Document:

Exhibit 10.1

 

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

 

This Separation Agreement and Release of Claims (the “Agreement”) is made effective December 11, 2018 (the “Effective Date”), by and between David Eisler (“Employee”) and U.S. Auto Parts Network, Inc., its officers, directors, employees, foreign and domestic subsidiaries, benefit plans and plan administrators, affiliates, agents, joint ventures, attorneys, successors and/or assigns (collectively referred to as “Company”).

 

RECITALS

 

WHEREAS, Employee currently serves as the SVP, Chief Legal and Administrative Officer of the Company, and Employee and Company have mutually agreed that Employee resign from the Company, contingent upon the Company treating the separation as a termination without cause under the terms of his Employment Agreement dated June 14, 2018, by and between the Company and Employee and the terms of his equity grants previously entered into with the Company.

 

WHEREAS, Employee has agreed to stay on as SVP, Chief Legal and Administrative Officer through the earlier of (i) March 29, 2019, or (ii) Employee’s death (such earliest date, the “Separation Date”).

 

WHEREAS, the parties desire to settle all claims and issues that have, or could have been raised by Employee in relation to Employee’s employment with Company and arising out of or in any way related to the acts, transactions or occurrences between Employee and Company to date, including, but not limited to, Employee’s employment with Company or the termination of that employment, on the terms set forth below.

 

THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth, it is agreed by and between the undersigned as follows:

 

AGREEMENTS

 

Based upon the foregoing, and in consideration of the mutual promises contained in this Agreement, Employee and the Company agree, effective upon the date of execution by Employee, as follows:

 

1.                                      Severance Package.  In exchange for the promises set forth herein, Company agrees to provide Employee with the following payments and benefits (“Severance Package”), to which Employee is not otherwise entitled. Employee acknowledges and agrees that this Severance Package constitutes adequate legal consideration for the promises and representations made by Employee in this Separation Agreement.

 

(a)         Severance Payment. Company agrees to provide Employee with a severance payment equal to six (6) months of Employee’s base salary, One Hundred Thirty-Four Thousand Dollars and Two Cents ($134,002), less all applicable federal and state income and employment taxes (“Severance Payment”). The Severance Payment will be paid out on a bi-weekly basis over the six (6) month period following the Separation Date in accordance with the Company’s payroll practices for its employees.

 

 

(b)         Retention Bonus. Employee shall be entitled to receive a one-time retention bonus in the gross amount of $75,000, less all applicable federal and state income and employment taxes, to be paid by the Company on the Separation Date.

 

(c)          Continuation of Group Health Benefits. Provided that Employee elects to continue his group health care coverage pursuant to the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and remains eligible for these benefits, Company agrees to reimburse Employee for the COBRA premiums required to continue the group health care coverage for Employee and those dependents of Employee who were enrolled as participants in Company’s group health care coverage as of the Separation Date, for COBRA coverage through the twelve (12) month period following the Separation Date.

 

(d)         Acceleration of Vesting; Extension of Option Exercise Period. Company shall cause the vesting of each of Employee’s outstanding restricted stock unit awards and performance-based restricted stock unit awards that are specifically identified in Exhibit A hereto (“Stock Awards”) to be automatically accelerated on the Separation Date.  In addition, all of Employee’s vested stock options shall remain exercisable by Employee until the earlier of (i) twelve (12) months following the Separation Date, (ii) the lapse of the maximum term of the stock option, or (iii) the lapse of the term of the stock option resulting from a change of control of the Company. Company shall be entitled to withhold applicable federal and state income and employment taxes related to the vesting contemplated by this Section 1(d) from amounts payable hereunder.

 

2.                                      Tax Liability.  Employee assumes full responsibility for any and all taxes, interest and/or tax penalties that may ultimately be assessed upon any payments made by Company provided hereunder. In the event that any taxing authority seeks to collect taxes, interest and/or penalties from the Company on the consideration conveyed to Employee under this Agreement, Employee will hold the Company harmless from any and all claims for such taxes, interest and/or tax penalties and will indemnify the Company against any such tax-related claims.

 

3.                                      Acknowledgment.  The Company will pay Employee all regular salary, expenses, commissions, distributions, and Company benefits due and owing as of the Separation Date, less appropriate withholdings and is not owed any monies allowed, including but not limited to those required under the California Labor Code, as of the Separation Date.  This sum is not consideration for this Agreement.  The Company will pay Employee for any vacation days that Employee has accrued but has not used as of the Separation Date.  This sum is likewise not consideration for this Agreement.   Information regarding the transfer or distribution of Employee’s USAP 401(k) Retirement Plan account (if applicable) will be provided to Employee under separate cover by Fidelity Investments Consideration following the Separation Date.

 

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4.                                      Non-Admission of Liability.

 

The Company hereby disclaims any wrongdoing against Employee.  Indeed, Employee agrees that neither this Agreement, nor the furnishing of the consideration for the release contained herein shall be deemed or construed at any time for any purpose as an admission by Company of any liability or unlawful conduct of any kind.

