Document:

Exhibit 4.62

 

Exclusive Option Agreement

 

This Exclusive Option Agreement (this “Agreement”) is executed by and among the following Parties as of January 1, 2016, in Shanghai, the People’s Republic of China (“China” or the “PRC”):

 

Party A:            Yanhua Network Technology (Shanghai) Co., Ltd., a wholly foreign-owned enterprise incorporated and existing under applicable law of China having its registered office at Room 605, 6th Floor, Building No.1, Lane 2145, Jingshajiang Road, Putuo District, Shanghai, PRC;

 

Party B:            Tairan Guo, a Chinese citizen with Identification No.: 210803197804291530;

 

Party C:            Lv Neng Tao E-Commerce (Suzhou) Co., Ltd., a limited liability company incorporated and existing under applicable law of China having its registered office at Room 306, Building No.3, Keling Road 78, High-tech Zone, Suzhou, PRC.

 

In this Agreement, each of Party A, Party B and Party C shall be hereinafter referred to as a “Party” individually, and as the “Parties” collectively.

 

Whereas: Party B is one of the shareholders of Party C and as of the effective date of this Agreement holds 33% of the equity interests of Party C, representing RMB 3.3 million in the registered capital of Party C;  Party A and Party C has signed a series of VIE agreements (“VIE Agreements”) in Shanghai such as Exclusive Business Cooperation Agreement.

 

Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement:

 

1.                  Sale and Purchase of Equity Interest

 

1.1                     Option Granted

 

In view of Party A has paid Party B RMB 10 as the consideration, and Party B confirmed receipt and that the consideration is sufficient, Party B hereby irrevocably grants Party A an exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase the equity interests in Party C then held by Party B once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”).  Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B.  Party C hereby agrees to the grant by Party B of the Equity Interest Purchase Option to Party A.  The term “person” as used herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations.

 

Strictly Confidential

 

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1.2                     Steps for Exercise of the Equity Interest Purchase Option

 

Subject to the provisions of the laws and regulations of China, Party A may exercise the Equity Interest Purchase Option by issuing a written notice to Party B (the “Equity Interest Purchase Option Notice”), specifying:(a) Party A’s decision to exercise the Equity Interest Purchase Option; (b) the portion of equity interests to be purchased by Party A or the Designee from Party B (the “Optioned Interests”); and (c) the date for purchasing the Optioned Interests or the date for the transfer of the Optioned Interests.

 

1.3                     Equity Interest Purchase Price

 

The total price for the purchase by Party A of all Optioned Interests held by Party B upon exercise of the Equity Interest Purchase Option by Party A shall be RMB 3.3 million; if Party A exercises the Equity Interest Purchase Option to purchase part of the Optioned Interests held by Party B in Party C, then the purchase price shall be calculated on a pro rata basis.  If at the time when Party A exercises the Equity Interest Purchase Option, the PRC laws impose mandatory requirements on the purchase price of such Optioned Interests, such that the minimum price permitted under PRC law is higher than the aforementioned price, then the purchase price shall be such minimum price permitted by PRC law (collectively, the “Equity Interest Purchase Price”).

 

1.4                     Transfer of Optioned Interests

 

For each exercise of the Equity Interest Purchase Option:

 

1.4.1                    As one of the shareholders of Party C at that time, Party B shall promptly cause Party C to convene a shareholders’ meeting to ensure himself or herself and urge other shareholders to approve the resolution on Party B’s transfer of the Optioned Interests to Party A and/or the Designee(s);

 

1.4.2                    Party B shall execute an equity interest transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable), in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests;

 

1.4.3                    Relevant party shall execute all necessary contracts, agreements or documents with relevant parties, obtain all necessary government approvals and permits, and take all necessary measures, so as to transfer valid ownership of the Optioned Interests to Party A and/or the Designee(s), unencumbered by any security interests, and cause Party A and/or the Designee(s) to become the registered owner(s) of the Optioned Interests.  For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party’s rights or interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements, but shall be deemed to exclude any security  interest created by this Agreement, Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney; “Party B’s Equity Interest Pledge Agreement” as used in this Agreement shall refer to the Interest Pledge Agreement executed by and among Party A, Party B and Party C on the date hereof and any modification, amendment and restatement thereto.; “Party B’s Power of Attorney” as used in this Agreement shall refer to the Power of Attorney executed by Party B on the date hereof granting Party A with a power of attorney and any modification, amendment and restatement thereto.

