OPERATING AGREEMENT

During the term of this Agreement, in order to ensure the normal operation of Party B and its Business, Party A agrees that subject to Party B’s satisfaction of the provisions of this Agreement described below, Party A shall guarantee the performance of contracts, agreements and transactions executed by Party B related to its Business (“Party B’s Obligations”); and in return, Party B agrees to pay to Party A a fee (“Fee”) equal to 50% of Party B’s cash flows from operating activities (“Operating Cash Flow”). The Fee shall be paid monthly by Party B to Party A within 10 days following the end of each month based on the Operating Cash Flow for such month as estimated by Party A and Party B in good faith (“Estimated Monthly Amount”). Within sixty (60) days after the end of each fiscal quarter, Party A and Party B shall make a final determination of the actual Operating Cash Flow for such quarter (“Final Quarterly Amount”) based on the financial statements of Party B, which have been reviewed or audited by the Parties’ registered certifying accountant for U.S. financial reporting purposes (“Accountant”). To the extent the Final Amount is greater than the Estimated Monthly Amounts for such quarter, the Fee shall be adjusted and Party B shall promptly remit to Party A the additional Fee due and owing. To the extent the Final Amount is less than the Estimated Monthly Amounts for such quarter, the Fee shall be adjusted and Party A shall promptly remit to Party B the amount by which the Fee was overpaid.

In consideration of the requirements of Article 1 herein and to ensure the performance of the Consulting Agreement, the License Agreement and this Agreement between Party A and Party B, and to ensure the payment of all amounts owed by Party B to Party A, Party B together with its shareholders Party C and Party D hereby jointly and severally agree that Party B shall not conduct any transaction which may materially affect its assets, obligations, rights or the Business unless it obtains a prior written consent from Party A, including without limitation the following actions:

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

To sell to any third party or acquire from any third party any assets or rights, including without limitations, any plant, equipment, real property or personal property, or any intellectual property rights;

To provide any guaranty for any third party obligations;

To assign to any third party any agreements related to the Business;

To engage in any other business consulting agreements with any third party or to engage in any other business activities other than the Business; and

To pledge any of its assets or intellectual property rights to any third party as a security interest.

To ensure the performance of the Consulting Agreement, the License Agreement and this Agreement between Party A and Party B, and to ensure the payment of all amounts owed by Party B to Party A, Party B together with its shareholders Party C and Party D hereby jointly and severally agree to accept the operation guidance set by Party A on, including but not limited to, business and marketing strategies, business planning, business operation guidance, the appointment and dismissal of its directors and officers (as described in Article 4 below), the hiring and firing employees, its daily operation of the Business, and its financial and budgeting system.

Party B together with its shareholders Party C and Party D hereby jointly and severally agree that Party B, Party C and Party D shall appoint personnel recommended by Party A as the directors of Party B, and Party B shall appoint those candidates recommended by Party A as Party B's General Manager, Chief Financial Officer, and other high level managerial positions.

Any amendment and supplement of this Agreement shall come into force only after a written agreement in the English language is signed by all parties. The amendment and supplement duly executed by all parties shall be part of this Agreement and shall have the same legal effect as this Agreement.

This Agreement shall be governed by and construed in accordance with the PRC laws.

The parties shall strive to settle any dispute arising from  the interpretation or performance, or in connection with this Agreement through friendly  negotiation. In case no settlement can be reached through negotiation, except as provided in Article 1, either party may submit  such dispute to China International Economic and Trade Arbitration Commission ("CIETAC") for arbitration in accordance with the current rules of CIETAC. The arbitration proceedings shall take place in Hong Kong and shall be conducted in English. The arbitration award shall be final and binding upon the parties.

Any notice which is given by the parties hereto for the purpose of performing the rights, duties  and obligations hereunder shall be in writing in the English language. Where such notice is delivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by telex or facsimile, the notice time is the time when such notice is transmitted. If  such notice does not reach the addressee on business date or reaches the addressee after the business time, the next business day following such day is the date of notice. The delivery place is the address first written above of the parties hereto or the address advised in writing from time to time. The writing form includes facsimile and telex.

This Agreement shall be executed by a duly authorized representative of each party and shall  become effective as of the date first written above. The term of this Agreement is ten (10) years,  unless early termination occurs in accordance with the relevant provisions herein.

During the term of this Agreement or any renewal term, Party B, Party C and Party D 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 days prior written notice to Party B,  Party C and Party D.

This Agreement is executed in English only, and the executed English language Agreement shall prevail in all cases. This Agreement may be executed in counterparts, each of which  shall constitute one and the same agreement, and by facsimile or electronic signature.