ShareholdersVoting Proxy Agreement

 

 

This Shareholders’ Voting Proxy Agreement (this “Agreement”) is entered into by and between the following parties in Wuhan China on June 30th, 2009:

 

Party A:  Wuhan Vogue-Show Jewelry Co., Ltd., a Wholly-Owned Foreign Enterprise (“WOFE”) registered in Wuhan of the PRC, with legal registered office at 5th Floor 1-3, No. Te 13, Economic Development Zone, Jiang’an District, Wuhan.

 

Party B:  Wuhan Kingold Jewelry Co., Ltd (“Party B”), a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number:  420100000023089 and legal registered office at No. Te 15, Huangpu Science and Technology Park, Jiang’an District, Wuhan.

 

Party C:  Each of the shareholders of Wuhan Kingold Jewelry Co., Ltd listed on Table 1 (collectively, the “Kingold Shareholders” or individually, the “Shareholder”)

 

In this Agreement, Party A, Party B and the Kingold Shareholders collectively are referred to as “all parties” and each of them is referred to as “a party”.

 

WHEREAS:

 

1.           Wuhan Kingold Jewelry Co., Ltd is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with legal registered office at No. Te 15, Huangpu Science and Technology Park, Jiang’an District, Wuhan.

 

2.           On the day of the execution of this Agreement, the Kingold Shareholders duly and legally hold 95% shares of Party B.  The percentage of shares held by each Shareholder are listed on Table 1 attached hereto.

 

3.           Kingold Shareholders desire to entrust Party A or any person designed by Party A (“Designee”) as their proxy with the power to exercise the Kingold Shareholders’ voting rights at the shareholders’ meetings of Party B or by written consents.

 

4.           Party A agrees to accept the above commission.

 

NOW, THEREFORE, with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws and regulations of the PRC.

Clause 1.

Voting Proxy

 

1.           Each of the Kingold Shareholders irrevocably grants and entrusts Party A or any of Party A’s Designees to be their exclusive proxy to exercise their voting rights that a Kingold Shareholder would have at a shareholders’ meeting or by written consent (hereinafter referred to as “Commissioned Voting”) for the maximum period permitted pursuant to law of PRC and in accordance with and within the limitations of the laws of the PRC and the Articles of Association of Party B, including but not limited to the following rights:

 

(1)           to attend and participate in the shareholders’ meetings of Party B as the voting proxy of the Kingold Shareholders;

 

(2)           to vote on the matters proposed at the shareholders’ meetings on behalf of the Kingold Shareholders, including voting on the appointment and election of the directors and supervisors of Party B;

 

(3)           to call the shareholders’ meetings of Party B; and

 

(4)           all other shareholder voting rights as stipulated in the Articles of Association of Party B.

 

2.           Party B and each of the Kingold Shareholders shall assume the responsibility as arising from and in relation to the exercise of the Commissioned Voting by Party A or any of Party A’s Designees.

 

3.           Party B and each of the Kingold Shareholders agrees that Party A will not require the opinion or approval of Kingold Shareholders before its exercise of the Commissioned Voting, unless otherwise provided in this Agreement; however, after any resolution at a shareholders’ meeting is adopted, Party A shall inform Party B of such resolution in a timely manner.

 

4.           Party A may from time to time establish and amend rules which govern how Party A or its Designee shall exercise the Commissioned Voting, including, but not limited to, the quorum required to authorize or take any action and to execute documents evidencing such action, and Party A shall take action pursuant to such rules.

 

Clause 2.

Representations and Warranties

 

1.           Each party respectively represents and warranties to the other parties that, on the day of execution of this Agreement:

 

(1)           They have the right to execute this Agreement and the capability to perform the obligation pursuant to this Agreement;

 

(2)           They have carried out all necessary internal decision-making procedures, obtained proper authority, acquired all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws and contracts binding or affecting them; and

 

(3)           Once executed, this Agreement will constitute the legal, valid, binding obligation of each party and each party will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

2.           Party A represents and undertakes to the Kingold Shareholders that:

 

(1)           Party A agrees to accept the commission of the Kingold Shareholders pursuant to Clause 1 of this Agreement and exercise shareholder voting and other rights pursuant to this Agreement on behalf of the Kingold Shareholders.

 

(2)           Party A agrees that, where necessary, within the scope stipulated in Paragraph 1 of Clause 1 herein, it will grant the Commissioned Voting to a Designee appointed by Party A.

 

(3)           Party A undertakes that, if the Kingold Shareholders request, it will report the operations of Party B to the Kingold Shareholders and consider the reasonable suggestions from the Kingold Shareholders.

 

3.           Party B and Kingold Shareholders, jointly and severally, undertake and represent to Party A that:

 

(1)           Notwithstanding any change to the capital structure of Party B, each of the Kingold Shareholders will grant Party A to exercise its shareholder’s voting rights on behalf of the Kingold Shareholders, provided that such Kingold Shareholder holds the equity interest in Party B.

 

(2)           Without the written consent of Party A, the Kingold Shareholders will not transfer, entrust or confer their equity interest in Party B to any other party, including but not limited to individuals, entities, enterprises, partnerships, joint ventures and non-profit organizations other than Party A or Party A’s Designee.

 

(3)           Party B and each of the Kingold Shareholders acknowledges that each of them will continue to perform this agreement even if one or more of such shareholders no longer holds the equity interest of Party B.