 

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1.5                     Payment

 

When Party A exercises the Equity Interest Purchase Option, the Parties shall separately negotiate the specific payment method of the equity consideration.

 

2.                  Covenants

 

2.1           Covenants regarding Party C

 

Party B (as a shareholder of Party C) and Party C covenant from the effective date of this Agreement as follows:

 

2.1.1                              Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association of Party C, increase or decrease its registered capital, or change its structure of registered capital in other manners;

 

2.1.2                              They shall maintain Party C’s corporate existence in accordance with good financial and business standards and practices, obtain and maintain all necessary government licenses and permits by prudently and effectively operating its business and handling its affairs;

 

2.1.3                              Without the prior written consent of Party A, they shall not at any time following the date from the effective date of this Agreement, sell, transfer, mortgage or dispose of in any manner any material assets exceeding RMB 500,000 of Party C or legal or beneficial interest in the material business or revenues of Party C, or allow the encumbrance thereon of any security interest;

 

2.1.4                              Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, except for payables incurred in the ordinary course of business other than through loans;

 

2.1.5                              They shall always operate all of Party C’s businesses within the ordinary course of business to maintain the asset value of Party C and refrain from any action/omission that may adversely affect Party C’s operating status and asset value;

 

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2.1.6                              Without the prior written consent of Party A, they shall not cause Party C to execute any major contract, except the contracts in the ordinary course of business (for the purpose of this subsection, a contract with a price exceeding RMB 500,000 shall be deemed a major contract);

 

2.1.7                              Without the prior written consent of Party A, they shall not cause Party C to provide any person with any loan or credit;

 

2.1.8                              They shall provide Party A with information on Party C’s business operations and financial condition at Party A’s request;

 

2.1.9                              If requested by Party A, they shall procure and maintain insurance in respect of Party C’s assets and business from an insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses;

 

2.1.10                       Without the prior written consent of Party A, they shall not cause or permit Party C to merge, consolidate with, acquire or invest in any person;

 

2.1.11                       They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to Party C’s assets, business, revenue or equity interest;

 

2.1.12                       To maintain the ownership by Party C of all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions, file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

 

2.1.13                       Without the prior written consent of Party A, they shall ensure that Party C shall not in any manner distribute dividends to its shareholders, provided that upon Party A’s written request, Party C shall immediately distribute all distributable profits to its shareholders;

 

2.1.14                       At the request of Party A, they shall appoint any person designated by Party A as the director or the senior executives of Party C;

 

2.1.15                       Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and

 

2.1.16                       Unless otherwise required by PRC law, Party C shall not be dissolved or liquated without prior written consent by Party A;

 

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2.2           Covenants of Party B

 

Party B covenants from the effective date of this Agreement as follows:

 

2.2.1                              Without the prior written consent of Party A, Party B shall not sell, transfer, mortgage or dispose of in any other manner any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon, except for the interest placed in accordance with Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney;

 

2.2.2                              Without the prior written consent of Party A, as a shareholder of Party C, Party B shall ensure himself/herself and shall procure the shareholders and/or the directors (or the executive director) of Party C not to approve any sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the equity interests in Party C held by Party B, or allow the encumbrance thereon of any security interest, except for the interest placed in accordance with Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney;

 

2.2.3                              Without the prior written consent of Party A, Party B shall not approve and shall cause the shareholders and/or the directors (or the executive director) of Party C not to approve the merger or consolidation with any person, or the acquisition of or investment in any person;

 

2.2.4                              Party B shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the equity interests in Party C held by Party B;

 

2.2.5                              Party B shall ensure himself/herself and shall cause the shareholders or the directors (or the executive director) of Party C to vote in favor of the transfer of the Optioned Interests as set forth in this Agreement and to take any and all other actions that may be requested by Party A;

 

2.2.6                              To the extent necessary to maintain Party B’s ownership in Party C, Party B shall execute all necessary or appropriate documents, take all necessary or appropriate actions, file all necessary or appropriate complaints, and raise necessary or appropriate defenses against all claims;

