Document:

Exhibit 4.23

 

Capital Increase Agreement

 

Between

 

Huainan Wang

 

Ningbo Zhishanzhizhen Investment Management Partners (Limited Partnership)

 

Ningbo Baoshu Investment Management Partners (Limited Partnership)

 

Ningbo Honghu Investment Management Partners (Limited Partnership)

 

Ningbo Bowentongda Investment Management Partners (Limited Partnership)

 

And

 

Reemake Media Co., Ltd.

 

For

 

Beijing Zhongming Century Technology Co., Ltd.

 

September 8, 2016

 

 

Capital Increase Agreement

 

This capital increase agreement (the “Agreement”) is hereby signed by the following parties on September 8, 2016:

 

1.              Beijing Zhongming Century Technology Co., Ltd. (the “Company”) is a limited liability company registered in Beijing according to the laws of the People’s Republic of China (“China”, Hong Kong SAR, Macau SAR and Taiwan are excluded for the purpose of the Agreement);

 

2.              Existing Shareholders:

 

Huaina Wang;

 

Ningbo Zhishanzhizhen Investment Management Partners (Limited Partnership), a limited liability partnership established according to the laws of the People’s Republic of China;

 

Ningbo Baoshu Investment Management Partners (Limited Partnership), a limited liability partnership established according to the laws of the People’s Republic of China;

 

Ningbo Honghu Investment Management Partners (Limited Partnership), a limited liability partnership established according to the laws of the People’s Republic of China;

 

Ningbo Bowentongda Investment Management Partners (Limited Partnership), a limited liability partnership established according to the laws of the People’s Republic of China;

 

3.              Investor:

 

Reemake Media Co., Ltd., a limited liability company established according to the laws of the People’s Republic of China;

 

Party A, Party B and Party C may be referred to as a “Party” individually or collectively, “the Parties”.

 

WHEREAS:

 

1.              The Company is incorporated as a limited liability company according to the laws of the People’s Republic of China.

 

2.              The Company, the investor and other related parties signed a loan agreement (the Agreement and its subsequent amendments or supplemental agreements amended from time to time are collectively referred to as the “Loan Agreement”) attached in Appendix 1, requiring the investor to provide loans (the “Original Loan”) to the Company.

 

3.              The investor agreed that a certain amount of the Original Loan under the Loan Agreement will expire earlier as stated in the Loan Agreement without adding interest. The Company will refund the abovementioned loan amount to the investor without any additional interest. The remaining balance (the “Loan Principal”) will be subject to a debt-to-equity swap (the “Debt-to-Equity Swap”) according to the Loan Agreement.

 

 

4.              All parties agreed and acknowledged that the investor has agreed to implement the above mentioned “Debt-to-Equity Swap” in the form of a capital increase for the Company and Beijing BabyTree Marketing Consulting Co., Ltd., respectively.

 

Therefore, as mutually beneficial to all parties, the Parties hereby agree to the following:

 

Article 1 The Implementation and Termination of the Loan Agreement

 

1.1       All parties agreed that the Loan Principal under the Loan Agreement will be swapped for equity in the form of capital increase to the Beijing BabyTree Marketing Consulting Co., Ltd., in which RMB351,550,469 will be allocated to the Company and RMB20,449,531 will be allocated to Beijing BabyTree Marketing Consulting Co., Ltd.

 

1.2       The Debt-to-Equity Swap with the Company

 

(1)         All parties have agreed that the Loan Principal for the Company to swap debt for equity is RMB351,550,469 (the “Amount of Debt Equity Swap”); The Company shall pay the Amount of Debt Equity Swap in two instalments. The first installment for the Debt-to-Equity Swap will be in the amount of RMB175,775,000 (the “First Installment of Repayment Amount”); the second installment will be in the amount of RMB175,775,469 (the “Second Installment of Repayment Amount”).

 

(2)         It is agreed by all parties that the investor shall increase capital to the Company subject to Article 2 of the Agreement and amortize the payment for capital increase amount subject to Article 3 of the Agreement.

 

1.3       All parties agreed that the Debt-to-Equity Swap principal amount for Beijing BabyTree Marketing Consulting Co., Ltd., will be stipulated in a separate agreement (including but not limited to repayment of principle and capital increase plan).

 

1.4       All parties hereby consent and confirm that according to the Loan Agreement, the investor exempts any interest the Company is required to pay (if any) beginning on the effective day of the Agreement. The Agreement is terminated on the day the Company pays off the Loan Principal stated in the Loan Agreement. All parties’ rights and obligations are terminated since the termination day of the Loan Agreement. None of the parties will be privileged to or undertake any rights, obligations or responsibilities derived from the Loan Agreement; One party waives its rights of recourse and recoupment from all other parties under the Loan Agreement (if any).

 

Article 2 Capital Increase from the Investor

 

2.1       It is agreed and acknowledged by the parties that the investor will invest an aggregated amount of RMB351,550,469 (the “Capital Increase Amount”) (of which 4,168,700 accounted into registered capital and the remaining accounted into Company’s capital reserves) to subscribe the newly-added registered capital of RMB4,168,700 (the “Capital Increase”).

 

 

The shareholders of the Company have unanimous consent over the Capital Increase and agreed to give up their preferential subscription right of the Capital Increase.

 

2.2       It is agreed and acknowledged by the parties that in addition to the completion of the Capital Increase under the Agreement by the investor, there are other investors engaged in capital investment in the Company and conduct certain registration modifications at the same time. The Company will stipulate the relevant terms with the other investors and relevant parties for their capital increase in a separate agreement, but the investor’s rights or interests under the Agreement shall not be reduced or affected by the above agreement or capital increase plan.

