Document:

Exhibit 4.6

 

PRIVATE & CONFIDENTIAL

3 December 2010

 

BETWEEN

 

FAST BOOST HOLDINGS LIMITED

(Borrower)

AND

PHILLIP VENTURES ENTERPRISE FUND 2 LTD

(Lender)

AND

FAME BRILLIANT GROUP LIMITED

(Warrantor)

AND

HONG JINSHAN

(Warrantor)

AND

OR SIU FONG

(Warrantor)

 

 

SUPPLEMENTAL AGREEMENT

 

 

KHATTARWONG

Partnership in Practice

 

80 Raffles Place,

 

#25-01 UOB Plaza 1, Singapore 048624

 

Tel: 65-6535 6844 / Fax 65-6534 4892

 

Email kwp@khattarwong.com

 

 

THIS SUPPLEMENTAL AGREEMENT is made on the 3rd day of December 2010 AMONGST:

 

(1)                                 FAST BOOST HOLDINGS LIMITED (Company Registration. 1463677), a corporation  incorporated under the laws of the British Virgins Islands with its registered office at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the British Virgin Islands (the “Borrower”);

 

(2)                                 PHILLIP VENTURES ENTERPRISE FUND 2 LTD. (Company Registration: 200609453C), a company incorporated in Singapore with its registered address at 250 North Bridge Road, #06-00 Raffles City Tower, Singapore 179101 (the “Lender”);

 

(3)                                 FAME BRILLIANT GROUP LIMITED (Company Registration No. 1462170) a corporation incorporated under the laws of the British Virgins Islands with its registered office at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the British Virgin Islands (“Fame Brilliant”);

 

(4)                                 HONG JINSHAN (Hong Kong Passport/IC No.: R333454(5)), of Room 502, Block 3D, Donggang Huayuan, Zhifang Road, Shishi City, Fujian, the People’s Republic of China (“Hong”); and

 

(5)                                 OR SIU FONG (Hong Kong Passport/IC No.: P722887(6)), of Flat C, 22/F., Block 5, Laguna Verde The Greenwood, 8 Laguna Verde Avenue, Hong Kong (“Or”),

 

(Hong and Or shall collectively be termed the “Founders”, and each, a “Founder”; Fame Brilliant and the Founders shall collectively be termed the “Warrantors”, and each, a “Warrantor”),

 

(collectively, the “Parties” and, each, a “Party”).

 

BACKGROUND:

 

(A)                               The Parties entered into a convertible loan agreement dated 24 December 2008 under which the Lender extended a loan of S$4 million to the Borrower. This agreement was varied by a supplemental agreement dated 15 January 2010. The convertible loan agreement, as varied by the supplemental agreement shall be termed, the “First Agreement”.

 

(B)                               The Parties entered into a second convertible loan agreement dated 15 January 2010 under which the Lender extended another loan of S$4 million to the Borrower (the “Second Agreement”). Pursuant to the First Agreement and the Second Agreement (collectively, the “Convertible Loan Agreements”), the Lender extended an aggregate sum of S$8.0 million (the “Aggregate Loan”) to the Borrower.

 

(C)                               The Parties has since agreed to abandon the IPO, and in its stead, it is intended that the Group will undertake an initial public offering in the United States of America (the “New IPO”). In connection with the New IPO:

 

(i)                                     ZUOAN FASHION LIMITED (the “Cayman Listco”) was incorporated as an exempted company in the Cayman Islands with limited liability with effect from 24 August 2010; and

 

(ii)                                  A share swap was undertaken such that the Cayman Listco (instead of the Listco) became the holding company of the Borrower (the “New Share Swap”),

 

(the “Additional Restructuring Steps”).

 

1

 

(D)                               It is further intended that after the completion of the Restructuring Exercise and the Additional Restructuring Steps, the Group would be enlarged to include the Cayman Listco in place of Listco, and Cayman Listco would undertake the New IPO, an initial public offering of American depository shares representing ordinary shares in the capital of Cayman Listco (the “ADS”s), and apply for the ADSs to be listed on NYSE (the “US Listing”).

 

(E)                                In connection with the US Listing, following further negotiation between the Parties, the Parties intend to amend the terms and conditions of the Convertible Loan Agreements as set out in this Supplemental Agreement.

 

IT IS HEREBY AGREED as follows:

 

1.                                      DEFINITIONS

 

1.1                               Unless otherwise defined, terms and phrases defined in the Convertible Loan Agreements  shall have the same meanings when used in this Supplemental Agreement.

 

1.2                               The provisions of Clauses 1.2 to 1.5 of the First Agreement shall mutatis mutandis apply to this Supplemental Agreement as if repeated in this Supplemental Agreement.

