Document:

EX-4.9

 Exhibit 4.9 
  

 
 Cooperation Framework Agreement

 in respect of 

Transfer of 100% of the Shares of Zhengzhou Kaitong Kegongmao Co., Ltd. 

 
  

by and among 
 Beijing
Baijiahulian Technology Co., Ltd. (Party A) 
 SUN Ding (Party B1) 

LI Congyu (Party B2) 

Zhengzhou Kaitong Kegongmao Co., Ltd. (Party C) 

and 
 WANG Taozhu (Party
D) 
 Dated December 26, 2019 

 Table of Contents 

 

					
	 Section 1 Definitions and Interpretation
	  	 	4	 
	Section 2 Purpose and Principles of Transaction	  	 	5	 
	Section 3 Pre-reorganization 	  	 	6	 
	 Section 4 Transfer of the Target Shares
	  	 	7	 
	 Section 5 Transaction Price and Payment
	  	 	7	 
	 Section 6 Closing
	  	 	12	 
	 Section 7 Transitional Period
	  	 	12	 
	 Section 8 Representations and Warranties
	  	 	13	 
	 Section 9 Taxes and Expenses
	  	 	15	 
	 Section 10 Breach of Agreement
	  	 	15	 
	 Section 11 Confidentiality and Announcement
	  	 	17	 
	 Section 12 Force Majeure
	  	 	18	 
	 Section 13 Notices
	  	 	18	 
	 Section 14 Governing Law and Dispute Resolution
	  	 	19	 
	 Section 15 Miscellaneous
	  	 	19	 
	 Exhibit 1: Definitions 
	  	 	23	 

 Cooperation Framework Agreement 

in respect of 
 Transfer
of 100% of the Shares of Zhengzhou Kaitong Kegongmao Co., Ltd. 
 by and among 

Beijing Baijiahulian Technology Co., Ltd., SUN Ding, LI Congyu and WANG Taozhu 

This Cooperation Framework Agreement (this “Agreement”) is made in Zhengzhou as of December 26, 2019 by and among: 

Party A (Transferee): Beijing Baijiahulian Technology Co., Ltd., a limited liability company duly incorporated and validly existing in Beijing under
the laws of the People’s Republic of China (the “PRC”) whose registered address is at W102, 1/F, Building 7#, East Zone, Yard 10, East Xibeiwang Road, Haidian District, Beijing and legal representative is CHEN Xiangdong; 

Party B1 (Transferor 1): SUN Ding, a citizen of the PRC with ID No. ****, residential address at ****; 

Party B2 (Transferor 2): LI Congyu, a citizen of the PRC with ID No. ****, residential address at ****; 

Party C (Target Company): Zhengzhou Kaitong Kegongmao Co., Ltd., a limited liability company duly incorporated and validly existing in Zhengzhou City,
Henan Province under the laws of the PRC whose registered address is at east of 1st Avenue and north of Jingnan 3rd Road, Zhengzhou Economic
and Technologic Development Zone and legal representative is LI Congyu; and 
 Party D: WANG Taozhu, a citizen of the PRC with ID No. of ****,
residential address at ****. 
 Party B1 and Party B2 are referred herein collectively as “Party B” or the “Transferors”,
and Party A, Party B, Party C and Party D are referred herein collectively as the “Parties”. 
 WHEREAS: 

 

	1.	 Beijing Baijiahulian Technology Co., Ltd. (“Party A”) is a limited liability company
duly incorporated and validly existing in Beijing under the laws of the PRC whose registered address is at W102, 1/F, Building 7#, East Zone, Yard 10, East Xibeiwang Road, Haidian District, Beijing, legal representative is CHEN Xiangdong and the
unified social credit code is ****. 

  

	2.	 Zhengzhou Kaitong Kegongmao Co., Ltd. (the “Target Company”) is a limited liability
company duly incorporated and validly existing in Zhengzhou City, Henan Province under the laws of the PRC whose registered address is at east of 1st Avenue and north of Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone, legal representative is LI Congyu and the unified social credit code is ****, and as of the date of this Agreement, having a registered
capital of RMB fifty million (¥50,000,000.00). Party B1 Mr. SUN Ding and Party B2 Ms. LI Congyu are shareholders of the Target Company, who hold 50% of the shares each, 100% of the shares in total, of the Target Company. The registered
capital of the Target Company has been paid in full. The Actual Controller of the Target Company is Ms. WANG Taozhu. 

