Exhibit 10.3

 

EQUITY INTEREST PLEDGE AGREEMENT

 

THIS EQUITY INTEREST PLEDGE AGREEMENT （“Agreement”） is entered into by and
between the following parties on December 1, 2015.

 

Pledgee: Recon Hengda Technology (Beijing) Co., Ltd. (“Party A”)

Registered Address: Room5771, Floor 5, Shenchang Building, Courtyard 51, Zhichun
Road, Haidian District, Beijing, China.

 

 

Pledgor: HUANG Baokun, SHI Jing, LI Suzhen.

HUANG Baokun ID Num.:

SHI Jing ID Num.:

LI Suzhen ID Num.:

 

WHEREAS:

 

1.Party A is a wholly foreign-owned enterprise duly established and valid
existing under the PRC laws. Party A is permitted by the competent authority to
conduct business in the following categories: research and development of
computer software and network communication software, technology transfer,
technical consulting, technology services, and computer training. Party A and
Qinghai Hua You Downhole Technology Co., Ltd. (“QINGHAI HUAYOU”), owned by the
Pledgor, have entered into an Exclusive Technical Consulting and Service
Agreement on December 1, 2015, (the “Service Agreement”).

 

2.The Pledgor holds 100% equity interest of QINGHAI HUAYOU, which is a limited
liability company duly established and validly existing in Qinghai under the
laws of the PRC.

 

3.In order to ensure the technical consulting and service fee that Party A could
collect from QINGHAI HUAYOU, pursuant to the Service Agreement, the Pledgor is
willing to pledge all of its equity interest in QINGHAI HUAYOU to the Pledgee as
a security for such technical consulting and service fees.

 

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

 

Article 1                   Definitions

 

Unless otherwise stipulated hereof, for the purpose of this Agreement, the
following terms shall have the following meanings:

 

1.1Pledge refers to the full meaning assigned to that term in Article 2 of this
Agreement.

 

1.2Equity Interest refers to the 100% equity interest (the “Equity Interest”) in
QINGHAI HUAYOU, lawfully held by the Pledgor.

 

1.3Rate of Pledge refers to the ratio between the value of the pledge under this
Agreement and the technical consulting fees under the Service Agreement.

 

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1.4Term of Pledge refers to the period provided for under Article 3.2 hereunder.

 

1.5Service Agreement refers to the Exclusive Technical Consulting and Service
Agreement entered into by and between QINGHAI HUAYOU and Party A on December 1,
2015.

 

1.6Default refers to any event enumerated in Article 7 hereto.

 

1.7Notice of Default refers to the notice of default issued by the Pledgee in
accordance with this Agreement.

 

Article2     Pledge

 

2.1Party B agrees to pledge all of its Equity Interest in QINGHAI HUAYOU to the
Pledgee as a guarantee for the technical consulting service fee payable to the
Pledgee under the Service Agreement.

 

2.2Pledge right under this Agreement refers to the right owned by the Pledgee
who shall be entitled to have priority in receiving payment or proceeds from the
auction or sale of the equity interest pledged by the Pledgor to the Pledgee.

 

Article 3     Rate of Pledge and Term of Pledge

 

3.1The Rate of Pledge:

 

The Rate of Pledge shall be 100% under this Agreement.

 

3.2The Term of Pledge

 

3.2.1 The Pledge of the Equity Interest under this Agreement shall take effect
as of the date that the Pledge of the Equity Interest is recorded in the
register of shareholders of QINGHAI HUAYOU.

 

3.2.2 During the Term of Pledge, the Pledgee shall be entitled to foreclose the
Pledge in accordance with this Agreement in the event that QINGHAI HUAYOU fails
to pay exclusive technical consulting and service fees in accordance with the
Service Agreement.

 

Article4     Possession of Pledge Documents

 

4.1During the Term of Pledge, the Pledgee shall be entitled to possess the
contribution certificate of the Equity Interest (the “Contribution Certificate”)
and the register of shareholders of QINGHAI HUAYOU. The Pledgor shall deliver
the Contribution Certificate and the register of shareholders hereunder to the
Pledgee within one week of the execution of this Agreement.

 

4.2The Pledgee shall be entitled to collect dividends of the Equity Interest.

 

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Article5     Representations and Warranties of Party B

 

5.1Party B is the lawful holder of the Equity Interest.

 

5.2The Pledgee shall not be interfered with by any third party at any time when
the Pledgee exercising its rights in accordance with this Agreement.

 

5.3The Pledgee shall be entitled to exercise or assign the Pledge in accordance
with this Agreement.

 

5.4The Pledgor shall not pledge or encumber the Equity Interest to any third
party except for the Pledgee.

 

Article6     Covenants of the Pledgor

 

6.1During the term of this Agreement, the Pledgor covenants to the Pledgee that
the Pledgor shall:

 

6.1.1Except for the transfer of the Equity Interest to the Pledgee or the
specified person designated by the Pledgee (“Specified Person”) as subject to
the Exclusive Equity Interest Purchase Agreement entered into by and among the
Party A, Party B and QINGHAI HUAYOU on December 1, 2015, not transfer or assign
the Equity Interest, create or permit to be created any pledges which may have
an adverse effect on the rights or benefits of the Pledgee without prior written
consent from the Pledgee.

 

6.1.2Comply with and implement laws and regulations with respect to the pledge
of equity interest, Comply with the notices, orders or suggestions with respect
to the Pledge issued or made by the competent authority after receiving the
same, or raise objection to such notices, orders or suggestions at the
reasonable request or with the consent of the Pledgee.

 

6.1.3Timely notify the Pledgee of any event or any notice which may affect the
Pledgor’s Equity Interest or any part of its right, and any event or notice
which may alter or affect any of the Pledgor’s covenants and obligations
hereunder.

 

6.2The Pledgor agrees that the Pledgee’s right to exercise the Pledge obtained
from this Agreement shall not be suspended or hampered through legal procedure
by the Pledgor, any successors of the Pledgor, any person authorized by the
Pledgor or any other third party.

 

6.3The Pledgor warrants to the Pledgee that in order to protect or perfect the
security on the payments of the technical consulting and service fees under the
Service Agreement, the Pledgor shall execute in good faith and procure other
parties who have interests in the Pledge to execute all title certificates,
contracts upon the request of the pledgee, and/or perform and procure other
parties who have interests to take action as required by the Pledgee and provide
access to exercise the rights and authorization vested in the Pledgee under this
Agreement, and execute all the documents with respect to the alternations of
certificate of the Equity Interest with the Pledgee or the person (individual or
legal entity) designated by the Pledgee, and provide all notices, orders and
decisions deemed necessary by the Pledgee to the Pledgee within a reasonable
time.

 

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6.4The Pledgor warrants to the Pledgee that the Pledgor will comply with and
perform all the guarantees, covenants, agreements, representations and
conditions for the benefits of the Pledgee, fail so performing, the Pledgor
shall compensate all the losses therefore suffered by the Pledgee.

 

Article7     Default

 

7.1The events enumerated below shall be deemed as default:

 

7.1.1QINGHAI HUAYOU fails to make full payments of the exclusive technical
consulting and service fees as scheduled under the Service Agreement.

 

7.1.2The Pledgor makes any material misleading or fraudulent representations or
warranties under Article 5 herein, and/or the Pledgor is in violation of any
warranties under Article 5 herein.

 

7.1.3The Pledgor violates any covenant under Article 6 herein.

 

7.1.4The Pledgor violates any term or condition herein.

 

7.1.5The Pledgor waives the pledged Equity Interest or transfers or assigns the
pledged Equity Interest without prior written consent of the Pledgee, except as
provided in Article 6.1.1 in this Agreement.

 

7.1.6Any external loan, security, compensation, covenant or other compensation
liabilities of the Pledgor’s (1) is required to be repaid or performed prior to
the due date due to default; or (2) is due but cannot be repaid or performed as
scheduled and thereby cause the Pledgee to deem that the Pledgor’s capacity to
perform the obligations herein is affected.

 

7.1.7The Pledgor is incapable of repaying its general debt or other debt.

 

7.1.8This Agreement becomes illegal or the Pledgor is incapable to continue to
perform obligations herein for the reason of the promulgation of the related
laws.

 

7.1.9Any approval, permit or authorization of the competent authority in
associated with the enforcement and validity of this Agreement is withdrawn,
suspended, invalidated or materially revised.

 

7.1.10The property of the Pledgor adversely changes and causes the Pledgee to
deem that the capability of the Pledgor to perform the obligations herein is
affected.

 

7.1.11The successors or assignees of QINGHAI HUAYOU are only entitled to perform
a portion of or refuse to perform the liability to pay under the Service
Agreement.

 

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7.1.12Other circumstances whereby the Pledgee is incapable of exercising the
right to foreclose on the Pledge in accordance with the related laws.

 

7.2Party B should immediately notify Party A in writing of the occurrence of any
event under Article 7.1 herein or any events that may result in the foregoing
events upon his knowledge.

 

7.3Unless the Default under Article 7.1 herein has been remedied to the
Pledgee’s satisfaction, the Pledgee, at any time when the Event of Default
occurs or thereafter, may issue a written notice of default to the Pledgor and
require the Pledgor immediately make full payments of the outstanding service
fees under the Service Agreement and other payables or foreclose on the Pledge
in accordance with Article 8 herein.

 

Article8     Rights of the Pledgee

 

8.1The Pledgor shall not transfer or assign the Equity Interest without prior
written approval from the Pledgee prior to the full repayment of the consulting
and service fees under the Service Agreement.

 

8.2The Pledgee shall serve the Notice of Default on the Pledgor when it
exercises the right of pledge.

 

8.3The Pledgee may exercise the right to foreclose on the Pledge at any time
when the Pledgee serves the Notice of Default pursuant to Article 7.3

 

8.4The Pledgee is entitled to have priority in receiving payments or proceeds
from the auction or sale of whole or part of the Equity Interest pledged herein
in accordance with applicable law until the outstanding technical consulting and
service fees and all other payables under the Service Agreement are repaid.

