 payment of the various payables
                by
                Party B to Party A, Party B together with its shareholders Party
                C hereby
                jointly agree to accept, from time to time, advice regarding corporate
                policy advise provided by Party A in connection with company’s daily
                operations, financial management and the employment and dismissal
                of the
                company’s employees. 

            

    

    

    
      	
              4.

            	
              Party
                B together with its shareholders Party C hereby jointly agree that
                Party C
                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
                take such position. The person recommended by Party A in accordance
                with
                this Article herein should comply with the stipulation on the
                qualifications of directors, General Manager, Chief Financial Officer,
                and
                other senior officers pursuant to applicable law.
                

            

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              5.

            	
              Party
                B together with its shareholders Party C 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 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 Services Agreement. 

            

    

    

    
      	
              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 and 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 disclosed in accordance with applicable laws or rules or
                regulations of stock exchange; (c) 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, and 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
                Agreement shall be governed by and construed in accordance with PRC
                law.
                

            

    

    

    
      	
              12.

            	
              The
                parties 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, each party can submit
                such
                matter to China International Economic and Trade Arbitration Commission
                (“CIETAC”) for arbitration in accordance with its rules of CIETAC. The
                arbitration proceedings shall take place in Beijing and shall be
                conducted
                in Chinese. Any resulting arbitration award shall be final and conclusive
                and binding upon all 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 become effective on
                the date
                of execution. 

            

    

    

    
      	
              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 the Parties
                hereto
                through mutual consultation. 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 expiration 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.

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

            

    

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     [Signature
      Page]

    

    IN
      WITNESS WHEREOF
      both
      parties hereto have caused this Agreement to be duly executed by their legal
      representatives and duly authorized representatives on their behalf as of the
      date first set forth above. 

     

    
      	
              PARTY
                A: 

            	
              Haie
                Hi-tech Engineering (Hong Kong) Company Limited 

            
	 	
              Legal/Authorized
                Representative: /s/ WU
                Qinghuan             

            
	 	
              Name:
                WU Qinghuan

            
	 	
              Title:
                Director

            
	 	 
	
              PARTY
                B: 

            	
              Shanghai
                Xin Ye Environmental Protection Engineering Technology Co., Ltd.
                

            
	 	
              Legal/Authorized
                Representative: /s/ WU
                Qinghuan             

            
	 	
              Name:
                WU Qinghuan

            
	 	
              Title:
                Executive Director

            

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    SIGNATURE
      PAGE FOR SHAREHOLDERS OF PARTY B

    

    PARTY
      C:
      SHAREHOLDERS
      OF PARTY B:

    

    /s/
      WU
      Qinghuan             

    By:
      WU
      Qinghuan 

    PRC
      ID
      Card No.:
      320112194610111693

    Shares
      of
      Shanghai Xin Ye Environmental Protection Engineering Technology Co., Ltd. owned
      by WU Qinghuan:
      100%

     

    
      
        
        

      

      
        6Unassociated Document

    PROXY
      AGREEMENT

    This
      Shareholders’ Voting Rights Proxy Agreement (the “Agreement”) is entered into as
      of December 28, 2005 among the following partiesæ 

    

    
      	
              Party
                A:

            	
              Haie
                Hi-tech Engineering (Hong Kong) Company Limited 

            
	 	
              Registered
                Address: 

            	
              FLAT/RM
                B 20/F Public Bank Centre, 120 Des Voeux Road Central, HK, China
                B

            
	 	
              Director:
                WU Qinghuan

            
	 	 
	
              Party
                B:

            	
              The
                undersigned one shareholders of Shanghai Xin Ye Environmental Protection
                Engineering Technology Co., Ltd, a corporation incorporated under
                the laws
                of China (“Company”).

            

    

    

    RECITALS

     

    
      	
              A

            	
              Party
                A, a limited company incorporated under law of Hong Kong, has the
                expertise in the business of Engineering and
                Investment.

            
	 	 
	
              B.

            	
              As
                of the date of the Agreement Party B are the enrolled shareholder
                of
                Company and each legally holds the equity interest in Company set
                forth
                Party B’s name below. The total shares held by Party B collectively
                represent 100% of total outstanding shares of Company. 

            
	 	 
	
              C.

            	
              Party
                B desires to grant to the Board of Directors of Party A a proxy to
                vote
                all of Party B’s shares in Company for the maximum period of time
                permitted by law in consideration of the issuance to Party B of shares
                and
                for other good and valuable
                consideration.