 

2.2.7                              Party B shall appoint any designee of Party A as the director or the senior executives of Party C, at the request of Party A;

 

2.2.8                              If Party received any profit distribution, interest, dividend or proceeds of liquidation from Party C, Party B shall promptly donate all such profit distribution, interest, dividend or proceeds of liquidation to Party A or any other person designated by Party A in the manner permitted by the applicable PRC laws; and

 

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2.2.9                              Party B shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party B,  Party C and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof.  To the extent that Party B has any remaining rights with respect to the equity interests subject to this Agreement hereunder or under the Party B’s Equity Interest Pledge Agreement or under the Party B’s Power of Attorney, Party B shall not exercise such rights except in accordance with the written instructions of Party A.

 

3.                  Representations and Warranties

 

Party B and Party C hereby represent and warrant to Party A, jointly and severally, as of the effective date of this Agreement and each date of the transfer of the Optioned Interests, that:

 

3.1                     They have the power, capacity and authority to execute and deliver this Agreement and any equity interest transfer contracts to which they are parties concerning each transfer of the Optioned Interests as described thereunder (each, a “Transfer Contract”), and to perform their obligations under this Agreement and any Transfer Contracts.  Party B and Party C agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option.  Upon the effectiveness of this Agreement and execution of the Transfer Contracts to which they are parties, this Agreement and such Transfer Contracts shall constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

 

3.2                     Party B and Party C have obtained any and all approvals and consents from the competent government authorities and third parties (if required) for the execution, delivery and performance of this Agreement.

 

3.3                     The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable laws of China; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party C; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, or constitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of any condition for the grant and/or continued effectiveness of any licenses or permits issued to either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

 

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3.4                     Party B has the good and saleable title to the equity interests held by it in Party C.  Except for Party B’s Equity Interest Pledge Agreement and Party B’s Power of Attorney, Party B has not placed any security interest on such equity interests;

 

3.5                     Party C has the good and saleable title to all of the assets, and has not placed any security interest on the aforementioned assets;

 

3.6                     Party C does not have any outstanding debts, except for (i) debt incurred during the ordinary course of business; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained;

 

3.7                     Party C has complied with all PRC laws and regulations in asset acquisition; and

 

3.8                     There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party C, assets of Party C or Party C.

 

4.                  Effective Date and Term

 

This Agreement shall become effective upon execution by the Parties, and remain effective until all equity interests held by Party B in Party C have been transferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement.

 

5.                  Governing Law and Resolution of Disputes

 

5.1                     Governing Law

 

The execution, effectiveness, interpretation, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

 

5.2                     Methods of Resolution of Disputes

 

In the event of any dispute with respect to the interpretation and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations.  If the dispute remains unresolved within 30 days after one Party issues a written notice calling for resolution to the other, either Party may submit the relevant dispute to the Shanghai International Economic and Trade Arbitration Commission for arbitration, in accordance with the arbitration rules of such arbitration commission effective at that time.  The place of the hearing of the arbitration shall be Shanghai.  The arbitration award shall be final and binding on both Parties.

 

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6.                  Taxes and Fees

 

Each Party shall pay any and all transfer and registration taxes, expenses and fees incurred thereby or levied thereon in accordance with the laws of China in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactions contemplated under this Agreement and the Transfer Contracts.

 

7.                  Notices

 

7.1                     All notices and other communications required to be given pursuant to this Agreement or otherwise given in connection with this Agreement shall be delivered personally, or sent by registered mail, prepaid postage, a commercial courier service, facsimile transmission or email to the address of such Party set forth below.  Each notice shall also be emailed again.  The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

 

7.1.1                    Notices given by personal delivery, courier service, registered mail or prepaid postage shall be deemed effectively given on the date of receipt or refusal at the address set forth as notice address;

 

7.1.2                    Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission.

 

7.2                     For the purpose of notices, the addresses of the Parties are as follows:

 

Party A:             Yanhua Network Technology (Shanghai) Co., Ltd.

