Entrusted Management Agreement Among Yan Tinghe, Shandong Yong Chun Tang Bioengineering Co. Ltd. and Shandong Spring Pharmaceutical Co., Ltd., Effective as of April 1, 2008
Among
Yan
Tinghe,
Shandong
Xxxx Xxxx Xxxx Bioengineering Co. Ltd.
and
Shandong
Spring Pharmaceutical Co., Ltd.,
Effective
as of April 1, 2008
This Entrusted Management Agreement
(the "Agreement") is entered into on the 4th day
of April, 2008 in Shandong, China by:
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Party
A:
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1.
Yan Tinghe, a citizen of PRC with ID Card number 210105681115317, who owns
100% of Shandong Xxxx Xxxx Tang Bioengineering Co. Ltd.;
and
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2.
Shandong Xxxx Xxxx Xxxx Bioengineering Co. Ltd., an 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 370831228000622, and the legal
registered address is Gucheng West Road Sihe Office, Sishui County,
Shandong
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and
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Party
B:
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Shandong
Spring Pharmaceutical Co., Ltd. is a wholly-foreign owned enterprise
registered in Shandong, PRC, the registration number of its legal and
valid Business License is 0174939,
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Whereas:
1. Under
this Agreement, Shandong Xxxx Xxxx Tang Bioengineering Co. Ltd. and Yan Tinghe
have acted collectively as one party to this Agreement;
2. Party
A desires to entrust Shandong Xxxx Xxxx Xxxx Bioengineering Co. Ltd. to Party B
to manage its assets and debts;
3. Party
B agrees to accept such entrustment and to manage Shandong Xxxx Xxxx Tang
Bioengineering Co. Ltd. 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.
Article
1. Entrusted
Management
1.1 Party
A agrees to entrust the management of Shandong Xxxx Xxxx Xxxx Bioengineering Co.
Ltd. to Party B pursuant to the terms and conditions of this Agreement. Party B
agrees to manage Shandong Xxxx Xxxx Tang Bioengineering Co. Ltd. in accordance
with the terms and conditions of this Agreement.
1.2 The
term of this Entrusted Management Agreement shall be from April 1, 2008 (the
“Effective Date” of this Agreement) to the earlier of the
following:
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(1)
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the
winding up of Shandong Xxxx Xxxx Xxxx Bioengineering Co. Ltd.,
or
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(2)
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the
termination date of this Entrusted Management Agreement to be determined
by the Parties hereto, or
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(3)
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the
date on which Party B completes the acquisition of Shandong Xxxx Xxxx Tang
Bioengineering Co. Ltd.
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1.3 During
the entrusted period, Party B shall be fully responsible for the management of
Shandong Xxxx Xxxx Xxxx Bioengineering Co., Ltd. The management service includes
without limitation the following:
(1) Party B’s rights
with respect to the operation of Shandong Xxxx Xxxx Tang Bioengineering Co. Ltd.
shall include the right to appoint and terminate members of the Board of
Directors and the right to hire managerial and administrative personnel
etc. Party A or its voting proxy shall make a shareholder's
resolution and a board of directors' resolution based on the decision of Party
B's Board of Directors.
(2) Party
B has the right to manage and control all assets of Party A. Shandong
Xxxx Xxxx Xxxx Bioengineering Co., Ltd. shall open an entrusted account or
designate an existing account as an entrusted account. Party B has the full
right to decide the use of the funds in the entrusted account. The signer of the
account shall be appointed or confirmed by Party B. All of the funds of Shandong
Xxxx Xxxx Tang Bioengineering Co., Ltd. shall be kept in this account, including
but not limited to its existing working capital and purchase price received from
selling its inventory to Party B. 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. All revenues from its
operation shall be kept in this account.
(3) Party
B shall have the full right to control and administer the financial affairs and
daily operation of Shandong Xxxx Xxxx Xxxx Bioengineering Co., Ltd., such as
entering into and performance of contracts, and payment of taxes,
etc.
(4) If
Shandong Xxxx Xxxx Tang Bioengineering Co., Ltd. requires additional funds to
maintain its operations, Party B shall provide such additional funds through a
bank loan or other resources and Party A shall provide necessary assistance in
obtaining these funds.
1.4 In
exchange for the services of Party B pursuant to this Entrusted Management
Agreement, Party A shall pay an entrusted management fee to Party
B. The entrusted management fee shall equal Shandong Xxxx Xxxx
Xxxx Bioengineering Co., Ltd's net profits, being the monthly revenues after
deduction of operating costs, expenses and taxes. If the net profit is zero,
Shandong Xxxx Xxxx Tang Bioengineering Co., Ltd. is not required to pay the
entrusted management fee; if Shandong Xxxx Xxxx Xxxx Bioengineering Co., Ltd.
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.
1.5 Party
B shall assume all operation risks out of the entrusted management of Shandong
Xxxx Xxxx Tang Bioengineering Co., Ltd. and bear all losses of Shandong Xxxx
Xxxx Xxxx Bioengineering Co., Ltd. If Shandong Xxxx Xxxx Tang
Bioengineering Co., Ltd. does not have sufficient funds to repay its debts,
Party B is responsible for paying off these debts on behalf of Shandong Xxxx
Xxxx Xxxx Bioengineering Co., Ltd. If Shandong Xxxx Xxxx Tang
Bioengineering Co., Ltd's net assets are lower than its registered capital,
Party B is responsible for funding the deficit.