  

	3.	 The Target Company owns the right to use the state-owned land for construction under the State-owned Land Use
Certificate Zheng Guo Yong [2007] No. 0134 with an area of land use right of 16,709.61 square meters (the “Project Land”) and the properties on the Project Land, including: (i) the property under the Property Title
Certificate Yu [2016] Zhengzhou Property Right No. 0030729, located at No. 8 Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone, for science and education/ scientific
research use, and with a floor area of 5,330.57 square meters (the “No. 2 R&D Building”); (ii) the property under the Property Title Certificate Yu [2016] Zhengzhou Property Right No. 0030561, located at
No. 8 Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone, for science and education/ scientific research use, and with a floor area of 12,044.40 square meters (the
“Product Exhibit Center”); (iii) the underground garage located at No. 8 Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone, with a planned floor area of
8,783.41 square meters and an actually measured floor area of 8,502.19 square meters, and including 170 parking lots (the “Completed Underground Garage”); and (iv) the building under construction on the Project Land, including the
construction in progress on the Project Land, with a total planned floor area of 38,605.25 square meters (including 35,732,72 square meters above the ground (21 floors) and 2,872.53 square meters under the ground (one floor)), whose main structures
have been completed (the actual construction area is 39,750.54 square meters) (the “No. 1 R&D Building”), and the underground garage located at the basement floor of the No. 1 R&D Building, with a
planned floor area of 2,872.53 square meters and including 30 parking lots (the “Uncompleted Underground Garage”) (the properties described in Clauses (i) through (iv) are referred herein collectively as the “Underlying
Assets”). 

	4.	 Party A wishes to purchase 100% of the shares of the Target Company (the “Target Shares”)
pursuant to the terms and conditions of this Agreement, to acquire the right to use the state-owned land for construction in respect of the Project Land and the ownership of the Underlying Assets held by the Target Company. 

NOW THEREFORE, in consideration of the foregoing, the Parties agree to effectuate the share transfer transaction contemplated hereby pursuant to the terms and
conditions of this Agreement, and hereby agree as follows: 
 Section 1 Definitions and Interpretation

	1.1	 Definitions 

For purpose of this Agreement, unless otherwise provided herein or the context otherwise requires, the capitalized terms used herein shall
have the meanings set forth in Exhibit 1 hereto. 
  

	1.2	 Interpretation 

  

	 	1.2.1	 For all purposes of this Agreement, except as otherwise expressly provided, (a) the words “not less
than”, “not more than”, “more than” and “less than” include the given figure, the words “exceeding” and “in excess of” do not include the given figure; (b) the term “including”
shall be deemed to be followed by “without limitation”, regardless of whether it is actually followed by such phrase or any phrase with similar meaning; and (c) all references in this Agreement to sections, recitals, exhibits and
schedules are to sections, recitals, exhibits and schedules of this Agreement; the exhibits and schedules to this Agreement constitute an integral part of this Agreement. Any reference to this Agreement shall be construed to include all exhibits and
schedules to this Agreement. 

  

	 	1.2.2	 The section headings used in this Agreement are for identification and reference only, and shall not be
utilized in interpreting or construing this Agreement. 

  

	 	1.2.3	 Notwithstanding any other provision contained herein, a reference in this Agreement to any applicable law of
the PRC includes such applicable law as amended, modified, supplemented or reenacted from time to time hereafter. 

  

	 	1.2.4	 References in this Agreement to documents and information mean documents and information in any form, including
those in paper form or contained in electronic media, optical disk, magnetic disk or films. 

  

	 	1.2.5	 A reference in this Agreement to any government authority includes the government authorities succeeding its
functions according to law. 

 Section 2 Purpose and Principles of Transaction 

 

	2.1	 Purpose of transaction 

The Parties hereto unanimously agree that Party A purchases 100% of the shares of the Target Company for the purpose of enjoying and
controlling the exclusive right, free from any defect, to use the state-owned land for construction in respect of the Project Land and the ownership of the Underlying Assets held by the Target Company, through holding all shares of the Target
Company. 
  

	2.2	 Basic principles of transaction 

 

	 	2.2.1	 In consideration of the purpose of transaction described in Section 2.1, the Parties unanimously agree
that Party B and Party D shall jointly carry out the pre-reorganization of the Target Company pursuant to Section 3, to ensure that after the completion of the
pre-reorganization, the Target Company’s total assets are not less than RMB 125,996,300 and total liabilities are not more than RMB 121,439,600, all assets, debts, claims and personnel of the Target
Company irrelevant to the Underlying Assets have been spun off from the Target Company, the relevant matters meet the conditions as agreed, and the Target Company satisfies the conditions for acquisition. 