 

Article 3 Delivery and Payment

 

3.1       Under the provisions and conditions of the Agreement, the Investor shall pay the Capital Increase Amount to the Company in two installments. The amount of the first installment (the “First Installment of the Capital Increase Amount”) paid by the Investor is equal to the agreed upon amount of the First Installment of Repayment Amount set forth in Article 1.2 (1); the amount of the second installment (the “Second Installment of the Capital Increase Amount”) paid by the Investor is equal to the agreed upon amount of the Second Installment of Repayment Amount set forth in Article 1.2 (1).

 

3.2       Agreed by all parties, if the pre-conditions set forth in Article 4.1 for delivery have been satisfied or waived in writing by the Investor, the Company shall make the First Installment of Payment within five working days or any alternative timeline agreed upon by all parties. All parties shall execute the transfer of the capital increase plan and the Investor shall initiate the transfer of the First Installment of the Capital Increase Amount into an account designated by the Company. If the pre-conditions set forth in Article 4.2 for delivery have been satisfied or waived in writing by the Investor, the Company shall make the First Installment of Payment within five working days or any alternative timeline agreed upon by all parties. All parties shall execute the transfer of the capital increase plan and the Investor shall initiate the transfer of the Second Installment of the Capital Increase Amount into an account designated by the Company.

 

As agreed by all parties, the Company is entitled to demand a liquidated damage (20% of the principal) from the investor and terminate the Agreement by submitting written notice at any time, if the following happens:

 

(1) The investor failed to make any installment within the aforementioned period (the “Overdue Capital Increase Amount”);

 

(2) The investor failed to repay the corresponding Capital Increase Amount as agreed in another agreement signed with Beijing BabyTree Marketing Consulting Co., Ltd.

 

The Company is entitled to offset aforesaid liquidated damage by utilizing the Principal that is not yet paid to the investor (if any) or the First Installment of the Capital Increase Amount paid by the investor (if any).

 

 

If the aforesaid amount of the liquidated damage is not sufficient to cover the loss due to the Investor’s default, the Investor shall indemnity against the loss or compensate in the amount of the insufficient portion. At that time, given the notice of termination for the Agreement from the Company, the Company shall pay the amount (if any) to the Investor with no interest within five working days after deducting the aforementioned liquidated damage from the paid increased fund made by the Investor under the Agreement; and pay the corresponding principle of the loan (if any) that is not yet repaid to the Investor as set forth in the Loan Agreement.

 

3.3                 Agreed by all parties, the investor’s obligation under the Agreement is fulfilled after the Investor has paid the Capital Increase Amount in its entirety as set forth in the Agreement.

 

3.4                 Agreed by all parties, after the investor make the full payment of Capital Increase Amount according to the Agreement, the Company should entrust an accounting firm of relevant qualification to conduct capital verification in time. The Company and its Existing Shareholders promise to complete relevant registration of equity’s modification within 2 months after the investor make the full payment of increased fund according to the Agreement.

 

3.5                 Agreed by all parties, if the Company and its Existing Shareholders fail to complete the relevant registration of equity’s modification based on above Article 3.4, the investor are entitled to demand the company pay a contractual penalty (the amount of Overdue Capital Increase Amount is equal to 20% of Capital Increase Amount) and release this agreement in written notice at any time. Whenever if the investor release the agreement in written notice, the company should pay the investor the Capital Increase Amount as well as aforementioned Overdue Capital Increase Amount within 5 working days.

 

3.6                     Once the investor completes the investment obligations under this Agreement and become shareholders of the Company, they are entitled to corresponding shareholder’s rights and undertake shareholder’s obligations.

 

Article 4 Conditions Precedent

 

4.1       Conditions Precedent of Delivery

 

Unless a written waiver is provided by the investor, or otherwise agreed by related parties, the obligation of the investor making its first installment lies on the satisfaction of the following preconditions of delivery, and that all are satisfied or waived by the investor as “Date of Delivery”. Date of Delivery shall be the day on which the investor pay the First Installment of Repayment Amount to the Company.

 

(1) The agreement has been signed by all parties;

 

(2) The investor have received the total amount of First Installment of Repayment from the Company;

 

(3) From the date of signing for the Agreement (including the signing date) to the Date of Delivery, the Company and its existing shareholders will ensure their Representation and  Warranty under this Agreement is authentic, integrated, and accurate, and fulfil the commitment stipulated in the provisions of this Agreement without any violation under the Agreement.

 

 

4.2       Conditions Precedent of Second Installment of Repayment

 

Unless that a written waiver is provided by the investor, or otherwise agreed by related parties, the obligation of the investor making its second installment lies on the satisfaction of the following preconditions, and the day that all are satisfied or waived by the investor as “Satisfaction Date of Second Installment Conditions”. Satisfaction date of second installment conditions shall be the day on which the investor pay second installment to the company.

 

(1) The investor have received the total amount of Second Installment of the Capital Increase Amount from the company

 

(2) From the date of signing for the Agreement (including Signing Date) to the Satisfaction Date of Second Installment Conditions, the Company and its Existing Shareholders will ensure their Representation and Warranty under this Agreement is authentic, integrated, and accurate, and fulfil the commitment stipulated in the provisions of this Agreement without any violation under the Agreement.

