Document:

AGENCY AGREEMENT

 

This Agency Agreement (the “Agreement”)
is entered into as of this 8th day of April, 2013 (the “Effective Date”), by and between QuantumSphere, Inc., a corporation
organized under the laws of the State of California, USA (“QSI”), on the one hand, and Beijing LuckyStar Co. Ltd.,
an entity organized under the laws of the People’s Republic of China (“BLS”), on the other hand. QSI and BLS
are collectively referred to herein as the “Parties.”

 

RECITALS

 

WHEREAS, QSI is a leading
manufacturer of nanocatalysts with multiple thermo-catalytic and electro-catalytic applications, including nano-Fe catalysts for
the ammonia production industry;

 

WHEREAS, BLS is
a professional and reputed company of consulting, marketing, outsourcing, import/export, and sales in Hi-tech chemical and agrochemical
products and technology; 

 

WHEREAS, BLS desires
to serve as an agent of QSI for the purpose of introducing QSI-Nano-Fe catalysts for use in commercial ammonia plants in the People’s
Republic of China (the “Territory”) on the terms set forth herein; and

 

WHEREAS, QSI desires
to retain BLS to serve as its agent in the Territory for the purposes of (i) introducing QSI-Nano-Fe catalysts for sales and marketing
purposes to commercial ammonia plant operators, and (ii) validation of QSI-Nano-Fe catalysts in one or more commercial ammonia
plants.

 

NOW THEREFORE, in consideration
of the mutual covenants and premises, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties agree
as follows:

 

1.          BLS
will provide not less than six (6) commercial iron catalysts commonly used by commercial ammonia plants in the Territory. To this
end, BLS shall confer with prospective commercial ammonia plant customers to confirm their respective preferred commercial iron
catalysts either presently utilized, or desired to be utilized upon refurbishment.

 

2.          With
respect to the commercial iron catalysts to be provided to QSI, each shall consist of (i) not less than 50 grams of materials,
and (ii) a Material Safety Data Sheet in a customary form.

 

3.          QSI
will test the commercial iron catalysts provided by BLS in its facility in Santa Ana, California USA, utilizing the testing methodologies
developed and utilized over the last three (3) years. QSI will provide the detailed test results (Measuring the delta between QSI-Nano
coated vs. uncoated catalysts) to BLS following completion thereof, and will have a technical conference call with BLS staff to
review the test results of each of the commercial iron catalysts.

 

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4.          In
addition to the items mentioned in Section 3 above, QSI shall furnish technical assistance to assist BLS in carrying out its duties
under this Agreement by providing technical support, product brochures, samples, as well as speak to, and answer the questions
of, prospective customers of BLS upon request, etc.

 

5.          QSI
hereby initially appoints BLS as its agent for QSI’s products in the Territory for the express purpose of securing the placement,
or sale as the case may be, of QSI-Nano Fe catalysts in a single commercial ammonia plant. The foregoing may consist of utilization
of QSI-Nano-Fe catalysts in either (i) each of the ammonia reactor beds at the initial ammonia plant, or (ii) a slipstream reactor
bed at the initial ammonia plant. QSI personnel shall be granted access to the initial ammonia plant where QSI-Nano-Fe catalysts
are deployed and shall review, in-person, the production results with technical staff at the initial ammonia plant. Upon the conclusion
of a successful commercial validation (“Successful Commercial Validation”) of the QSI-Nano-Fe catalysts at the initial
commercial ammonia plant, this Agreement will become an exclusive Agency Agreement with respect to the Territory. Once exclusivity
is achieved it will remain in place for the Term and successive one (1) year terms provided the following occurs: BLS sells QSI
Nano-Fe catalysts to at least one (1) ammonia plant, for complete refurbishment, each contractual year. In the event the foregoing
benchmark is not met, the Agreement will continue for the remainder of the Term on a non-exclusive basis. In addition, the Parties
will discuss additional regions around the world where BLS has existing relationships with ammonia plant owners and operators.
A Successful Commercial Validation shall mean a measurable positive delta (i.e., ammonia production yield increase) between the
QSI-Nano coated vs. the uncoated commercial catalysts previously used by the initial ammonia plant.

