Agreement

This Agreement dated on November 20, 2010, is entered into in Shandong, People’s Republic of China among the Shareholders of Shandong Zhidali Industrial Co., Ltd. (“Shandong Zhidali” or “Company”) set forth on Schedule I (each a “Shareholder”, and collectively, the “Shareholders”) and Mr. CHAN YUET MING (each a “Party”, and collectively, the “Parties”).

WHEREAS, Mr. CHAN YUET MING, a citizen of Hong Kong (“Mr. CHAN”), is the sole shareholder and director of Zhidali International Group Inc. (“Zhidali International”), a BVI corporation. Zhidali Industrial Co., Ltd. (“Zhidali Industrial”) is a wholly-owned subsidiary of the Zhidali International, and holds 100% equity interests of Zhidali Technology Limited (“Zhidali Technology”), a Hong Kong company. Zhidali Technology is the sole shareholder of Tengzhou City Yangshi Keguang Electronics Co., Ltd (“WFOE”). Mr. CHAN is also the sole director of Zhidali Industrial and Zhidali Technology.

WHEREAS, Shandong Zhidali is a domestic company with exclusively domestic capital registered in the PRC and its main business scope is XXXX.

NOW, THRERFORE, in consideration of the mutual promises of the Parties and the terms and conditions hereof, the Parties hereby agree as follows:

1. As the sole director of Zhidali International, Zhidali Industrial, Zhidali Technology, Mr. CHAN irrevocably authorizes the Shareholders to exercise director’s rights of Zhidali International, Zhidali Industrial, Zhidali Technology, including but not limited to the right to call the director’s meeting, accept the notice regarding the director’s meeting and its agenda, participate in the director’s meeting and exercise the right of electing, designating or appointing the director, general manager, financial controller or other senior management personnel, determine the matters of distribution of dividend. And Mr. CHAN undertakes that he will not appoint any additional directors of Zhidali International, Zhidali Industrial, Zhidali Technology without the prior written consent of the Shareholders.

2. As the sole shareholder of Zhidali International, Mr. CHAN irrevocably authorizes the Shareholders to participate in the shareholder’s meeting and exercise the shareholder’s right on his behalf.

3. Mr. CHAN agrees that the Shareholders will be entitled to the right of obtaining 100% of Zhidali International’s common stock (as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions) within 5 years for no consideration in accordance with the respective pro rata ownership according to their respective pro rata ownership of Shandong Zhidali upon the satisfaction of the following condition: The net income reported in the Consolidated Interim Report of WFOE commencing from January 1, 2010 to June 30, 2010 is no less than $  million.

 

 

 

[Reminder of this page intentionally left blank.]

 

IN WITNESS WHEREOF, the Parties execute this Agreement as of the date first written above.

Yang Zhiqiang

Signature:                                                                       

Meng Xianhua

Signature:                                                                      

Signature:                                                                   

 

 

 

 

No.	Name	Address	ID No.	Percentage of Shares Held (%)
1	Yang Zhiqiang			99%
2	Meng Xinhua			1%