Document:

Exhibit
      10.2

     

    
      CONFIDENTIAL
        AND WITHOUT PREJUDICE

      FOR
        SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

       

    

    MEMORANDUM
      OF UNDERSTANDING AMONG PLAINTIFFS AND 

    DEFENDANTS
      IN IN
      RE INFOSONICS CORPORATION DERIVATIVE 

    LITIGATION,
      Lead Case No. 06-CV-1336 JLS (WMc)

    

    This
      Memorandum of Understanding (“MOU”) contains the material terms of a settlement
      (the “Settlement”) and release and dismissal, with prejudice, of any and all
      claims that were asserted, or could have been asserted, in or relating to
In
      re
      InfoSonics Derivative Litigation,
      Case No. 06-CV-1336 JLS (WMc) of Caridad Miller and Jason Haggerty (“Co-Lead
      Plaintiffs”) and Plaintiff Peter Cunningham (collectively, “Plaintiffs”),
      individually and derivatively on behalf of InfoSonics Corporation (“InfoSonics”
or the “Company”), against Nominal Defendant InfoSonics and defendants Joseph
      Ram, Jeffrey A. Klausner, Joseph C. Murgo, Robert S. Picow, Kirk A. Waldron,
      Randall P. Marx and Abraham G. Rosler (the “Individual Defendants”)
      (collectively, with Nominal Defendant InfoSonics, referred to as “Defendants”)
      in the above -referenced action (the “Action”) pending in the United States
      District Court for the Southern District of California (the “Court”).

    

    Plaintiffs
      and Defendants (collectively the “Parties”) contemplate that this MOU will be
      superceded by a more detailed “Stipulation of Settlement” incorporating the
      terms and conditions set forth herein and other customary terms and conditions
      as agreed upon by counsel for the Parties. Among other terms and conditions
      below, the Settlement is subject to execution of a Stipulation of Settlement,
      court approval of the Stipulation of Settlement following a noticed hearing,
      and
      dismissal with prejudice of the Action.

    

    1.  InfoSonics
      will agree to implement the following corporate governance changes and maintain
      them in effect for at least five (5) years from entry of a court order approving
      the Stipulation of Settlement, which has become final, except to the extent
      advisable or necessary to address changes in applicable state laws, federal
      laws, and self-regulatory organization (“SRO”) rules (such as
      NASDAQ):

    

    a. The
      Company’s outside counsel shall be involved in all grants of stock options and
      be primarily responsible for the record keeping, resolutions, and minutes with
      respect to stock option grants.

     

    b. The
      Company will change audit partners no less frequently than every five
      years.

     

    c. Each
      director of the Company will be encouraged to attend in person or telephonically
      at least 80% of all Board and committee meetings.

    

    d. The
      Audit
      Committee may hire independent consultants who report directly to the Audit
      Committee at the Company’s expense as the Audit Committee deems appropriate in
      its sole judgment.

    
       

      e. The
        Company will ask its outside auditor to identify the stock option granting
        process as a “high risk” audit item and ask the outside auditor to conduct its
        audit accordingly.

       

    

    
      
        SD\640
          840.2

        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      CONFIDENTIAL
        AND WITHOUT PREJUDICE

      FOR
        SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

       

    

    f. The
      Audit
      Committee shall meet with the Company’s outside auditor at least annually to
      discuss the Company’s accounting for stock-based compensation.

    

    g. The
      Company will request its Chief Executive Officer (“CEO”) to increase the amount
      of time he spends meeting with the Company’s outside auditor as part of the
      year-end audit process.

    

    h. The
      Company’s CEO will acknowledge, to the extent required by the current
      certifications in the Company’s Form 10-Qs and 10-Ks, responsibility for the
      Company’s accounting controls. 