 

6.          During
the term hereof, QSI hereby warrants and represents to BLS that QSI will not circumvent BLS and will not directly contact the customers
in the Territory identified in Exhibit A hereto, which may be augmented from time to time. If QSI is contacted by any customer
within the Territory, QSI will not negotiate with the customer to reach a deal directly or indirectly, and any such customer shall
be informed that all discussions should be had directly with BLS for follow up purposes. QSI and BLS will mutually agree upon pricing
parameters for each respective ammonia plant prior to pricing being discussed with any ammonia plant operator(s).

 

7.          BLS
shall provide its own office of 5A standard at its own cost, and shall provide and be responsible for procuring and maintaining
phone, fax, copier, administrative personnel and other customary office equipment and staff. It is understood that QSI and BLS
shall keep in close communication at all times.

 

8.          BLS
agrees that it will apply all necessary resources to fulfill its obligations under this Agreement and to solicit customers in the
Territory. It is understood and agreed that, immediately following the Effective Date, BLS will assign an experienced employee
with at least ten (10) years’ experience in working for, or dealing with, the chemical industry and government associations
in the Territory. The BLS employee shall operate in QSI’s best interests in the Territory at all times. The BLS employee
assigned to manage QSI affairs in China shall be fluent in English (both spoken and written), and all communications between QSI
and BLS shall be in English. QSI will be responsible for training the BLS employee in the USA if it is deemed necessary by the
Parties. The BLS employee shall communicate with QSI personnel not less than a weekly basis and shall provide a monthly written
report outlining the then existing sales pipeline in the Territory (“Sales Pipeline”). The Sales Pipeline shall include
a twelve-month rolling forecast of prospective placements of QSI-Nano-Fe in an effort to manage QSI-Nano-Fe inventory requirements,
along with the associated coating of the applicable commercial iron catalysts for deployment at the initial ammonia plant. Communications
between the BLS employee and QSI personnel shall occur during the hours of 7:00am – 9:00pm Pacific Time.

 

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9.          BLS
shall be responsible for all the marketing activities in the Territory, including but not limited to: distributing flyers, advertising,
participating in related conferences, visiting clients, reception work, etc.

 

10.         If
customers solicited by BLS require a visit to QSI, QSI will provide necessary assistance for such visits by issuing invitation
letters, arranging hotel bookings and transportation, etc. QSI shall be responsible for providing high standard reception to the
customers.

 

11.         Upon
execution of this agreement, QSI shall pay BLS the sum of Three Thousand Dollars (US $3,000) per month, in arrears, to be applied
against office expenses, and activity fees (e.g., travel) in China directly relating to the subject matter of this Agreement. Upon
the completion of the initial Successful Commercial Validation and/or receipt of the initial ammonia plant purchase order, QSI
shall commence paying BLS the sum of Six Thousand Dollars (US $6,000) per month. The foregoing monthly payment shall be in addition
to and separate and apart from, any payments of commission BLS receives pursuant to the terms of this Agreement.

 

12.         The
Parties specifically understand and agree that BLS shall receive commissions on all sales it makes in the Territory. The commission
on the sale for QSI’s products shall be 12% of the contract price. For the avoidance of doubt, commissions are only earned
upon receipt of revenues by QSI. To this end, commissions shall be due and payable net 30 from the date of receipt of payment by
QSI. In addition, Representative shall be reimbursed for reasonable travel and other expenses outside of the territory which have
been approved by QSI in advance.

 

13.         This
Agreement shall be effective for a period of five (5) years (the “Term”) from the date hereof, subject to termination
by either party in the event a Successful Commercial Validation has not been achieved within eighteen (18) months of the Effective
Date. This Agreement is freely assignable by QSI upon a “Change of Control”, and no consent of BLS shall be required
in connection therewith. A Change of “Change in Control” shall mean the occurrence of any of the following events:
(A) a sale of all or substantially all of the assets of either of the Parties; (B) a liquidation or dissolution of either
of the Parties; (C) a merger or consolidation in which the applicable party hereto is not the surviving corporation, unless
the stockholders of such party immediately prior to such consolidation, merger or reorganization, own more than 50% of the post-merger
company’s voting power immediately after such merger or consolidation; and (D) any consolidation or merger of either of the
parties, or any other corporate reorganization, in which the stockholders of the applicable party hereto immediately prior to such
consolidation, merger or reorganization, own less than 50% of the Company’s voting power immediately after such consolidation,
merger or reorganization; provided, however, that a “Change in Control” shall not include any transaction the
sole purpose of which is to change the domicile of the applicable party’s incorporation or formation. This Agreement shall
be automatically renewable for successive one (1) year terms following the conclusion of the Term, provided that BLS sells QSI
Nano-Fe catalysts to at least one (1) ammonia plant, for complete refurbishment, each contractual year . If either party shall
be in breach of any of its obligations under this Agreement and has not remedied such breach within thirty (30) days after receipt
of written notice from the other party, then such other party shall have the right to terminate this Agreement forthwith by notice
in writing. In the event of cancellation and termination of this Agreement, regardless of reason, neither party shall be obligated
to indemnify the other by reason of such cancellation and termination, except each party shall remain obligated in accordance herewith
for all events prior to such cancellation or termination.