 

Article 5 Representations and Warranties of the Parties

 

5.1       The Company and its existing shareholders jointly and individually warrants and undertakes to the investor, which are as follow:

 

(1)        From the date of signing of this Agreement to the date of last installment of Capital Increase Amount, the Company and its existing shareholders shall do their best to complete the transaction according to the terms and conditions stated in this agreement;

 

(2)        The Company and its existing shareholders are duly incorporated and validly existing entities under the laws of the People’s Republic of China, or a natural person of full capacity of civil conduct;

 

(3)        The Company and its existing shareholders have full rights and power and authority to execute this Agreement, and fulfill the obligations under this Agreement and other relevant agreements or documents;

 

(4)        The Agreement is authorized, signed, and delivered by the Company and its existing shareholders and also presumably by other parties to whom it thus constitutes an effective and binding obligation, and enforceable execution can be taken according to its terms;

 

(5)        The signing and delivery of the Agreement, or compliance with the terms and provisions hereof will not: result in a breach of, its Memorandum and Articles of Association or other constitutive documents;; or result in a breach of any law, rule, regulation, ordinance, order, judgement or regulatory body;

 

(6)        The existing shareholders of the Company have made the full payment to the Company that they subscribe to contribute, without existence of partially financing, feigned financing, withdrawal of capital, etc.

 

 

(7)        The Company and its existing shareholders, by act or omission, shall not damnify the authenticity, accuracy, and integrity of the statements and promises under the Agreement; and

 

(8)        If other investors have any preferential rights prior to the Investor in their Capital Increase Agreement or any other documents signed with the Company and its existing shareholders, the Investor are automatically entitled to such right. The Company and its existing shareholders should ensure the investor to enjoy this right by taking all measures including but not limit to signing supplemental agreement. For any relevant Capital Increase Agreements signed with other investors, the Company and its existing shareholders are required to disclosure such relevant agreements to the Investor.

 

5.2       The Investor’s commitment is as follows:

 

(1)        The Investor is a duly incorporated and validly existing entity under the laws of the People’s Republic of China; the investor, its shareholders or partners, and all indirect shareholders commercially registered as traced back to its uppermost layer are entities in mainland China or natural persons of Chinese nationality, without any existence of foreign capital. On the premise of providing reasonable cause, the Company has the right to require its Investor to transfer its share holdings to entity that was appointed by the Investor and was recognized by the Company, or to modify its shareholding structure, the Investor promise to complete aforementioned transfer or modification within specified time as Company’s requirement.

 

(2)        From the date of signing this agreement to the date of last installment of Capital Increase Amount, the investor shall do their best to complete the transaction as the terms and conditions stated in the Agreement;

 

(3)        The Investor shall provide necessary files in order to assist the Company to obtain all government approval, consent, permission and filing under the Agreement or needed for fully fulfillment of it.

 

(4)        The investor has sufficient rights, power and authorization to sign the Agreement, and promise to fulfill the obligations under the Agreement and such relevant agreement or document;

 

(5)        The Agreement shall be authorized, signed and delivered by the investors, and other parties, if any. The Agreement shall constitute valid and binding obligations, and may be enforced by the terms after signing; and

 

(6)        The investor’s signing and delivery of the Agreement, and their performance of respective obligations by the terms herein shall not and shall will not: constitute an infringement of all parties to articles or any other organizational document, or constitute breach of terms under such document; lead to infringement of any contract that is binding on the party which as the trade party or such entity; lead to violation or breach of any applicable laws, regulations or any act, warrant, prohibition, judgment or ruling that is binding on the party made by any government authority.

 

 

Article 6 Cancellation and Termination

 

6.1       The Agreement shall be terminated upon the occurrence of any of the following circumstances:

 

(1)         Terminate in accordance with the Agreement.

 

(2)         All parties agree in writing to revoke the Agreement.

 

(3)         The occurrence of a statutory force majeure event, resulting in that all parties are unable to perform the Agreement or to achieve the purpose of the Agreement.

 

6.2       Effect of Cancellation or Termination:

 

(1)         After cancellation or termination of the Agreement, each party hereto shall return the consideration herein to the other party in the principle of fairness, reasonableness and good faith, and try to restore the status when the Agreement is signed.

 

(2)         Upon cancellation or termination of the Agreement pursuant to any aforementioned provisions under Article 6.1, unless otherwise specified herein, all rights and obligations of the parties hereunder shall terminate immediately, and any party shall has no other claim to the other party except for obligations as provided in Article 10 herein.

 

Article 7 Confidentiality

 

7.1       Unless otherwise specified herein, all parties shall try their best to ensure the strict confidentiality of all technical, commercial and any other unpublicized information and document (including written, oral, tangible or intangible) in all forms acquired by negotiation, signing or performing the agreement, due diligence. Including to ensure the strict confidentiality of any content herein and any other cooperation and transaction that may exist between the parties. Confidentiality period shall be up when such information and document have been made public by the provider. The parties shall limit its directors, officers, employees, agents, consultants, subcontractors, suppliers, and customers to obtain above information except for properly performing obligations herein.

 

7.2       The above restrictions shall not apply to:

 

(1)         General information that already can be obtained by the public before the disclosure;

 

(2)         General information that already can be obtained by the public before the disclosure but not due to the fault of the receiving party;

 

(3)         Information that is obtained before the disclosure, and is not obtained directly or indirectly from the other party and can proved by the receiving party;

 

(4)         As required by the law, the parties are obliged to disclose such above confidential information to relevant government department, stock exchange institution and others, or to its direct legal adviser and financial adviser as required by its normal operation.

 

 

7.3       The Parties hereto shall ask their directors, senior officers, employees, agents, consultants, subcontractors, suppliers, customers of the company and affiliated companies to comply with confidentiality obligations of Article 7.1 herein.

 

7.4       Regardless of the reason for the cancellation and termination of the Agreement, the parties hereto shall comply with confidentiality obligations of Article 7.1 herein.