 

(4)           Without the written consent of Party A, the Kingold Shareholders shall not make any decisions for the production and operation of Party B.

 

(5)           Party B and each of the Kingold Shareholders hereby acknowledges that the obligation of Party B and each of the Kingold Shareholders under this Agreement are separate and if any Kingold Shareholder does not hold the equity interest in Party B or shall no longer be a Kingold Shareholder, the obligation of Party B and the other Kingold Shareholder parties shall remain in full force and effect, and such party shall continue performing this Agreement.

 

(6)           Unless others directed by Party A, Kingold Shareholder, shall not directly exercise the Commissioned Voting that have been granted to Party A or its Designee.

(7)           Each of the Kingold Shareholders owns the shares of Party B set forth below on Table 1, free and clear of all liens and encumbrances, and none of the Kingold Shareholders have granted to anyone, other than Party A or its Designee, a power of attorney or proxy over any of such shares or in such Kingold Shareholder’s rights as a shareholder of Party B.  Party B and each of the Kingold Shareholders further represent and warrant that the execution and delivery of this Agreement by such Kingold Shareholder will not violate any laws, regulations, judicial or administrative orders, arbitration awards, agreements, contracts or covenants applicable to each of the Kingold Shareholders.

 

Clause 3.

Exercise of the Commissioned Voting

 

1.           Each of the Kingold Shareholders agree, that, within the scope stipulated in Paragraph 1 of Clause 1 herein, Party A may grant the Commissioned Voting to a Designee and assume any legal responsibility as arising from and in relation to the exercise of the Commissioned Voting by such Designee.

 

2.           Party B and the Kingold Shareholders will provide sufficient assistance to the exercise of the Commissioned Voting by Party A or its Designee, including the prompt execution of related shareholders’ meeting resolutions and other legal instruments where necessary.

 

3.           If, at any time within the period of this Agreement, the conferring or exercise of the Commissioned Voting under this Agreement cannot be exercised due to any reason (except the breach of this Agreement by Party A or Party B), each party shall immediately seek the most similar substitute proposal of this Agreement and enter into a supplementary agreement or adjust the terms and conditions of this Agreement in order to ensure the achievement of the purpose of this Agreement.

 

Clause 4.

Indemnity

 

1.           Each of the parties hereto agrees that Party A will not assume any liabilities to or compensate (in currency or any other form) Party B, any of the Kingold Shareholders or any third party due to the exercise of the Commissioned Voting.

 

2.           Party B and the Kingold Shareholders, jointly and severally, agree that they will indemnify, protect and prevent Party A against or from the losses, liabilities, expenses and reasonable fees (including reasonable legal fees) actually arising from or in relation to any damage, claim, loss, charge, legal proceeding, lawsuit and fine caused by the exercise of the Commissioned Voting, so long as Party A acted in good faith and is not found to be guilty of gross negligence or willful misconduct with respect thereto.

 

Clause 5.

Term of this Agreement

 

1.           This Agreement shall come into effect as of the day when all parties sign and stamp it and shall remain in force unless terminated pursuant to this Clause.

 

2.           The term of this Agreement may be extended by Party A in its sole discretion before the termination or expiration of this Agreement.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.

 

3.           This Agreement will not terminate until the purchase of the 95% equities or all the assets of Party B by Party A is completed, unless otherwise unanimously agreed by all parties.

4.           This Agreement may be terminated by Party A by giving 30 days prior written notice to each of the Kingold Shareholders and Party B.

 

5.           Clause 4 regarding indemnity shall survive the termination of this Agreement.

 

Clause 6.

Governing Law

 

The execution, validity, effect, interpretation, performance and dispute solution of this Agreement shall be governed by the laws and regulations of the PRC.

 

Clause 7.

Dispute Resolution

 

All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“CIETAC”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 

Clause 8.

General Terms

 

1.           Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All exhibits, addendums, and schedules referred to in this Agreement are incorporated herein by reference.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.

 

2.           Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.

 

3.           Headings.  The headings of any Clauses or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 

4.           Construction.  References in this Agreement to ‘‘Clauses,” “Sections,” “Schedules” and “Exhibits” shall be to the Clauses, Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words “herein”, “hereof” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word “including” when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.

5.           Transfer.  Without the prior written consent of Party A, neither Party B nor any of the Kingold Shareholders shall transfer all or part of their rights and obligations under this Agreement to any third party or its affiliate; and any transfer on or in relation to this Agreement without approval shall be invalid.  Party A shall determine whether to approve a transfer within thirty (30) days after the receipt of a transfer notice from a Kingold Shareholder without unreasonable delay.

 

6.           Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or enforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

7.           Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.

 

8.           Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.

 

9.           Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.

 

10.         Notices.  All notices required or permitted under this Agreement shall be in writing and shall be sufficiently given only if mailed by registered or certified mail, return receipt requested, or sent by expedited or overnight delivery service with return receipt, or sent by telecopier with confirmed receipt, to the party to receive notice at the following addresses or at such other address as any party may, upon ten (10) days prior written notice, direct:

 

 

11.         Copies of this Agreement.  This Agreement shall be executed in four counterparts, each party holds one and the rests are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.

 

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IN WITNESS HEREOF, all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

 

Party A:  Wuhan Vogue-Show Jewelry Co., Ltd (seal)

Signature of Legal Representative (or Authorized Representative):

Party A:  Wuhan Kingold Jewelry Co., Ltd (seal)

Signature of Legal Representative (or Authorized Representative):

The Kingold Shareholders: