On 20 December 2022, YTO, on behalf of YTO Group, as the purchaser, and the First Tractor Company Limited, on behalf of the Group, as the supplier, entered into the Research and Development Services Agreement, pursuant to which the Group agreed to provide Research and Development Services to YTO Group. Parties are: (a) YTO, on behalf of YTO Group, as the purchaser; and (b) the First Tractor Company Limited, on behalf of the Group, as the supplier. Services to be provided: Pursuant to the Research and Development Services Agreement, the Group agreed to provide the Research and Development Services to YTO Group, including: (1) Product research and development: the research and development of agricultural machinery products (including harvesters and agricultural tools and other products) and the relevant production technologies; (2) Technological services: technological services in relation to the products of YTO Group; (3) Material testing services: metallic materials, inorganic materials, chemical materials and physical flaw detection; (4) Calibration services: calibration services provided for material weighing, product testing, technical training, procurement of calibration instrument, assessment of standard instrument, system management, and preparation and revision of calibration standards; and
(5) Calibration instrument testing services: services including verification, calibration, testing, maintenance and modification for the calibration instruments of YTO Group. Term: From 1 January 2023 to 31 December 2023. Payment Terms: The payment under the Research and Development Services Agreement shall be settled in cash and the payment terms shall be specified in each separate contract to be agreed by the parties in accordance with the Research and Development Services Agreement. Pricing Standard for the Transactions under the Research and Development Services Agreement: Under the Research and Development Services Agreement, the fee of the Research and Development Services shall be determined in the following order: (1) the price of non-connected transactions of similar business between the Group and third parties who are independent of the connected parties;
(2) the price which consists of the reasonable cost of services provided by the Group plus gross profit of comparable unconnected transactions in the same category (including but not limited to those which are the same as or similar to the contents, work period and intellectual property rights in respect of design, research and development or testing projects, etc.); or (3) in the event that the above prices are not available or not applicable, the price shall be determined through negotiations by the parties on an arm's length basis.