 

2.                                      AMENDMENT OF THE CONVERTIBLE LOAN AGREEMENTS

 

2.1                               Amendments to Clause 1.1 of both Convertible Loan Agreements

 

Clause 1.1 of both Convertible Loan Agreements be amended as follows:

 

(a)                                 The definition of “Business Day” shall be replaced in its entirety by the following:

 

““Business Day” means a day (other than Saturday, Sunday or a gazetted public holiday on which commercial banks are open for business in New York, United States of America, the Hong Kong Special Administrative Region, and the PRC;”;

 

(b)                                 The definition of “Conversion Shares” shall be replaced in its entirety by the following:

 

““Conversion Shares” means the Cayman Listco Shares to be issued and credited as fully paid-up upon the conversion of the Loans;”;

 

(c)                                  The definition of “Deed of Charge” shall be replaced in its entirety by the following:

 

““Deed of Charge” means, as the case may be, (i) the deed executed by Fame Brilliant in favour of the Lender granting a charge over 15,408 ordinary shares in the capital of the Listco dated 24 December 2008 which was subsequently varied by a supplemental deed of charge dated 22 January 2010, which has been discharged by a deed of discharge dated 29 September 2010; or (ii) the deed to be executed by Fame Brilliant in favour of the Lender granting a charge over 15,408 ordinary shares in the capital of Cayman Listco of par value USD$0.01 each in the agreed form;”;

 

2

 

(d)                                 The definition of “Group” or “Group Companies” shall be replaced in its entirety by the following:

 

““Group” or “Group Companies” means the Borrower and its subsidiaries, and  (i) before the completion of the Additional Restructuring Steps, Listco, subject to Listco becoming the holding company of the Borrower in connection with the Restructuring Exercise; or (ii) Cayman Listco, upon Cayman Listco becoming the holding company of the Borrower after the completion of the Additional Restructuring Steps, and “Group Company” means any or a specific corporation within the Group;”;

 

(e)                                  The definition of “IPO Price” shall be replaced in its entirety by the following:

 

““IPO Price” means the value of a Cayman Listco Share computed based on the offering price of the ADS representing Cayman Listco Shares to be listed on NYSE in connection with the US Listing as calculated below;

 

	
IPO Price
  	
=
  	
Offering price per ADS at US Listing
  
	
Number of Cayman Listco Shares represented by one ADS
  

 

(f)                                   The definition of “Listing Date” shall be replaced in its entirety by the following: 

 

““Listing Date” means the date of the ADSs are listed on the NYSE;”;

 

(g)                                  The definition of “Maturity Date” shall be replaced in its entirety by the following:

 

““Maturity Date” means 31 January 2011, or such other date and subject to such terms and conditions as may be mutually agreed amongst the Parties;”;

 

(h)                                 The definition of “Moratorium” shall be replaced in its entirety by the following:

 

““Moratorium” means such moratorium on the transfer or disposal of interests in the Cayman Listco Shares as stipulated in Clause 11;”;

 

(i)                                     The definition of “Preliminary IPO Price” shall be replaced in its entirety by the following:

 

““Preliminary IPO Price” means the estimated IPO Price computed based on the estimated offering price per ADS in the US Listing as communicated by the Underwriter to the Cayman Listco, which shall be computed as follows:

 

	
Preliminary      
  	
=
  	
Mid-point of the Estimated Price Range
  
	
IPO Price
  	
Number of Cayman Listco Shares represented by one ADS
  

 

(j)                                    The definition of “Underwriting Agreement” shall be replaced in its entirety by the following:

 

““Underwriting Agreement” means the underwriting agreement to be executed amongst, inter alia, the Cayman Listco and the Underwriters in connection with the US Listing;”;

 

(k)                                 The following definitions be deleted:

 

(i)                                     Conversion Date;

 

(ii)                                  MAS;

 

(iii)                               Provenance;

 

3

 

(iv)                              Sale Shares; and

 

(v)                                 UOB Kay-Hian;

 

(l)                                     The following new definitions be inserted, such that they appear in alphabetical order in amongst the list of words and expressions defined:

 

(i)                                    (1)                                  ““Additional Restructuring Steps” means additional corporate  restructuring action undertaken in connection with the US Listing, being:

 

(a)                                 the establishment and incorporation of Cayman Listco as an exempted company in the Cayman Islands with limited liability; and

 

(b)                                 the share swap undertaken such that the Cayman Listco (instead of the Listco) became the holding company of the Borrower;”;

 

(2)                                 the phrase “and the Additional Restructuring Steps” be inserted  after the phrase “in connection with the Restructuring Exercise”, in:

 

(a)                                 the First Agreement

 

·                            In Clause 8.1(b)

·                            In Clause 8.2(b)

·                            In Clause 12.1

 

(b)                                 the Second Agreement

 

·                            In Clause 7.1(b)

·                            In Clause 7.2(b)

·                            In Clause 11.1; and

 

(3)                                 the phrase ”, save as provided in the Restructuring Exercise or  the Additional Restructuring Steps” be inserted at the end of Clause 8.2(c) of the First Agreement and Clause 7.2(c) of the Second Agreement;

 

(ii)                                  ““ADS” means American depository shares representing the Cayman  Listco Shares to be listed on NYSE”;

 

