Document:

f8k021111ex10i_kurrant.htm

Exhibit 10.1

 

EXCLUSIVE TECHNICAL CONSULTING SERVICE AGREEMENT

THIS EXCLUSIVE TECHNICAL CONSULTING SERVICE AGREEMENT (the “Agreement”) is made and entered into by and between the following parties as of February 11, 2011 in Shandong, the People’s Republic of China (“China” or the “PRC”):

Party A: Tengzhou City Yangshi Keguang Electronics Co., Ltd. 

Registered Address: No. 1, Zhidali Rd, Tengzhou Economic Development Zone, Shandong Province

Party B: Shandong Zhidali Industrial Co., Ltd.

Registered Address: No. 1, Zhidali Rd., Tengzhou Economic Development Zone

 

Each of Party A and Party B shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively.

WHEREAS,

	
1.

	
Party A, a wholly foreign-owned enterprise duly established and validly existing under the laws of the PRC, possesses professional knowledge, facilities, resources and skills to provide Party B with technical consulting services relevant to the development and operation of Party B’s business.

	
2.

	
Party B, a limited liability company duly established and validly existing under the laws of the PRC, agrees to accept the technical consulting services provided by Party A in accordance with this Agreement.

 

NOW THEREFORE, through mutual discussion, the Parties have agreed as follows:

	
1.

	
Technical Consulting Services; Exclusivity

	  	
1.1

	
During the term of this Agreement, Party A shall provide the following technical consulting services to Party B in accordance with this Agreement:

	 	 	 
	  	
(i)

	
Provision of technology information and materials related to Party B’s business development and operation, the contents of which may be enhanced or diminished during the performance of this Agreement and upon mutual agreement to address each Party’s requirements; and

	 	 	 
	  	
(ii)

	
Training of technical and managerial personnel for Party B and provision of required training documents, and the provision of technologists and managerial personnel to Party B as necessary to provide related technology and training services.

	  	
1.2

	
Party B hereby agrees to accept the technical consulting services provided by Party A. Party B further agrees that, during the term of this Agreement, it shall not accept technical consulting and services from any other party without the prior written consent of Party A.

 

  

1

  

	  	
1.3

	
Party A shall be the sole and exclusive owner of all right, title and interests to any and all intellectual property rights arising from the performance of this Agreement, including but not limited to, copyrights, patent, know-how and commercial secrets, whether such intellectual property is developed by Party A or Party B.

	
2.

	
Consulting Fee

	  	
2.1

	
As consideration for the services provided by Party A under this Agreement, Party B shall pay an annual consulting fee to Party A equal to 80% of Party B’s annual net profit (the “Consulting Fee”).

	  	
2.2

	
Party A agrees to reimburse Party B for all necessary expenses related to the performance of this Agreement before Party B pays such Consulting Fee, including but not limited to, travel expenses, expert fees, printing fees and mail costs.

	  	
2.3

	
Party A also agrees to reimburse Party B for taxes (not including income tax), customs and other expenditures related to Party B’s performance of this Agreement.

	  	
2.4

	
Party B shall pay such Consulting Fee to Party A on a semi-annual basis, with any over- or underpayment by Party B to be reconciled once the annual net profit of Party B is determined at the end of Party B’s fiscal year. During the term of this Agreement, Party B shall make payments of the Consulting Fee to the bank account described in Section 2.5 below within three (3) working days after each semi-year end, and the Parties shall complete any reconciliation payment within three (3) days after the determination described in Section 2.5 below. In the event that Party B should fail to make timely payment of the Consulting Fee or other necessary expenses in accordance with this Agreement, Party B shall pay a late fee to Party A based on one percent (1%) compound annual interest of the payment amount then due, from the date of such nonpayment until payment is made in full.

	  	
2.5

	
Party B shall open and maintain a separate bank account for payment of the Consulting Fee and any other payments under this Agreement. Within ninety (90) calendar days after each fiscal year end, Party B shall furnish a written report of its net profit for such fiscal year end to Party A to reconcile the Consulting Fee. Party A is entitled to appoint its own employee, PRC accountant or international accountant to review or audit Party B’s account books to verify the amount of the Consulting Fee and in relation to the services provided hereunder. Any fees payable to such an accountant shall be paid by Party A. Party B shall provide any and all documents, account books, records, materials and information, as well as necessary assistance to the employee or accountant designated by Party A. The audit report issued by Party A’s employee shall be final and conclusive unless Party B gives written objection within seven (7) days after receiving such report. An audit report issued by Party A’s appointed accountant shall be deemed final and conclusive. Party A is entitled to serve Party B with a written request for payment of any deficient amount at any time after receiving the audit report confirming the amount of the Consulting Fee. Party B shall pay within seven (7) days after receiving the notice in accordance with Section 2.4.

