Document:

fitway_ex104.htm

EXHIBIT 10.4

 

LITERAL ENGLISH TRANSLATION OF GOVERNING CHINESE TEXT

                                                   

Business Operation Agreement

 

This Business Operation Agreement (the “Agreement”) is executed by the following parties on the 10th day of NOV, 2010 in Chongqing, China.

 

Party A: Chongqing Difa Investment Management Limited Company

 

Party B: Chongqing Zhongbao Investment Group Limited Liability Company.

 

Party C:  All the natural persons listed in Appendix A.

 

WHEREAS, Party A is a wholly foreign-owned limited liability company duly registered and existing under the laws of the People’s Republic of China (hereinafter referred to as “China”,for the purposes of this Agreement,exclude Hong Kong, Macao and Taiwan,).

 

WHEREAS, Party B is a limited liability company duly registered and existing under the laws of China.

 

WHEREAS, Party C is Party B’s shareholders collectively holding 100% of Party B’s total equity.

 

WHEREAS, Party A and Party C agree and acknowledge that, after the consummation of the equity purchase negotiations, Party C shall transfer 100% of the equity it holds in Party B to Party A or any third party designated by Party A (the “Equity Transfer”) pursuant to the equity purchase agreement executed in connection therewith.

 

WHEREAS, following the consummation of the Equity Transfer, Party B’s daily operations will have material impact on Party A’s interests.

 

THEREFORE, in light of the principle of equality and mutual benefit, the parties agree as follows:

 

  

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Article I

Duty of Abstention

 

1.1. To ensure Party A receive the full benefit of all the obligations born by Party B to Party A pursuant to the terms of the agreements entered into between Party A and Party B, Party B and Party C hereby acknowledge and agree that, without the prior written consent of Party A and any other party designated by Party A, Party B shall not conduct any deals which may materially affect Party B’s assets, obligations, rights or business operations, including but not limited to:

 

	
1.1.1  

	
Conduct any activity which is beyond its business scope;

 

	
1.1.2  

	
Loan from or to any third party or incurring any debt;

 

	
1.1.3  

	
Chang or dismiss any director or replacing any senior employee;

 

	
1.1.4  

	
Sell any asset or right to or obtain any asset or right from any third party, including but not limited to any intellectual property rights;

 

	
1.1.5  

	
Provide any guarantee or any other form of security to any third party with its assets or intellectual property; or incur any encumbrances on any of its assets;

 

	
1.1.6  

	
Modify its articles of association or change its business scope;

 

	
1.1.7  

	
Change its normal operation procedures or modify any of its major internal rules and regulations;

 

	
1.1.8  

	
Transfer any of the rights or obligations under this Agreement to any third party.

 

1.2. Party A shall have the right to inspect Party B’s operation from time to time and shall be provided with appropriate assistance from Party B, including but not limited to providing access to the documents which Party A has requested for review and answering questions raised by Party A. If Party A believe that an action of Party B or Party C violates Article I hereof in accordance with Party A’s reasonable and objective judgment, Party A shall have the right to request Party B or Party C to cease or remedy such violation where possible.

 

  

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Article II

Business Operation and Personnel Arrangement

 

2.1. Party B and Party C hereby agree to accept Party A’s suggestions from time to time regarding (i) Party B’s staff appointments and dismissals, (ii) Party B’s day-to-day management and operations, (iii) Party B’s financial management system and (iv) matters of similar nature, and to strictly follow such suggestions.

 

2.2. Party B and Party C hereby agree to appoint the nominees designated by Party A to be Party B’s directors pursuant to the procedures provided by applicable laws and regulations and Party B’s articles of associations, and procure that the nominee recommended by Party A be elected as the chairman of Party B’s board by the directors appointed thereby.  Party B shall appoint the senior officers designated by Party A including but not limited to Party B’s general manager and chief financial officer.