 

	 	2.2.2	 Party B and Party D understand and agree that though 100% of the shares of the Target Company will be
transferred to Party A pursuant to this Agreement, Party B and Party D still have the obligation to procure the Target Company to, after the completion of the share transfer contemplated hereby, enter into a supplementary agreement with Linjiu
Construction with respect to the subsequent construction of the No. 1 R&D Building, to ensure the completion of the No. 1 R&D Building. Party B and Party D further understand and agree that since the share purchase contemplated
hereby includes assumption of debts, the total price for the transaction is fixed at RMB 333,809,358,00 for the time being, which comprises: (i) the consideration for the transfer of the Target Shares; and (ii) the debts owed by the Target
Company to its creditors as set forth in the List of Debts of the Target Company attached hereto as Exhibit 4, provided that the said share transfer price shall be adjusted pursuant to Section 5.1 and be paid pursuant to Section 5.4.

  

	 	2.2.3	 According to Party B and Party D, 30% of the shares of Henan Junen Energy Investment and Development Co., Ltd.
(“Henan Junen”) held by the Target Company is unable to be divested for the time being, because its controlling shareholder is unable to cooperate with the Target Company to go through the relevant share transfer registration
procedures. Party A agrees to continue to hold such 30% shares after the completion of the share transfer contemplated hereby, and after such shares become transferable, cooperate with Party B and Party D to complete the applicable registration
(filing) procedures in connection with the transfer of such shares, to the extent that there isn’t any material breach on the part of Party B, the Target Company (prior to the completion of the share transfer contemplated hereby) and Party D
hereunder, or such material breach (if any) has been remedied and compensated for. 

  

	 	2.2.4	 Party B and Party D agree that they have the obligation to procure the Target Company to enter into an
agreement with Henan Sanfang Yuantai Testing Technology Co., Ltd. (“Sanfang Yuantai”) to terminate its lease of the No. 2 R&D Building, pursuant to which Sanfang Yuantai shall complete the applicable procedures with the
industrial and commercial registration authority to change its registered address into its newly leased premises and provide Party A with proof of such new address prior to March 1, 2020, and evacuate the No. 2 R&D Building prior to
May 31, 2020. The rent payable by Sanfang Yuantai for the period from January 1, 2020 till the date of its evacuation shall be attributable to the Target Company after the completion of the share transfer contemplated hereby. Party B and
Party D shall be responsible for any compensation or loss arising out of the termination of the lease contract with Sanfang Yuantai. 

 Section 3
Pre-reorganization 
  

	3.1	 Party B, Party D and the Target Company undertake to complete the
pre-reorganization of the Target Company as follows within ten (10) calendar days from the date hereof, except as waived by Party A: 

 

	 	3.1.1	 The Target Company shall have entered into an agreement with Sanfang Yuantai to terminate its lease of the
No. 2 R&D Building, which agreement shall have taken effect and provides, among others: (i) Sanfang Yuantai shall, prior to March 1, 2020, cease to register the No. 2 R&D Building as its address with the industrial and
commercial registration authority, the tax authority and other relevant authorities, and provide a copy of the proof of address submitted by it to the industrial and commercial registration authority when registering its new address and the relevant
lease contract; and (ii) Sanfang Yuantai shall evacuate the No. 2 R&D Building and return it to the Target Company prior to May 31, 2020; the rent for the period from the signing date of the agreement to terminate its lease
contract till the date of its evacuation shall be charged according to the original rate of rent specified in the lease contract, provided, however, if Sanfang Yuantai fails to evacuate on time, a penalty equivalent to double RMB1.7 per square
meters per day shall be imposed. 

  

	 	3.1.2	 Each of the creditors as set forth in the List of Debts of the Target Company attached hereto as Exhibit
4 shall have issued a Letter of Confirmation to the Target Company, confirming the total amount of debts (including principal, penalty, interest, etc.) owed by the Target Company to such creditor, and that the Target Company does not owe any other
obligation or liability for breach to such creditor except the debt as expressly set forth therein. The total amount of debts confirmed in such Letters of Confirmation shall not exceed the total amount of liabilities of the Target Company as set out
in Section 2.2.1. 

  

	 	3.1.3	 Party B and the Target Company shall have entered into agreements with all employees listed in the
Disclosure Schedule attached hereto as Exhibit 2, and terminated employment or service relationships (as the case may be) with and paid the applicable compensation to such employees according to law, the costs incurred in which shall be fully
borne by Party B and Party D. 