 

Article 8 Liability and Compensation

 

8.1       Any party hereto violates provision herein, other parties shall also have the right to claim compensation for the loss therefrom in addition to the rights hereunder.

 

8.2       Subject to other provisions of the agreement, one party hereto (“the Indemnitor”) shall keep the Indemnitee (“the Indemnitee”) from damage and pay relevant compensation to other parties under following situation: (a) Breaches of any declaration and warranty herein by the Indemnitor or situation that any declaration and warranty found inconsistent with the facts. (b) Situation that the Indemnitor breaches or fails to fully fulfill any commitment, agreement, warranty or obligation herein, unless having waiver of breach expressed in writing by other parties. The Indemnitor shall compensate it if the Indemnitee suffered any or all losses directly or indirectly due to situation as aforesaid.

 

8.3       If any party hereto violates the provisions herein, other parties shall also have the right to demand the breaching party to completely and actually fulfill obligations hereunder in addition to the rights hereunder.

 

8.4       Notwithstanding anything to the contrary herein, Article 8.4 shall survive the termination of the rights and obligations of the parties hereto or the termination herein.

 

Article 9 Applicable Law and Dispute Resolution

 

9.1       Applicable Law

 

The Agreement shall be governed by the laws of the People’s Republic of China.

 

9.2       Dispute Resolution

 

Any dispute arising from or in connection with the Agreement, shall be submitted to the China International Economic and Trade Arbitration Commission for arbitration in Beijing in accordance with the arbitration rules in force at that time. The arbitral award is final and binding on all parties. During the settlement of disputes, the parties shall continue to perform the other provisions herein in addition to the matters in dispute.

 

 

Article 10 Expenses

 

10.1          The Parties shall bear their costs generated from drafting relevant documentation used for legal, financial, due diligence and transactions hereunder.

 

Article 11 Others

 

11.1          Unless otherwise agreed, this Agreement and the new Memorandum and Articles of Association shall supersede all prior oral or written agreements, discussion, minutes, memoranda, understandings or communications (including but not limited to fax and emails) in relation to the specific matters mentioned herein among the parties before the signing day.

 

11.2          Any amendments to the Agreement, shall be made in writing and signed by duly authorized representatives of the parties, and shall form an integral part of the agreement.

 

11.3          The headings contained in the Agreement are for reference only and shall not in any way affect the meaning or interpretation of the Agreement.

 

11.4          Notice

 

Any notice, demand, request or any other communication required or permitted hereunder shall be made in writing and send to the receiver after the signing of the sending party. One party may notify the other party in writing of the change of address due to the agreement. Any notice sent in the following ways shall be deemed to be delivered. The date of delivery shall be the earlier one of the following dates:

 

(1)         Delivered by personal service, the receiving date shall be the date of receipt;

 

(2)         Delivered by registered letter, the receiving date shall be the tenth (10) day after the date of imprinting a postmark the post office;

 

(3)         Delivered by express, the receiving date shall be the third (3) day after the date of sending by the delivery service.

 

(4)         Delivered by facsimile, the receiving date shall be the next (1) work day after the date of sending.

 

11.5          If, in accordance with any relevant law, any one or more of the provisions herein or any other legal document(s) contemplated by capital increase is found to be invalid, illegal or unenforceable, then:

 

(1)         The validity, legality and enforceability of the other provisions herein shall not be affected or impeded, and shall be in full force and effect, except as otherwise invalid, unlawful or unenforceable agreements, validity, legality and enforceability of other agreements contemplated by capital increase shall not be affected or impeded, and shall be in full force and effect.

 

(2)         The parties shall forthwith replace the invalid, illegal or unenforceable clauses or agreements with legal, valid and enforceable one, and the intent of such replacement shall be the closest to the invalid, unlawful or unenforceable terms or

 

 

the intent herein.

 

11.6          Article 6.2, Article 7, Article 8, Article 9 and Article 10 herein shall continue to be effective upon termination of the Agreement.

 

11.7          The Agreement shall be held in seven copies of the same form, each contracting party shall hold one, and the remaining one is for the Company to keep.

 

11.8          The Agreement shall come into force as of the date on which it is sealed or signed by all parties.

 

(There is no text below.)

 

 

(This page is left for signature of “Capital Increase Agreement of Beijing Zhongming Century Technology Co., Ltd.”)

 

The Company:

 

Beijing Zhongming Century Technology Co., Ltd.  (Seal) 

 

	
Signature of Authorized Signatory:
    	
/Seal/
    	
 
    

 

Existing Shareholders:

 

Mr. Wang Huainan

 

	
Signature of the Party or Authorized Signatory:
    	
/s/ Wang Huainan
    	
 
    

 

Ningbo ZhiShanzhizhen Investment Management Cooperative Enterprise (Limited Partnership) (Seal) /Seal/

 

	
Signature of Authorized Signatory:
    	
/s/ Xu Chong
    	
 
    

 

Ningbo Baoshu Investment Management Partnership Enterprise (Limited Partnership) (Seal) /Seal/

 

	
Signature of Authorized Signatory:
    	
/s/ Wang Huainan
    	
 
    

 

	
Ningbo Honghu Investment Management Partnership   Enterprise (Limited Partnership) (Seal) /Seal/
    

 

	
Signature of Authorized Signatory:
    	
/s/ Xu Chong
    	
 
    

 

Ningbo Bowentongda Investment Management Partnership Enterprise (Limited Partnership) (Seal) /Seal/

 

	
Signature of Authorized Signatory:
    	
/s/ Xu Chong
    	
 
    

 

 

(This page is left for signature of “Capital Increase Agreement of Beijing Zhongming Century Technology Co., Ltd.”)