 

  

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3.

	
Representations and Warranties

	  	
3.1

	
Representations and Warranties of Party A

Party A hereby represents and warrants as follows:

	  	
3.1.1

	
Party A is a company that is duly registered, validly existing under the laws of the PRC and is authorized to enter into this Agreement.

	 	 	 
	  	
3.1.2

	
Party A has the power to enter into and perform this Agreement in accordance with its charter and organizational documents as well as its business scope, and has taken all necessary action to obtain all consents and approvals necessary to execute and perform this Agreement, and the execution and performance of this Agreement by Party A does not and will not result in any violation of enforceable or effective laws or contractual limitations.

	  	
3.1.3

	
Upon execution, this Agreement shall constitute the legal, valid and binding obligation of Party A and may be enforceable in accordance with the terms hereof.

	  	
3.2

	
Representations and Warranties of Party B

	 	 	 
	 	 	Party B hereby represents and warrants as follows:

 

	  	
3.2.1

	
Party B is a company that is duly registered, validly existing under the laws of the PRC and is authorized to enter into this Agreement.

	  	
3.2.2

	
Party B has the power to execute and perform this Agreement in accordance with its charter and organizational documents as well as its business scope, has taken all necessary action to obtain all consents and approvals necessary to execute and perform this Agreement, and the execution and performance of this Agreement by Party B does not and will not result in any violation of enforceable or effective laws or contractual limitations.

	  	
3.2.3

	
Upon its execution, this Agreement shall constitute the legal, valid and binding obligation of Party B, enforceable against it in accordance with the terms hereof.

	
4.

	
Confidentiality

	  	
4.1

	
Party B agrees to use all reasonable and best efforts to protect and maintain the confidentiality of Party A’s confidential information received in connection with this Agreement. Party B shall not disclose, grant or transfer such confidential information to any third party. Upon termination of this Agreement Party B shall, upon Party A’s request, destroy or return to Party A any documents, materials or software containing any such confidential information, shall completely delete any such confidential information from any memory devices and shall not use or permit any third party to use such confidential information.

 

  

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4.2

	
Pursuant to this Agreement, the term “confidential information” shall mean any technical information or business operation information which is unknown to the public, can bring about economic benefits, has practical utility and about which a Party has adopted secret-keeping measures.

 

	  	
4.3

	
Both Parties agree that the provisions of Article 4 shall survive notwithstanding the alteration, revocation or termination of this Agreement.

 

	
5.

	
Indemnities

 

	  	
5.1

	
Party B shall indemnify Party A against any loss, damage, liability or expenses suffered or incurred by Party A as a result of or arising out of any litigation, claim or compensation request relating to the technical consulting services provided by Party A to Party B under this Agreement.

 

	
6.

	
Effectiveness and Term of this Agreement

 

	  	
6.1

	
This Agreement shall be executed and come into effect as of the date first set forth above. The term of this Agreement shall be 20 years unless earlier termination as set forth in this Agreement or upon the mutual written agreement of the Parties hereto.

 

	  	
6.2

	
This Agreement may be extended prior to termination for one or more 20 year terms upon written notice by Party A, provided such extension is permitted by law and subject to the approval of the registration administration for the extension of Party B’s business duration. The parties will cooperate to renew this Agreement if such renewal is legally permitted at the time.

 

	
7.

	
Termination of the Agreement

 

	  	
7.1

	
The Agreement shall terminate automatically on the expiration date unless it is otherwise renewed in accordance with this Agreement.

 

	  	
7.2

	
Throughout the term of this Agreement, Party B may not terminate this Agreement absent of gross negligence, bankruptcy, fraud or illegal action on the part of Party A. Notwithstanding the above, Party A may terminate this Agreement by providing written notice to Party B thirty (30) days before such termination.

 

	  	
7.3

	
The rights and obligations of both Parties under Article 4 and Article 5 of this Agreement shall survive after the termination of this Agreement.

 

	
8.

	
Dispute Settlement

 

	  	
8.1

	
The Parties shall strive to settle any dispute arising from the interpretation or performance, or in connection with this Agreement through mutual negotiation. In case no settlement can be reached through negotiation, either Party may submit such dispute to the China International Economic and Trade Arbitration Committee for arbitration according to its then effective arbitration rules. The arbitration shall be held in Beijing, PRC. The arbitration proceedings shall be conducted in Chinese. The arbitration award shall be final and binding upon the Parties.

 

  

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9.