 

8.5The Pledgor shall not hinder the Pledgee from foreclosing on the Pledge in
accordance with this Agreement and shall provide necessary assistance for the
foreclosure of Pledge.

 

Article9     Transfer or Assignment

 

9.1The Pledgor shall not confer or transfer any right or obligation herein to
any third party without the prior written consent of the Pledgee.

 

9.2This Agreement shall be binding and enforceable on Pledgee and each of his
successors and assignees.

 

9.3The Pledgee may transfer or assign all or any of his rights and obligations
under the Service Agreement to any person (individual or legal entity)
designated by him at any time. In this case, the assignee shall enjoy and
undertake all rights and obligations herein of the Pledgee as if the assignee is
a party hereto. Where the Pledgee transfers or assigns the rights and
obligations under the Service Agreement, the Pledgor shall execute the relevant
agreements and/or documents with respect to such transfer or assignment at the
request of the Pledgee.

 

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9.4Where the Pledgee transfers or assigns the pledge to a third party, the new
parties to the pledge shall re-execute a pledge contract.

 

Article10     Termination

 

10.1This Agreement shall not be terminated until the consulting and service fees
under the Service Agreement are paid in full and QINGHAI HUAYOU no longer
undertakes any obligation under the Service Agreement.

 

Article11     Formalities Fees and Other Expenses

 

11.1The Pledgor shall be responsible for all the fees and actual expenditures in
relation to this Agreement, including but not limited to legal fees, cost of
production, stamp tax and any other taxes and charges. If the Pledgee pays the
relevant taxes and fees in accordance with laws, the Pledgor shall fully
indemnity such taxes and fees paid by the Pledgee.

 

11.2The Pledgor shall be responsible for all the fees (including but not limited
to any taxes, formalities fees, management fees, litigation fees, attorney’s
fees, and various insurance premiums in connection with disposition of the
Pledge) incurred by the Pledgor for the reason that the Pledgor fails to pay any
payable taxes, fees or charges in accordance with this Agreement, or the Pledgee
has recourse to any forgoing taxes, charges or fees by any means for other
reasons.

 

Article12     Force Majeure

 

12.1If the fulfilment of this Agreement is delayed or prevented due to the Force
Majeure Events, the party affected by such a Force Majeure Event shall free from
any obligation to the extent of delay or holdback. Force Majeure refers to any
event beyond control of the affected party and unavoidable with reasonable
caution, which shall include but not limited to, government acts, nature
disasters, fire, explosion, typhoon, flood, earthquake, tidal wave, lightning or
war. However, any lack of credit, assets or financing shall not be deemed as an
event beyond control of a Party. The party claiming the Force Majeure and
seeking a waiver of its obligations hereunder shall promptly inform the other
party of the Force Majeure and the procedure to fulfil its obligations
hereunder.

 

12.2If performance of this Agreement is delayed or prevented due to Force
Majeure set forth in the preceding paragraph, the affected party shall not
subject to any liability hereunder arising from the performances so delayed or
prevented. The affected party shall make reasonalbe effort to reduce or diminish
the effect from such Event, and shall make reasonable efforts to resume its
performance. Both parties shall resume the performance with best effort upon
elimination of such Event.

 

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Article13      Dispute Settlement

 

13.1This Agreement shall be governed by and construed in all respects in
accordance with the laws of the PRC.

 

13.2The Parties shall strive to settle any dispute arising from the
interpretation or performance, or in connection with this Agreement through
friendly negotiation. In case no settlement can be reached through negotiation,
each Party can submit such matter to China International Economic and Trade
Arbitration Committee for arbitration according to its currently effective
arbitration rules. The arbitration shall be held in Beijing. The arbitration
proceedings shall be conducted in Chinese. The arbitration awards shall be final
and binding upon the Parties. The arbitration awards may be submitted to the
applicable People’s Court for enforcement.

 

Article14     Notices

 

14.1Any notice to which is given by the both Parties hereto regarding 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, inter alias, facsimile and telex from time to
time.

 

Article15     Appendix

 

15.1The Appendix of this Agreement as attached hereto is parts of this
Agreement.

 

Article16     Effectiveness

 

16.1This Agreement and any amendments, supplements and modifications of this
Agreement shall be in writing, and come into effect upon being executed by the
Parties thereto.

 

16.2This Agreement is executed both in Chinese and English with four copies for
each language. The Chinese version shall prevail in the event of any
inconsistency between the English and any Chinese versions thereof.

 

[THIS SPACE IS INTENTIONALLY LEFT BLANK]

 

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This page is the signing page of this Equity Interest Pledge Agreement.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above written.

 

 

 

Party A: Recon Hengda Technology (Beijing) Co., Ltd.

 

 

Legal Representative: /s/ Chen Guangqiang

 

 

 

Party B:

 

HUANG Baokun

 

Signature: /s/ Huang Boakun

 

SHI Jing

 

Signature: /s/ Shi Jing

 

LI Suzhen

 

Signature: /s/ Li Suzhen

 

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APPENDIX

 

1.The register of the shareholders of QINGHAI HUAYOU

 

2.The Contribution Certificate of QINGHAI HUAYOU

 

3.The Exclusive Technical Consulting and Service Agreement.

 

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