 

5.                                      Release.

 

(a)         Employee, on behalf of Employee, Employee’s spouse, successors, heirs, and assigns, hereby forever relieves, releases, and discharges the Company as well as its past, present and future officers, directors, administrators, shareholders, employees, agents, successors, subsidiaries, parents, assigns, representatives, brother/sister corporations, and all other affiliated or related corporations, all benefit plans sponsored by the Company, and entities, and each of their respective present and former agents, employees, or representatives, insurers, partners, associates, successors, and assigns, and any entity owned by or affiliated with any of the above (collectively, the “Released Parties”), from any and all claims, debts, liabilities, demands, obligations, liens, promises, acts, agreements, costs and expenses (including but not limited to attorneys’ fees), damages, actions, and causes of action, of whatever kind or nature, including but not limited to any statutory, civil, administrative, or common law claims, whether known or unknown, suspected or unsuspected, fixed or contingent, apparent or concealed, arising out of any act or omission occurring before Employee’s execution of this Agreement, including but not limited to any claims based on, arising out of, or related to Employee’s employment with, or the separation of Employee’s employment or other service with the Company, any claims arising from rights under federal, state, and local laws relating to the regulation of federal or state tax payments or accounting; federal, state or local laws that prohibit harassment or discrimination on the basis of race, national origin, religion, sex, gender, age, marital status, bankruptcy status, disability, perceived disability, ancestry, sexual orientation, family and medical leave, or any other form of harassment or discrimination or related cause of action (including but not limited to failure to maintain an environment free from harassment and retaliation, inappropriate comments or touching and/or “off-duty” conduct of other Company employees); statutory or common law claims of any kind, including but not limited to, any alleged violation of Title VII of the Civil Rights Act of 1964, The Civil Rights Act of 1991, Sections 1981 through 1988 of Title 42 of the United States Code, as amended; The Employee Retirement Income Security Act of 1971, as amended, The Americans with Disability Act of 1990, as amended, the Age Discrimination in Employment Act, 29 U.S.C. Sections 621 et. seq., the Workers Adjustment and Retraining Notification Act, as amended; the Occupational Safety and Health Act, as amended, the Sarbanes-Oxley Act of 2002, the California Family Rights Act (Cal. Govt. Code § 12945.2 et. seq.), the California Fair Employment and Housing Act (Cal. Govt. Code § 12900 et. seq.), statutory provision regarding retaliation/discrimination for filing a workers’ compensation claim under Cal. Labor Code § 132a, California Unruh Civil Rights Act,

 

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California Sexual Orientation Bias Law (Cal. Lab. Code § 1101 et. seq.), California AIDS Testing and Confidentiality Law, California Confidentiality of Medical Information (Cal. Civ. Code § 56 et. seq.), contract, tort, and property rights, breach of contract, breach of implied-in-fact contract, breach of the implied covenant of good faith and fair dealing, tortious interference with contract or current or prospective economic advantage, fraud, deceit, invasion of privacy, unfair competition, misrepresentation, defamation, wrongful termination, tortious infliction of emotional distress (whether intentional or negligent), breach of fiduciary duty, violation of public policy, or any other common law claim of any kind whatsoever; any claims for severance pay, sick leave, family leave, liability pay, overtime pay, vacation, life insurance, health insurance, continuation of health benefits, disability or medical insurance, or Employee’s 401(k) rights or any other fringe benefit or compensation; and any claim for damages or declaratory or injunctive relief of any kind.  The Parties agree and acknowledge that the release contained in this Paragraph 5 does not apply to any vested rights Employee may have under any 401(k) Savings Plan with the Company.  Employee represents that at the time of the execution of this Agreement; Employee suffers from no work-related injuries and has no disability or medical condition as defined by the Family Medical Leave Act.  Employee represents that Employee has no workers’ compensation claims that Employee intends to bring against the Company.  Employee understands that nothing contained in this Agreement, including, but not limited to, this Paragraph 5, will be interpreted to prevent Employee from filing a charge with a governmental agency or participating in or cooperating with an investigation conducted by a governmental agency, including the Equal Employment Opportunity Commission.  Employee further acknowledges that this release also releases the Company for all claims of unpaid wages, including unpaid overtime wages, related to Employee’s employment with the Company and subject to the terms of this Agreement.

 

(b)         Mistakes in Fact; Voluntary Consent.  The Parties, and each of them, expressly and knowingly acknowledges that, after the execution of this Agreement, the Parties may discover facts different from or in addition to those that they now know or believe to be true with respect to the claims released in this Agreement.  Nonetheless, this Agreement shall be and remain in full force and effect in all respects, notwithstanding such different or additional facts and Employee intends to fully, finally, and forever settle and release those claims released in this Agreement.  In furtherance of such intention, the release given in this Agreement shall be and remain in effect as a full and complete release of such claims, notwithstanding the discovery and existence of any additional or different claims and each Parties assume the risk of misrepresentations, concealments, or mistakes, and if the Parties should subsequently discover that any fact relied upon in entering into this Agreement was untrue, that any fact was concealed, or that Employee’s understanding of the facts or law was incorrect, Employee shall not be entitled to set aside this Agreement or the settlement reflected in this Agreement or be entitled to recover any damages on that account.

 

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(c)          Section 1542 of the California Civil Code.  Employee expressly waives any and all rights and benefits conferred upon Employee by Section 1542 of the California Civil Code, which states as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN EMPLOYEE’S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY EMPLOYEE MUST HAVE MATERIALLY AFFECTED EMPLOYEE’S SETTLEMENT WITH THE DEBTOR.

