ENTRUSTED MANAGEMENT AGREEMENT

 

BETWEEN

 

Chen Lixiang

 

 

AND

 

Shaanxi Techteam Jinong Humic Acid Products Co. Ltd.

 

 

 

June 16th, 2013

 

 

 

 

 

 

 

Entrusted Management Agreement

 

 

This Entrusted Management Agreement (the “Agreement”) is entered into as of
【June 16 th,2013 】in 【Xi’an China 】by:

 

Party A

 

1.              Chen Lixiang, owns 100% shares of Xi’an Hu County Yuxing
Agriculture Technology Developing Ltd.

 

and

 

Party B

 

Shaanxi Techteam Jinong Humic Acid Products Co. Ltd., a wholly foreign-owned
enterprise registered in Xi’an, China; and the registration number of its legal
and valid Business License is 【610000100003655 】;

 

 

 

Whereas,

 

1.              Party A is shareholder of Xi’an Hu County Yuxing Agriculture
Technology Developing Ltd,. (hereinafter referred to as “Yuxing”) and holds all
issued and outstanding shares of Yuxing. Under this Agreement, Chen Lixiang and
Yuxing have acted collectively as one party to this Agreement;

 

2.              Shaanxi Techteam Jinong Humic Acid Products Co. Ltd.is a
wholly-foreign owned enterprise incorporated and existing within the territory
of China in accordance with the law of the People’s Republic of China, the
registration number of its legal and valid Business License is
【610000100003655】, and the legal registered address is 【3/F, Block A, South
Taibai Road, Xi’an China 】.

 

3.              Party A desires to entrust Party B to manage and operate Yuxing;

 

4.              Party B agrees to accept such entrustment and to manage Yuxing
on behalf of Party A.

 

Therefore, in accordance with laws and regulations of the People’s Republic of
China, the Parties agree as follows after friendly consultation based on the
principle of equality and mutual benefit.

 

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Article 1                   Entrusted Management

 

1.1          Party A agrees to entrust the management of Yuxing to Party B
pursuant to the terms and conditions of this Agreement. Party B agrees to manage
Yuxing in accordance with the terms and conditions of this Agreement.

 

1.2          The term of this Entrusted Management Agreement (the “Entrusted
Period”) shall be from the effective date of this Agreement to the earlier of
the following:

 

(a)          the winding up of Yuxing or

(b)         the termination date of this Entrusted Management Agreement to be
determined by the Parties hereto, or

(c)          the date on which Party B completes the acquisition of Yuxing.

 

1.3          During the Entrusted Period, Party B shall be fully and exclusively
responsible for the management of Yuxing. The management service includes
without limitation the following:

 

(a)          Party B shall be fully and exclusively responsible for the
operation of Yuxing, which includes the right to appoint and terminate executive
director and the right to hire managerial and administrative personnel etc.
Party A or its voting proxy shall make shareholder’s resolution and Board of
Directors’ resolution based on the decision of Party B.

 

(b)         Party B has the full and exclusive right to manage and control all
cash flow and assets of Party A. Yuxing shall open an entrusted account or
designate an existing account as an entrusted account. Party B has the full and
exclusive right to decide the use of the funds in the entrusted account. The
authorized signature of the account shall be appointed or confirmed by Party B.
All of the funds of Yuxing shall be kept in this account, including but not
limited to its existing working capital and purchase price received from selling
its production equipment, inventory, raw materials and accounts receivable to
Party B (if any), all payments of funds shall be disbursed through this
entrusted account, including but not limited to the payment of all existing
accounts payable and operating expenses, payment of employees salaries and
purchase of assets, and all revenues from its operation shall be kept in this
account.

 

(c)          Party B shall have the full and exclusive right to control and
administrate the financial affairs and daily operation of Yuxing, such as
entering into and performance of contracts, and payment of taxes etc.