    

    i. The
      Company shall revise its corporate governance principles, by-laws and/or
      articles of incorporation to the extent necessary to require that a majority
      of
      the members of the Board be independent. An “independent” director shall be
      defined by the SEC rules and/or the NASDAQ rules. Essentially, an independent
      director is one who:

    

    (1) is
      not,
      and in the past five years has not been, employed by the Company or any of
      its
      subsidiaries or affiliates;

    

    (2) does
      not
      receive, and in the past five years has not received, any remuneration as an
      advisor, consultant, or legal counsel to the Company or any of its subsidiaries,
      affiliates, executive officers, or directors;

    

    (3) does
      not
      have, and in the past five years has not had, any contract or agreement with
      the
      Company or any of its subsidiaries or affiliates pursuant to which the director
      performed or agreed to perform any personal services for the
      Company; 

    

    (4) does
      not
      have, and in the past five years has not had, any relationship or engaged in
      any
      transaction with the Company or any of its subsidiaries or affiliates other
      than
      his or her service as a director;

    

    (5) is
      not,
      and in the past five years has not been, affiliated with or employed by any
      present or former independent auditor of the Company or any of its subsidiaries
      or affiliates;

    

    (6) is
      not,
      and in the past five years has not been, a director or executive officer of
      any
      Company for, which any executive officer of the Company serves as a director;
      and

    

    (7) 
      is not a
      member of the immediate family of a person who is not independent pursuant
      to
      subsections (1) to (7) above. 

     

    
      
        SD\640
          840.2

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      CONFIDENTIAL
        AND WITHOUT PREJUDICE

      FOR
        SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

       

    

    j. The
      Company’s Board shall establish a policy which requires the independent
      directors to meet in an executive session at least four times a year or at
      each
      formal, in-person meeting of the full Board, and require that the Board report
      to shareholders the number of such meeting held each year.

    

    k. The
      Company shall revise its corporate governance policy to require that an
      independent director sit on no more than three additional public company boards,
      and that the CEO of the Company and the Chairman of the Board each sit on no
      more than one other such board.

    

    l. Any
      Company stock option or other similar plan shall provide an objective,
      measurable and fair mechanism for pricing stock options. 

    

    m. All
      future Company stock option or other similar plan (“Stock Option Plan”) shall
      clearly define the exercise price, the grant date and the fair market value
      of
      stock (e.g., the closing price on a specified date, or the average closing
      price
      over a specified period). Subject to section 14 (b) below, in no event shall the
      exercise price or value of an award be determined by reference to the fair
      market value of the Infosonics stock on a day other than the grant date of
      the
      award. The fair market value of Infosonics stock on a grant date shall be the
      closing price for a share of common stock on such day as reported on the NASDAQ.
      

    

    n. Company
      Stock Option Plans shall provide:

    

    (1) The
      exercise price for each option grant shall be at least 100 percent of the
      closing market price on the date of grant; and

    

    (2) If
      the
      option grant is held close to an earnings release, the pricing of the grant
      shall be the closing price on the third trading day following the earnings
      release.

    

    o. Company
      Stock Option Plans shall comply with legal, professional and ethical
      requirements for proper disclosure and proper accounting and shall provide
      appropriate documentation for proper disclosure and accounting.

     

    p. The
      Company shall either instruct its outside counsel to file SEC Forms 3, 4 and
      5
      for requesting officers and directors in connection with Stock Option Plans,
      or
      else the Company’s Stock Option Plan shall identify who is responsible for
      completing and filing SEC Forms 3, 4 and 5.

    

    q. The
      Company’s process for granting executive non-cash compensation shall have the
      same transparency and be consistent with the process and methodology for
      determining executive cash compensation.

    

    r. The
      authority to grant stock option awards should be limited to the full Board
      or to
      a properly constituted Compensation Committee. If stock option awards are made
      by the Compensation Committee, no executive officer shall serve as a member
      of
      the Compensation Committee. 

     

    
      
        SD\640
          840.2

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    CONFIDENTIAL
      AND WITHOUT PREJUDICE

    FOR
      SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

     

    s. As
      a
      general rule, all grants shall be made at a meeting of the Infosonics Board
      or a
      properly constituted Compensation Committee, rather than by unanimous written
      consent. Corporate counsel shall be requested to attend any and all meetings
      where options are granted and shall promptly prepare minutes of the
      meeting.