  

	 	3.1.4	 With respect to the transfer of the Target Shares hereunder, Party B shall have performed the applicable
internal decision-making procedures and convened a meeting of shareholders pursuant to the articles of association of the Target Company, at which the shareholders adopt a resolution (including a resolution of the Board of Directors) that approves
the share transfer contemplated hereby and states that the two shareholders agree to waive their first right of refusal in respect of such share transfer, among others (the relevant resolution of the shareholders is set forth in Exhibit 5).

  

	 	3.1.5	 Party B and the Target Company shall have issued an announcement about the share transfer contemplated hereby
on the China Industry & Commerce News and the Henan Economic News, requesting the creditors of the Target Company to report their claims to the Target Company, the costs incurred in which shall be fully borne by Party B and Party D.

  

	3.2	 After fulfilling the obligations set forth in Section 3.1 and obtaining the relevant documents, Party B,
Party C and Party D shall immediately submit the originals and copies of such documents to Party A for examination. Party A shall notify Party B, Party C and Party D whether such documents and the content thereof meet the requirements hereof within
two (2) working days of receipt thereof. If Party A determines that the content of such documents does not meet the requirements hereof, Party A shall request Party B, Party C and Party D to continue to perform their obligations until the
requirements set forth in this Section 3 have been satisfied. After confirming that Party B, Party C and Party D have fulfilled their obligations in accordance with the provisions of this Section 3, Party A shall issue a letter of
confirmation in writing. Party B, Party C and Party D shall be deemed to have completed the pre-reorganization under this Section 3 on the date that Party A issues such letter of confirmation.

 Section 4 Transfer of the Target Shares 

 

	4.1	 Party B agrees to transfer the Target Shares held by them to Party A on such conditions and at such price as
set forth herein. After the completion of the transfer of the Target Shares, Party A shall hold 100% of the shares of the Target Company. 

  

	4.2	 The Parties acknowledge that the transaction price for the share transfer contemplated hereby includes taxes,
and the final share transfer price shall be determined and paid in accordance with the provisions of Section 5. 

  

	4.3	 Party A and Party B shall, upon execution of this Agreement, also enter into a Share Transfer Agreement
in form and substance attached hereto as Exhibit 6, which shall take effect from the date of completion of the pre-reorganization as confirmed by Party A in writing pursuant to Section 3, and within three
(3) working days after the effective date of the Share Transfer Agreement, complete the applicable registration procedures with the industrial and commercial registration authority in respect of the transfer of the Target Shares to Party A,
changes in the legal representative, directors, supervisors and senior officers and the filing of the new articles of association of the Target Company. The Parties shall give cooperation to each other in such registration procedures in connection
with the share transfer contemplated hereby, and execute or provide such documents or information as the industrial and commercial registration authority may require from time to time. 

 

	4.4	 The transfer of the Target Shares shall be deemed to have been completed on the date that (which date shall be
the “Completion Date of Transfer of the Target Shares”): 

  

	 	4.4.1	 Party A has been registered as the holder of 100% shares of the Target Company according to law;

  

	 	4.4.2	 the new articles of association of the Target Company adopted after the completion of transfer of the Target
Shares have been filed with the industrial and commercial registration authority; and 

  

	 	4.4.3	 the legal representative, directors, supervisors and senior officers appointed by Party A have been registered
and filed with the industrial and commercial registration authority. 

 Section 5
Transaction Price and Payment 
  

	5.1	 The Parties agree that the total price for the transaction contemplated hereby shall be calculated according to
the floor area of the Underlying Assets, and the price shall be RMB5,800 per square meters for the above-ground properties, RMB3,000 per square meters for the underground properties, and RMB1,500 per square meters for the exit of the above-ground
garage. The total transaction price payable by Party A is fixed at RMB333,809,358,00 for the time being. In such price, the total price for the properties whose property title certificates have been obtained (including the No. 2 R&D
Building with a floor area of 5,330.57 square meters and the Product Exhibition Center with a floor area of 12,044.40 square meters), and the properties whose actual area has been measured (including the Completed Underground Garage with an actually
measured floor area of 8,502.19 square meters and the Entrance to the Completed Underground Garage with a floor area of 307.60 square meters) shall not be adjusted; the price for the properties whose property title certificates have not been
obtained and whose actual area has not been measured, i.e. the No. 1 R&D Building and its underground structures shall be provisionally determined and after their property title certificates have been obtained and actual area has been
measured, be adjusted as follows: 