 

2.3. If the above-mentioned Party A’s designated directors or senior managers leave Party A, whether by voluntary retirement or dismissal by Party A, such directors or senior officers at the same time shall be dismissed from their positions by Party B.  Under such circumstances, Party B and Party C will appoint other persons designated by Party A to take over such positions.

 

2.4. For the purpose of Section 2.3, Party B and Party C shall take all procedural measures necessary (whether internal or external) to effect the abovementioned dismissals and subsequent appointments in accordance with applicable laws, Party B’s articles of association and the provisions of this Agreement.

 

Article III

Other Agreements

 

3.1. If any agreement between Party A and Party B shall terminate or expire, Party A shall in its sole discretion determine whether or not to terminate any or all other agreements between Party A and Party B.

 

3.2. Party C agrees that, any dividend, distribution of dividends or other income or any interest distributed to it’s shareholder, Party C, from Party B shall be transferred to Party A promptly without attaching any conditions thereto. Any taxes and fees incurred (if any) related to such transfers shall be paid by the parties in accordance with relevant laws.

 

Article IV

Prohibition of Conflicts of Interest

 

4.1. Party B undertakes not to engage in any business conflicting with the interests of Party A or compete with any business activities of Party A, and shall not engage in any of the following:

 

	
4.1.1  

	
Investing, equity participation, cooperation, contracting, leasing, being entrusted with the operation or otherwise engage in any business conducted by Party A;

 

	
4.1.2  

	
Being directly or indirectly employed by or entrusted to other companies or organizations to engage in any business competing with Party A;

 

	
4.1.3  

	
Directly or indirectly obtaining any economic benefits from any companies in competition with Party A.

 

  

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Article V

Liability of Default

 

5.1. Except otherwise provided by this Agreement, if Party B or Party C fails to completely perform or suspends the performance of any of their obligations under this Agreement and fails to remedy such non-performance within 30 days after receiving notice from Party A, Party B or Party C will be deemed to be in breach of the terms of this Agreement.

 

5.2. If Party B or Party C violates this Agreement which causes Party A to incur any costs (including but not limited to legal fees or costs, arbitration fees and travel costs), and/or responsibility for any loss suffered (including but not limited to a reasonable loss of profit), Party B and Party C shall be jointly and severally liable to compensate Party A for such cost, liability and/or damages.

 

Article VI

Entire Agreement; Amendments

 

6.1. All the agreements expressly referred to or contained in this Agreement together with this Agreement constitute an entire agreement between the parties on the subject matter therein and herein, which replace all previous oral and written agreements, contracts, understandings and communications between the parties concerning the subject matter therein and herein.

 

6.2. Any amendment, supplement or modification to this Agreement must be in writing and signed by each of the parties hereto. Any amendment, supplement or modification duly executed by the parties hereto shall become an integral part of this Agreement and be of the same legal force and effect.

 

Article VII

Governing Law

 

The execution, validity, performance and construction of this Agreement, as well as the settlement of disputes shall be governed and construed by the laws of the People’s Republic of China.

 

Article VIII

Settlement of Disputes

 

8.1. In the event of a dispute between the parties hereto concerning the construction and/or performance of any provision of this Agreement, the parties hereto shall consult with each other to resolve the dispute in good faith. Failing such consultation, any party hereto may submit such dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) in accordance with its Arbitration Rules. The place of arbitration shall be Beijing, and the arbitration shall be conducted in Chinese. The decision of the CIETAC shall be final and binding on the parties hereto.

 

  

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LITERAL ENGLISH TRANSLATION OF GOVERNING CHINESE TEXT

 

8.2. Every Party is continuingly entitled to exercise its rights and shall perform its obligations under this agreement during the period of arbitration.

 

Article IX

Notices

 

9.1. Any notice served on a party hereunder in connection with the performance of such party’s rights and obligations hereunder shall be served in writing. If served in person, the notification shall be deemed to be made on its actual delivery; if sent via telex or fax, on its dispatch. If the day of service falls on a day other than a business day or after business hours, the immediate following business day should be deemed the day of service of such notification.