    

    t. The
      Compensation Committee may not delegate authority to a sub-committee to grant
      stock options.

    

    u. The
      body
      authorized to grant stock options shall be specified in the Compensation
      Committee Charter and any current and/or subsequent equity incentive plan,
      whether subject to stockholder approval or not.

    

    2.  
      InfoSonics, the Individual Defendants and their Related Parties (defined below)
      will receive broad releases of all Released Claims (defined below) that were
      or
      could have been brought based upon or arising out of the allegations in the
      Derivative Actions, including any derivative claims relating to settlement
      of
      the Action as follows: 

    

    a. “Related
      Parties” means each of a released party’s past, present or future directors,
      officers, employees, partnerships, partners, members, principals, agents,
      underwriters, insurers, co-insurers, reinsurers, controlling shareholders,
      attorneys, accountants or auditors, advisors, banks or investment banks or
      bankers, analysts, associates, personal or legal representatives, predecessors,
      successors, parents, subsidiaries, divisions, joint ventures, assigns,
      executors, administrators, spouses, heirs, related or affiliated entities,
      any
      entity in which a party and/or any member of a party’s immediate family has a
      controlling interest, any members of their immediate families, or any trust
      of
      which any party is the settler or which is for the benefit of any party and/or
      member(s) of his or her family. Defendants and their respective Related Parties
      are collectively “Released Parties.”

    

    b. “Released
      Claims” shall collectively mean any and all claims, rights or causes of action
      or liabilities whatsoever, whether based on federal, state, local, statutory
      or
      common law or any other law, rule or regulation (whether foreign or domestic),
      including both known and Unknown Claims (defined below), accrued claims and
      not
      accrued claims, foreseen claims and unforeseen claims, matured claims and not
      matured claims, that have been or could have been asserted from the beginning
      of
      time to the date of the entry of an order of final judgment on the settlement
      in
      any forum by InfoSonics, or by any InfoSonics shareholder on behalf of
      InfoSonics, against any of the Released Parties which arise out of or relate
      in
      any way to the allegations, transactions, facts, matters or occurrences,
      representations or omissions involved, set forth, referred to in the Action,
      or
      that arise out of or relate in any way to settlement of the Action including
      this MOU and any actions or inactions relating thereto.

    

    c. “Unknown
      Claims” means any claim that the Parties and any other persons and entities
      whose claims are being released do not know or suspect to exist in their favor
      at the time of the release which, if known by him, her, might have affected
      the
      decision to compromise the claims, or the decision whether to agree, object,
      or
      not object to the settlement and release. Upon the effective date of a final
      settlement, the settling Parties and any other

     

    
      
        SD\640
          840.2

        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      CONFIDENTIAL
        AND WITHOUT PREJUDICE

      FOR
        SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

       

    

    persons or entities whose claims are being released shall
      expressly waive and relinquish, to the fullest extent permitted by law, the
      provisions, rights, and benefits conferred by §1542 of the California Civil Code
      and by any law of any state or territory of the United States, or principle
      of
      common law, or of international or foreign law, which is similar, comparable
      or
      equivalent to §1542 of the California Civil Code. Section 1542
      provides:

     

    A
      GENERAL
      RELEASE DOES NOT EXTEND TO CLAIMS, WHICH THE  CREDITOR
      DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER  FAVOR
      AT
      THE TIME OF EXECUTED THE RELEASE, WHICH IF KNOWN  BY
      HIM OR
      HER MUST HAVE MATERIALLY AFFECTED HIS OR HER  SETTLEMENT
      WITH THE DEBTOR

     

    The
      settling Parties may hereafter discover facts in addition to or different from
      those which he, she or it now knows or believes to be true with respect to
      the
      subject matter of this release, but it is their intention to finally and forever
      settle and release the claims notwithstanding any Unknown Claims they may have,
      as that term is defined in this paragraph. 