  

	 	(1)	 the provisional price for the No. 1 R&D Building shall be calculated on the basis that the area of its
above-ground structures is 34,215.34 square meters (the planned area of the above-ground structures less the estimated area of the Four-storey Building to Be Constructed in the West) and the area of its underground structures is 2,872.53 square
meters (which is its planned area); 

  

	 	(2)	 the final price for the No. 1 R&D Building shall be calculated and adjusted as follows: with respect
to the above-ground structures, after its property title certificate has been obtained, the price shall be calculated and adjusted by multiplying the floor area stated in the property title certificate (less the actual floor area of the Four-storey
Building to Be Constructed in the West) by RMB5,800 per square meters; with respect to the underground structures, the price shall be calculated and adjusted by multiplying its actual floor area as measured after the completion and acceptance
inspection thereof by RMB3,000 per square meters. 

 The Parties understand and agree that the price payable hereunder includes taxes, therefore,
Party A, as the Transferee, shall pay the balance of the share transfer price after withholding and paying the applicable taxes (if any) in connection therewith that Party A is required to withhold and pay according to law. 

 

	5.2	 The total transaction price comprises: 

 

	 	5.2.1	 the transfer price for the Target Shares payable by Party A to Party B; and 

 

	 	5.2.2	 the debts owed by the Target Company to the third parties as of the Completion Date of Transfer of the Target
Shares (including the debts set forth in the List of Debts of the Target Company attached hereto as Exhibit 4 and confirmed by the Parties, and the external debts newly incurred by the Target Company from the Base Date till the Completion
Date of Transfer of the Target Shares and confirmed by Party A). 

  

	5.3	 Adjustment of the share transfer price 

The Parties agree that the following amounts incurred during the term of this Agreement shall be deducted from the share transfer price
payable by Party A to Party B hereunder: 
  

	 	5.3.1	 any debt (including without limitation liabilities, compensation and administrative penalties) incurred by the
Target Company after Party A becomes a shareholder of the Target Company as a result of any failure on the part of Party B, the Target Company and Party D to disclose the relevant matters and contingent liabilities, including without limitation
disputes, liabilities, administrative penalties and contingent liabilities arising out of the execution of any document, any written or oral commitment, any labor relationship, execution of any employment contract, payment of social insurance and
housing provident fund contributions for employees and taxes, and construction works prior to the Closing Date; 

  

	 	5.3.2	 any penalty payable by Party B and Party D pursuant to Section 10.3.2 due to failure of the Target Company
to enter into an agreement with Sanfang Yuantai to terminate its lease of the No. 2 R&D Building pursuant to Section 3.1.1 or Sanfang Yuantai fails to evacuate and return to the Target Company the No. 2 R&D Building and
complete the procedures with the industrial and commercial registration authority to change or cancel (as applicable) its registered address pursuant to such agreement; 

 

	 	5.3.3	 any compensation payable or loss suffered by the Target Company as a result of termination of the lease
contract with Sanfang Yuantai; 

  

	 	5.3.4	 any additional debt incurred by the Target Company resulting from the total amount of debts confirmed by the
creditors of the Target Company in their Letters of Confirmation issued under Section 3.1.2 exceeding the total amount of liabilities of the Target Company as set out in Section 2.2.1; and 

 

	 	5.3.5	 any and all penalties and losses incurred by the Target Company resulting from any delay on the part of the
Target Company after the completion of the share transfer contemplated hereby in discharging the debts owed to its creditors as set forth in the List of Debts of the Target Company attached hereto as Exhibit 4, due to any reason attributable
to Party B and Party D. 

  

	5.4	 Arrangement for payment of the transaction price 

The Parties unanimously agree that the transaction price hereunder shall be paid in four (4) installments as follows: 

	 	5.4.1	 First installment of the transaction price 

The Parties unanimously agree that within seven (7) working days after the completion of the
pre-reorganization and pre-closing work as set forth in Section 3 and satisfaction of all of the following conditions, Party A shall pay RMB forty five million
(¥45,000,000.00) and the relevant interest, as the first installment of the transaction price, of which, RMB thirty million (¥30,000,000.00) shall be paid to the account of the Target Company, and RMB fifteen million
(¥15,000,000.00) and the relevant interest shall be paid to the joint capital account to be opened by Party B and Party A pursuant to the provisions hereof, which shall be wholly paid to the account opened by Henan Long
Brothers Landscaping Engineering Co., Ltd. (“Long Brothers”) at Industrial Bank Co., Ltd. Zhengzhou Branch (the “Industrial Bank”) to repay the loan provided by the Industrial Bank to Long Brothers and accrued
interest, thereby releasing the mortgage created over the Product Exhibition Center: 
  