 

Thus, notwithstanding the provisions of section 1542, and to implement a full and complete release and discharge of the Released Parties, Employee expressly acknowledges this General Release is intended to include in its effect, without limitation, all claims Employee does not know or suspect to exist in Employee’s favor at the time of signing this Agreement, and that this General Release contemplates the extinguishment of any such claim.  Employee warrants that Employee has read this General Release, including this waiver of California Civil Code section 1542, and that Employee has consulted counsel about this Agreement and specifically about the waiver of section 1542, and that Employee understands this Agreement and the section 1542 waiver, and so Employee freely and knowingly enters into this Agreement.  Employee acknowledges that Employee may later discover facts different from or in addition to those Employee now knows or believes to be true regarding the matters released or described in this General Release, and even so Employee agrees that the releases and agreements contained in this General Release shall remain effective in all respects notwithstanding any later discovery of any different or additional facts.  Employee assumes any and all risk of any mistake in connection with the true facts involved in the matters, disputes, or controversies released or described in this Agreement or with regard to any facts now unknown to Employee relating thereto.  Employee hereby expressly waives and relinquishes all rights and benefits under the foregoing section and any law of any other jurisdiction of similar effect with respect to Employee’s release of any unknown or unsuspected claims herein.

 

Accordingly, Employee knowingly, voluntarily and expressly waives any rights and benefits arising under Section 1542 of the California Civil Code and any other statute or principle of similar effect.

 

(d)         No Lawsuits.  Employee agrees to take any and all steps necessary to insure that no lawsuit arising out of any claim released herein shall ever be prosecuted by Employee or on Employee’s behalf in any forum, and hereby warrants and covenants that no such action has been filed or shall ever be filed or prosecuted.  Employee also agrees that if any claim is prosecuted in Employee’s name before any court or administrative agency that Employee waives and agrees not to take any award or other damages from such suit to the extent permissible under applicable law.

 

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6.                                      Confidential and Proprietary Information / Return of Company Property.  Employee acknowledges that as a result of Employee’s employment with the Company, Employee has had access to the Company’s confidential and proprietary business information, including, but not limited to, product information, pricing strategies, vendor and supplier information, business plans, research and development activities, manufacturing and marketing techniques, technological and engineering data, processes and inventions, legal matters affecting the Company and its business, customer and prospective customers information, trade secrets, bid prices, contractual terms and arrangements, prospective business transactions, and financial and business forecasts (“Confidential Information”).  Employee also acknowledges and reaffirms Employee’s compliance and ongoing obligation to comply with that certain Confidential Information and Invention Assignment Agreement previously entered into with the Company.  Confidential Information also includes information, knowledge or data of any third party doing business with the Company that the third party has identified as being confidential.  Employee agrees not to use or to disclose to anyone any Confidential Information at any time in the future without the prior written authorization of the Company, unless ordered to do so by a court of competent jurisdiction.  In the event of any such court order, Employee agrees to promptly notify the Company and to afford the Company the opportunity to take appropriate legal action prior to Employee’s disclosure of any Confidential Information.

 

Employee understands and acknowledges that whether or not Employee signs this Agreement, Employee has both a contractual and common law obligation to protect the confidentiality of the Company’s trade secret information after the termination of Employee’s employment for so long as the information remains confidential.  Employee further agrees to immediately return all Company property in Employee’s possession, including but not limited to all materials, documents, photographs, handbooks, manuals, electronic records, files, laptop computer, cellular telephones, keys and access cards, no later than two days after the Separation Date and Employee certifies that Employee has not and will not retain any Company property, trade secret or other operating or strategic information following the Separation Date.

 

7.                                      Resignation as SVP, Chief Legal and Administrative Officer.  As a condition to the terms in this Agreement, Employee hereby agrees to continue in his role as SVP, Chief Legal and Administrative Officer though the Separation Date.  Effective as of the Separation Date, Employee hereby resigns from his position as Company’s SVP, Chief Legal and Administrative Officer and all other employee and officer positions of Company, including other employee, officer and director positions of its subsidiaries and affiliates and Employee agrees to take any and all actions as may be necessary to effect such resignations on the Separation Date.

 

8.                                      Non-Solicitation and Non-Disparagement.  Employee will not directly or indirectly for a period of one (1) year following the Separation Date, attempt to disrupt, damage, impair or interfere with the Company’s business by raiding or hiring any of the Company’s employees or soliciting any of them to resign from their employment by the Company, or by disrupting the relationship between the Company and any of its consultants, agents, representatives, vendors, customers and other business partners. Employee acknowledges that this covenant is necessary to enable the Company to maintain a stable workforce and remain in business.  Employee further agrees that Employee will not make any voluntary statements, written or oral, or cause or encourage others to make any statements that defame, disparage or in any way criticize the personal and/or business reputations, practices or conduct of Company or any of the other Company Released Parties.

 

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9.                                      Remedies.  Employee understands and agrees that in the event Employee violates any provision of this Agreement, including the provisions set forth in Paragraphs 5, 6, or 8, then (a) the Company shall have the right to apply for and receive an injunction to restrain any violation of this Agreement; (b) the Company shall have the right to immediately discontinue any enhanced benefit provided under this Agreement; (c) Employee will be obligated to reimburse the Company its cost and expenses incurred in defending Employee’s lawsuit and enforcing this Agreement, including the Company’s court costs and reasonable attorneys’ fees; and (d) as an alternative to (c), at the Company’s option,  Employee shall be obligated upon demand to repay the Company the cost of all but $500 of the enhanced benefits paid under this Agreement. Employee acknowledges and agrees that the covenants contained in this Paragraph 9 shall not affect the validity of this Agreement and shall not be deemed to be a penalty or forfeiture.  The remedies available to the Company pursuant to this Paragraph 9 are in addition to, and not in lieu of, any remedies which may be available under statutory and/or common law relating to trade secrets and the protection of the Company’s business interest generally.

 

10.                               Nonassignment.  Employee represents and warrants that Employee has not assigned or transferred any portion of any claim or rights Employee has or may have to any other person, firm, corporation or any other entity, and that no other person, firm, corporation, or other entity has any lien or interest in any such claim.