	
Force Majeure

	  	
9.1

	
A “Force Majeure Event” means any event which is out of the control of each party and that would be unavoidable or insurmountable even if the Party affected by such event paid reasonable attention to it. Force Majeure Events shall include, but not be limited to, government actions, natural disasters, fire, explosion, typhoons, floods, earthquakes, tide, lightning or war. However, any lack of credit, assets or financing shall not be deemed a Force Majeure Event.

 

	  	
9.2

	
If the fulfillment of this Agreement is delayed or prevented due to a Force Majeure Event as defined above, the Party affected by such a Force Majeure Event shall be free from any obligation to the extent of the delay or holdback. The Party claiming the occurrence of a Force Majeure Event shall provide the other Party with the steps of fulfilling the obligations of this Agreement.

 

	  	
9.3

	
Performance under this Agreement shall be suspended during the existence of such Force Majeure Event, provided the Party claiming the existence of the Force Majeure Event has notified the other Party of the existence of such Force Majeure Event and has used reasonable best efforts to perform under the Agreement. Both Parties further agree to use reasonable best efforts to resume performance of this Agreement if the reason for exemption has been corrected or remedied.

 

	
10.

	
Notices

 

	  	
10.1

	
Any notice or other communication under this Agreement shall be in Chinese and be sent to the addresses first written above or other addresses as may be designated from time to time by hand delivery or mail or facsimile. Any notice required or given hereunder shall be deemed to have been served: (a) on the same date if sent by hand delivery; (b) on the tenth date after posting if sent by air-mail, (c) on the fourth date if sent by professional hand delivery which is acknowledged worldwide; and (d) the receipt date displayed on the transmission confirmation notice if sent by facsimile.

 

	
11.

	
Assignment

 

	  	
11.1

	
Party B may not assign or transfer any rights or obligations under this Agreement to any third party without prior written consent from Party A. Party B hereby agrees that Party A may assign and transfer its rights and obligations under this Agreement, and no any further consent from Party B will be required.

 

	
12.

	
Severability

 

	  	
12.1

	
If any of the terms of this Agreement are invalid, illegal or unenforceable, the validity and enforceability of the other terms hereof shall nevertheless remain unaffected.

 

  

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13.

	
Amendments and Supplement

 

	  	
13.1

	
Any amendment or supplement of this Agreement shall be effective only if it is made in writing and signed by both Parties hereto. The amendment or supplement duly executed by the Parties hereto shall be made a part of this Agreement and shall have the same legal effect as this Agreement.

 

	
14.

	
Governing Law

 

	  	
14.1

	
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of China.

The Remainder of this page is intentionally left blank

 

  

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

 

	
Party A: Tengzhou City Yangshi Keguang Electronics Co., Ltd. 

	 	 	 	 
	
 

	
By: 

	 
	 	
Name:

	
Yang Zhiqiang

	 
	 	Title:	
Chief Executive Officer

	 
	 	 	 	 
	
Party B: Shandong Zhidali Industrial Co., Ltd 

	 	 	 	 
	 	By:	 
	
 

	
Name:

	
Yang Zhiqiang

	 
	 	Title:	
Chief Executive Officer

	 

 

7f8k021111ex10ii_kurrant.htm

Exhibit 10.2

OPERATING AGREEMENT

THIS OPERATING AGREEMENT (the “Agreement”) is made and entered into among the following parties as of February 11, 2011 in Shandong, the People’s Republic of China (“China” or the “PRC”):

 

Party A:Tengzhou City Yangshi Keguang Electronics Co., Ltd.

 

Address:  No. 1, Zhidali Rd, Tengzhou Economic Development Zone, Shandong Province

 

Party B:  Shandong Zhidali Industrial Co., Ltd.

 

Address:  No. 1, Zhidali Rd., Tengzhou Economic Development Zone

 

Party C:  Yang Zhiqiang

 

ID No.: 370826197612094638

 

Party D:  Meng Xianhua

 

ID No.: 370826194712084628

WHEREAS:

 

	
1.

	
Party A is a wholly foreign-owned enterprise duly incorporated and validly existing under the People’s Republic of China (the “PRC”) law, which has the technology, expertise, practical experience and professional technicians to provide consulting services relevant to the development and operation of Party B’s business.

 

	
2.

	
Party B is a limited liability company duly incorporated and validly existing under the PRC law;

 

	
3.

	
Party C and Party D are shareholders of Party B who collectively own 100% of the equity interests of Party B;

 

	
4.

	
Party A has established a business relationship with Party B pursuant to an Exclusive Technical Consulting Service Agreement entered into by and between them dated as of February 11, 2011 (the “Service Agreement”);

 

	
5.

	
Pursuant to the Service Agreement, Party B shall pay Party A certain fees as set forth in the Service Agreement, and the daily operations of Party B will have a material effect on its ability to pay such fees to Party A;

 

	
6.