	 	(1)	 100% of the shares of the Target Company shall have been registered in the name of Party A, and the legal
representative, directors, supervisors and senior officers appointed by Party A and the new articles of association of the Target Company shall have been registered or filed with the industrial and commercial registration authority;

  

	 	(2)	 the Parties shall have completed the closing pursuant to Section 6; 

 

	 	(3)	 after Party A acquires 100% of the shares of the Target Company pursuant to the provisions hereof, Party A,
Party B1 and Party B2 shall jointly open a capital supervision account in the name of Party B, which shall be exclusively used for receiving the first installment of the share transfer price in the amount of RMB fifteen million (¥15,000,000.00)
to be paid by Party A to Party B, which shall then be lent by Party B to Long Brothers, and for repaying the loan of RMB fifteen million (¥15,000,000.00) and accrued interest directly to the Industrial Bank on behalf of Long Brothers;

  

	 	(4)	 after Party A acquires 100% of the shares of the Target Company pursuant to the provisions hereof, Party A, the
Target Company, Long Brothers and Party B (Party B1 and Party B2) shall enter into a five-party agreement, pursuant to which, Party A agrees to provide RMB thirty million (¥30,000,000.00) to the Target Company after Party A becomes a shareholder
of the Target Company, for the Target Company to repay the debts it owes to Long Brothers and accrued interest, and Long Brothers agrees that the Target Company shall directly pay such amount to the Industrial Bank; and 

 

	 	(5)	 the Industrial Bank shall issue a letter of confirmation in writing, agreeing that the Target Company and Party
B repay the loan of RMB forty five million (¥45,000,000.00) and accrued interest on behalf of Long Brothers in the manner described above. 

  

	 	5.4.2	 Second installment of the transaction price 

The Parties unanimously agree that within seven (7) working days after the satisfaction of all of the following conditions, Party A shall
pay the second installment of the transaction price in the amount of RMB sixty seven million three hundred eighty three thousand seven hundred and seven point five two (¥67,383,707.52) (such amount is the maximum amount to be paid as the second
installment of the transaction price and shall be subject to the amount actually paid then), which shall be paid to the account designated by the Target Company and then be applied by the Target Company towards the repayment of the amounts payable
to the external creditors as set forth in the List of Debts of the Target Company attached hereto as Exhibit 4: 
  

	 	(1)	 all of the conditions for the payment of the first installment of the transaction price shall have been
satisfied; and 

	 	(2)	 the mortgage created over the Product Exhibition Center shall have been released. 

 

	 	5.4.3	 Third installment of the transaction price 

The Parties unanimously agree that the third installment of the transaction price in the amount of RMB twenty four million ten thousand one
hundred eighty two point six eight (¥24,010,182.68) shall be exclusively applied by the Target Company towards the repayment of the debts owed to the affiliates as set forth in the List of Debts of the Target Company attached hereto as
Exhibit 4, and be paid in two installments as follows: 
  

	 	(1)	 within seven (7) working days after the satisfaction of all of the following conditions, Party A shall pay
RMB ten million (¥10,000,000.00) to the account designated by the Target Company, which shall be applied by the Target Company towards the repayment of the debts owed to certain affiliates as set forth in the List of Debts of the Target
Company attached hereto as Exhibit 4: 

  

	 	(a)	 all of the conditions for the payment of the first and second installments of the transaction price shall have
been satisfied; 

  

	 	(b)	 Sanfang Yuantai shall have ceased to register the No. 2 R&D Building as its address with the
industrial and commercial registration authority, the tax authority and other relevant authorities, and provided a copy of the proof of address submitted by it to the industrial and commercial registration authority when registering its new address
and the relevant lease contract prior to March 1, 2020; 

  

	 	(c)	 Party B and Party D shall assist the Target Company in executing an agreement with Linjiu Construction with
respect to the amount of the costs and expenses payable for continuing the construction of the No. 1 R&D Building till the completion thereof, time and method of payment thereof, duration of construction and other relevant matters;

  