 

11.                               Future Cooperation. Employee agrees to cooperate reasonably with the Company, its successors, and all the Company affiliates (including the Company’s outside counsel) in connection with the contemplation, prosecution and defense of all phases of existing, past and future litigation, regulatory or administrative actions about which the Company reasonably believes Employee may have knowledge or information. Employee further agrees to make himself available at mutually convenient times as reasonably deemed necessary by the Company’s counsel. The Company shall not utilize this Section to require Employee to make himself available to an extent that it would unreasonably interfere with employment responsibilities that he may have, and shall pay Employee a consulting rate of $400 per hour for his time in connection with such cooperation and reimburse Employee for any pre-approved reasonable business travel expenses that he incurs on the Company’s behalf as a result of this Section, after receipt of appropriate documentation consistent with the Company’s business expense reimbursement policy. Employee agrees to appear without the necessity of a subpoena to testify truthfully in any legal proceedings in which the Company calls him as a witness. Employee further agrees that he shall not voluntarily provide information to or otherwise cooperate with any individual or private entity that is contemplating or pursuing litigation or any type of action or claim against the Company, its successors or affiliates, or any of their current or former officers, directors, employees, agents or representatives.

 

12.                               Consideration and Revocation Period.  Employee may revoke Employee’s release of claims, insofar as it extends to potential claims under the Age Discrimination in Employment Act, by informing the Company of Employee’s intent to revoke Employee’s release within seven (7) calendar days following Employee’s execution of this Agreement.  Employee understands that any such revocation must be in writing and delivered by hand or by certified mail - return receipt requested - within the applicable period to Human Resources Department, 16941 Keegan Avenue, Carson, California 90746.  Employee understands that if Employee exercises Employee’s right to revoke, then the Company will have no obligations under this Agreement to Employee or to others whose rights derive from Employee.

 

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The Agreement shall not become effective or enforceable, until the revocation period identified above has expired.  The terms of this Agreement shall be open for acceptance by Employee for a period of twenty-one (21) calendar days. Employee understands that Employee should, and the Company hereby advises Employee to, consult with legal counsel regarding the releases contained herein and to consider whether to accept the Company’s offer and sign the Agreement. Employee acknowledges that it has been Employee’s decision alone whether or not to consult with counsel regarding this Agreement. Employee acknowledges that no proposal or actual change that Employee or Employee’s counsel makes with respect to this Agreement will restart the 21-day period.

 

Employee acknowledges that Employee was permitted to use as much of the 21-day consideration period as Employee wished prior to signing, but by Employee’s signature below Employee acknowledges that Employee has chosen to voluntarily execute this Agreement earlier and to waive the remaining days of such 21-day period.

 

13.                               Miscellaneous Provisions

 

(a)                                 Integration.  This Agreement, together with that certain Confidential Information and Invention Assignment Agreement previously entered into with the Company, constitutes a single, integrated written contract expressing the entire Agreement of the parties concerning the subject matter referred to in this Agreement.  No covenants, agreements, representations, or warranties of any kind whatsoever, whether express or implied in law or fact, have been made by any party to this Agreement, except as specifically set forth in this Agreement.  All prior and contemporaneous discussions, negotiations, and agreements have been and are merged and integrated into, and are superseded by, this Agreement, including without limitation that certain Employment Agreement dated June 14, 2018 by and between the Employee and the Company.

 

(b)                                 Modifications.  No modification, amendment, or waiver of any of the provisions contained in this Agreement shall be binding upon any party to this Agreement unless made in writing and signed by both parties.

 

(c)                                  Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law and to carry out each provision herein to the greatest extent possible, but if any provision of this Agreement is held to be void, voidable, invalid, illegal or for any other reason unenforceable, the validity, legality and enforceability of the other provisions of this Agreement will not be affected or impaired thereby.

 

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(d)                                 Non-Reliance on Other Parties.  Except for statements expressly set forth in this Agreement, no party has made any statement or representation to any other party regarding a fact relied on by the other party in entering into this Agreement, and no party has relied on any statement, representation, or promise of any other party, or of any representative or attorney for any other party, in executing this Agreement or in making the settlement provided for in this Agreement.

 

(e)                                  Negotiated Agreement.  The terms of this Agreement are contractual, not a mere recital, and are the result of negotiations between the parties.  Accordingly, no party shall be deemed to be the drafter of this Agreement.

 

(f)                                   Successors and Assigns.  This Agreement shall inure to the benefit of and shall be binding upon the heirs, successors, and assigns of the parties hereto and each of them.  In the case of the Company, this Agreement is intended to release and inure to the benefit of any affiliated corporations, parent corporations, brother-sister corporations, subsidiaries (whether or not wholly owned), divisions, shareholders, officers, directors, agents, representatives, principals, and employees.

 

(g)                                  Applicable Law; Venue.  This Agreement shall be construed in accordance with, and governed by, the laws of the State of California without taking into account conflict of law principles.  Employee and the Company agree to submit to personal jurisdiction in the State of California and to venue in its courts. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(h)                                 Attorneys’ Fees.  In the event suit is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to receive, in addition to any other relief, reasonable attorneys’ fees and costs.

 

(i)                                     Continuing Obligations under Securities Law. Employee acknowledges that Employee continues to be subject to Company’s Insider Trading policy and agrees that if Employee is aware of material nonpublic information about Company at the Separation Date, Employee agrees not to trade in securities of Company or disclose material nonpublic information about Company to a third party other than on a need-to-know basis, until that information has become public or is no longer material.  Employee acknowledges that after the Separation Date Employee may continue to be subject to Section 16 of the Securities Exchange Act of 1934 (“Section 16”) and agrees to comply with the requirements of Section 16.  Employee acknowledges that Employee may continue to be an “affiliate” for purposes of federal securities law and agrees to sell Company stock in compliance with restrictions imposed by Rule 144 of the Securities Act of 1933.