            

    

    

    NOW
      THEREFORE,
      the
      parties agree as follows: 

    

    
      	
              1.

            	
               Party
                B hereby agrees to irrevocably grant and entrust Party A, for the
                maximum
                period permitted by law, with all of Party B’s voting rights as a
                shareholder of Company. Party A shall exercise such rights in accordance
                with and within the limitations of the laws of the PRC and the Articles
                of
                Association of Company.

            
	 	 
	
              2.

            	
              Party
                A may from time to time establish and amend rules to govern how Party
                A
                shall exercise the powers granted to it by Party B herein, including,
                but
                not limited to, the number or percentage of directors of Party A
                which
                shall be required to authorize or take any action and to sign documents
                evidencing the taking of such action, and Party A shall only take
                action
                in accordance with such rules 

            

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
              3.

            	
              All
                Parties to this Agreement hereby acknowledge that, regardless of
                any
                change in the equity interests of Company, Party B shall appoint
                the
                person designated by Party A with the voting rights held by Party
                B. Party
                B shall not transfer its equity interests of Company to any individual
                or
                company (other than Party A or the individuals or entities designated
                by
                Party A). Party B acknowledges that it will continue to perform this
                Agreement even if one or more than one of them no longer hold the
                equity
                interests of Company.

            

    

    

    
      	
              4

            	
              This
                Agreement has been duly executed by the Parties, and, in the case
                of a
                Party which is not a natural person, has been duly authorized by
                all
                necessary corporate or other action by such Party and executed and
                delivered by such Party’s duly authorized representatives, as of the date
                first set forth above and shall be effective on the date of
                execution.

            

    

    

    
      	
              5.

            	
              Party
                B represents and warrants to Party A that Party B owns all of the
                shares
                of Company set forth below its name on the signature page below,
                free and
                clear of all liens and encumbrances, and Party B has not granted
                to
                anyone, other than Party A, a power of attorney or proxy over any
                of such
                shares or in Party B’s rights as a shareholder of Company. Party B further
                represents and warrants that the execution and delivery of this Agreement
                by Party B will not violate any law, regulations, judicial or
                administrative order, arbitration award, agreement, contract or covenant
                applicable to Party B.

            

    

    

    
      	
              6.

            	
              This
                Agreement may not be terminated without the unanimous consent of
                both
                Parties, except that Party A may, by giving thirty (30) days prior
                written
                notice to Party B hereto, terminate this Agreement
                

            

    

    

    
      	
              7.

            	
              Any
                amendment and/or rescission shall be agreed by the Parties in writing.
                

            

    

    

    
      	
              8.

            	
              The
                execution, validity, construction and performance of this Agreement
                shall
                be governed by the laws of PRC.

            

    

    

    
      	
              9.

            	
              This
                Agreement has been executed in three (3) duplicate originals in English,
                each Party has received one (1) duplicate original, and all originals
                shall be equally valid.

            

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              10.

            	
              Both
                Parties agree that in case of disputes arising from this Agreement,
                both
                Parties shall settle their dispute through mediation, not in a lawsuit
                brought in Court. If the Parties cannot reach a settlement 45 days
                after
                the mediation, the dispute shall be referred to and determined by
                arbitration in the China International Economic and Trade Arbitration
                Commission (“CIETAC”) Shanghai Branch upon the initiation of either Party
                in accordance with the prevailing arbitration rules of CIETAC. The
                written
                decision of the arbitrator shall be binding and conclusive on the
                Parties
                hereto and enforceable in any court of competent
                jurisdiction.

            

    

     

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    [SIGNATURE
      PAGE]

    

    IN
      WITNESS WHEREOF
      each
      party hereto has caused this Proxy Agreement to be duly executed by itself
      or a
      duly authorized representative on its behalf as of the date first written
      above.

    

    
      	
              PARTY
                A: 

            	
              Haie
                Hi-tech Engineering (Hong Kong) Company Limited 

            
	 	
              Legal/Authorized
                Representative: /s/ WU
                Qinghuan             

            
	 	
              Name:
                WU Qinghuan

            
	 	
              Title:
                Director

            
	 	 
	
              PARTY
                B:   

            	 
	 	/s/
              WU
              Qinghuan             
	 	
              By:
                WU Qinghuan 

            
	 	
              PRC
                ID Card No.: 320112194610111693

            
	 	
              Shares
                of Shanghai Xin Ye Environmental Protection Engineering Technology
                Co.,
                Ltd. owned by WU Qinghuan: 100%

            

    

     

    
      
        
        

      

      
        4

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