 

9.2. Any notices or other communications shall be sent to the parties hereto at the following addresses in accordance with the terms of Section 9.1:

 

Party A: Chongqing Difa Investment Management Limited Company

Address:

Fax:

Tel:

Receiver:

 

Party B: Chongqing Zhongbao Investment Group Limited liability Company.

Address:

Fax:

Tel:

Receiver:

Authorized representative of Party C:

Address:

Fax:

Tel:

  

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LITERAL ENGLISH TRANSLATION OF GOVERNING CHINESE TEXT

 

Article X

Effectiveness; Term and Others

 

10.1. This Agreement shall be executed by the authorized representatives on the date first set forth above and enter into force at the same time. Unless any relevant provision hereunder shall terminate at an earlier date, this Agreement shall have a term expiring ten (10) years from the date first written above. Following the expiration of the term, unless Party A have notified Party B and Party C not less than three (3) months in advance of such expiration date in writing of its intention not to renew this Agreement, this Agreement shall automatically extend for another ten (10) years.

 

10.2. If any provision of this Agreement shall be deemed illegal or unenforceable, the provision shall be deemed to be deleted from the Agreement and null and void. All other provisions of this Agreement shall remain valid and the provision deleted shall be considered as never having formed a part of this Agreement. The parties shall consult with each other and consent to a mutually acceptable, legitimate and effective provision to replace any such deleted provisions.

 

10.3. The failure of any party to exercise any right, power or privilege under this Agreement shall not be deemed a waiver of the same. Any individual exercise of any right, power or privilege shall not preclude the exercise of any other right, power or privilege.

 

10.4. This Agreement is written in both English and Chinese, and both versions shall be equally binding. Should any discrepancy arise between the two versions, the Chinese version shall prevail.

 

10.5. This Agreement is made into 8 originals with each Party holding one original, the rest of which are kept with Party A as back-up documents.. Each original of the Agreement shall be equally binding.

 

 

[Signature page follows]

 

  

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LITERAL ENGLISH TRANSLATION OF GOVERNING CHINESE TEXT

 

IN WITNESSTH WHEREOF, the duly authorized representatives of each Party hereto have duly executed this Agreement on the date first above written.

 

Party A: Chongqing Difa Investment Management Limited Company(seal)

 

Legal representative or authorized representative: (signature)

 

Party B: Chongqing Zhongbao Investment Group Limited liability Company(seal) Legal representative or authorized representative: (signature)

 

Party C: Shareholders of Chongqing Zhongbao Investment Group Limited liability Company

 

Signature:

 

  

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LITERAL ENGLISH TRANSLATION OF GOVERNING CHINESE TEXT

 

Appendix A

 

Name Roll of Party C

 

	
Name

	
ID Number

	
Address

	
Equity Ratio

	
Haoji Xia

	
512301196308054892

	
8-16, Suit 2 ,NO.7,Minsheng Road,Yuzhong District,Chongqing

	
80.62%

	
Wanting  Fei

	
510221198109121762

	
7-1 NO.7,Minsheng Road,Yuzhong District,Chongqing

	
19.38%

 

  

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EXHIBIT 10.5

 

LITERAL ENGLISH TRANSLATION OF GOVERNING CHINESE TEXT

 

Exclusive Managerial Consulting Services Agreement

 

This Exclusive Managerial and Consulting Services Agreement (the “Agreement”) is executed by the following parties on the 9th day of NOV 2010 in Chongqing, China.

 

WHEREAS, Chongqing Difa Investment Management Limited Company (the “Party A”) is a wholly foreign-owned limited liability company duly registered and existing under the laws of the People’s Republic of China ( hereinafter referred to as “China”, for the purposes of this Agreement, exclude Hong Kong, Macao and Taiwan), with its business scope covering international economic information consultation, investment and management consultation.