 

(j)                                    This Agreement may be executed via facsimile and in one or more counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument, binding on the parties.

 

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EMPLOYEE ACKNOWLEDGES AND AGREES THAT EMPLOYEE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS AGREEMENT, THAT  EMPLOYEE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF EMPLOYEE’S CHOICE, THAT BY SIGNING THIS AGREEMENT, EMPLOYEE HAS UTILIZED OR WAIVES THE 21-DAY CONSULTING PERIOD, AND THAT EMPLOYEE SIGNS THIS AGREEMENT WITH THE INTENT OF RELEASING THE COMPANY AND ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FROM ANY AND ALL CLAIMS.

 

	
ACCEPTED   AND AGREED TO:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Employee:
    	
 
    	
U.S.   Auto Parts Network, Inc.:
    
	
 
    	
 
    	
 
    
	
/s/   David Eisler
    	
 
    	
/s/   Aaron Coleman
    
	
Signature
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    
	
12/11/18
    	
 
    	
12/11/18
    
	
Date
    	
 
    	
Date
    

 

10

 

EXHIBIT A

 

Stock Awards

 

	
Grant
    	
 
    	
Stock
   Awards
   with
   Vesting
   Acceleration
    	
 
    
	
RSU #0001028
    	
 
    	
40,000
    	
 
    
	
PRSU #0001121
    	
 
    	
55,602
    	
 
    
	
RSU #0001125
    	
 
    	
43,490
    	
 
    

 

11Exhibit 10.5

 

Confidential

 

THE EXCLUSIVE SERVICE AGREEMENT

 

AMONG

 

HUAYA INFORMATION (SHENZHEN) CO., LTD.

 

AND

 

QIANHAI ASIA TIME (SHENZHEN) INTERNATIONAL
FINANCE SERVICE CO., LTD.

 

[September 5],
2018

 

    	1

     

    

 

THE EXCLUSIVE SERVICE AGREEMENT

 

THIS EXCLUSIVE SERVICE AGREEMENT (this “AGREEMENT”)
is entered into as of [September 5], 2018 in Shenzhen, the People’s Republic of China
(“CHINA” or “PRC”) by and among the following five Parties:

 

(1) HUAYA INFORMATION (SHENZHEN) CO., LTD. (HUAYA)

 

REGISTERED ADDRESS: Room 3902, Building 5, Dachong International
Center, No.39 Tong Gu Road, Yuehai Street, Nanshan district, Shen Zhen, China

 

(2) QIANHAI ASIA TIME (SHENZHEN) INTERNATIONAL FINANCE SERVICE
CO., LTD. (“ASIA TIME”)

 

REGISTERED ADDRESS: Room 3902A, Building 5, Dachong International
Center, No.39 Tong Gu Road, Yuehai Street, Nanshan district, Shen Zhen, China

 

(In this Agreement, HUAYA, ASIA TIME
and ASIA TIME Subsidiaries shall hereinafter be referred to as a “PARTY” individually, and collectively
 “PARTIES”.)

 

WHEREAS:

 

(1) HUAYA is a consulting company, which owns
a series of managing consulting and commercial consulting services of enterprises.

 

(2) ASIA TIME is a comprehensive company with
professional commercial consulting services of enterprises, which specializes on finance information consulting and counselling
of IPO.

 

(3) In order to give HUAYA the actual control
of ASIA TIME and ASIA TIME Subsidiaries, ASIA TIME and ASIA TIME Subsidiaries
intends to irrevocably entrust to HUAYA the right of management and operation of ASIA TIME and ASIA
TIME Subsidiaries and the responsibilities and authorities of their shareholders and directors of ASIA TIME
and ASIA TIME Subsidiaries.

 

(4) HUAYA agrees to accept the entrustment of
ASIA TIME and ASIA TIME Subsidiaries, and to exercise the right of management and operation of ASIA
TIME and ASIA TIME Subsidiaries and the responsibilities and authorities of their shareholders and board
of directors of ASIA TIME and ASIA TIME Subsidiaries.

 

NOW, THEREFORE, after friendly consultations among them, the
Parties hereby agree as follows:

 

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ARTICLE 1 – DEFINITION

 

1.1 Unless to be otherwise interpreted by the terms or in the
context herein, the following terms in this Agreement shall be interpreted to have the following meanings:

 

“SERVICE FEES” means the provision of management
and consultation services charged by HUAYA hereunder.

 

“ASIA TIME Subsidiaries” means all
of the companies held by ASIA TIME (exclusive of Qianhai Asia Time (Shenzhen) International Fund Management Company (“Fund
Company”))

 

1.2 References in this Agreement to any laws and regulations
(the “LAWS”) shall include reference (1) to the amendments, changes, supplements and reformulations of such Laws, whether
or not the effectiveness of the same is prior to or after the execution of this Agreement; and (2) at the same time to other decisions,
notices and rules formulated or becoming effective according to such Laws.

 

1.3 Unless otherwise specified in the context of this Agreement,
the Article, sub-article, section or paragraph mentioned herein shall refer to the corresponding content in this Agreement accordingly.