(iii)                              (1)                                  ““Cayman Listco” means Zuoan Fashion Limited, an exempted  company in the Cayman Islands with limited liability with effect from 24 August 2010;”

 

(2)                                 the term “Listco” shall be replaced with “Cayman Listco” in:

 

(a)                                 the First Agreement

 

·                            In the 3 instances in Clause 2.2

·                            In Clause 6.1

·                            In Clause 7.3

·                            In the introductory paragraph of Clause 8.1

·                            In the phrase “outstanding shares by the Borrower or the Listco” in Clause 8.1(a)

·                            In the 2 instances in Clause 11.1

 

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·                            In Clause 12.1

·                            In Clause 12.2(a)

·                            In the 2 instances in Clause 12.2(b)

·                            In Clause 12.3

·                            In Clause 15.1(j)

 

(b)                                 the Second Agreement

 

·                            In the 3 instances Clause 2.2

·                            In Clause 6.3

·                            in the 2 instances appearing in the introductory paragraph of Clause 7.1

·                            In the phrase “outstanding shares by the Borrower or the Listco” in Clause 7.1(a)

·                            In the 2 instances in Clause 10.1

·                            In Clause 11.1

·                            In Clause 11.2(a)

·                            In the 2 instances in Clause 11.2(b)

·                            In Clause 11.3

·                            In Clause 14.1(j)

 

(3)                                 the phrase “(whilst the Listco is the holding company of the  Borrower); or the Cayman Listco (whilst the Cayman Listco is the holding company of the Borrower)” shall be added after the phrase “the Listco”, appearing in:

 

(a)                                 the First Agreement

 

·                            where it first appears in Clause 8.1(a)

·                            in the introductory paragraph of Clause 8.1(c)

·                            In Clause 8.1(c)(i)

·                            In Clause 8.1(c)(ii)

·                            In Clause 8.2(b)

·                            In Clause 8.2(h)

·                            In Clause 8.2(i)

·                            in the 3 instances in Clause 8.3

·                            in the 2 instances in Clause 9.1(f)

 

(b)                                 the Second Agreement

 

·                            Where it first appears in Clause 7.1(a)

·                            In the introductory paragraph of Clause 7.1(c)

·                            In Clause 7.1(c)(i)

·                            In Clause 7.1(c)(ii)

·                            in Clause 7.2(b)

·                            In Clause 7.2(c)

·                            In Clause 7.2(h)

·                            In Clause 7.2(i)

·                            In the 3 instances in Clause 7.3

·                            In the 2 instances in Clause 8.1(f)

 

(iv)                              “Cayman Listco Shares” means ordinary shares in the capital of Cayman Listco”;

 

5

 

(v)                                 ““Estimated Price Range” means the range of the estimated offering  price per ADS as disclosed in the Registration Statement””;

 

(vi)                              ““Registration Statement” means the registration statement to be filed  with the SEC in connection with the US Listing;”;

 

(vii)                           ““SEC” means the Securities and Exchange Commission of the United  States of America;”;

 

(viii)                       (1)                                  ““US Listing” means the listing of the ADSs on NYSE”;

 

(2)                                 the word “Listing” shall be replaced with “US Listing”, in the  following instances:

 

(a)                                      In the introductory paragraph of Clause 8.1 and Clause 14(a) of the First Agreement; and

 

(b)                                      In the Introductory paragraph of Clause 7.1 and Clause 13.1(a) of the Second Agreement; and

 

(3)                                 adding the phrase “or US Listing” after the phrase “the Listing”,  appearing in:

 

(a)                                      in the introductory paragraph of Clause 8.1(b) and Clause 14.1(e) of the First Agreement; and

 

(b)                                      in the introductory paragraph of Clause 7.1(b) and Clause 13.1(d) of the Second Agreement; and

 

(ix)                              ““Underwriters” means Cowen and Company and other underwriters  designated in the Underwriting Agreement;”.

 

2.2                               Other Amendments

 

(a)                                 Clause 7.1 of the First Agreement and Clause 6.1 of the Second Agreement shall be replaced in their entirety by the following

 

“All (and not some only) of the Loans shall automatically be converted into Conversion Shares on or at any time immediately after the Borrower has delivered to the Lenders a Conversion Notice signed by an authorised signatory of the Borrower. The Borrower shall issue such a Conversion Notice to the Lenders when the Underwriters communicate to the Cayman Listco the Preliminary IPO Price.”

 

(b)                                 Clause 9.1(c) of the First Agreement and Clause 8.1(c) the Second Agreement shall be replaced in its entirety by the following:

 

“the Borrower shall submit a US Listing application to the NYSE within 12 months from the Drawdown Date;”

 

(c)                                  Clause 9.1(d) of the First Agreement and Clause 8.1(d) of the Second Agreement, respectively, shall be replaced in its entirety by the following:

 

“in the event that the Borrower seeks listing on an exchange other than NYSE on or before the Maturity Date, the Lenders shall have the same rights as stated in this Agreement;”

 

(d)                                 Clause 9.1(e) of the First Agreement and Clause 8.1(e) of the Second Agreement shall be replaced in its entirety by the following:

 

6

 

“in the event that the Redemption shall have occurred or the Put Option shall have been exercised and the Borrower seeks listing within 2 years thereafter (as the case may be), the Lenders shall be entitled to make an investment directly or indirectly in the Borrower or the WFOE on the same terms and conditions as stated in this Agreement;”; and

 

(e)                                  Clause 10.1 of the First Agreement and Clause 9.1 of the Second Agreement  shall be replaced in its entirety by the following:

 

“...