Address:           3rd Floor, CSSD Building, No. 158 Wangdun Road, Suzhou Industrial Park

Attn:                              Lin Wang

Tel:                                     (512)6288 5565 8000

 

Party B:             Tairan Guo

Address:           3rd Floor, CSSD Building, No. 158 Wangdun Road, Suzhou Industrial Park

Attn:                              Tairan Guo

Tel:                                     (512)6288 5565 8000

 

Party C:             Lv Neng Tao E-Commerce (Suzhou) Co., Ltd.

Address:           3rd Floor, CSSD Building, No. 158 Wangdun Road, Suzhou Industrial Park

Attn:                              Lin Wang

Tel:                                     (512)6288 5565 8000

 

7.3                     Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms of this Section.

 

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8.                  Confidentiality

 

The Parties acknowledge that the existence and the terms of this Agreement, and any oral or written information exchanged between the Parties in connection with the preparation and performance of this Agreement are regarded as confidential information.  Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of other Parties, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock  exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels, or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section.  Disclosure of any confidential information by the shareholders, director, employees of, or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

 

9.                  Further Warranties

 

The Parties agree to promptly execute documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

 

10.           Breach of Agreement

 

10.1              If Party B or Party C materially breaches any provision under this Agreement, Party A is entitled to terminate this Agreement and/or require Party B or Party C to compensate Party A’s losses.  This Section 10 shall not prejudice any other rights of Party A under this Agreement.

 

10.2              Party B or Party C shall not terminate this Agreement unilaterally in any event unless otherwise required by the applicable laws.

 

11.           Miscellaneous

 

11.1              Amendments, changes and supplements

 

Any amendment, change and supplement to this Agreement shall be made in writing by all of the Parties.

 

11.2              Entire agreement

 

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and written consultations, representations and contracts reached with respect to the subject matter of this Agreement.

 

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11.3              Headings

 

The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of the provisions of this Agreement.

 

11.4              Language

 

This Agreement is written in Chinese in three copies, each Party having one copy.

 

11.5              Severability

 

In the event that one or several of the provisions of this Agreement are held to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect.  The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

 

11.6              Successors

 

The terms of this Agreement shall be binding and valid to the respective successors and permitted assigns of the Parties.

 

11.7              Survival

 

11.7.1                        Any obligations that occurred or that are due in connection with this Agreement before the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

 

11.7.2                        The provisions of Sections 5, 8, 10 and this Section 11.7 shall survive the termination of this Agreement.

 

11.8              Waivers

 

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require the signatures of the Parties.  No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such a Party with respect to any similar breach in other circumstances.

 

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Option Agreement as of the date first above written.

 

 

	
Party A:
    	
Yanhua Network Technology (Shanghai) Co., Ltd.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
Minghua Zhao
    	
 
    
	
Title:
    	
Legal Representative
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party   B:
    	
Tairan   Guo
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party C:
    	
Lv Neng Tao E-Commerce (Suzhou) Co., Ltd.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
Minghua Zhao
    	
 
    
	
Title:
    	
Legal RepresentativeExhibit 4.63

 

Equity Interest Pledge Agreement

 

This Exclusive Interest Pledge Agreement (this “Agreement”) is executed by and among the following Parties as of January 1, 2016, in Shanghai, the People’s Republic of China (“China” or the “PRC”):

 

Party A:       Yanhua Network Technology (Shanghai) Co., Ltd., a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its registered address at Room 605, 6th Floor, Building No.1, Lane 2145, Jingshajiang Road, Putuo District, Shanghai, PRC (hereinafter the “Pledgee”);

 

Party B:       Min Xiahou, a Chinese citizen with Identification No.: 350203196407134017 (hereinafter the “Pledgor”);

 

Party C:       Lv Neng Tao E-Commerce (Suzhou) Co., Ltd., a limited liability company organized and existing under the laws of the PRC, with its registered address at Room 306, Building No.3, Keling Road 78, High-tech Zone, Suzhou, PRC.

 

In this Agreement, each of the Pledgee, the Pledgor and Party C shall be hereinafter referred to as a “Party” individually, and as the “Parties” collectively.

