Management Entrustment Agreement
This
Agreement is made and entered into on July
25,
2008 in
Fuzhou
City, Fujian Province, P.R.C., by and between the following
parties:
Party
A:
Sanming Huajian Bio-Engineering Co., Ltd.
Registered
business address: Jikou District, Sanyuan District Industrial Development Park,
Sanming City.
Party
B:
Green Planet Bioengineering Co., Ltd.
Registered
business address: #000 xx Xxxxxx Xxxxxxx, #000, Xxxx Ye Nan Road, Sanming
City.
WHEREAS:
1.
Party
A is an enterprise registered in Sanming City, Fujian Province, and legally
existing to date. The number of its business license is
350400100007408.
2.
Party
B is a Wholly Foreign-owned Enterprise registered in Sanming, and legally
existing to date. The number of its business license is
350400400003046.
3.
In
order to let Party B have actual control of Party A and realize the
consolidation of financial statements, Party A intends to irrevocably entrust
to
Party B for its management the right of operation management of Party A and
the
responsibilities and authorities of the investor and the executive director
of
Party A.
4.
Party
B agrees to accept the entrustment of Party A, and to exercise the right of
operation management of Party A and the responsibilities and authorities of
the
investor and the executive director of Party A.
5.
Party
A has obtained the approval of its investor to enter into this Agreement. The
investor also has issued the commitment letter of competing industry
prohibition.
NOW,
THEREFORE, through friendly consultation, under the principle of equality and
mutual benefits, in accordance with the relevant laws and regulations of the
People’s Republic of China, the parties agree to enter into this Agreement and
to be bound with the terms and conditions as follows:
Article
1
Entrusted Operation
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1.1
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Party
A agrees to irrevocably entrust the right of operation management
of Party
A and the responsibilities and authorities of Party A’s investor and the
executive director to Party B in accordance with the terms and conditions
of this Agreement. Party B agrees to exercise the aforesaid rights
and
responsibilities in accordance with the terms and conditions of this
Agreement.
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1.2
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The
term of the entrusted operation is from the effective date of this
Agreement to the earliest date of the following:
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1)
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The
termination date of Party A’s business;
or
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2)
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The
termination date of the entrusted operation as agreed upon by the
parties
under this Agreement; or
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3)
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The
date on which Party B possesses more than 51% of Party A’s
shares.
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1.3
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The
purpose of the entrusted operation is: Party B shall be in charge
of the
normal business operations of Party A and perform the responsibilities
and
rights of Party A’s investor and the executive director, and Party A shall
pay its profit (if any) to Party B and Party B shall be responsible
to
Party A’s loss (if any). During the term of the entrusted operation, Party
B, as the entrusted manager, shall provide full management to Party
A’s
operations.
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1.4
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The
contents of the entrusted operation shall include but not be limited
to
the following:
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1)
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Party
B shall be in charge of all aspects of Party A’s operations; nominate and
replace the members of Party A’s executive director, engage Party A’s
management staff and decide their compensation.
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2)
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Party
B shall manage and control all the funds of Party A. The account
of Party
A shall be managed and decided solely by Party B. The seals and signatures
for such account shall be the seals and signatures of the personnel
appointed and confirmed by Party B. All the cash of Party A shall
be kept
in this entrusted account shall be handled through this account,
including
but not limited to receipt of all Party A’s business income, current
working capital, recovered account receivables, etc., and the payment
of
all account payables and operation expenses, employee salaries and
asset
purchases, etc.
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3)
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All
the matters of Party A, including internal financial management,
day-to-day operation, external contact execution and performance,
tax
filing and payment, change of rights and personnel, etc., shall be
controlled and managed by Party B in all
aspects.
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4)
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Party
B shall enjoy all the other responsibilities and rights enjoyed by
Party
A’s investor in accordance with the Company Law and the articles of
association of Party A, including but not limited to the
following:
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a. Deciding
Party A’s operation principles and investment plan;
b. Nominating
the executive director or the supervisor;
c. Discussing
and approving the report of the executive director or the
supervisor;
d. Discussing
and approving the annual financial budget and settlement plan;
e. Discussing
and approving the profit distribution plan and the loss compensation
plan;
f. Resolving
on the increase or decrease of the registered capital;
g. Resolving
on the issuance of the corporate bond;
h. Resolving
on the matters including merger, division, change of corporate form, dissolution
and liquidation of the company;
i. Amending
the articles of association;
j. Other
responsibilities and rights provided by Party A’s articles of association.