 

Investors

 

Reemake Media Co., Ltd. (Seal) /Seal/

 

	
Signature of Authorized Signatory:
    	
/s/ Dai Yusen
    	
 
    

 

 

Appendix 1: Loan AgreementExhibit 4.24

 

Capital Increase Agreement

 

Between

Wang Huainan

Wang Qian

And

Reemake Media Co., Ltd.

For

Beijing BabyTree Marketing Consulting Co., Ltd.

 

September 8, 2016

 

 

Capital Increase Agreement

 

This capital increase agreement (the “Agreement”) is hereby signed by the following parties on September 8, 2016:

 

1.              Beijing BabyTree Marketing Consulting Co., Ltd. (the “Company”), a limited liability company registered in Beijing under the laws of the People’s Republic of China (the PRC or “China”, Hong Kong SAR, Macau SAR and Taiwan are excluded for the purpose of the Agreement);

 

2.              Existing Shareholders:

Wang Huainan:

Wang Qian:

 

3.                  Investor:

 

Reemake Media Co., Ltd., a limited liability company established under the PRC laws;

 

Party A, Party B and Party C may be referred to as a “Party” individually or the “Parties” collectively.

 

WHEREAS:

 

1.              The Company is currently a limited liability company established under the PRC laws.

 

2.              Beijing Zhongming Century Technology Co., Ltd., the Investor and other related parties signed a Loan Agreement (together with its subsequent amendments or supplemental agreements from time to time, the “Loan Agreement”) attached hereto in Appendix 1, pursuant to which the Investor shall provide loans (the “Original Loan”) to Beijing Zhongming Century Technology Co., Ltd.

 

3.              The Investor decided that a certain part of the Original Loan under the Loan Agreement be accelerated and no interest will be charged therefrom. Beijing Zhongming Century Technology Co., Ltd. will refund such accelerated part of the loan to the investor without interest. The remaining balance (the “Principal”) of the amount of the Original Loan will be subject to a debt-to-equity swap (the “Debt-to-Equity Swap”) according to the Loan Agreement.

 

4.              The Parties agree and acknowledge that the Investor will implement the above mentioned “Debt-to-Equity Swap” in the form of a capital increase for the Company and Beijing Zhongming Century Technology Co., Ltd., respectively.

 

Therefore, based on the principles of equality and mutual benefits and through amicable negotiations, the Parties hereby agree as follows:

 

Article 1 Performance of Loan Agreement

 

1.1       The Parties unanimously agree that the Investor will effect the Debt-to-Equity Swap by contributing the Principle under the Loan Agreement to the Company and Beijing Zhongming Century Technology Co., Ltd. respectively as capital increase, of which RMB351,550,469 is to be invested in Beijing Zhongming Century Technology Co., Ltd., and RMB20,449,531 is to be invested in the Company, both as a capital increase.

 

 

1.2       Debt-to-Equity Swap for the Company

 

(1)         The Parties unanimously agree that the amount of the Principal subject to Debt-to-Equity Swap for the Company is RMB20,449,531 (the “Amount of Debt-to-Equity Swap”), and Beijing Zhongming Century Technology Co., Ltd. shall repay the above mentioned Amount of Debt-to-Equity Swap in two instalments, the first of which will be in the amount of RMB10,225,000 (the “First Installment of Repayment”), and the second of which will be in the amount of RMB10,224,531 (the “Second Installment of Repayment”).

 

(2)         It is agreed by all the Parties that the Investor shall increase the capital of the Company subject to Article 2 of the Agreement and pay the capital increase amount subject to Article 3 of the Agreement.

 

Article 2 Capital Increase by the Investor

 

2.1       It is agreed and acknowledged by the Parties that the Investor will invest an aggregate amount of RMB20,449,531 (the “Capital Increase Amount”) to finally subscribe for 7.792% of the Company’s equity interest (the “Capital Increase”). The shareholders of the Company hereby unanimously agree to the Capital Increase and agree to waive their respective pre-emptive right to subscribe for the Capital Increase.

 

2.2       It is agreed and acknowledged by the Parties that in addition to the Capital Increase completed by the Investor under the Agreement, there are other investors that invest in the capital increase and conduct certain AIC change registration concurrently with the Investor, and with respect to the investment to the Company and the relevant capital increase matters, the Company, such other investors and other concerned parties shall enter into a separate agreement to agree on the relevant capital increase plan; provided, however, that such separate agreement or capital increase plan shall not in any respect impair the Investor’s rights or interests in the Company provided under the Agreement.

 

Article 3 Closing and Delivery

 

3.1       Under the provisions and conditions of the Agreement, the Investor shall pay the Capital Increase Amount to the Company in two installments. The amount of the first installment (the “First Installment of the Capital Increase Amount”) payable by the Investor shall be equal to the amount of the First Installment of Repayment set forth in Article 1.2 (1), and the amount of the second installment (the “Second Installment of the Capital Increase Amount”) payable by the Investor shall be equal to the amount of the Second Installment of Repayment set forth in Article 1.2 (1).

 

 

3.2       The Parties unanimously agree that subject to the satisfaction, or the waiver by the Investor, of each of the conditions precedent to the closing set forth in Article 4.1, the Parties shall effect the closing of the Capital Increase and the Investor shall wire transfer the First Installment of the Capital Increase Amount to a specific receiving account designated by the Company within five working days after the date when Beijing Zhongming Century Technology Co., Ltd. has paid the First Installment of Repayment to the Investor, or at such other time as agreed upon by the Parties. The Investor shall wire transfer the Second Installment of the Capital Increase Amount to a specific receiving account designated by the Company within five working days after the date when Beijing Zhongming Century Technology Co., Ltd. has paid the Second Installment of Repayment to the Investor, or at such other time as agreed upon by the Parties.