 

(d)                                 The Put Option Period shall be for 3 months commencing immediately  from any of the following events:

 

(i)                                    withdrawal of the Registration Statement;

 

(ii)                                rejection of the US Listing application by the NYSE;

 

(iii)                            issuance of a stop order suspending the effectiveness of the Registration Statement by the SEC;

 

(iv)                              occurrence of any Event of Default; or

 

(v)                                  the IPO is aborted for whatever reasons including (i), (ii), (iii) and (iv) above.

 

(e)                                  The Put Option Notice shall not be served on the Founders in the event  that the ADSs are successfully listed on NYSE. For the avoidance of doubt, notwithstanding anything to the contrary in this Agreement, the Put Option shall lapse and cease to have any further effect upon the successful US Listing and quotation of the ADSs on the NYSE.”;

 

(f)                                   The phrase “Notice of Transfer” appearing twice in Clause 12.7 of the First  Agreement and Clause 11.7 of the Second Agreement be replaced with “Sale Notice”.

 

(g)                                  The phrase “date of Listing” appearing in Clause 13.1 and Clause 12.1 of the  Second Agreement be replaced with “Listing Date”.

 

(h)                                 Clause 14.1(b) of the First Agreement and Clause 13.1(b) of the Second  Agreement shall be replaced in its entirety by the following:

 

“the conversion into Conversion Shares pursuant to Clause 7 does not take place by Maturity Date (or such later date as may be determined by the Lenders at their sole discretion);”

 

(i)                                     Clause 24.3(b) of the First Agreement and Clause 23.3(b) of the Second  Agreement, respectively, shall be replaced in its entirety by the following:

 

“to any information whatsoever requested or required to be delivered by applicable law or rules or by a court of competent jurisdiction or by any governmental body or regulatory authority including and the SGX-ST and NYSE or the Securities Industry Council and SEC; and”; and

 

(j)                                    Schedule 2 of the First Agreement and Schedule 1 and the Second  Agreement shall be replaced in its entirety by Schedule 1 of this Supplemental Agreement.

 

7

 

3.                                      OTHER AMENDMENTS TO THE FIRST AGREEMENT

 

Clause 1.1 of the First Agreement shall be amended by:

 

(a)                                 replacing the definition of “Declined Subscription Shares” in its entirety with the following:

 

““Declined Subscription Shares” has the meaning ascribed to it in Clause 8.1(b)(ii);”;

 

(b)                                 replacing the definition of “Exercising Lender” in its entirety with the following:

 

“Exercising Lender” has the meaning ascribed to it in Clause 10.1 (a)”; and

 

(c)                                  replacing the definition of “Redemption” in its entirety with the following:

 

“Redemption” means the redemption of the Loans by the Borrower as described in Clause 14;”.

 

4.                                      OTHER AMENDMENTS TO THE SECOND AGREEMENT

 

4.1                               The date “31 December 2010” appearing Clause 6.2(c) of the Second Agreement shall be replaced with “31 January 2011”:

 

4.2                               Clause 7.4 of the Second Agreement shall be replaced as follows:

 

“The Parties agree that the provisions in this Clause 7 shall not apply to the issue of any new Cayman Listco Shares or other securities or instruments convertible into or otherwise exchangeable into Cayman Listco Shares (directly or indirectly) (“New Securities”) and the subscription of any of such New Securities by new investor(s) shall be on such terms that are not more favourable than this Agreement.”

 

4.3                               Clause 10.3 of the Second Agreement shall be replaced in its entirety by the following:

 

“In the event that, any shareholder of the Cayman Listco offers his Cayman Listco Shares or ADSs for sale in connection with the US Listing (the “Vendor Sale”) the Lender shall be entitled to similarly offer its Cayman Listco Shares or ADSs for sale in connection with the US Listing subject to such limitations as may be imposed by the Underwriter.”

 

5.                                      CONFIRMATION AND INCORPORATION; CONFIRMATION OF NO BREACH

 

5.1                               Except to the extent expressly varied or amended by the provisions of this Agreement, the terms and conditions of the Convertible Loan Agreements are hereby confirmed by the Parties and shall remain in full force and effect.

 

5.2                               References to either Convertible Loan Agreements, in any document or instrument however expressed, shall be read and construed as references to the Convertible Loan Agreement as varied or amended and supplemented by this Agreement.