    

    The
      foregoing does not represent the precise wording of the release, but rather
      is
      intended to paraphrase the intent of such a general release. The release of
      Defendants and their Related Parties shall be part of the Stipulation of
      Settlement and Final Judgment in this Action. 

    

    3.  
      The
      Defendants agree not to oppose an application for attorney’s fees by Plaintiffs
      of up to an aggregate of $350,000.00 (three hundred and fifty thousand dollars),
      inclusive of all costs and expenses. InfoSonics will pay or cause its insurer
      AIG (National Union Fire Insurance Co. of Pittsburg, PA) (“AIG”) to pay the
      attorney’s fees awarded by the Court up to the capped sum of $350,000.00 (three
      hundred and fifty thousand dollars) (the “Settlement Fee”) within seven (7)
      business days after judgment in this Action becomes final and after the
      expiration of any appeals period or after being affirmed on appeal (the “Payment
      Date”). InfoSonics and the Individual Defendants shall have no obligation to
      fund any award of fees and costs in excess of the agreed upon cap. The
      Individual Defendants shall have no obligation to fund any of the Settlement
      Fee. 

    

    4.  Plaintiffs
      acknowledge that this Settlement is contingent on the settlement of In
      re
      InfoSonics Securities Litigation,
      Case
      No. 06-CV-1231 JLS (WMc). Plaintiffs agree: (a) to use their best efforts to
      coordinate with and facilitate the settlement in In
      Re
      InfoSonics Securities Litigation;
      (b) to
      not unreasonably delay the settlement process in this Action or in In
      Re
      InfoSonics Securities Litigation;
      (c) to
      have joint court hearings, if possible, for preliminary approval, final
      approval, and other matters in connection with the settlement of this Action
      and
In
      Re
      InfoSonics Securities Litigation;
      (d) to
      allow for notice of this Settlement and the In
      Re
      InfoSonics Securities Litigation settlement
      to be provided jointly to InfoSonics’ stockholders, in a notice that will be
      provided by plaintiffs in In
      Re
      InfoSonics Securities Litigation,
      provided that Plaintiffs herein shall bear no costs of notice, and/or to
      otherwise allow for notice to InfoSonics’ stockholders via means other than
      first-class mail (such as via a public SEC filing), again provided that
      Plaintiffs herein shall bear no costs of notice; and (e) to cooperate with
      the
      plaintiffs and defendants in In
      Re
      InfoSonics Securities Litigation
      to
      facilitate the timely and adequate notice of settlement. As long as this MOU
      and
      the Stipulation of Settlement remain in effect, the Parties agree to cooperate
      and use all reasonable efforts to secure the joint hearings of the dismissal
      of
In
      re
      InfoSonics Securities Litigation.
      

     

    
      
        SD\640
          840.2

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      CONFIDENTIAL
        AND WITHOUT PREJUDICE

      FOR
        SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

       

    

    5.  This
      MOU
      and the Stipulation of Settlement is conditioned upon final Court approval
      of
      the Settlement. Plaintiffs will seek approval of the Stipulation of Settlement
      upon appropriate notice (at no expense to Plaintiffs herein) as may be approved
      by the Court. The Parties shall negotiate in good faith and execute a definitive
      Stipulation of Settlement and such other documentation as may be required to
      obtain final Court approval of the settlement upon the terms contained herein.
      The eventual Stipulation of Settlement between the Parties shall explicitly
      provide that in the event that the Settlement fails to achieve final approval
      and/or the judgment fails to become final after the expiration of any appeals
      period or after being affirmed on appeal, or fails for any other reason, the
      Settlement Fee shall not be due, and if it has otherwise been paid, it shall
      be
      refunded to InfoSonics and/or AIG, respectively, to the extent each funded
      the
      Settlement Fee, together with interest at the legal rate, no later than twenty
      (20) business days after the event giving rise to the termination of the
      Settlement. This provision shall survive any other failure of the Stipulation
      of
      Settlement, and may be specifically enforced by the Court.