 

ARTICLE 2 - LICENSES AND SERVICES BY
HUAYA

 

2.1 ASIA TIME and ASIA TIME Subsidiaries
agree to irrevocably entrust the right of management and operation of ASIA TIME and ASIA TIME Subsidiaries
and the responsibilities and authorities of their shareholders and board of directors to HUAYA in accordance with
the terms and conditions of this Agreement. HUAYA agrees to exercise the aforesaid rights and responsibilities in
accordance with the terms and conditions of this Agreement.

 

2.2 The said entrustment is irrevocable and shall not be withdrawn,
unless the Agreement is terminated pursuant to written agreement of both parties.

 

2.3 The purpose of the entrusted operation is that HUAYA
shall be in charge of the normal business operations of ASIA TIME and ASIA TIME Subsidiaries and perform
the responsibilities and rights of ASIA TIME and ASIA TIME Subsidiaries’ investors and directors.
During the term of the entrusted operation, HUAYA, as the entrusted manager, shall provide full management to ASIA
TIME and ASIA TIME Subsidiaries’ operations.

 

2.4 The contents of the entrusted operation shall include but
not be limited to the following:

 

		1)	HUAYA shall be in charge of all aspects
of ASIA TIME and ASIA TIME Subsidiaries’ operations; nominate and replace the members of ASIA
TIME and ASIA TIME Subsidiaries’ board of directors, and engage ASIA TIME and ASIA
TIME Subsidiaries’ management staff and decide their compensation.

 

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		2)	HUAYA shall manage and control all the
funds of ASIA TIME and ASIA TIME Subsidiaries. The accounts of ASIA TIME and ASIA
TIME Subsidiaries shall be managed solely by HUAYA. The seals and signatures for such account shall be the
seals and signatures of the personnel appointed and confirmed by HUAYA. All the cash of ASIA TIME
and ASIA TIME Subsidiaries shall be kept in this entrusted account and shall be handled through this account, including
but not limited to receipt of all ASIA TIME and ASIA TIME Subsidiaries’ business income, current
working capital, recovered account receivables, and the payment of all account payables and operation expenses, employee salaries
and asset purchases.

 

		3)	All the matters of ASIA TIME and ASIA
TIME Subsidiaries, including but not limited to internal financial management, day-to-day operation, external contact
execution and performance, tax filing and payment, change of rights and personnel, shall be controlled and managed by HUAYA
in all aspects.

 

		4)	HUAYA shall enjoy all the other responsibilities
and rights enjoyed by ASIA TIME and ASIA TIME Subsidiaries’ investors in accordance with the
applicable law and the articles of association of ASIA TIME and ASIA TIME Subsidiaries, including
but not limited to the following:

 

		a.	Deciding ASIA TIME and ASIA TIME
Subsidiaries’ operation principles and investment plan;

		b.	Nominating the members of the board of directors;

		c.	Discussing and approving the report of the executive
officers;

		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 ASIA
TIME and ASIA TIME Subsidiaries’ articles of association.

 

		5)	HUAYA enjoys all the other responsibilities
and rights enjoyed by ASIA TIME and ASIA TIME Subsidiaries’ board of directors and executive
officers in accordance with the applicable law and the articles of association of ASIA TIME and ASIA TIME
Subsidiaries, including but not limited to the following:

 

		a.	Executing the resolution of the investors;

		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;

 

    	4

     

    

 

		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 ASIA
TIME and ASIA TIME Subsidiaries’ articles of association.

 

ARTICLE 3 SERVICE FEES

 

3.1 The Service Fees to be charged by HUAYA for
its provision of services hereunder shall be as follows:

 

(1) All revenue of ASIA TIME and its subsidiaries, including
revenue from the business on commercial consulting and counselling of IPO, which can be waived by HUAYA from time
to time in its sole discretion.

 

(2) The amount of Service Fees agreed in (1) above shall be
paid to HUAYA on a monthly basis following the proportion according to their actual incomes from main business in
the current month.

 

3.2 Upon written agreement between HUAYA and ASIA
TIME and its subsidiaries, the fees agreed in Article 3.1 or their calculation percentage may be adjusted according to the circumstances
in the actual performance, with particulars thereof to be stipulated in separate supplementary agreements to be entered into between
the two Parties as an appendix hereto.

 

3.3 ASIA TIME and its subsidiaries shall, in accordance with
this Article 3, pay promptly the amounts due and payable to HUAYA to the bank account designated by HUAYA.
In case that HUAYA is to change its bank account, HUAYA shall notify the ASIA TIME and its subsidiaries
thereof in writing seven (7) working days in advance.

 

ARTICLE 4 - EXCLUSIVITY

 

4.1 Without the prior consent in writing by HUAYA,
none of the ASIA TIME and its subsidiaries may accept any management and consulting services from any other third parties.

 

4.2 HUAYA shall no longer provide any other commercial
consulting companies at the local places of the ASIA TIME and its subsidiaries with management and consulting services similar
to those hereunder. However, this Article does not restrict HUAYA from providing such similar services to Commercial
Consulting servicers in other cities. Such new Commercial Consulting servicers may, through signing Acknowledgement Letter in the
form of Appendix 1 hereof, become a party of this Agreement, to enjoy the same rights of the other Commercial Consulting servicers
and to assume the same obligations of the other Commercial Consulting servicers; provided that such new Commercial Consulting servicers
shall perform, starting from the date of execution of the Acknowledgement Letter, the payment obligations hereunder of the Exclusive
Service Fees. As the rights and obligations of the Commercial Consulting servicers hereunder are severable and independent from
each other’s, such new Commercial Consulting servicers will not, by their joining in this Agreement, affect in any way the
rights and obligations of the existing Commercial Consulting servicers, with the joining-in of such new Commercial Consulting servicers
only subject to the confirmation thereof by HUAYA in signing an agreement among them. ASIA TIME or its subsidiaries
agree hereby irrevocably and unconditionally to such joining-in, and confirm further that any issue concerning the joining-in of
new Commercial Consulting servicers for business cooperation hereunder will not be subject to the agreement of the existing Commercial
Consulting servicers.