 

1.4          In consideration of the services provided by Party B hereunder,
Party A shall pay the entrusted management fee to Party B which shall be equal
to the earnings before tax (if any) of Yuxing. The entrusted management fee
shall be as follows: during the term of this agreement, the entrusted management
fee shall be equal to Yuxing’s estimated earnings before tax, being the monthly
revenues after deduction of operating costs, expenses and taxes other than
income tax. If the earnings before tax is zero, Yuxing is not required to pay
the entrusted management fee; if Yuxing sustains losses, all such losses will be
carried over to next month and deducted from next month’s entrusted management
fee. Both Parties shall calculate, and Party A shall pay, the monthly entrusted
management fee within 20 days of the following month. The above monthly payment
shall be adjusted after the end of each quarter but before the filing of tax
return for such quarter (the “Quarterly Adjustment”), so as to make the
after-tax profit of Yuxing of that quarter is zero. In addition, the above
monthly payment shall be adjusted after the end of each fiscal year but before
the filing for the yearly tax return (the “Annual Adjustment”), so as to make
the after-tax profit of Kingtone Information of that fiscal year is zero.

 

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1.5          Party B shall assume all operation risks out of the entrusted
management of Yuxing and bear all losses of Yuxing. If Yuxing has no sufficient
funds to repay its debts, Party B is responsible for paying off these debts on
behalf of Yuxing; if Yuxing’s net assets are lower than its registered capital,
Party B is responsible for funding the deficit.

 

Article2                   Rights and Obligations of the Parties

 

2.1          During the term of this Agreement, Party A’s rights and obligations
include:

 

(a)          to hand over Yuxing to Party B for entrusted management as of the
effectiveness date of this Agreement and to hand over all of business materials
together with Business License and corporate seal of Yuxing to Party B;

(b)         Party A has no right to make any decision regarding Yuxing’s
operations without the prior written consent of Party B;

(c)          to have the right to know the business conditions of Yuxing at any
time and provide proposals;

(d)         to assist Party B in carrying out the entrusted management in
accordance with Party B’s requirement;

(e)          to perform its obligations pursuant to the Shareholders’ Voting
Rights Proxy

Agreement, signed by and between Chen Lixiang and Party B on 【 】 in【 】, and not
to violate the said agreement;

(f)          not to intervene Party B’s management over Yuxing in any form by
making use of shareholder’s power;

(g)          not to entrust or grant their shareholders’ rights in Yuxing to a
third party other than Party B without Party B’s consent;

(h)         not to otherwise entrust other third party other than Party B to
manage Yuxing in any form without Party B’s prior written consent;

(i)           not to terminate this Agreement unilaterally with for any reason
whatsoever; or

(j)           to enjoy other rights and perform other obligations under the
Agreement.

 

2.2          During the term of this Agreement, Party B’s rights and obligations
include:

 

(a)          to enjoy the full and exclusive right to manage Yuxing
independently;

(b)         to enjoy the full and exclusive right to dispose of all assets of
Yuxing;

(c)          to enjoy all profits and bear losses arising from Yuxing’s
operations during the Entrusted Period;

 

-3-

 

 

 

 

(d)         to appoint executive director of Yuxing;

(e)          to appoint the legal representative, general manager, vice general
manager, financial manager and other senior managerial personnel of Yuxing;

(f)          to convene shareholders’ meetings of Yuxing in accordance with the
Shareholders’ Voting Rights Proxy Agreement and sign resolutions of
shareholders’ meetings; and

(g)          to enjoy other rights and perform other obligations under the
Agreement.

 

Article 3                   Representations and Warranties

 

The Parties hereto hereby make the following representations and warranties to
each other as of the date of this Agreement that:

 

(a)          has the right to enter into the Agreement and the ability to
perform the same;

(b)         the execution and delivery of this Agreement by each party have been
duly

authorized by all necessary corporate action;

(c)          the execution of this Agreement by the officer or representative of
each party has been duly authorized;

(d)         each party has no other reasons that will prevent this Agreement
from becoming a binding and effective agreement between both parties after
execution;

(e)          the execution and performance of the obligations under this
Agreement will not violate any provision of the business license, articles of
association or other similar documents of its own;

(f)          violate any provision of the laws and regulations of PRC or other
governmental or regulatory authority or approval;

(g)          violate or result in a breach of any contract or agreement to which
the party is a party or by which it is bound.