 

WHEREAS, Chongqing Zhongbao Investment Group Limited liability Company (the “Party B”) is a limited liability company duly registered and existing under the laws of China.

 

WHEREAS, Party A is willing to provide Party B managerial consulting services and Party B desires to accept the services rendered by Party A.

 

NOW THEREFORE, in light of the principle of equality and mutual bensefit, after friendly consultations, the parties hereto agree as follows:

 

Article I.  Managerial and Consulting Services;

 

1.1 During the term of this Agreement, Party B agree that Party A provide managerial consulting services (the “Services”) on an exclusive basis to Party B as set forth in Appendix I hereto.

 

1.2 During the term of this Agreement,without the prior written consent of Party A,Party B shall not accept any managerial consulting services rendered by any party other than Party A. Party B shall not be licensed or assigned by any party other than Party A with any technology or technological improvements which are identical or similar to that contained in the Services rendered by Party A, unless such license or transfer is permitted by Party A through prior written consent.

 

1.3 Party A shall be the sole and exclusive owner of all rights, title and interests to and in any intellectual property arising from the performance of this Agreement, including, but not limited to, any copyrights, patents, technological secrets, business know-how, regardless of the intellectual property mentioned above is developed by Party A or Party B based on Party A’s existing intellectual property.

 

1.4 Party B undertakes that, on the same conditions offered to Party B , Party B shall afford Party A and its affiliates with a priority to cooperate with Party B in future business cooperation.

 

Article II.  Obligations of Party A and Party B

 

2.1 Obligation of Party A

 

Party A agrees to provide to Party B the Services during the term of this Agreement.

 

2.2 Obligations of Party B

 

  

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2.2.1  

	
 During the term of this Agreement,Party B shall pay the Service fee to Party A in accordance with the fee schedule set forth in Appendix II hereto.

 

	
2.2.2  

	
 Party B shall utilize the Services provided by Party A in good faith for the purposes set forth in this Agreement.

 

	
2.2.3  

	
Party B shall notify Party A of the occurrence of any event or any matters or issues arised which are likely to have an influence on Party B’s regular business operations.

 

	
2.2.4  

	
Party B shall admit Party A’s personnel or persons authorized by Party A into Party B’s offices and other working facilities.

 

	
2.2.5  

	
Party B shall not take any actions and shall try to procure any third party not to take any actions which will have harmful influence on the proprietorship of technology or intellectual property rights enjoyed by Party A under this agreement.

 

	
2.2.6  

	
Party B shall obtain and hold in full force and effect all governmental permits and approvals (if any) required for Party A to fulfill its obligations under this Agreement.

 

Article III.  Representations and Warranties

 

3.1 Party A hereby represents and warrants to Party B as follows:

 

	
3.1.1  

	
  Party A is a company duly registered and validly existing under the laws of the  People’s Republic of China.

 

	
3.1.2  

	
  Party A has the full right, power, authority and capacity and all consents and approvals of the relevant third party and government entity necessary to execute and perform this Agreement, which shall not cause a breach of any contract to which Party A is a counterparty or be in breach of any applicable laws.

 

	
3.1.3  

	
  This Agreement will constitute a legal, valid and binding agreement of Party  A enforceable against it in accordance with its terms upon its execution.

 

3.2 Party B hereby represents and warrants to Party A as follows:

 

	
3.2.1  

	
  Party B is a company duly registered and validly existing under the laws of the People’s Republic of China and is licensed to engage in the provision of the Services.

 

	
3.2.2  

	
  Party B has the full right, power and authority and capacity and all consents and approvals of the relevant third party and government entity necessary to execute and perform this Agreement, which shall not cause a breach of any contract to which Party A is a counterparty or be in breach of any applicable laws.

 

	
3.2.3  

	
  This Agreement will constitute a legal, valid and binding agreement of Party B enforceable against it in accordance with its terms upon its execution.