 

    	5

     

    

 

ARTICLE 5 - INTELLECTUAL PROPERTY

 

5.1 The rights of intellectual property concerning the work
product created during the process of services provision by HUAYA hereunder shall belong to HUAYA.

 

5.2 During the valid term of this Agreement, if HUAYA
develops any new solutions that may be used in the daily commercial consulting business or management of the Commercial Consulting
servicers, or provides the Commercial Consulting servicers with other services not included herein at their request, the Parties
agree to cooperate with each other thereon in the way, in priority, agreed herein or in the way similar to that agreed herein,
with necessary adjustments to be made to the Service Fee payment percentage or the most similar percentage agreed in Article 3.

 

ARTICLE 6 - CONFIDENTIALITY

 

6.1 No matter if this Agreement is terminated or not, the Parties
shall be obliged to keep in strict confidence the commercial secret, proprietary information and customer information in relation
to other Parties and any other non-open information of other Parties which they may become aware of as the result of their performance
hereof (collectively, “CONFIDENTIAL INFORMATION”).

 

Unless with prior consent of such other Parties in writing or
required to disclose to parties other than Parties hereof according to relevant laws, regulations or listing rules, no Party shall
disclose the Confidential Information or any part thereof to any parties other than Parties hereof; unless for the purpose of performance
hereof, no Party shall use directly or indirectly the Confidential Information or any part thereof for any other purposes, or it
shall bear the default liability and indemnify the losses.

 

6.2 Upon termination of this Agreement, the Parties shall, upon
demand by other Parties providing the Confidential Information, return, destroy or otherwise dispose of all the documents, materials
or software containing the Confidential Information and suspend using such Confidential Information.

 

6.3 Notwithstanding any other provisions herein, the validity
of this Article shall not be affected by the suspension or termination of this Agreement.

 

    	6

     

    

 

ARTICLE 7 – UNDERTAKINGS AND GUARANTEES

 

HUAYA, ASIA TIME and ASIA TIME
Subsidiaries hereby undertake and guarantee for each of its own that:

 

7.1 it is a company of limited liabilities duly registered and
legally existing under the PRC laws with independent legal person status, and with full and independent status and legal capacity
to execute, deliver and perform this Agreement, and may act independently as a subject of actions;

 

7.2 its has full internal power and authority within its company
to execute and deliver this Agreement and all the other documents to be entered into by it in relation to the transaction referred
to herein, and it has the full power and authority to complete the transaction referred to herein. This Agreement shall be executed
and delivered by it legally and properly, and constitutes the legal and binding obligations on it and is enforceable on it in accordance
with its terms and conditions;

 

7.3 it has all business licenses necessary for its business
operations as of the effective date of this Agreement, has full rights and qualifications to engage in its currently engaged businesses,
may perform its obligations hereunder, and will maintain, during the valid term of this Agreement, the validity of all its such
business licenses; and

 

7.4 it shall inform promptly the other Parties of any litigations
it is involved in and other disadvantageous circumstances that may affect the performance hereof, and shall endeavor at its best
efforts to prevent the deterioration of losses caused by such litigations or other disadvantageous circumstances.

 

ARTICLE 8 - AGREEMENT TERM

 

8.1 The Parties hereby confirm that, once this Agreement is
formally executed by the Parties, this Agreement shall be irrevocably effective as far as the date [September 5], 2018:
unless terminated earlier by the Parties in writing, this Agreement shall be valid for a term of 20 years starting
from the date [September 5], 2018.

 

Notwithstanding the provision in the preceding sentence, as
the rights and obligations of each of the Commercial Consulting servicers there under are separate and independent from each other,
upon agreement in writing by HUAYA. this Agreement may be terminated only in relation to any one of the Commercial
Consulting servicers, with such termination not subject to the agreement of the other Commercial Consulting servicers.

 

8.2 The Parties hereby confirm that, from the year 2019 onward,
the amount of the Service Fees shall be negotiated on January 1 each year, with any adjustment thereto (if any) to be made in writing
as an appendix hereto.

 

8.3 Upon termination of this Agreement, each Party shall continue
to abide by its obligations under Articles 3 and 6 hereunder.

 

    	7

     

    

 

ARTICLE 9 -
NOTICE

 

9.1 Any notice, request, demand and other correspondences made
as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.

 

9.2 The abovementioned notice or other correspondences shall
be deemed to have been delivered when it is transmitted if transmitted by facsimile or telex; it shall be deemed to have been delivered
when it is delivered if delivered in person; it shall be deemed to have been delivered five (5) days after posting the same if
posted by mail.

 

ARTICLE 10 - DEFAULT LIABILITY

 

10.1 The Parties agree and confirm that, if any Party (the “DEFAULTING
PARTY”) breaches substantially any of the agreements made under this Agreement, or fails substantially to perform any of
the obligations under this Agreement, such a breach shall constitute a default under this Agreement (a “DEFAULT”),
then the non-defaulting Party whose interest is damaged thereby shall have the right to require the Defaulting Party to rectify
such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take
remedial measures within such reasonable period or within ten (10) days of the non-defaulting Party notifying the Defaulting Party
in writing and requiring it to rectify the Default, then the non-defaulting Party shall have the right, at its own discretion,
to (1) terminate this Agreement and require the Defaulting Party to indemnify it fully for the damage; or (2) demand the enforcement
of the Defaulting Party’s obligations hereunder and require the Defaulting Party to indemnify it fully for the damage.