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5)
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Party
B enjoys all the other responsibilities and rights enjoyed by Party
A’s
executive director in accordance with the Company Law and the articles
of
association of Party A, including but not limited to the
following:
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a. Executing
the resolution of the investor;
b. Deciding
the company’s operation plan and investment scheme;
c. Composing
the annual financial budget and settlement plan;
d. Formulating
the profit distribution plan and the loss compensation plan;
e. Formulating
the plans regarding to the increase or decrease of the registered capital and
the issuance of the corporate bond;
f. Formulating
the plans regarding to the matters including merger, division, change of
corporate form and dissolution of the company;
g. Deciding
on the establishment of the internal management structure of the
company;
h. Formulating
the basic rules and regulations of the company;
i. Representing
the company to sign relative documents;
j. Other
responsibilities and rights provided by Party A’s articles of association
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6)
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The
said entrustment is irrevocable and shall not be withdrawn, unless
the
Agreement is terminated.
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1.5
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The
Fee of Entrusted Operation: For the performance of the entrusted
matters
provided under this Agreement, Party A shall pay an entrustment fee
to
Party B, which shall be Party A’s total profit (if any) after deduction of
necessary expenses. Party A shall transfer the payment, which is
obtained
by selling its equipment, inventories, raw materials, components,
accounts
receivable and by renting its real estate, land use right, to Party
B as
the entrustment fee. If the net amount is zero or negative after
the
aforesaid calculation, Party A shall not pay any entrustment fee,
and the
loss of the given month shall be deducted in the following months’
entrustment fee. Party A and Party B shall calculate and settle each
month’s entrustment fee payable by Party A within 10 days after the end
of
that month.
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1.6
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The
Assumption of the Entrustment Risk: Party B shall assume all the
operation
risks in association with the management of Party A entrusted to
it. Party
B shall be responsible for any loss incurred to Party A’s operation. If
Party A’s cash is not enough to pay its debt, Party B is liable to pay the
debt; if the loss leads to a net asset balance of less than the registered
capital, Party B shall be liable to make up for the
deficiency.
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Article
2
Rights and Obligations of the Parties
2.1 During
the term of the entrusted operation, the rights and obligations of Party A
shall
include:
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1)
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After
the execution of this Agreement, the management of Party A shall
be handed
over to Party B. Party A’s executive director shall, within 5 days after
the effective date of this Agreement, deliver Party A’s seals and
financial materials (including but not limited to balance sheet,
profit
and loss statement, cash flow statement and any attachments, relevant
right certificates and other proprietary and operation documents)
to Party
B to ensure that Party B could exercise its operation management
rights in
all aspects after taking over the management of Party A and could
set up
financial records accordingly;
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2)
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During
the term of the entrusted operation, without Party B’s consent, Party A
and its investor and executive director shall not make any decision
on
Party A’s operations, and they shall not intervene with Party B’s
entrusted management activities in any
form;
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3)
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During
the term of the entrusted operation, Party A’s executive director shall
have the obligation to cooperate with Party B in accordance with
Party B’s
request to ensure the stability and consistency of the
operation;
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4)
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To
entrust the authorities of the investor and the executive director
to
Party B;
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5)
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To
timely pay the entrustment fee to Party
B;
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6)
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Without
Party B’s consent, Party A shall not entrust any third party other than
Party B in any form to manage Party A’s
businesses;
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7)
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The
executive director and investor of Party A shall issue necessary
documents
for the purpose of accomplishing the management by Party
B;
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8)
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Party
A shall not unilaterally early terminate this Agreement for any
reason.
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9)
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Other
rights and obligations of Party A provided under this Agreement.
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2.2 During
the term of the entrusted operation, the rights and obligations of Party B
shall
include:
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1)
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Party
B shall enjoy independent and comprehensive management right over
Party
A’s operations;
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2)
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Party
B shall have the right to adjust the organizational structure and
the
personnel placement of Party A based on the needs of the
management;
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3)
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Party
B shall have the right to dispose of all the assets on the books
of Party
A on the execution day of this Agreement, and Party can B dispose
of any
of the aforesaid assets without any prior consent of Party
A;
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4)
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Party
B shall be entitled to all of the Party A’s income after deducting
necessary expenses.
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5)
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Party
B shall has the right to invest in the projects of new products and
technologies of Party A, also enjoys the profits from these projects
in
the future.
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6)
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Party
B shall take over of Party A in a timely
manner;
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7)
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Party
B shall carry out all the responsibilities and rights entrusted to
it
under this Agreement in good faith and with honesty and trustworthiness,
and shall pay reasonable attention to the entrusted matters and notify
Party A timely of relevant matters;
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8)
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Party
B shall act in good faith and consult with Party A in regards to
the
handling of matters not covered by this
Agreement;
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9)
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Other
obligations shall be performed by Party B under this Agreement.