    

    6.  This
      MOU
      and the Stipulation of Settlement is also conditioned upon final Court approval,
      after appropriate notice, of the settlement in In
      re
      InfoSonics Securities Litigation.
      The
      eventual Stipulation of Settlement between the Parties herein shall explicitly
      provide that in the event that the In
      re
      InfoSonics Securities Litigation
      memorandum of understanding and/or stipulation of settlement fails to achieve
      final approval and/or the judgment fails to become final after the expiration
      of
      any appeals period or after being affirmed on appeal, or fails for any other
      reason, Defendants have the option of voiding this MOU and/or the Stipulation
      of
      Settlement in this Action. In such event, the MOU/Stipulation of Settlement
      shall be null and void, Lead Counsel shall jointly and severally be responsible
      for refunding the Settlement Fee to InfoSonics and/or AIG, respectively, to
      the
      extent each funded the Settlement Fee, together with interest at the legal
      rate,
      no later than twenty (20) business days after notice by InfoSonics that it
      is
      exercising its option of voiding the MOU/Stipulation of Settlement in this
      Action. This provision shall survive any other failure of the MOU/Stipulation
      of
      Settlement, and may be specifically enforced by the Court.

    

    7.  
      Defendants deny any liability or responsibility for the claims made in the
      Action and make no admission of any wrongdoing. This MOU and all negotiations,
      discussions and proceedings in connection with this MOU shall not constitute
      any
      evidence or be an admission by any of the Defendants that any acts or wrongdoing
      have been committed and shall not be deemed to create any inference that there
      is any liability on the part of any of the Defendants. This MOU and all
      negotiations, discussions and proceedings in connection with this MOU, shall
      not
      be offered or received in evidence or used for any other purpose in this or
      any
      other proceeding in any court, administrative agency, arbitration forum, or
      other tribunal other than as may be necessary to enforce the terms of the MOU.
      The Stipulation of Settlement and the Final Judgment shall provide that
      Defendants deny all liability and make no admission of any wrongdoing.

     

    
      
        SD\640
          840.2

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    CONFIDENTIAL
      AND WITHOUT PREJUDICE

    FOR
      SETTLEMENT PURPOSES ONLY
SUBJECT TO FED. R. OF EVIDENCE. 408

     

     

    8.  The
      final
      order and judgment shall contain a provision providing for the dismissal of
      the
      Action with prejudice and without costs, except as otherwise provided in the
      Stipulation of Settlement. 

    

    9.  This
      MOU
      shall be binding upon the Parties, and inure to the benefit of the successors,
      assigns, executors, administrators, heirs, insurers, and legal representatives
      of the Parties hereto, provided, however, that no assignment by any party shall
      operate to relieve such party of its obligations hereunder. This MOU shall
      also
      inure to the benefit of the parties to In
      Re
      InfoSonics Securities Litigation.
      

    

    10.  This
      MOU
      shall be governed by the laws of the State of California, without regard to
      its
      conflict of law rules.  

    

    11.  This
      MOU
      may be signed in counterparts and transmitted by facsimile or other electronic
      means.

     

    
      
        	
                Dated:
                  August 6, 2008

              	
                Dated:
                  August 6, 2008

              
	
                JOHNSON
                  BOTTINI, LLP

              	
                LATHAM
                  & WATKINS LLP

              
	
                FRANK
                  A. BOTTINI

              	
                PETER
                  H. BENZIAN

              
	 	
                KIMBERLY
                  AROUH HICKS

              
	 	 
	 	 
	
                /s/
                  Frank A. Bottini

              	
                
                  /s/
                    Kimberly Arouh Hicks

                

              
	
                Counsel
                  for Plaintiffs

              	
                Counsel
                  for InfoSonics Corporation, 

              
	 	
                Joseph
                  Ram, Jeffrey A. Klausner, 

              
	 	
                Joseph
                  C. Murgo, Robert S. Picow, 

              
	 	
                Kirk
                  A. Waldron, Randall P. Marx and

              
	 	
                Abraham
                  G. Rosler

              

      

    

     

    
      
        SD\640
          840.2

        
        

      

      
        7EXCLUSIVE
      TECHNICAL CONSULTING AND SERVICE AGREEMENT

     

    THIS
      EXCLUSIVE TECHINCAL CONSULTING AND SERVICE AGREEMENT (the
      “Agreement”)
      is
      made
      and entered into by and among the following parties on March 31,
      2008.