 

10.2 The Parties agree that any of the following events shall
be deemed to have constituted the Default:

 

(1) Any of ASIA TIME or its subsidiaries or their respective
shareholders breaches any provisions of the Entrustment Agreement on Shareholder’s Voting Rights PROXY AGREEMENT entered
into by it with HUAYA;

 

(2) any of ASIA TIME or its subsidiaries or their respective
shareholders breaches any provisions of other Agreements entered into by it with HUAYA on [September 5], 2018.

 

10.3 The Parties agree and confirm that under no circumstances
shall ASIA TIME and ASIA TIME Subsidiaries be able to demand termination of this Agreement for whatever
reason, unless the Laws or this Agreement provides for otherwise.

 

10.4 Not withstanding any other provisions herein, the validity
of this Article 10 shall not be affected by the suspension or termination of this Agreement.

 

    	8

     

    

 

ARTICLE 11 - FORCE MAJEURE

 

In the event of earthquake, typhoon, flood, fire, war, computer
virus, loophole in the design of tooling software, internet system encountering hacker’s invasion, change of policies or
laws, and other unforeseeable or unpreventable or unavoidable event of force majeure, which directly prevents a Party from performing
this Agreement or performing the same on the agreed condition, the Party encountering such a force majeure event shall forthwith
issue a notice by a facsimile and, within ten (10) days, present the documents proving the details of such force majeure event
and the reasons for which this Agreement is unable to be performed or is required to be postponed in its performance, and such
proving documents shall be issued by the notaries office of the area where such force majeure event takes place. The Parties shall
consult each other and decide whether this Agreement shall be waived in part or postponed in its performance with regard to the
extent of impact of such force majeure event on the performance of this Agreement. No Party shall be liable to compensate for the
economic losses brought to the other Parties by the force majeure event.

 

ARTICLE 12 – MISCELLANEOUS

 

12.1 This Agreement shall be prepared in the Chinese language
in two (2) original copies, with each involved Party holding one (1) copy hereof.

 

12.2 The formation, validity, execution, amendment, interpretation
and termination of this Agreement shall be subject to the PRC Laws.

 

12.3 Any disputes arising hereunder and in connection herewith
shall be settled through consultations among the Parties, and if the Parties cannot reach an agreement regarding such disputes
within thirty (30) days of their occurrence, such disputes shall be submitted to Shenzhen Court of International Arbitration in
accordance with the arbitration rules of such Commission, and the arbitration award shall be final and binding on the Parties involved
in such dispute.

 

12.4 Any rights, powers and remedies empowered to any Party
by any provisions herein shall not preclude any other rights, powers and remedies enjoyed by such Party in accordance with laws
and other provisions under this Agreement, and the exercise of its rights, powers and remedies by a Party shall not preclude its
exercise of its other rights, powers and remedies by such Party.

 

12.5 Any failure or delay by a Party in exercising any of its
rights, powers and remedies hereunder or in accordance with laws (the “PARTY’S RIGHTS”) shall not lead to a waiver
of such rights, and the waiver of any single or partial exercise of the Party’s Rights shall not preclude such Party from
exercising such rights in any other way and exercising the remaining part of the Party’s Rights.

 

12.6 The titles of the Articles contained herein shall be for
reference only, and in no circumstances shall such titles be used in or affect the interpretation of the provisions hereof.

 

12.7 Each provision contained herein shall be severable and
independent from each of other provisions, and if at any time any one or more articles herein become invalid, illegal or unenforceable,
the validity, legality or enforceability of the remaining provisions herein shall not be affected as a result thereof.

 

    	9

     

    

 

12.8 Once executed, this Agreement shall replace any other legal
documents entered into by the relevant Parties hereof in respect of the same subject matter hereof.

 

12.9 Any amendments or supplements to this Agreement shall be
made in writing and shall take effect only when properly signed by the Parties to this Agreement.

 

12.10 No Party shall assign any of its rights and/or obligations
hereunder to any parties other than the Parties hereof without the prior written consent from the other Parties.

 

12.11 This Agreement shall be binding on the legal successors
of the Parties.

 

12.12 The rights and obligations of each of the ASIA TIME
Subsidiaries hereunder are independent and severable from each other, and the performance by any of the ASIA TIME
Subsidiaries of its obligations hereunder shall not affect the performance by any other of the ASIA TIME Subsidiaries
of their obligations hereunder.

 

12.13 Each of the Parties undertakes to declare and pay respectively
according to the Laws any taxes in relation to the transaction hereunder.

 

[THE REMAINDER OF THIS PAGE IS LEFT BLANK]

 

    	10

     

    

 

IN WITNESS HEREOF, the Parties have caused this Exclusive Service
Agreement to be executed in Guangzhou as of the date first hereinabove mentioned.

 

HUAYA
(SHENZHEN) INFORMATION CO., LTD. (Company chop)

 

	Signed
    by:	/s/
    Chen Qiang	 
	Name:	Chen Qiang	 
	Position:	Authorized
     Representative	 

 

QIANHAI
ASIA TIME (SHENZHEN) INTERNATIONAL FINANCE SERVICE CO., LTD. (Company chop)

 

	Signed
    by:	/s/
    Chen Qiang	 
	Name:	Chen Qiang	 
	Position:	Authorized
     Representative	 

 

    	11

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