 

Whereas:

 

1.              The Pledgor is a citizen of China who as of the effective date of this Agreement holds 33% of the equity interests of Party C, representing RMB 3.3 million in the registered capital of Party C.  Party C is a limited liability company registered in Suzhou, China engaging in online trade agency (shall not engage in financial business), business information consulting (except for brokerage), vehicles, equipment leasing, car transport information consulting services, investment advice (except for financial securities insurance business, except for brokerage), sales of solar photovoltaic and new energy related products, energy-saving products and equipment sales, self-support and agent various types of goods and technology import and export business (except for commodities and technologies that the state restricts from operating or prohibiting the import and export), information technology and new energy technology areas of technology development, technical consultation, technology transfer, technical services, investment management (except for equity investment and equity investment management).  Party C acknowledges the respective rights and obligations of the Pledgor and the Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge;

 

2.              The Pledgee is a wholly foreign-owned enterprise registered in China.  The Pledgee and Party C have executed an Exclusive Business Cooperation Agreement (as defined below); Party C, the Pledgee and the Pledgor have executed an Exclusive Option Agreement (as defined below); and the Pledgor has executed a Power of Attorney (as defined below) in favor of the Pledgee;

 

3.              To ensure that Party C and the Pledgor fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and the Power of Attorney, the Pledgor hereby pledges to the Pledgee all of the equity interest that the Pledgor holds in Party C as security for Party C’s and the Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and the Power of Attorney.

 

Strictly Confidential

 

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To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon the following terms.

 

1.                   Definitions

 

Unless otherwise provided herein, the terms below shall have the following meanings:

 

1.1                     Pledge: shall refer to the security interest granted by the Pledgor to the Pledgee pursuant to Section 2 of this Agreement, i.e., the right of the Pledgee to be paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from the auction or sale of the Equity Interest.

 

1.2                     Equity Interest: shall refer to 33% equity interests in Party C will be held by the Pledgor at the effective date of this Agreement, representing RMB 3.3 million in the registered capital of Party C, and all of the equity interest thereafter legally acquired by the Pledgor in Party C.

 

1.3                     Term of the Pledge: shall refer to the term set forth in Section 3 of this Agreement.

 

1.4                     Transaction Documents: shall refer to the Exclusive Business Cooperation Agreement executed by and between Party C and the Pledgee on January 1, 2016, (the “Exclusive Business Cooperation Agreement”), the Exclusive Option Agreement executed by and among Party C, the Pledgee and the Pledgor on January 1, 2016, (the “Exclusive Option Agreement”), Power of Attorney executed on January 1, 2016, by the Pledgor (the “Power of Attorney”) and any modification, amendment and restatement to the aforementioned documents.

 

1.5                     Contract Obligations: shall refer to all the obligations of the Pledgor under the Exclusive Option Agreement, the Power of Attorney and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and this Agreement.

 

1.6                     Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by the Pledgee, incurred as a result of any Event of Default on the part of the Pledgor and/or Party C under the Transaction Documents.  The amount of such losses shall be calculated based on such factors as the reasonable business plan and profit forecast of the Pledgee, the consulting and service fees payable to the Pledgee under the Exclusive Business Cooperation Agreement, damages and relevant fees under the Transaction Documents, all expenses occurred by the Pledgee in connection with enforcement of the Pledgor’s and/or Party C’s Contract Obligations and etc.

 

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1.7                     Event of Default: shall refer to any of the circumstances set forth in Section 7 of this Agreement.

 

1.8                     Notice of Default: shall refer to the notice issued by the Pledgee in accordance with this Agreement declaring an Event of Default.

 

2.                   Pledge

 

2.1                     The Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under this Agreement.  Party C hereby assents that the Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

 

2.2                     During the term of the Pledge, the Pledgee is entitled to receive dividends distributed on the Equity Interest.  Without the prior written consent of the Pledgee, the Pledgor shall not receive dividends distributed on the Equity Interest.  Dividends received by the Pledgor on Equity Interest after the deduction of individual income tax paid by the Pledgor shall be, as required by the Pledgee, (1) deposited into an account designated and supervised by the Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to making any other payment; or (2) to the extent not violate the applicable PRC laws, unconditionally donated to the Pledgee or any other person designated by the Pledgee.

 

2.3                     The Pledgor may subscribe for a capital increase in Party C only with prior written consent of the Pledgee.  Any additional equity interest obtained by the Pledgor as a result of the Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest.

 

2.4                     In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to the Pledgor upon Party C’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designated and supervised by the Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) to the extent not violate PRC laws, unconditionally donated to the Pledgee or any other person designated by the Pledgee.