     

    Party
      A: Beijing Huate Xingye Keji Co., Ltd. 

    Registered
      Address:
      Room
      5107, Shenchang Building, 51 Zhichun Road, Haidian District,
      Beijing

    

    Party
      B: Dalian
      Winland International Shipping Agency Co., Ltd. 

    Registered
      Address: Summit Building, Shanghai Road, Zhongshan District, Dalian

    

    WHEREAS,

    

    
      	1.	
              Party
                A, a wholly foreign-owned enterprise duly
                established and valid existing
                under the People’s Republic of China (the “PRC”),
                owns resources to provide relevant technical consulting and
                services.

            

    

    

    
      	2.	
              Party
                B is a limited liability company duly established and valid existing
                under
                the PRC laws. Party A agrees to provide Party B technology consulting
                and
                related service, and Party B agrees to accept such technical consulting
                and services provided by Party A in
                accordance with this Agreement.
                

            

    

    

    NOW
      THEREFORE, through
      mutual negotiations, the Parties hereto agree as follows:

    

    
      	
              1.

            	
              Technical
                Consulting and Services; Exclusivity

            

    

    

    
      	
            	1.1	
              During
                the term of this Agreement, Party A agrees to, as the exclusive technical
                consulting and services provider of Party B, provide the technical
                consulting and services to Party B in accordance with this
                Agreement:

            

    

    

    
      	
            	(i)	
              Analysis
                and evaluation of Party B’s current business, operational model and
                customer types in an effort to integrate current business management
                resource;

            

    

    

    
      	
            	(ii)	
              Provision
                of advanced management skills to offer a framework for the construction
                of
                a new management platform;

            

    

    

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

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
            	(iv)	
              Training
                of technical and managerial personnel for Party B and provision of
                required training documents. Party A will send technologists and
                managerial personnel to Party B to provide related technology and
                training
                service as necessary.

            

    

     

    
      	
            	1.2	
              Party
                B hereby agrees to accept such technical consulting and services
                provided
                by Party A. Party B further agrees that, during the term of this
                Agreement, it shall not accept the technical consultation and service
                provided by any other third party without the prior written consent
                of
                Party A. 

            

    

    

    
      	
            	1.3	
              Party
                A shall be the sole and exclusive owner of all right, title and interests
                to any and all interllectual property rights arising from the performance
                of this Agreement (including but not limited to, copyrights, patent,
                know-how, commercial secrets and others), no matter whether it is
                developed by Party A or by Party B based on Party A’s intellectual
                property right.

            

    

    

    

    
      	
              2.

            	
              Payment
                for the technical consultation and service(“Consulting
                Fees”)

            

    

    

    
      	 	
              2.1

            	
              The
                both parties agree that the consulting fees shall be paid per year
                in
                accordance with the consulting and service actually provided by Party
                A.
                

            

    

    

    
      	 	
              2.2

            	
              Except
                for the Consulting Fees mentioned above, Party B agrees to reimburse
                Party
                A for all necessary expenses in relation to performing this Agreement,
                including but not limited to, travelling expenses, fees payable to
                experts, printing fees and mail cost.

            

    

    

    
      	 	
              2.3

            	
              Except
                for the Consulting Fees, Party B agrees to reimburse Party A the
                tax,
                customs and other expenditures(income tax is not included) in relation
                to
                Party A’s performance of this Agreement by Party A.
                