 

The Parties unanimously agree that in addition to the right to demand the payment of liquidated damages equal to 20% of the Principal from the Investor and, the Company is also entitled to terminate the Agreement with a written notice at any time, if:

 

(1) the Investor fails to make any installment of the Capital Increase Amount within the aforementioned period (the “Overdue Capital Increase Amount”); or

 

(2) the Investor fails to pay the corresponding Capital Increase Amount as agreed in the separate agreement with Beijing Zhongming Century Technology Co., Ltd.

 

The Company is entitled to directly offset aforesaid liquidated damages with the Principal that remains outstanding and payable by Beijing Zhongming Century Technology Co., Ltd. to the Investor (if any) or the First Installment of the Capital Increase Amount paid by the Investor to the Company (if any). If the aforesaid amount of the liquidated damages is not sufficient to cover the loss suffered by the Company as a result of the Investor’s default, the Investor shall indemnify or compensate the Company for such shortfall. In this case, if the Company gives a written notice to terminate the Agreement, the Company shall refund to the Investor the Capital Increase Amount (if any) net of the amount of such liquidated damages with no interest within five working days after the termination of the Agreement, and pay to the Investor the corresponding Principal (if any) that is not yet repaid as set forth in the Loan Agreement.

 

3.3       The Parties unanimously agree that the Investor’s investment obligation under the Agreement is fulfilled after the Investor has paid the Capital Increase Amount in its entirety as set forth in the Agreement.

 

3.4       The Parties unanimously agree that after the Investor make the full payment of Capital Increase Amount according to the Agreement, the Company should promptly entrust an accounting firm of corresponding qualification to conduct capital verification. The company and its Existing Shareholders promise to go through and complete relevant registration of equity change within 2 months after the Investor has made the full payment of the Capital Increase Amount in accordance with the Agreement.

 

 

3.5       The Parties unanimously agree that if the relevant registration of equity change fails to be handled and completed pursuant to Section 3.4 hereinabove for reasons attributable to the Company and its Existing Shareholders, in addition to the right to demand the payment of liquidated damages equal to 20% of the Capital Increase Amount from the Company, the Investor is also entitled to terminate the Agreement with a written notice at any time. In this case, if the Investor gives a written notice to terminate the Agreement, the Company shall refund to the Investor the Capital Increase Amount (if any) already paid by the Investor together with the amount of such liquidated damages within five working days after the termination of the Agreement.

 

3.6       Once the Investor has completed its investment obligations under this Agreement and become a shareholder of the company, it shall enjoy the rights and undertake the obligations as a shareholder.

 

Article 4 Conditions Precedent

 

4.1.    Conditions to Closing

 

Unless a written waiver is provided by the Investor or otherwise agreed by related parties, the obligation of the Investor to pay the First Installment of the Capital Increase Amount is conditional upon the satisfaction of the following conditions precedent to the closing, and the date on which all of the following conditions are satisfied, or waived by the investor, is hereinafter referred to as the “Closing Date,” which shall be the date of payment of the First Installment of Repayment by Beijing Zhongming Century Technology Co., Ltd. to the Investor:

 

(1) the Agreement shall have been signed by all the Parties;

 

(2) the investor shall have received the total amount of the First Installment of Repayment from Beijing Zhongming Century Technology Co., Ltd.;

 

(3) from (and including) the date of execution of the Agreement to the Closing Date, the representations and warranties made by the Company and its existing shareholders under this Agreement shall remain fully authentic, complete and accurate, and the Company and its existing shareholders shall have fulfilled the commitments set forth herein without any breach of the Agreement.

 

4.2.    Conditions Precedent to Payment of Second Installment of Capital Increase Amount

 

Unless a written waiver is provided by the Investor or otherwise agreed by related parties, the obligation of the Investor to pay the Second Installment of the Capital Increase Amount is conditional upon the satisfaction of the following conditions precedent, and the date on which all of the following conditions are satisfied, or waived by the Investor, is hereinafter referred to as the “Satisfaction Date of Second Payment Conditions,” which shall be the date of payment of the Second Instalment of Repayment by Beijing Zhongming Century Technology Co., Ltd. to the Investor.

 

(1) the Investor shall have received the total amount of the Second Installment of the  Capital Increase Amount from Beijing Zhongming Century Technology Co., Ltd.;

 

 

(2) from (and including) the date of execution of the Agreement to the Satisfaction Date of Second Payment Conditions, the representations and warranties made by the Company and its existing shareholders under this Agreement shall remain fully authentic, complete and accurate, and the Company and its existing shareholders shall have fulfilled the commitments set forth herein without any breach of the Agreement.