	
The Parties desire to enter into this Agreement to provide for Party A’s guarantee of expenses and losses of Party B and clarify matters in connection with Party B’s operation.

 

  

1

  

 

NOW THEREFORE, through mutual discussion, all parties to this Agreement have agreed as follows:

 

	
1.

	
Party A agrees, subject to the satisfaction by Party B of the relevant provisions herein, to serve as guarantor for Party B in contracts, agreements or transactions relating to Party B’s operations that are entered into 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 counter-guarantee, to pledge the receivable account from its operations and its entire assets to Party A. According to the aforesaid guarantee arrangement, Party A may, when necessary, enter into written guarantee contracts with Party B’s counter-parties thereof to assume the guarantee liability as the guarantor , and Party B, Party C and Party D shall take all necessary actions (including but not limited to executing relevant documents and transacting relevant registrations) to carry out the arrangement of counter-guarantee to Party A.

 

	
2.

	
In consideration of the requirement of Article 1 herein and to ensure the performance by Party B of its obligations under the Service Agreement, Party B, Party C and Party D hereby jointly agree that Party B shall not conduct any transaction which may materially affect its assets, obligations, rights or operation (excluding business contracts entered into in the ordinary course of Party B’s regular operations and the liens obtained by relevant counter parties due to such contracts) without Party A’s prior written consent. Such transactions shall include, but are not limited to, the following matters:

 

	  	
2.1

	
borrowing money from any third party or assuming any debt;

 

	  	
2.2

	
selling to or acquiring from any third party any asset or right, including but not limited to any intellectual property right;

 

	  	
2.3

	
providing any guarantee for any third party with any of its assets or intellectual property rights; or

 

	  	
2.4

	
assigning to any third party its business agreements.

 

	
3.

	
In order to further ensure the performance by Party B of its obligations under the Service Agreement, Party B, Party C and Party D hereby jointly agree to accept the corporate policy advice and guidance provided by Party A from time to time during the term of this Agreement in connection with Party B’s daily operations as well as the financial management and the recruitment, retention and dismissal of Party B’s employees.

 

	
4.

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

 

  

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5.

	
Party B, Party C and Party D hereby jointly agree and confirm that Party B shall first seek guarantee from Party A if such guarantee is required for Party B’s performance of any contract or loan for working 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 at 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 a 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 Service 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 unenforceable according to relevant laws, such clause shall be deemed invalid only within the applicable area of the Law and shall not affect the validity or enforceability of any other clause in this Agreement in any way.

 

	
9.

	
Party B shall not assign or transfer 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 and transfer its rights and obligations under this Agreement subject only to a written notice 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 all such documents confidential and not disclose any such documents to any third party without prior written consent from other parties except under the following conditions: (a) such documents are known or shall be known by the public (other than when 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 a stock exchange with jurisdiction; (c) any documents required to be disclosed by any party to its legal counsel or financial consultant for the purpose of the transactions contemplated under this Agreement, provided that such legal counsel or financial consultant shall also comply with the confidentiality as stated hereof. Any disclosure by employees or agents employed by any party shall be deemed the disclosure of such party and such party shall assume all liabilities resulting from such disclosure. This Article shall survive the termination of, amendment of, cancellation of or the inability to perform any other clause in this Agreement.

 

	
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 the then effective rules of CIETAC. The arbitration proceedings shall take place in Beijing and shall be conducted in Chinese. The 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 shall become effective concurrently.

 

	
14.

	
The parties confirm that this Agreement shall constitute the entire agreement of the Parties with respect to the subject matters therein.

 

	
15.

	
The term of this Agreement is 20 years unless earlier terminated in accordance with Article 16 herein or pursuant to any other relevant agreements reached by all parties. This Agreement may be extended at Party A’s written request prior to the expiration of this Agreement for additional terms of 20 years each.

 

	
16.

	
This Agreement shall terminate upon expiration of its term unless renewed in accordance with Article 15 herein. During the 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) day prior written notice to Party B, and this Agreement shall terminate unless assigned in accordance with Article 9 hereof prior to the end of such notice period.

 

	
17.

	
This Agreement may be executed in one or more original or facsimile copies.

 

 [Reminder of this page intentionally left blank.]

 

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

 

  

4

  

 

	  
	
Party A: Tengzhou City Yangshi Keguang Electronics Co., Ltd.

	
Authorized Representative: Yang Zhiqiang

Seal:

 

	
Party B: Shandong Zhidali Industrial Co., Ltd.

	
Authorized Representative: Yang Zhiqiang

	
Seal:

 

	
Party C: Yang Zhiqiang

	
Signature:

	  
	
Party D: Meng Xianhua

	
Signature:

 

5

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