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Article
3
Warranties and Representations
Each
party shall warrant and represent to the other party, on the execution day
of
this Agreement, that:
1) Each
party shall have the right to enter into this Agreement, and the ability to
perform this Agreement;
2) In
order
to execute and perform this Agreement, each party has gone through the necessary
internal decision-making procedures and obtained the approval;
3) Each
party has duly authorized its representative to execute this
Agreement;
4) Each
party shall not have any reason of its own that will encumber the effectiveness
of this Agreement from the effective date and become binding on such
party;
5) The
execution of this Agreement and the performance of the obligations hereunder
will NOT:
a) violate
the business license, articles of association or any other similar documents
of
that party;
b) violate
the laws and regulations of P.R.C., or the government authorization or
permit;
c) violate
any other contracts or agreements to which that party is a party (or is bound),
or lead to that party’s breach of contract under such contracts or
agreements.
Article
4
Effect of the Agreement
This
Agreement shall be valid upon the subscription of both parties’ legal
representatives or duly authorized representatives and the affixture of both
parties’ corporate seals.
Article
5
Liability of Breach of the Agreement
After
the
effectiveness of this Agreement, apart from the situation described in Article
6
of this Agreement, either party’s violation of any provisions under this
Agreement shall constitute a breach of this Agreement and thus be liable to
compensate the non-breaching party for any damages that may arise
thereof.
Article
6
Force Majeure
Either
party’s failure to perform the obligations or part of the obligations of this
Agreement due to a force majeure event shall not be deemed as a breach of the
agreement; however, the non-performing party shall timely provide effective
evidence of the force majeure event to the other party, and the parties shall
discuss a settlement plan through consultation.
Article
7
The Governing Law
The
execution, effectiveness, interpretation, performance and dispute resolution
of
this Agreement shall be governed by the laws and regulations of
China.
Article
8
Dispute Resolution
Any
dispute arising under this Agreement shall be first settled by the parties
through friendly consultation. If the dispute cannot be settled through
consultation, either party is entitled to submit the dispute to the People’s
Court that has jurisdiction over the dispute.
Article
9
Confidentiality
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9.1
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The
parties agree and shall cause their relevant personnel to keep strict
confidence of all the terms and conditions of this Agreement and
all the
matters of the entrusted operation that have access to. They shall
not
disclose the aforesaid information to any third party unless it is
required by the explicit provision of law, or the instruction of
judicial
or governmental agencies or with consent of the other party, otherwise,
the disclosing party shall bear the relevant legal
consequences.
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9.2
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The
confidentiality obligation of the parties shall survive the termination
of
this Agreement.
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Article
10 Severability of the Clauses
10.1
If
any clause of this Agreement is invalidated or non-enforceable due to the
provisions of laws or regulations, this clause is invalid while all other
clauses shall remain in full force and effect and binding upon both
parties.
10.2
In
the event the aforesaid situation occurs, the parties shall, through friendly
consultation, agree upon a supplemental clause to replace the invalid clause
at
their earliest possible time.
Article
11 Non-waiver of Rights
11.1
If
one party fails or delays to exercise a certain right provided under this
Agreement, such failure or delay shall not constitute the waiver of such right
by that party.
11.2
If
one party fails to require the other party to perform a certain obligation
provided under this Agreement, such failure shall not constitute the waiver
by
that party of the right to require the other party to perform at a later
time.
11.3
If
one party violates any clause of this Agreement and obtains a waiver of
liability from the non-violating party, such waiver shall not constitute the
waiver of liability by the non-violation party over the violations by the other
party at a later time or of other clauses of this Agreement.
Article
12 No Transfer
Unless
otherwise provided in this Agreement, without the prior written consent of
the
other party, one party shall not transfer or entrust this Agreement or any
right
or obligation under this Agreement to a third party, nor shall one party provide
any guarantee to a third party or do other similar things.
Article
13 Miscellaneous
13.1
Any
supplemental agreements entered into by the parties after the effective date
of
this Agreement shall be an effective part of this Agreement and have the same
legal effect as this Agreement. If there is any discrepancy between the
supplemental agreement and this Agreement, the supplemental agreement shall
prevail.
13.2
This
Agreement is written in Chinese and English. This Agreement is executed in
six
(6) official copies of each language, each party shall have two official copies
of each language and the remaining shall be retained for the government
procedure purposes. In the event of any conflict between the two versions,
the
Chinese version shall prevail.
13.3
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on this
date first above written.
[NO
CONTEXT BELOW, SIGNATURE PAGE ONLY]
Party
A:
Sanming Huajian Bio-Engineering Co., Ltd. (Seal)
Legal
representative: (Signature)
Party
B:
Green Planet Bioengineering Co., Ltd. (Seal)
Authorized
representative: (Signature)