 

Article 5 Statements and Commitments by the Parties

 

5.1.    The Company and its Existing Shareholders jointly and severally make the following statements and commitments to the Investor:

 

(1)        from the date of execution of this Agreement to the date of payment of the last installment of the Capital Increase Amount, the Company and its Existing Shareholders shall do their best to complete the transaction as the terms and conditions stated in this agreement;

 

(2)        each of the Company and its Existing Shareholders is an entity duly incorporated and in good existence under the laws of the PRC, or a natural person of full capacity of civil conduct;

 

(3)        the Company and its Existing Shareholders have full right and power and authorization to sign the Agreement, and fulfill their respective obligations under the Agreement and such relevant agreements or documents;

 

(4)        the Agreement has been duly authorized, signed and delivered by the Company and its Existing Shareholders and, assuming that it is also duly authorized, signed and delivered by the other parties hereto,  constitutes a valid and binding obligation of them, enforceable against them in accordance with the terms hereof;

 

(5)        the execution and delivery of the Agreement by the Company and its Existing Shareholders, and the performance of their respective obligations hereunder, do not and will not: violate or constitute a default under its articles of association or any other constitutional document; result in a breach of any contract to which it is a party or by which it is bound; result in its contravention or violation of any applicable law, regulation, or any decree, writ, injunction, judgment or ruling issued by any government authority to which it is subject;

 

(6)        the Existing Shareholders of the Company have duly made the entire contributions subscribed by them, and there have been no partial contribution, falsified contribution, withdrawal of contribution and such other circumstances.

 

(7)        none of the Company and its Existing Shareholders will, by act or omission, impair the authenticity, accuracy and completeness of the representations and warranties under the Agreement; and

 

(8)        if it is stipulated in a capital increase agreement or any document between other investors (on the one hand) and the Company and its Existing Shareholders (on the other hand) that such other investors shall have any right in precedence over the Investor, the Investor shall automatically become entitled to such right. The Investor and the Existing Shareholders shall take all measures including but not limit to executing a supplemental agreement to enable the Investor to enjoy such right. The Company and its Existing Shareholders undertake that all agreements with other investors relating to capital increase will be disclosed to the Investor.

 

 

5.2.        The Investor hereby undertake that:

 

(1)        the Investor is an entity duly incorporated and in good existence under the laws of the PRC; the Investor, its shareholders and/or partners, as well as each of the Investor’s indirect shareholders up to the uppermost level under AIC registration, is a PRC domestic entity or a natural person of Chinese nationality, without any foreign capital being involved. If justified by reasonable causes, the Company may require the Investor to transfer its shares to an entity designated by the Investor and acceptable by the Company, or to adjust its shareholding structure, and the Investor undertakes to complete aforementioned transfer or adjustment within the time frame stipulated by the Company.

 

(2)        From the date of execution of this Agreement to the date of payment of the last installment of the Capital Increase Amount, the Investor shall do its best to cause the transaction contemplated hereby to be accomplished in accordance with the terms of the Agreement;

 

(3)        The Investor shall provide necessary files in order to assist the Company in obtaining all government approvals, consents, permissions, registrations and filings required under the Agreement or necessary for full performance of the Agreement.

 

(4)        the Investor has full rights, power and authorization to sign the Agreement, and promises to fulfill the obligations under the Agreement and such relevant agreements or documents;

 

(5)        the Agreement has been duly authorized, signed and delivered by the Investor and, assuming that it is also duly authorized, signed and delivered by the other parties hereto, constitutes a valid and binding obligation of the Investor, enforceable against it in accordance with the terms hereof; and

 

(6)        the execution and delivery of the Agreement by the Investor, and the performance of its obligations hereunder, do not and will not: violate or constitute a default under its articles of association or any other constitutional document; result in a breach of any contract to which it is a party or by which it is bound; result in its contravention or violation of any applicable law, regulation, or any decree, writ, injunction, judgment or ruling issued by any government authority to which it is subject.

 

Article 6 Cancellation and Termination

 

6.1       The Agreement may be terminated:

 

(1)         in accordance with the provisions of the Agreement;

 

(2)         unanimously by the Parties in writing;

 

(3)         if a statutory force majeure event occurs, in which renders no Party to be able to perform the Agreement or to achieve the purpose of the Agreement.

 

 

6.2       Effect of Cancellation or Termination:

 

(1)         After cancellation or termination of the Agreement, each Party hereto shall return the other Party the consideration hereunder obtained from the other Party under the principles of fairness, reasonableness and good faith, and try to restore the status when the Agreement is signed.

 

(2)         Upon cancellation or termination of the Agreement pursuant to any aforementioned provisions under Article 6.1, unless otherwise specified herein, all rights and obligations of the Parties hereunder shall terminate immediately, and no Party shall have other claims to the other Party or with respect to the termination hereof, except for the liabilities that should be undertaken as provided in Article 10 hereof.

 

Article 7 Confidentiality

 

7.1       Unless otherwise specified herein, each Party shall try its best to keep in strict confidence all forms (including written, oral, tangible or intangible) of technical, commercial and any other non-public information and materials of all the other Parties acquired by it in connection with the negotiation, execution or performance of the Agreement and due diligence investigations, including any content herein and any other cooperation and transaction that may exist between the Parties, until such information and documents have been made public by the original provider thereof. Each Party shall restrict the access to such information by its directors, officers, employees, agents, consultants, subcontractors, suppliers and customers on an “as-needed” basis only for purposes of their due performance of the obligations hereunder.

 

7.2       The above restrictions shall not apply to:

 

(1)         the information that has already become publicly available at the time of disclosure;

 

(2)         the information that has already become publicly available after the disclosure not through the fault of the receiving Party;

 

(3)         the information that the receiving Party may prove to have been in its possession prior to the disclosure, and not obtained directly or indirectly from the other Party;

 

(4)         any disclosure by any Party to relevant government authority or stock exchange as required by the law, or to its direct legal counsel and financial adviser as necessary for its normal business operation.

 

7.3       Each Party shall cause the directors, senior officers, employees, agents, consultants, subcontractors, suppliers, customers of it and its affiliated companies to comply with the confidentiality obligations set forth in Article 7.1 hereof.