 

  

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Article IV.  Confidentiality

 

4.1 Party B agrees to use all reasonable means to protect and maintain the confidentiality of Party A’s confidential data and information obtained as a result of  the provision of the Services by Party A to Party B (collectively “Confidential Information”), Party B shall not disclose or transfer any Confidential Information to any third party without Party A’s prior written consent. Upon termination or expiration of this Agreement, Party B shall, at Party A’s option, return all and any documents, information or software that may contain any such Confidential Information or destroy and delete any Confidential Information from any memory device, and cease to use it. Party B shall by necessary means confine the disclosure of the Confidential Information only to Party B’s employees, agents or professional consultants necessary to know such information and procure the same abide by the confidentiality obligations hereunder.

 

4.2 The following shall not be considered Confidential Information:

 

	
4.2.1  

	
  Information that is available in the public domain at the time of the disclosure;

 

	
4.2.2  

	
  Information that becomes available in the public domain after the disclosure for reasons other than Party B’s fault;

 

	
4.2.3  

	
  Information which Party B can prove to be known to Party B prior to the disclosure by Party A and not obtained from Party A, or the affiliates, shareholders or ultimate shareholders of Party A either directly or indirectly.

 

	
4.2.4  

	
  Information that Party B is required to disclose by law or order of a Governmental Entity or court of competent jurisdiction, or in its due course of business, Party B discloses to its direct legal counsel and financial advisor, provided that Party B procure its legal counsel and financial advisor abide by the confidentiality obligations hereunder.

 

4.3 Article IV shall survive any amendment, expiration or termination of this Agreement.

 

Article V.  Liability of Default

 

5.1 Except otherwise provided by this Agreement, if Party B fails to fully perform or suspends the performance of any of their obligations under this Agreement and fails to remedy such non-performance within 30 days after receiving notice of such breach from Party A, Party B will be deemed to be in breach of the terms of this Agreement.

 

5.2 If Party B violates this Agreement which causes Party A to incur any costs (including but not limited to legal fees, legal costs, arbitration fees and travel costs), and/or responsibility for any loss suffered (including but not limited to a reasonable loss of profit), Party B shall be liable to compensate Party A for such cost, liability and/or damages.

 

  

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Article VI.  Entire Agreement; Amendments

 

6.1 All the agreements expressly referred to or contained in this Agreement together with this Agreement constitute an entire agreement between the parties on the subject matter therein and herein, which replace all oral and written agreements, contracts, understandings and communications between the parties concerning the subject matter therein and herein.

 

6.2 Any amendment, supplement or modification to this Agreement must be in writing and signed by each of the parties hereto. Any amendment, supplement or modification following due execution by the parties hereto shall become an integral part of this Agreement and be of the same legal force and effect.

 

Article VII.  Governing Law

 

The execution, validity, performance and construction of this Agreement, as well as the settlement of disputes shall be governed and construed by the laws of the People’s Republic of China.

 

Article VIII.  Settlement of Disputes

 

8.1 In the event of a dispute between the parties hereto concerning the construction and/or performance of any provision of this Agreement, the parties hereto shall consult to resolve the dispute in good faith. Failing such consultation, any party hereto may submit such dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) in accordance with its Arbitration Rules. The place of arbitration shall be Beijing, and the arbitration shall be conducted in Chinese. The decision of the CIETAC shall be final and binding on the parties hereto.

 

8.2 Every Party is continuingly entitled to exercise its rights and shall perform its obligations hereunder during the period of arbitration.

 

Article IX.  Notices

 

9.1 Any notice served on a party hereto in connection with the performance of such party’s rights and obligations hereunder shall be served in writing. If served in person, the notification shall be deemed to be made on its actual delivery; if sent via telex or fax, on its dispatch. If the day of service falls on a day other than a business day or after business hours, the immediate following business day should be deemed the day of service of such notification.

 

  

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9.2 Any notices or other communications shall be sent to the parties hereto at the following addresses in accordance with the terms of Section 9.1:

 

Party A: Chongqing Difa Investment Management Limited Company

 

Address:

Fax:

Tel:

Receiver:

 

Party B: Chongqing Zhongbao Investment Group Limited liability Company .