            

    

    

    
      	 	
              2.4

            	
              Party
                B shall provide Party A with a report in relation to Consulting Fees
                (“Consulting
                Fees Report”)
                in accordance with this Agreement within three (3) business days
                after
                each finacial year, and Party B shall remit the amount in RMB to
                the bank
                account designated by Party A within two(2) working days after delivering
                the Consulting Fees Report. In case that Party B fails to pay Consulting
                Fees and other necessary expenses in accordance with this Agreement,
                Party
                B shall pay Party A late fee based on a 12% annual interest (compound
                interest) from the date of such
                default.

            

    

    

    
      	 	
              2.5

            	
              Party
                B shall open separate bank account for the Consulting Fees under
                this
                Agreement. Party A is entitled to appoint its employee or PRC accountant
                or international accountant to review or audit the account books
                in
                relation to the consulting service from time to time. The fees payable
                to
                the accountant shall be paid by Party A itself. Party B shall provide
                any
                and all documents, account books, records, materials and information,
                and
                any convenience and assistance to the person designated by Party
                A or
                accountant appointed by Party A may deem necessary. The auditing
                report
                issued by Party A’s employee should be final and conclusive unless Party B
                give written objection within seven (7) days after receiving such
                report.
                The report issued by the accountant shall be final and conclusive.
                Party A
                is entitled to serve written payment notice to Party B at any time
                after
                receiving the audit report according to the consulting fee confirmed
                by
                the audit report. Party B shall pay within seven (7) days after receiving
                the notice in accordance with Article
                2.4.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.6

            	
              All
                payment payable by Party B to Party A shall have subtracted from
                tax, bank
                handing charge or any other expenses.

            

    

    

    
      	
              3.

            	
              Representations
                and Warranties

            

    

    

    
      	
            	3.1	
              Representations
                and Warranties of Party A

            

    

     

    Party
      A
      hereby the represents and warrants as follows:

     

    
      	 	
              3.2.1

            	
              It
                has the power to enter into and perform this Agreement in accordance
                with
                its constitutional documents and business scope, and has taken all
                necessary action to get authorization, consent and approval from
                third
                party and/or government authorities, and will not conflict with any
                agreement or laws binding on it.

            

    

     

    
      	 	
              3.2.2

            	
              Upon
                signing of this Agreement, this Agreement shall constitute a legally
                binding document on Party A and may be enforceable in accordance
                therewith. 

            

    

     

    
      	
            	3.2	
              Representations
                and Warranties of Party B

            

    

     

    Party
      B
      hereby the represents and warrants as follows:

     

    
      	 	
              3.2.1

            	
              Party
                B is a company duly registered and valid 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 constitutional documents within its business scope, and has taken
                all
                necessary action to obtain all consents and approval to execute and
                perform this Agreement, and do not and will not result in any violation
                of
                enforceable or effective laws or contractual limitations.
                

            

    

     

    
      	 	
              3.2.3

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

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              Confidentiality
                

            

    

    

    
      	 	
              4.1

            	
              Party
                B agrees to use all reasonable endeavours to protect and maintain
                the
                confidentiality of Party A’s confidential data and information
                acknowledged or received by Party B by accepting the exclusive echnical
                consulting and service from Party A (“Confidential
                Information”).
                Party B shall not disclose, grant or transfer to any third party
                of such
                Confidential Information. Upon termination of this Agreement, Party
                B
                shall, upon Party A’s request, return to Party A or destroy of any
                documents, material or software contained any of such Confidential
                Information, and shall completely delete any of such Confidential
                Information from any memory devices, and shall not use or permit
                any third
                party to use such Confidential Information.

            

    

     

    
      	 	
              4.2

            	
              The
                both Parties agree that the provisions of this 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 from any
                litigation, claim or compensation request in other methods in relation
                to
                the consulting and service 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 ten (10) years unless
                earlier terminated as set forth in this Agreement or the both Parties
                reach other written agreements containing articles of terminating
                this
                Agreement. 