 

3.                   Term of the Pledge

 

3.1                     The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein is registered with the relevant administration for industry and commerce (the “AIC”).  The Pledge shall remain effective until all Contract Obligations have been fully performed and all Secured Indebtedness has been fully paid.  The Pledgor and Party C shall (1) register the Pledge in the shareholders’ register of Party C within 3 business days following the execution of this Agreement, and (2) submit an application to the AIC for the registration of the Pledge of the Equity Interest contemplated herein within thirty (30) days following the execution of this Agreement.  The parties covenant that for the purpose of registration of the Pledge, the parties hereto and all other shareholders of Party C shall submit to the AIC this Agreement or an equity interest pledge contract in the form required by the AIC at the location of Party C which shall truly reflect the information of the Pledge hereunder (the “AIC Pledge Contract”).  For matters not specified in the AIC Pledge Contract, the Parties shall be bound by the provisions of this Agreement.  The Pledgor and Party C shall submit all necessary documents and complete all necessary procedures, as required by the relevant PRC laws and regulations and the competent AIC, to ensure that the Pledge of the Equity Interest shall be registered with the AIC as soon as possible after submission for filing.

 

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3.2                     During the Term of the Pledge, in the event the Pledgor and/or Party C fails to perform the Contract Obligations or pay Secured Indebtedness, the Pledgee shall have the right, but not the obligation, to exercise the Pledge in accordance with the provisions of this Agreement.

 

4.                   Custody of Records for Equity Interest subject to the Pledge

 

4.1                     During the Term of the Pledge set forth in this Agreement, the Pledgor shall deliver to the Pledgee’s custody the capital contribution certificate for the Equity Interest and the shareholders’ register containing the Pledge within one week from the effective date of this Agreement.  The Pledgee shall have custody of such documents during the entire Term of the Pledge set forth in this Agreement.

 

5.                   Representations and Warranties of the Pledgor and Party C

 

As of the execution date of this Agreement, the Pledgor and Party C hereby jointly and severally represent and warrant to the Pledgee that:

 

5.1                     The Pledgor is the sole legal and beneficial owner of the Equity Interest.

 

5.2                     The Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement.

 

5.3                     Except for the Pledge, the Pledgor has not placed any security interest or other encumbrance on the Equity Interest.

 

5.4                     The Pledgor and Party C have obtained any and all approvals and consents from the applicable government authorities and third parties (if required) for the execution, delivery and performance of this Agreement.

 

5.5                     The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles of association or other constitutional documents; (iii) result in any breach of or constitute any default under any contract or document to which it is a party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or approval granted to any Party; or (v) cause any permit or approval granted to any Party to be suspended, cancelled or attached with additional conditions.

 

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6.                   Covenants of the Pledgor and Party C

 

6.1                     During the term of this Agreement, the Pledgor and Party C hereby jointly and severally covenant to the Pledgee:

 

6.1.1                     The Pledgor shall not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest or any portion thereof, without the prior written consent of the Pledgee, except for the performance of the Transaction Documents;

 

6.1.2                     The Pledgor and Party C shall comply with and carry out all requirements under applicable laws and regulations relating to pledge, and within five (5) days of receipt of any notice, order or recommendation issued or made by the competent authorities regarding the Pledge (if any), shall present the aforementioned notice, order or recommendation to the Pledgee, and shall comply with the aforementioned notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon the Pledgee’s reasonable request or upon consent of the Pledgee;

 

6.1.3                     Each of the Pledgor and Party C shall promptly notify the Pledgee of any event or notice received by it that may have an impact on the Equity Interest or any portion thereof, as well as any event or notice received by it that may have an impact on any guarantees and obligations of the Pledgor under this Agreement or the performance of obligations of the Pledgor under this Agreement;

 

6.1.4                     Party C shall complete the registration procedures for the extension of the operation term within three (3) months prior to the expiration of such term to maintain the validity of this Agreement.

 

6.2                     The Pledgor agrees that the rights acquired by the Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmed by the Pledgor or any, successors or representatives of the Pledgor or any other persons through any legal proceedings.