 

5.3                               Each of the Parties confirms that there is no breach by the other Parties under the Convertible Loan Agreements (as amended by this Agreement), and without prejudice to the confirmation, to release the other Parties from any such breach.

 

8

 

6.                                      MISCELLANEOUS

 

6.1                               Each Party shall bear its own legal, professional and other costs and expenses incurred in connection with the negotiation, preparation or completion of this Supplemental Agreement.

 

6.2                               This Supplemental Agreement may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by signing any such counterpart. Each counterpart may be signed and executed by the Parties and transmitted by facsimile or electronic transmission and shall be as valid and effectual as if executed as an original.

 

6.3                               This Agreement shall be governed by, and construed in accordance with, the laws of the Republic of Singapore.

 

6.4                               For avoidance of doubt, a party who is not a Party to this Agreement has no rights under the Contracts (Right of Third Parties) Act (Cap. 53B) of Singapore to enforce any term of this Agreement, but this does not affect any right or remedy of third party which exists apart from this Act.

 

6.5                               In relation to any legal action or proceedings arising out of or in connection with this Agreement (“Proceedings”), each Party irrevocably and unconditionally submits to the jurisdiction of the courts of Singapore and waives any objection to the Proceedings in any such courts on the grounds of venue or on the grounds that the Proceedings have been brought in an inconvenient forum or similar grounds.

 

9

 

SCHEDULE 1

 

CONVERSION NOTICE

 

	
To:
  	
Lender
  
	
 
  	
 
  
	
Date:
  	
 
  

 

We refer to the Convertible Loan Agreements (the “Agreements”) dated 24 December 2008 (varied on 15 January 2010) and 15 January 2010, respectively, amongst (1) us, as a borrower, (2) you, as Lender, (3) Fame Brilliant (as defined in the Agreement) and (4) the Founders (as defined in the Agreement) in relation to the convertible loans of an aggregate sum of S$8.0 million.

 

Terms defined in the Agreements shall have the same meanings in this Conversion Notice unless the context requires otherwise. References to a Clause are to a clause of the Agreements.

 

In accordance with Clause 7.2 and/or Clause 6.2 and the Second Agreement (as the case may be), we hereby give you notice that the total number of Conversion Shares to be allotted and issued to you and (at your direction) your nominee is             and we will issue to you and (at your direction) your nominee such number of Conversion Shares on            :

 

Yours faithfully

for and on behalf of

FAST BOOST HOLDINGS LIMITED

 

 

	
 
  	
 
  
	
Name:
  	
 
  
	
 
  	
 
  
	
Title:
  	
 
  

 

10

 

IN WITNESS WHEREOF, the Parties have hereunto entered into this Supplemental Agreement on the date as set out above.

 

 

THE BORROWER

 

 

	
SIGNED by
  	
)
  	
 
  
	
OR SIU FONG
  	
)
  	
 
  
	
for and on behalf of
  	
)
  	
 
  
	
FAST BOOST GROUP HOLDINGS LIMITED
  	
)
  	
/s/ Or Siu Fong
  
	
in the presence of:
  	
)
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Witness:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
/s/ TSANG CHI HON
  	
 
  	
 
  
	
Signature of witness
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
TSANG CHI HON
  	
 
  	
 
  
	
Name of witness (block letters)
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Flat H, 4/F, Hang Yue Building, 334-350 Des Voeux Road West, HK
  	
 
  	
 
  
	
Address of witness
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
FAME BRILLIANT
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
SIGNED by
  	
)
  	
 
  
	
OR SIU FONG
  	
)
  	
 
  
	
for and on behalf of
  	
)
  	
 
  
	
FAME BRILLIANT GROUP LIMITED
  	
 
  	
)
  	
/s/ Or Siu Fong
  
	
in the presence of:
  	
)
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Witness:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
/s/ TSANG CHI HON
  	
 
  	
 
  
	
Signature of witness
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
TSANG CHI HON
  	
 
  	
 
  
	
Name of witness (block letters)
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
Flat H, 4/F, Hang Yue Building, 334-350 Des Voeux Road West, HK
  	
 
  	
 
  
	
Address of witness
  	
 
  	
 
  
				

 

11

 

	
THE LENDERS
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
SIGNED by
  	
)
  	
 
  	
 
  
	
TIMOTHY CHAN
  	
)
  	
 
  	
 
  
	
for and on behalf of
  	
)
  	
 
  	
/s/ Timothy Chan
  
	
PHILLIP VENTURES ENTERPRISE FUND 2 LTD
  	
)
  	
 
  	
 
  
	
in the presence of:
  	
)
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
Witness:
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
/s/ PAULINE CHOON
  	
 
  	
 
  	
 
  
	
Signature of witness
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
PAULINE CHOON
  	
 
  	
 
  	
 
  
	
Name of witness (block letters)
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
250 North Bridge Rd #06-00 Raffles City Tower(S) 179101.
  	