 

7.4       Even if the Agreement is canceled or terminated for whatever reason, the Parties shall comply with the confidentiality obligations set forth in Article 7.1 hereof.

 

 

Article 8 Liabilities for Breach and Indemnification

 

8.1       If any party hereto is in breach of any provision hereof, in addition to the other rights provided hereunder, the other Parties shall also have the right to claim compensation for the loss suffered by it therefrom due to such Party’s breach.

 

8.2       Subject to the other provisions of the Agreement, a Party (the “Indemnifying Party”) shall indemnify, pay relevant amounts to, and hold the other Parties (the “Indemnified Party”) from and against any damages, in the event that: (a) the Indemnifying Party is in breach of any of its representations and warranties set forth herein, or any of such representations and warranties fails to be true, or (b) the Indemnifying Party is in breach of or fails to fully perform any of its commitments, agreements, warranties or obligations hereunder, unless otherwise waived in writing by the other Parties. The Indemnifying Party shall indemnify or compensate the Indemnified Party for any and all losses directly or indirectly suffered as a result of any of the foregoing circumstances.

 

8.3       If any party hereto is in breach of any provision hereof, in addition to the other rights provided hereunder, the other Parties shall also have the right to require specific and full performance of the obligations hereunder by the defaulting Party.

 

8.4       Notwithstanding anything to the contrary herein, this Article shall survive the termination of the rights and obligations of the Parties hereunder or the termination of this Agreement.

 

Article 9 Applicable Law and Dispute Resolution

 

9.1            Applicable Law

 

The Agreement shall be governed by the laws of the PRC.

 

9.2            Dispute Resolution

 

Any dispute arising from or in connection with the Agreement shall be submitted to China International Economic and Trade Arbitration Commission for arbitration in Beijing in accordance with the arbitration rules in force at that time. The arbitral award is final and binding on all Parties. Pending the settlement of disputes, the Parties shall continue to perform the other provisions herein except for the matters in dispute.

 

Article 10 Expenses

 

10.1     The Parties shall bear their own costs generated from legal and financial due diligence investigations and the drafting of the relevant documentation in connection with the transactions contemplated hereunder.

 

 

Article 11 Others

 

11.1     Unless otherwise agreed, the Agreement and the new articles of association constitute the entire agreement of the relevant subject matters and supersede all oral or written agreements, discussions, minutes, memoranda, understandings or communications (including but not limited to fax and email) between the Parties prior to the date hereof.

 

11.2     Any amendment to the Agreement shall be made by a written agreement signed by the duly authorized representatives of the Parties, and shall form an integral part of the Agreement.

 

11.3     The headings contained in the Agreement are inserted for reference only and shall not in any way affect the meaning or interpretation of the Agreement.

 

11.4     Notices

 

Any notice, demand, request or any other communication required or permitted hereunder shall be made in writing and sent to the address of the recipient after executed by the sending Party. Any Party may notify the other party in writing to change its address for purposes of the Agreement. Any notice sent in the following ways shall be deemed to be duly delivered at the earlier of:

 

(1)         the date of receipt confirmed by signature, if sent by personal delivery;

 

(2)         the tenth (10th) day after the date on which the postmark is affixed by the post office, if sent by registered mail;

 

(3)         the third (3rd) day after the date on which the mail is handed to the express service provider, if sent by express delivery.

 

(4)         the next working day after the date of sending, if sent by facsimile.

 

11.5     If, in accordance with any relevant law, any one or more of the provisions hereof or any one or more of the other legal document(s) involved in the Capital Increase is held to be invalid, illegal or unenforceable, then:

 

(1)         the validity, legality and enforceability of the other provisions hereof shall not be affected or impaired, and such other provisions shall remain in full force and effect, except for the agreement(s) held as invalid, illegal or unenforceable, the validity, legality and enforceability of the other agreements involved in the Capital Increase shall not be affected or impaired, and such other agreements shall remain in full force and effect.

 

(2)         The Parties shall forthwith replace the aforesaid invalid, illegal or unenforceable provisions or agreements with legal, valid and enforceable ones, the intent of which shall be the closest to that of those invalid, illegal or unenforceable provisions or agreements.

 

11.6     Section 6.2, Article 7, Article 8, Article 9 and Article 10 hereof shall survive the termination of the Agreement.

 

 

11.7           The Agreement shall be made in FIVE counterparts, each Party shall hold one, and the remaining one will be retained by the Company.

 

11.8           The Agreement shall come into force as of the date on which it is sealed or signed by all Parties. (There is no text below.)

 

 

(This page contains no body text and is the signature page of the Capital Increase Agreement of Beijing BabyTree Marketing Consulting Co., Ltd.)

 

	
Company:
    
	
 
    
	
Beijing BabyTree Marketing Consulting Co., Ltd. (Seal) 

 
    
	
Signed by Authorized Signatory:
    	
/Seal/
    	
 
    
	
 
    
	
Existing   Shareholders:
    
	
 
    
	
Huainan Wang

 
    
	
Signed in person or by Authorized Signatory:
    	
/s/ Huainan Wang
    	
 
    
	
 
    
	
Qian Wang

 
    
	
Signed in person or by Authorized Signatory:
    	
/s/ Qian Wang
    	
 
    
						

 

 

(This page contains no body text and is the signature page of the Capital Increase Agreement of Beijing BabyTree Marketing Consulting Co., Ltd.)

 

	
Investor
    
	
 
    
	
Reemake Media Co., Ltd. (Seal) /Seal/

 
    
	
Signed by Authorized Signatory:
    	
/s/ Yusen Dai
    	
 
    

 

 

Appendix 1: Loan Agreement

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