	 	(d)	 since the Closing Date, the Target Company shall have not been subject to any administrative penalty or
involved in any litigation or arbitration, and no undisclosed creditor has lodged any claim against the Target Company, or such matters (if any) have been settled and the relevant amounts have been paid; and 

 

	 	(e)	 Party B and Party D shall have fulfilled all of their obligations hereunder, and have not committed any
material breach or such material breach (if any) has been remedied and compensated for; and 

  

	 	(2)	 within seven (7) working days after the satisfaction of all of the following conditions, Party A shall pay
the balance of the third installment of the transaction price (the total amount of debts owed to the affiliates less RMB10,000,000.00) to the account designated by the Target Company, which shall be applied by the Target Company towards the
repayment of the debts owed to the remaining affiliates as set forth in the List of Debts of the Target Company attached hereto as Exhibit 4: 

  

	 	(a)	 Sanfang Yuantai shall have evacuated and returned to the Target Company the No. 2 R&D Building prior
to May 31, 2020; 

  

	 	(b)	 since the Closing Date, the Target Company shall have not been subject to any administrative penalty or
involved in any litigation or arbitration, and no undisclosed creditor has lodged any claim against the Target Company, or such matters (if any) have been settled and the relevant amounts have been paid; and 

 

	 	(c)	 Party B and Party D shall have fulfilled all of their obligations hereunder, and have not committed any
material breach or such material breach (if any) has been remedied and compensated for. 

	 	5.4.4	 Fourth installment of the transaction price 

The Parties unanimously agree that the fourth installment of the transaction price shall be calculated as follows: amount of the fourth
installment of the transaction price = total transaction price as determined pursuant to Section 5.1 - (total amount already paid by Party A + total amount deductible from the total transaction price pursuant to Sections 5.3.1 through 5.3.5),
and be paid in three installments as follows: 
  

	 	(1)	 within seven (7) working days after the satisfaction of all of the conditions for the payment for the
second installment of the third installment of the transaction price as set forth in Section 5.4.3, Party A shall pay an amount equal to 70% of the fourth installment of the transaction price to the account designated by the Target Company, as
part of the price paid by Party A for the transfer of the Target Shares; 

  

	 	(2)	 within seven (7) working days after the satisfaction of all of the following conditions, Party A shall pay
an amount equal to 15% of the fourth installment of the transaction price to the account designated by the Target Company, as part of the price paid by Party A for the transfer of the Target Shares: 

 

	 	(a)	 within one (1) year after the issue date of the announcement under Section 3.1.5, no creditor has
lodged any claim against the Target Company, or such matters (if any) have been settled and the relevant amounts have been paid; and 

  

	 	(b)	 Party B and Party D shall have fulfilled all of their obligations hereunder, and have not committed any
material breach or such material breach (if any) has been remedied and compensated for; and 

  

	 	(3)	 within seven (7) working days after the satisfaction of all of the following conditions, Party A shall pay
an amount equal to 15% of the fourth installment of the transaction price to the account designated by the Target Company, as part of the price paid by Party A for the transfer of the Target Shares: 

 

	 	(a)	 the Target Company shall have obtained the property title certificate for the No. 1 R&D Building;

  

	 	(b)	 within three years and three months after the issue date of the announcement under Section 3.1.5, no
creditor has lodged any claim against the Target Company, or such matters (if any) have been settled and the relevant amounts have been paid; and 

  

	 	(c)	 Party B and Party D shall have fulfilled all of their obligations hereunder, and have not committed any
material breach or such material breach (if any) has been remedied and compensated for. 

  

	5.5	 The Parties acknowledge that prior to the payment of the share transfer price to Party B, Party A shall have
the right to directly adjust the share transfer price and deduct from the share transfer price the penalties and compensation (if any) payable by Party B and Party D and other amounts deductible from the share transfer price, including without
limitation any loss suffered by Party A after the Closing Date due to any contingent liabilities of the Target Company, in each case, in accordance with the provisions hereof. 

 

	5.6	 The Parties acknowledge that the transfer price for the Target Shares as agreed by Party A and Party B pursuant
to Section 5.4.4 shall be paid by Party A to the following accounts designated by Party B1 and Party B2 subject to the conditions contained herein: 

Bank account designated by Party B1: 

Bank: ****** 
 Account name:
***** 
 Account number: ****** 

 Bank account designated by Party B2: 

Bank: ****** 
 Account name:
****** 
 Account number: ****** 

The Parties acknowledge that Party A shall be deemed to have paid the transfer price for the Target Shares in full and on time to Party B1 and
Party B2 respectively when Party A pays the transfer price for the Target Shares to the respective designated bank accounts of Party B1 and Party B2 set forth above at such time and in such amount as set forth in Section 5.4.4. 