 
  	
 
  	
 
  
	
Address of witness
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
THE FOUNDERS
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
SIGNED by
  	
)
  	
 
  	
 
  
	
HONG JINSHAN
  	
)
  	
 
  	
/s/ Hong Jinshan
  
	
in the presence of:
  	
)
  	
 
  	
 
  
	
Witness:
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
/s/ TSANG CHI HON
  	
 
  	
 
  	
 
  
	
Signature of witness
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
TSANG CHI HON
  	
 
  	
 
  	
 
  
	
Name of witness (block letters)
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
Flat H, 4/F, Hang Yue Building, 334-350 Des Voeux Road West, HK
  	
 
  	
 
  	
 
  
	
Address of witness
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
SIGNED by
  	
)
  	
 
  	
 
  
	
OR SIU FONG
  	
)
  	
 
  	
/s/ Or Siu Fong
  
	
in the presence of:
  	
)
  	
 
  	
 
  
	
Witness:
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
/s/ TSANG CHI HON
  	
 
  	
 
  	
 
  
	
Signature of witness
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
TSANG CHI HON
  	
 
  	
 
  	
 
  
	
Name of witness (block letters)
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
Flat H, 4/F, Hang Yue Building, 334-350 Des Voeux Road West, HK
  	
 
  	
 
  	
 
  
	
Address of witness
  	
 
  	
 
  	
 
  

 

12Exhibit 10.1

 

English Translation

 

FORM OF DISTRIBUTION AGREEMENT

 

Party A: ZUOAN Dress Co., Ltd., Shishi (“ZUOAN”)

 

Legal Representative: James Jinshan Hong

 

Place of Business: Wuxing, North Beihuan Road, Fengli, Shishi City

 

Business License No.: QDMQZZi No. 007514 -1/0

 

Tel: 0595-83008890

 

Fax: 0595-88505229                         Postcode: 362700

 

Attorney:                                                         

 

ID Card No.:                                                    

 

Address:                                                          

 

Telephone:                                                        

 

Party B:                           (“Distributor”)

 

Legal Representative:                                                    

 

Place of Business:                                                          

 

Business License No.:                                                       

 

Telephone:                                          

 

Fax:                                                     Postcode:                          

 

Attorney:                                                     

 

ID Card No.:                                               

 

Address:                                                      

 

Tel:                                                              

 

1

 

This Distribution Agreement is entered into by and between ZUOAN and the Distributor for appointment of the regional distributor of ZUOAN’s products. This Distribution Agreement has been entered into upon principles of equality and voluntariness after mutual consultation in accordance with the Contract Law, the Trademark Law and the Patent Law of the People’s Republic of China.

 

I.                                        Distribution

 

ZUOAN hereby grants to the Distributor an exclusive right on the terms and conditions contained below to establish ZUOAN clothing and accessories stores (including outlets in shopping centers) and to distribute ZUOAN’s products in                              (the “Territory”).

 

II.                                   Term

 

This exclusive distribution right shall have a term of 3 years commencing on and ending on                              and may be renewed with a written application filed with ZUOAN three months before expiry of the distribution right. This application is subject to ZUOAN’s approval. Upon ZUOAN’s approval, a new distribution agreement shall be signed; however, if ZUOAN refuses to renew the distribution, this Agreement shall lapse, and ZUOAN shall have the right to sell its products or appoint a third party to be the distributor of its products. Under the same conditions, the Distributor shall have the right of first refusal.

 

III.                              Rights and Obligations of ZUOAN

 

1.                                      ZUOAN shall provide the Distributor with copies of its business documents, including its business license, product registration certificate, quality inspection certificate, product catalogs and marketing materials, etc.

 

2.                                      During the term of this Distribution Agreement, ZUOAN shall not authorize any other third party to resell ZUOAN’s products in                             .

 

3.                                      ZUOAN shall provide the Distributor with VI drawings, free of charge, for the ZUOAN clothing and accessories stores, shops and outlets to be established by the Distributor [which shall be decorated accordingly by local decoration companies appointed by the Distributor. ZUOAN shall reimburse the Distributor the decoration expenses at the rate of RMB1,500 per square meter upon inspection and acceptance of such decoration by ZUOAN]

 

4.                                      [ZUOAN shall provide, at its own expense, the Distributor with shelving items (including other items such as clothes hangers, trousers hangers, mannequins, complimentary gifts, etc.) to equip the ZUOAN stores.] [ZUOAN shall provide, at its own expense, the Distributor with shelving items to equip the ZUOAN stores. The Distributor shall be charged for other items (including clothes hangers, trousers hangers, mannequins, complimentary gifts, etc.) at 50% of the cost of such items.]

 

5.                                      ZUOAN shall raise its brand awareness and reputation through well-designed advertising programs.