 

6.3                     To protect or perfect the security interest granted by this Agreement for the Contract Obligations and Secured Indebtedness, the Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by the Pledgee.  The Pledgor also undertakes to perform and to cause other parties who have an interest in the Pledge to perform actions required by the Pledgee, to facilitate the exercise by the Pledgee of its rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with the Pledgee or designee(s) of the Pledgee (natural persons/legal persons).  The Pledgor undertakes to provide the Pledgee within a reasonable time with all notices, the orders and decisions regarding the Pledge that are required by the Pledgee.

 

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6.4                     The Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement.  In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, the Pledgor shall indemnify the Pledgee for all losses resulting therefrom.

 

7.                   Event of Breach

 

7.1                     The following circumstances shall be deemed an Event of Default:

 

7.1.1                    The Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement.

 

7.1.2                    Party C’s any breach to any obligations under the Transaction Documents and/or this Agreement.

 

7.2                     Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section 7.1, the Pledgor and Party C shall immediately notify the Pledgee in writing accordingly.

 

7.3                     Unless an Event of Default set forth in Section 7.1 has been successfully resolved to the Pledgee’s satisfaction within twenty (20) days after the Pledgee and/or Party C delivers a notice to the Pledgor requesting ratification of such Event of Default, the Pledgee may issue a Notice of Default to the Pledgor in writing at any time thereafter, demanding the Pledgor to immediately exercise the Pledge in accordance with the provisions of Section 8 of this Agreement.

 

8.                   Exercise of the Pledge

 

8.1                     The Pledgee shall issue a written Notice of Default to the Pledgor when it exercises the Pledge.

 

8.2                     Subject to the provisions of Section 7.3, the Pledgee may exercise the right to enforce the Pledge at any time after the issuance of the Notice of Default in accordance with Section 8.1.

 

8.3                     After the Pledgee issues a Notice of Default to the Pledgor in accordance with Section 8.1, the Pledgee may exercise any remedy measure under the applicable PRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from the auction or sale of the Equity Interest.  The Pledgee shall not be liable for any loss incurred by its duly exercise of such rights and powers.

 

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8.4                     The proceeds from the exercise of the Pledge by the Pledgee shall be used to pay for the taxes and expenses incurred as a result of disposing the Equity Interest and to perform the Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment.  After the payment of the aforementioned amounts, the remaining balance shall be returned to the Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where the Pledgor resides, with all expenses incurred being borne by the Pledgor.  To the extent not prohibited by the applicable PRC laws, the Pledgor shall unconditionally donate the aforementioned proceeds to the Pledgee or any other person designated by the Pledgee.

 

8.5                     The Pledgee may exercise any remedy measure available to it simultaneously or in any order.  The Pledgee may exercise the priority right in compensation based on the monetary valuation that such Equity Interest is converted into or with the proceeds from the auction or sale of the Equity Interest under this Agreement, without being required to exercise any other remedy measure first.

 

8.6                     The Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and the Pledgor or Party C shall not raise any objection to such exercise.

 

8.7                     When the Pledgee disposes of the Pledge in accordance with this Agreement, the Pledgor and Party C shall provide the necessary assistance to enable the Pledgee to enforce the Pledge in accordance with this Agreement.

 

9.                   Breach of Agreement

 

9.1                     If the Pledgor or Party C materially breaches any provision under this Agreement, Party A is entitled to terminate this Agreement and/or require the Pledgor or Party C to compensate all the losses.  This Section 9 shall not prejudice any other rights of the Pledgee under this Agreement.

 

9.2                     The Pledgor or Party C shall not have any right to terminate this Agreement unilaterally in any event unless otherwise required by the applicable laws.

 

10.            Assignment

 

10.1              Without the Pledgee’s prior written consent, neither the Pledgor nor Party C shall assign or delegate its/his rights and obligations under this Agreement.

 

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10.2              This Agreement shall be binding on the Pledgor and his/her successors and permitted assigns, and shall be valid with respect to the Pledgee and each of his/her successors and permitted assigns.

 

10.3              At any time, the Pledgee may assign any and all of its rights and obligations under the Transaction Documents and this Agreement to its designee(s), in which case the assignees shall have the rights and obligations of the Pledgee under the Transaction Documents and this Agreement, as if it were the original party to the Transaction Documents and this Agreement.