 

Article 4                   Effectiveness

 

This Agreement shall take effect after it is duly executed by the authorized
representatives of the parties hereto with seals affixed.

 

Article 5                   Liability for Breach of Agreement

 

During the term of this Agreement, any violation of any provisions herein by
either party constitutes breach of contract and the breaching party shall
compensate the non-breaching party for the loss incurred as a result of this
breach.

 

Article 6                   Force Majeure

 

The failure of either party to perform all or part of the obligations under the
Agreement due to force majeure shall not be deemed as breach of contract. The
affected party shall present promptly valid evidence of such force majeure, and
the failure of performance shall be settled through consultations between the
parties hereto.

 

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Article 7                   Governing Law

 

The conclusion, validity, interpretation, and performance of this Agreement and
the settlement of any disputes arising out of this Agreement shall be governed
by the laws and regulations of the People’s Republic of China.

 

Article 8                   Settlement of Dispute

 

Any disputes under the Agreement shall be settled at first through friendly
consultation between the parties hereto. In case no settlement can be reached
through consultation, each party shall have the right to submit such disputes to
China International Economic and Trade Arbitration Commission. The arbitration
award shall be final and binding on both parties.

 

Article 9                   Confidentiality

 

9.1          The parties hereto agree to cause its employees or representatives
who has access to and knowledge of the terms and conditions of this Agreement to
keep strict confidentiality and not to disclose any of these terms and
conditions to any third party without the expressive requirements under law or
request from judicial authorities or governmental departments or the consent of
the other party, otherwise such party or personnel shall assume corresponding
legal liabilities.

 

9.2          The obligations of confidentiality under Section 1 of this Article
shall survive after the termination of this Agreement.

 

Article 10               Severability

 

10.1            Any provision of this Agreement that is invalid or unenforceable
due to the laws and regulations shall be ineffective without affecting in any
way the remaining provisions hereof.

 

10.2      In the event of the foregoing paragraph, the parties hereto shall
prepare supplemental agreement as soon as possible to replace the invalid
provision through friendly consultation.

 

Article 11               Non-waiver of Rights

 

11.1      Any failure or delay by any party in exercising its rights under this
Agreement shall not constitute a waiver of such right.

 

11.2            Any failure of any party to demand the other party to perform
its obligations under this Agreement shall not be deemed as a waiver of its
right to demand the other party to perform such obligations later.

 

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11.3            If a party excuses the non-performance by other party of certain
provisions under this Agreement, such excuse shall not be deemed to excuse any
future non-performance by the other party of the same provision.

 

Article 12               Non-transferability

 

Unless otherwise specified under this Agreement, no party can assign or delegate
any of the rights or obligations under this Agreement to any third party nor can
it provide any guarantee to such third party or carry out other similar
activities without the prior written consent from the other party.

 

Article 13               Miscellaneous

 

13.1      Any and all taxes arising from execution and performance of this
Agreement and during the course of the entrusted management and operation shall
be borne by the Parties respectively pursuant to the provisions of laws and
regulations.

 

13.2            Any amendment entered into by the parties hereto after the
effectiveness of this Agreement shall be an integral part of this Agreement and
have the same legal effect as part of this Agreement. In case of any discrepancy
between the amendment and this Agreement, the amendment shall prevail. In case
of several amendments, the amendment with the latest date shall prevail.

 

13.3            This Agreement is executed by Chinese and English in duplicate
and both the English version and Chinese version shall have the same effect.
Each of the original Chinese and English versions of this Agreement shall be
executed in three copies. Each party shall hold one original for each version.

 

(This space intentionally left blank)

 

 

 

 

 

 

 

 

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IN WITNESS HEREOF, the Parties hereof have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.

 

 

PARTY A:

 

Chen Lixiang

 

(Signature) :  /s/ Chen Lixiang  

 

 

Xi’an Hu County Yuxing Agriculture Technology Developing Ltd.

 

 

 

 

(Signature) :  /s/ Chen Lixiang  

 

 

 

 

 

PARTY B: Shaanxi Techteam Jinong Humic Acid Products Co. Ltd.

 

(Seal)

 

 

Legal Representative/Authorized Representative

 

(Signature):  /s/ Li Tao  

 

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