 

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6.                                      ZUOAN shall assist the Distributor in establishing standard operating procedures and shall send sales representatives, periodically or otherwise, to the Distributor’s offices for on-site training in order to improve sales performance. The Distributor shall ensure that ZUOAN’s Retail Store Manual is observed in all stores. Otherwise, ZUOAN may at its discretion take punitive measures against the Distributor, such as imposition of a monetary penalty, suspending shipments or termination of the Agreement. The expenses incurred by ZUOAN’s sales representatives for travel to and from the Distributor’s offices shall be borne by ZUOAN; the expenses of accommodation, meals and transportation during their trip to the Distributor’s offices shall be borne by the Distributor, and the Distributor shall cause its employees to provide necessary assistance to ZUOAN’s sales representatives.

 

7.                                      If a defect is found in any ZUOAN product as measured by ZUOAN’s quality standards, such defective item shall be returned to and replaced by ZUOAN, provided that the Distributor shall complete a defective product return form. Return or replacement shall be subject to ZUOAN’s review and approval. When returning a defective item, the Distributor shall ensure that the original packaging is in good condition and that the product is not intentionally modified or damaged. ZUOAN shall have the right to refuse any return or replacement decision made by the Distributor without the prior consent of ZUOAN and, in such case, the Distributor shall be liable for any losses so incurred.

 

8.                                      ZUOAN shall have the right to visit the Distributor’s premises, periodically or otherwise, for sales performance review (including sales revenue, expenses and inventories, etc.), and the Distributor shall provide all necessary assistance to facilitate such review.

 

9.                                      ZUOAN may launch special offers or other marketing campaigns to meet the company’s strategic needs, and Distributor shall assist ZUOAN in implementing such campaigns.

 

10.                               ZUOAN shall have the right to decide whether there is a need for relocation of the Distributor’s office or remodeling of its stores in line with market conditions or ZUOAN’s brand development strategy, and the Distributor shall carry out such decisions.

 

IV.                               Rights and Obligations of the Distributor

 

1.                                      The Distributor shall, upon execution of this Distribution Agreement, provide ZUOAN with duplicate copies of its valid business license (with a scope of business covering apparel sales) and ID cards of its legal representative and attorney, as well as the original copy of the legal representative’s residence certificate as issued by the local public security bureau. (For a sole proprietorship, the duplicate copy of the sole proprietor’s ID card is required.)

 

2.                                      The Distributor shall be an independently managed economic entity. The Distributor shall be entitled to the revenues generated during the term of this Distribution Agreement and liable for any debts incurred. ZUOAN will not participate in distribution of the Distributor’s revenues or profits and the

 

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Distributor will not be required to pay any operating expenses or loyalty fees to ZUOAN based on such revenues or profits.

 

3.                                      The Distributor shall use reasonable efforts to protect ZUOAN’s brand image. The Distributor’s office shall follow the VI standard design furnished by ZUOAN; all stores, shops and outlets shall follow the VI drawings furnished by ZUOAN. In addition, the Distributor shall update the visual merchandising and shelf presentation of the stores periodically to support ZUOAN’s brand development strategy.

 

4.                                      The Distributor shall conform to applicable laws in conducting its business and protecting ZUOAN’s brand reputation. All taxes and charges incurred in reselling ZUOAN’s products shall be paid by the Distributor, and the Distributor shall handle and assume liability for any legal issue, whether administrative, civil or commercial, appropriately.

 

5.                                      The Distributor shall have the status of primary distribution and enjoy the discounts applicable to primary distributions.

 

Order price: The order price shall be                              of the recommended retail price (before tax). The specific discounts shall be determined in accordance with the supply policies announced by the head office at the distributor conference for each seasonal collection. Product packaging is included in the price and shall not be priced separately. ZUOAN shall provide packaging items for all products upon shipment.

 

6.                                      The Distributor shall have the exclusive right to resell ZUOAN’s products in                             , and the Distributor may sublicense this right to others to resell ZUOAN’s products in                              in the form of retail stores or outlets in shopping centers on terms and conditions specified by ZUOAN.

 

7.                                      Any store or outlet established by the Distributor or any sublicensed person shall be subject to ZUOAN’s approval. Factors to be considered include: the commercial environment of the proposed site (shopping center), floor area, brand influence, etc. In the event that any store is established without ZUOAN’s prior consent, ZUOAN may at its discretion terminate this Distribution Agreement.

 

8.                                      The Distributor shall resell ZUOAN’s products in                              and shall not exchange products with or resell products in other territories. If Distributor resells ZUOAN’s products in any territory other than the Territory specified herein, ZUOAN shall have the right to repurchase these products at the retail price from the purchasers, and the costs and market survey expenses thus incurred shall be borne by the Distributor, who will also be liable for a sum of damages up to 5 times the selling price.

 

9.                                      All retail terminals of ZUOAN products, whether managed by the Distributor or any sublicensed person, shall follow the recommended retail price set by ZUOAN at all times except during ZUOAN’s promotional campaigns or strategic adjustments. If the Distributor deems it necessary to launch a special offer, it shall file an application to ZUOAN in advance and implement the special offer only after receiving ZUOAN’s approval.