            

    

     

    
      	 	
              6.2

            	
              This
                Agreement shall be terminated upon written confirmation from both
                Parties
                before termination. Otherwise this agreement shall be extended
                automatically, the exetened term shall be ten (10) years.
                

            

    

     

    
      	
              7.

            	
              Termination
                of the Agreement

            

    

    

    
      	 	
              7.1

            	
              The
                Agreement shall extended automatically upon the expire date of this
                Agreement unless it is terminated in accordance with this
                Agreement.

            

    

    

    
      	 	
              7.2

            	
              During
                the term of this Agreement, Party B may not terminate this Agreement
                except in the case of gross negligence, fraud action, or other illegal
                action or bankruptcy of Party A. Notwithstanding the above, Party
                A may
                terminate this Agreement with a written notice to Party B thirty
                (30) days
                before suchc termination. 

            

    

    

    
      	 	
              7.3

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

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              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 friendly
                consultation. In case no settlement can be reached through consultation,
                each Party can submit such matter to China International Economic
                and
                Trade Arbitration Committee for arbitration according to the current
                effective arbitration rules of its. The arbitration shall be held
                in
                Beijing. The arbitration proceedings shall be conducted in Chinese.
                The
                arbitration award shall be final and binding upon the Parties.
                 

            

    

     

    
      	
              9.

            	
              Force
                Majeure

            

    

    

    
      	 	
              9.1

            	
              Force
                Majeure Event (“Event”)
                means any event which is out of control of each party, and which
                is
                unavoidable or insurmountable even the party affected by such event
                has
                paid reasonable attention to it. The Event shall include, but not
                limited
                to, government actions, nature disaster, fire, explosion, typhoons,
                floods, earthquakes, tide, lightning or war. However, any lack of
                credit,
                assets or financing shall not be deemed as Event. The party claiming
                the
                occurrence of Event shall provide the other party with the steps
                of
                fulfilling the obligations of this Agreement.

            

    

    

    
      	 	
              9.2

            	
              If
                the fulfillment of this Agreement is delayed or blocked due to the
                Event
                defined in the above, the party affected by such an Event shall free
                from
                any obligation to the extent of delay or holdback. The party affected
                by
                such an Event shall make proper measures to reduce or diminish the
                effect
                from such Event, and shall do its endeavour to recover capacity to
                performing the obligations delayed. The both parties agree to try
                its best
                to recover performance of this Agreement upon elimination of such
                Event.

            

    

    

    
      	
              10.

            	
              Notices

            

    

    

    
      	 	
              10.1

            	
              Any
                notice to which is given by the both Parties hereto for the purpose
                of
                performing the rights and obligations hereunder shall be in writing.
                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 including facsimile and telex from time to time.
                Written method includes fax and telefax.

            

    

     

    
      	
              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 by Party
                A.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              12.

            	
              Severability

            

    

     

    
      	 	
              12.1

            	
              If
                any of the terms of this Agreement is invalid, illegal or unenforceable
                due to incompliance with laws, the validity and enforceability of
                the
                other terms hereof shall nevertheless remain
                unaffected.

            

    

     

    
      	
              13.

            	
              Amendments
                and Supplement

            

    

     

    
      	 	
              13.1

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

            

    

     

    
      	
              14.

            	
              Governing
                Law and Languages

            

    

     

    
      	 	
              14.1

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

            

    

     

    
      	 	
              14.2

            	
              This
                Agreement is executed both in Chinese and English with two copies
                for each
                language. The Chinese version will prevail in the event of any
                inconsistency between the English and any Chinese translations
                thereof.

            

    

     

    [THIS
      SPACE IS INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      both Parties have its authorized representative executed this Agreement on
      the
      date first above written.

    

    Party
      A: /s/ Beijing Huate Xingye Keji Co., Ltd.

    Legal
      Representative (Signature):
      Du
      Guangwen

    

    Party
      B: /s/ Dalian
      Winland International Shipping Agency Co., Ltd.

    Legal
      Representative (Signature):
      Xue
      Ying

     

    
      
        
        

      

      
        7

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