Article 2. Rights
and Obligations of the Parties
2.1 During
the term of this Agreement, Party A's rights and obligations
include:
(1) to
hand over Shandong Xxxx Xxxx Xxxx Bioengineering Co., Ltd. to Party B for
entrusted management as of the effective date of this Agreement and to hand over
all of business materials together with Business License and corporate seal of
Shandong Xxxx Xxxx Tang Bioengineering Co., Ltd. to Party B;
(2) Party
A has no right to make any decision regarding Shandong Xxxx Xxxx Xxxx
Bioengineering Co., Ltd's operations without the consent of Party
B;
(3)
to have the right to know the business conditions of Shandong Xxxx Xxxx Tang
Bioengineering Co., Ltd. at any time and provide proposals;
(4) to
assist Party B in carrying out the entrusted management according to Party B's
requirement;
(5) to
perform its obligations pursuant to the Purchase Option and Cooperation
Agreement by and between the Parties, and not to violate the said
agreement;
(6) not
to interfere with Party B's management over Shandong Xxxx Xxxx Xxxx
Bioengineering Co., Ltd. in any form by making use of shareholder's
power;
(7) not
to entrust or grant their shareholders' rights in Shandong Xxxx Xxxx Xxxx
Bioengineering Co., Ltd. to a third party other than Party B without Party B's
consent;
(8) not
to otherwise entrust any third party other than Party B to manage Shandong Xxxx
Xxxx Tang Bioengineering Co., Ltd. in any form without Party B's consent;
and
(9) not
to terminate this Agreement unilaterally with any reason.
2.2 During
the term of this Agreement, Party B's rights and obligations
include:
(1) to
enjoy independent and full right to manage Shandong Xxxx Xxxx Xxxx
Bioengineering Co., Ltd.;
(2) to
enjoy the right to dispose of all assets of Shandong Xxxx Xxxx Tang
Bioengineering Co., Ltd.;
(3) to
enjoy profits and bear losses arising from Shandong Xxxx Xxxx Xxxx
Bioengineering Co., Ltd. operations during the period of entrusted
management;
(4) to
appoint all directors of Shandong Xxxx Xxxx Tang Bioengineering Co.,
Ltd.;
(5) to
appoint general manager, deputy general manager, financial manager and other
senior managerial personnel of Shandong Xxxx Xxxx Xxxx Bioengineering Co.,
Ltd.;
(6) to
convene shareholders' meetings of Shandong Xxxx Xxxx Tang Bioengineering Co.,
Ltd. and sign resolutions of shareholders' meetings; and
(7) to
enjoy other rights and perform other obligations under the
Agreement.
Article
3. Representation and Warranties
The Parties hereby make the following
representations and warranties to each other as of the date of this Agreement
that:
(1) it
has the right to enter into the Agreement and the ability to perform the
same;
(2) the
execution and delivery of this Agreement by each party have been duly authorized
by all necessary corporate action;
(3) the
execution of this Agreement by the officer or representative of each party has
been duly authorized;
(4) each
party has no reasons that will prevent this Agreement from becoming a binding
and effective agreement between both parties after execution;
(5) the
execution and performance of the obligations under this Agreement will
not:
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(a)
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violate
any provision of the business license, articles of association or other
similar documents of its own;
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(b)
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violate
any provision of the laws and regulations of PRC or other governmental or
regulatory authority or approval;
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(c)
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violate
or result in a breach of any contract or agreement to which the party is a
party or by which it is bound.
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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.
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 Place of arbitration is Shandong Province. The
arbitration award shall be final and binding on both parties.
Article
9. Severability
9.1 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.
9.2. 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
10. Non-waiver of Rights
10.1 Any failure or
delay by any party in exercising its rights under this Agreement shall not
constitute a waiver of such right.
10.2 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.
10.3 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
11. 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 from
the other party.
Article 12.
Miscellaneous
12.1 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.
12.2 This Agreement is executed
by Chinese and English in duplicate, and in case of any conflict the Chinese
version shall prevail. Each of the original Chinese and English versions of this
Agreement shall be executed in 6 copies. Each party shall hold two
original of each version, and the rest shall be used for governmental
registration or other necessary approval purposes.
12.3 In witness hereof, the
Agreement is duly executed by the parties hereto on the date first written
above.
IN WITNESS WHEREOF, the parties have
executed this agreement.
Party
A:
/s/ Xxx
Xxxxxx
Xxx
Tinghe
Shandong
Xxxx Xxxx Tang Bioengineering Co., Ltd. (official seal)
By: /s/ Yan
Tinghe
Authorized
representative: Yan Tinghe
Party
B:
Shandong
Spring Pharmaceutical Co., Ltd. (official seal)
By: /s/ Yan
Tinghe
Authorized
representative: Yan Tinghe