 

Address:

Fax:

Tel:

Receiver:

 

Article X.  Effectiveness; Term

 

10.1 This Agreement shall be executed by the authorized representatives on the date first set forth above and enter into force at the same time. Unless any relevant provision hereunder shall terminate at an earlier date, this Agreement shall have a term expiring ten (10) years from the date first written above. Following the expiration of the term, unless Party A shall have notified Party B and not less than three (3) months in advance of such expiration date in writing of its intention not to renew this Agreement, this Agreement shall automatically extend for another ten (10) years.

 

10.2 If any provision of this Agreement shall be deemed illegal or unenforceable, the provision shall be deemed to be deleted from the Agreement and null and void.  All other provisions of this Agreement shall remain valid and the provision deleted shall be treated as having no application and shall be considered as never having formed a part of this Agreement.  The parties shall consult with each other and consent to a mutually acceptable, legitimate and effective provision to replace any such deleted provisions.

 

10.3 The failure of any party to exercise any right, power or privilege under this Agreement shall not be deemed a waiver of the same. Any separate exercise of any right, power or privilege shall not exclude the exercise of any other right, power or privilege.

 

10.4 This Agreement is written in both English and Chinese, and both versions shall be equally binding. Should any discrepancy arise between the two versions, the Chinese version shall prevail.

 

10.5 This Agreement is made into 8 originals with each Party holding one original, the rest of which are kept with Party A as back-up documents. Each original of the Agreement shall be equally binding.

 

  

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[Signature page follows]

 

 

Party A: Chongqing Difa Investment Management Limited Company

 

Authorized representative:

 

 

Party B: Chongqing Zhongbao Investment Group Limited liability Company.

 

Authorized representative:

 

  

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IN WITNESSTH WHEREOF, the duly authorized representatives of each Party hereto have duly executed this Agreement on the date first above written.

 

Party A:Chongqing Difa Investment Management Limited Liability Company (seal)

 

Legal representative or authorized representative: (signature)

 

 

Party B: Chongqing Zhaobao Investment ( Group )Limited Liability Company (seal)

 

Legal representative or authorized representative: (signature)

 

  

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Appendix 1: List of Managerial and Consulting Services

 

 

	
Type of Service

	
Content of Service

	
Investment Management Consulting

	
Investment Management & Investment Consulting

	
International Business Consulting

	
Planning of development strategy, project feasibility study, business planning and sales planning, and investigation on a specially entrusted basis

	
Bulilding Management Consulting

	
Buliding Business Consulting & Building Managent Consulting

 

  

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Appendix 2: Calculation and Payment of the Fee for Managerial and Consulting Services

 

The rate of the fees charged for the Services (“Service Fees”) shall be calculated as 100% of Party B’s total quarterly income. The fee will be paid on a quarterly basis according to the services actually rendered. The fees for other relevant technological and consulting services rendered upon Party B’s request from time to time shall be otherwise agreed. Considering the development of Party B’s future business, both parties agree that Party B shall maintain in its bank account an amount no less than RMB10 million in cash or cash equivalent (hereinafter referred to as “Minimum Cash Flow”). At the end of each quarter, if the Minimum Cash Flow will be below the above required amount after Party B pays up the Service Fees according to relevant provisions, Party B shall pay the Service Fees with all the residual payable cash it then possesses after the deduction of the Minimum Cash Flow, the due date for the remaining part of the Services Fees shall be postponed to the next quarter, which shall be paid together with the Service Fees of that quarter. If Party B still can not meet the requirement, Party A is entitled to reduce the Service Fees for the relevant quarter to at least RMB 100 thousand.

 

  

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Appendix 3: The Service Period and Profit Estimation

 

The service period is tentatively fixed as 30 years and the profit of Zhongbao will be RMB 30million per year by estimation.

 

  

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