 

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10.                               The Distributor shall provide a periodic report on market information and sales data upon ZUOAN’s request. Before a seasonal shift, the Distributor shall provide a forecast of local menswear trends, market needs, etc. (including sample clothes). Daily reports on sales (covering details such as item number, color, size and quantity) shall be provided every day, and monthly reports on procurement, sales and inventory (covering details such as item number, color, size and quantity) shall be provided by end of each month.

 

11.                               If the Distributor deems it necessary to launch any major advertisement that is not a part of ZUOAN’s advertising plans, such advertisement campaign shall be subject to ZUOAN’s review and approval. In the event that any advertising effort is launched without ZUOAN’s prior consent, the expenses thus incurred shall be borne by the Distributor, who shall be also liable for any negative impact on ZUOAN’s brand image or any legal responsibility pertaining thereto; ZUOAN reserves the right to investigate the Distributor’s economic responsibility.

 

V.                                    Brand Promotion Allowance

 

As an incentive for brand promotion to facilitate network expansion and enhance sales performance, the Distributor will receive a bill-back sum accounting for 3% of the total monthly purchase price as the brand promotion allowance[; provided that ZUOAN has the right to unilaterally reduce or cancel such allowance (x) under abnormal market conditions or (y) due to necessity of ZUOAN’s development strategy, and the Distributor shall support ZUOAN’s decision and adjust its marketing and promotion policy within the relevant distributional region].

 

VI.                               Tasks and Objectives

 

1.                                      The Distributor shall prepare a market development proposal in line with ZUOAN’s development plan and development strategy to establish more stores and outlets in the Territory systematically and increase sales gradually.

 

2.                                      The sales objectives for each year/quarter shall be determined by ZUOAN, taking into account the conditions of the market and the Distributor’s circumstances. These objectives shall be announced at the distributor conference for each seasonal collection.

 

3.                                      ZUOAN may, as it deems fit, establish retail stores directly operated by ZUOAN in the Territory in line with its development strategy and marketing approach and, in such case, the Distributor shall provide all necessary assistance to ZUOAN.

 

VII.                          Terms of Payment and Method of Delivery

 

1.                                      Terms of payment: PAYMENT BEFORE SHIPMENT. ZUOAN shall make timely shipment after receiving the Distributor’s payment in cash or via TT. In the event of the Distributor’s failure to pay the purchase price in full and in a timely manner, ZUOAN reserves the right to withhold shipment. In the event of a working capital difficulties of the Distributor, the Distributor may file a “PAYMENT AFTER SHIPMENT” request and, in such case, ZUOAN may extend a credit line to Distributor. The amount of credit and the length of time for repayment shall depend on the Distributor’s request, its financial position and its credit reputation. If the Distributor deemed to have breached its commitments,

 

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ZUOAN may elect to refuse the Distributor’s request and, in such case, the PAYMENT BEFORE SHIPMENT policy shall apply.

 

2.                                      Method of delivery: ZUOAN shall arrange transportation of goods with a carrier designated by the Distributor. The costs and expenses, including but not limited to freight charges for purchased/returned goods, handling, insurance, shall be borne by the Distributor. The goods shall be deemed to have been delivered to the Distributor as soon as they are consigned to the carrier designated by the Distributor. ZUOAN shall notify the Distributor of a new shipment by telephone or facsimile and the Distributor shall upon arrival of such goods acknowledge receipt thereof or sign the receipt note and send a copy thereof via facsimile to ZUOAN for reference purposes. For late arrival of any shipment, the Distributor shall inform the carrier as well as ZUOAN of the problem within 3 days after the mutually agreed date of arrival, and ZUOAN shall provide necessary assistance to the Distributor in solving the delay.

 

VIII.                     Breach of Contract

 

1.                                      In the event that ZUOAN is the breaching party, it shall indemnify the Distributor from any losses incurred. In the event that the Distributor is the breaching party, ZUOAN shall have the right to terminate this Distribution Agreement and receive compensation from the Distributor for any goodwill or economic loss incurred.

 

2.                                      Upon expiry of this Distribution Agreement, if the Distributor is not found to be in breach of any provision herein, the parties hereto shall settle the payment for goods within one month thereafter.

 

IX.                               Settlement of Dispute

 

Any dispute arising out of or in relation to this Distribution Agreement shall be settled through mutual consultation. If no settlement can be reached, the dispute shall be submitted to the competent People’s Court in the judicial district in which ZUOAN is located.

 

X.                                    Supplementary Agreement

 

A supplementary agreement may be entered into separately for any matter that is not addressed herein. In the event of any discrepancy between the supplementary agreement and this Distribution Agreement, the supplementary agreement shall prevail.

 

XI.                               Essence of Agreement

 

This Distribution Agreement intends to establish a distribution relationship and set forth a sales arrangement that shall under no circumstance be construed as the relationship between a franchisor and franchisee.

 

This Distribution Agreement is made in three equally binding counterparts that shall become effective upon signature, with ZUOAN holding two copies and the Distributor holding one copy.

 

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On behalf of ZUOAN
 Authorized representative:
  	
On behalf of Distributor
 Authorized representative:
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
Date:
  	
 
  

 

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