 

10.4              In the event of change of the Pledgee due to assignment, the Pledgor and/or Party C shall, at the request of the Pledgee, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register the same with the competent AIC.

 

10.5              The Pledgor and Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any of them, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof.  Any remaining rights of the Pledgor with respect to the Equity Interest pledged hereunder shall not be exercised by the Pledgor except in accordance with the written instructions of the Pledgee.

 

11.            Termination

 

11.1              Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by the Pledgor and Party C, the Pledgee shall release the Pledge under this Agreement upon the Pledgor’s request as soon as reasonably practicable and shall assist the Pledgor in de-registering the Pledge from the shareholders’ register of Party C and with the competent PRC local administration for industry and commerce.

 

11.2              The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement.

 

12.            Handling Fees and Other Expenses

 

All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees, shall be borne by Party C.

 

13.            Confidentiality

 

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information.  Each Party shall maintain the confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, director, employees of or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and such Party shall be held liable for breach of this Agreement.

 

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14.            Governing Law and Resolution of Disputes

 

14.1              The execution, effectiveness, interpretation, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of China.

 

14.2              In the event of any dispute with respect to the interpretation and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations.  If the dispute remains unresolved within 30 days after one Party issues a written notice calling for resolution to the other, either Party may submit the relevant dispute to the Shanghai International Economic and Trade Arbitration Commission for arbitration, in accordance with the arbitration rules of such arbitration commission effective at that time.  The place of the hearing of the arbitration shall be Shanghai.  The arbitration award shall be final and binding on both Parties.

 

14.3              Upon the occurrence of any disputes arising from the interpretation and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

 

15.            Notices

 

15.1              All notices and other communications required to be given pursuant to this Agreement or otherwise given in connection with this Agreement shall be delivered personally, or sent by registered mail, prepaid postage, a commercial courier service, facsimile transmission or email to the address of such Party set forth below.  Each notice shall also be emailed again.  The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

 

15.2              Notices given by personal delivery, courier service, registered mail or prepaid postage shall be deemed effectively given on the date of receipt or refusal at the address set forth as notice address.

 

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15.3              Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

 

15.4              For the purpose of notices, the addresses of the Parties are as follows:

 

Party A:             Yanhua Network Technology (Shanghai) Co., Ltd.

Address:           7th Floor, Building 1-B, Jinqi Square, Lane 2145, Jinshajiang Road, Putuo District, Shanghai

Attn:                              Xin Jin

Tel:                                     021-80129001

Fax:                                 021-80129003

 

Party B:             Min Xiahou

Address:           3rd Floor, CSSD Building, No. 158 Wangdun Road, Suzhou Industrial Park

Attn:                              Min Xiahou

Tel:                                     (512)6288 5565 8000

 

Party C:             Lv Neng Tao E-Commerce (Suzhou) Co., Ltd.

Address:  3rd Floor, CSSD Building, No. 158 Wangdun Road, Suzhou Industrial Park

Attn:                              Lin Wang

Tel:                                     (512)6288 5565 8000

 

15.5              Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms of this Section.

 

16.            Severability

 

In the event that one or several of the provisions of this Contract are held to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Contract shall not be affected or compromised in any respect.  The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

 

17.            Attachments

 

The attachments set forth herein shall be an integral part of this Agreement.

 

18.            Effectiveness and Amendments

 

18.1              This Agreement shall become effective upon execution by the Parties.

 

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18.2              Any amendment, change and supplement to this Agreement shall be made in writing by all of the Parties and shall be effective upon the execution of all Parties and upon the registration in government authority as required (if necessary).

 

19.            Language and Counterparts

 

This Agreement is written in Chinese in four copies.  The Pledgor, the Pledgee and Party C shall hold one copy respectively and the other copy shall be used for registration.

 

[The remainder of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Equity Interest Pledge Agreement as of the date first above written.

 

 

	
Party A:
    	
Yanhua Network Technology (Shanghai) Co., Ltd.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
Minghua Zhao
    	
 
    
	
Title:
    	
Legal Representative
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party   B:
    	
Min   Xiahou
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party C:
    	
Lv Neng Tao E-Commerce   (Suzhou) Co., Ltd.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
Minghua Zhao
    	
 
    
	
Title:
    	
Legal Representative

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