 

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14.         If
during the performance of the Agreement, any dispute arises in connection with the Agreement, it shall be settled by both parties
through consultation in the spirit of friendliness. In the event the parties cannot, after a good faith effort, resolve a dispute,
then in such event, the Parties shall submit the dispute for binding arbitration in Orange County, California USA (the “Arbitration”).
The Arbitration shall be conducted pursuant to the rules of the International Centre for Dispute Resolution. 

 

15.         This
Agreement shall be governed by the laws of the State of California, USA.

 

16.         This
Agreement may be executed in multiple counterparts, each of which shall be considered an original, and all of which when taken
together shall be considered on and the same agreement.

 

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IN WITNESS WHEREOF, the Parties
have executed this Agreement as of the Effective Date.

 

	QUANTUMSPHERE, INC.	 
	 	 	 
	By:	/s/ Kevin D. Maloney	 
	 	Kevin D. Maloney	 
	 	Chief Executive Officer & President	 
	 	 
	BEIJING LUCKYSTAR CO., LTD.	 
	 	 	 
	By:	/s/ Fagen Li	 
	 	Fagen Li	 
	 	Co-Founder & Chairman	 

 

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EXHIBIT A

 

PROPOSED CUSTOMERSADDENDUM NO. 1 TO AGENCY AGREEMENT

 

This Addendum No. 1
(the “Addendum”) to that certain Agency Agreement dated April 8, 2013 (the “Agency Agreement”), by and
between QuantumSphere, Inc., a corporation organized under the laws of the State of California, USA (“QSI”), on the
one hand, and Beijing LuckyStar Co. Ltd., an entity organized under the laws of the People’s Republic of China (“BLS”),
on the other hand, is dated as of December 23rd, 2013 (the “Effective Date”). QSI and BLS are collectively referred
to herein as the “Parties”.

 

1.          All
capitalized terms not otherwise defined herein shall the meaning ascribed to such terms in the Agency Agreement.

 

2.          QSI
hereby appoints BLS as its agent in the Territory, subject to the terms and conditions of the Agency Agreement, for the representation
of all other applicable QSI nano-catalysts that may be utilized for the enhancement of additional chemical production processes,
exclusive of ammonia production, including, but not limited to, QSI Nano-Ni, QSI Nano-Co, and QSI Nano-Cu, among others (collectively,
“Additional QSI Nano-Catalysts”).

 

3.          
BLS shall introduce one or more suitable chemical production operators in the Territory for the purpose of validation of each of
the Additional QSI Nano-Catalysts in a lab environment as well as in an industrial plant environment. 

 

4.          
For the Term of the Agency Agreement, BLS shall be exclusive to QSI and shall not serve as an agent of, or represent in any manner,
any provider of nano-catalysts in the Territory.

 

5.          For
the avoidance of doubt, the compensation provision provided by Section 12 of the Agency Agreement shall apply to each of the Additional
QSI Nano-Catalysts.

 

6.          All
other terms and conditions of the Agency Agreement shall remain in full force and effect and shall apply in each case to the Additional
QSI Nano-Catalysts.

 

IN WITNESS WHEREOF, the Parties have executed
this Addendum as of the Effective Date.

 

	QUANTUMSPHERE, INC.	 
	 	 	 
	By:	/s/ Kevin D. Maloney	 
	 	Kevin D. Maloney	 
	 	CEO & President	 
	 	 	 
	BEIJING LUCKYSTAR CO. LTD.	 
	 	 	 
	By:	/s/ Fagen Li	 
	 	Fagen Li	 
	 	Co-Founder & Chairman

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