In case Party B1 or Party B2 changes his or her account set forth above, Party B1 or Party B2 (as the case may be) shall notify Party A in
writing ten (10) working days in advance, failing which, shall bear all losses arising therefrom. Before Party A pays each installment of the transaction price, Party B1 and Party B2 shall each issue a legal and valid receipt in the relevant
amount to Party A. If Party B1 and Party B2 fail to do so, Party A shall not be in breach of this Agreement if it delays in making such payment. 
  

	5.7	 Each Party shall bear its own taxes and fees in connection with the payment of the transaction price hereunder
pursuant to the applicable laws and regulations. If the Target Company has the obligation to withhold and pay the taxes and fees payable by Party B or file the relevant tax returns on behalf of Party B pursuant to the applicable laws and regulations
and the provisions of the local authorities, the Target Company shall have the right to withhold and pay the taxes payable by Party B or file the relevant tax returns on behalf of Party B in accordance with the requirements of the competent tax
authority, and directly deduct such taxes and fees from the share transfer price payable by Party A to Party B. 

 
Section 6 Closing 
  

	6.1	 The closing shall take place within one (1) calendar day after the
pre-reorganization under Section 3 has been completed, as confirmed by Party A. 

  

	6.2	 The Parties acknowledge that after the completion of the following matters, Party B, the Target Company and
Party D shall be deemed to have fulfilled their closing obligations in connection with the Target Shares: 

  

	 	6.2.1	 Party B has handed over the official seal, financial seal, contract seal, invoice seal, legal
representative’s seal, authorized agent’s seal the specimens of which have been submitted to the relevant banks and all other seals, certificates and licenses (including without limitation operation permissions, government approvals,
business licenses and loan cards), all contracts entered into with outsiders, project design and construction documents, title documents, administrative documents, personnel documents, insurance certificates and the originals of other relevant
documents to such person as designated by Party A, and has executed the Handover Form attached hereto as Exhibit 7 with Party B; 

  

	 	6.2.2	 the physical assets have been delivered in accordance with the List of Physical Assets attached hereto
as Exhibit 8, as confirmed by the Parties; 

  

	 	6.2.3	 all properties built on the Project Land, except the No. 2 R&D Building, have been delivered;

  

	 	6.2.4	 other matters relating to the closing of the transfer of the Target Shares. 

 

	6.3	 The Parties shall cause their respective representatives to execute a Handover Form in writing (attached
hereto as Exhibit 7) on the date that all conditions for closing have been satisfied and all matters relating to the closing have been completed (the “Closing Date”). 

Section 7 Transitional Period 

 

	7.1	 Except as otherwise provided herein, during the period from the Base Date to the Completion Date of Transfer of
the Target Shares (the “Transitional Period”), unless this Agreement is terminated or otherwise agreed by the Parties, the Target Company shall not, and Party B and Party D shall not request or arrange the Target Company to:

  

	 	7.1.1	 establish any new subsidiary or branch, or change the registered capital,
paid-in capital or shareholding structure of the Target Company; 

	 	7.1.2	 transfer, sell, lease, encumber or otherwise dispose of any material assets or business of the Target Company
(except as required for the purpose of this Agreement); 

  

	 	7.1.3	 provide any new external guarantee or incur any new debt (other than the debts arising out of the transactions
or practices in the ordinary course of business of the Target Company); 

  

	 	7.1.4	 provide any loan or guarantee to or for any outsider; 

 

	 	7.1.5	 distribute any profit or interest to the shareholders of the Target Company; 

 

	 	7.1.6	 acquire any equity or partnership interest, invest in any company or partnership individually or jointly with
any third party, or make any other equity investment, or acquire any material assets; 

  

	 	7.1.7	 amend the articles of association or accounting principles of the Target Company; 

 

	 	7.1.8	 enter into any agreement or arrangement, make any resolution or decision, or take any action or measure that
will result in any material adverse change in the business, assets, financial conditions or value of the Target Company (except as required for the purpose of this Agreement); 

 

	 	7.1.9	 liquidate, wind up or dissolve the Target Company, whether voluntary or involuntary; 

 

	 	7.1.10	 change or create any pledge, mortgage, trust or other encumbrance over the shares of the Target Company (except
as required for the purpose of this Agreement); 

  

	 	7.1.11	 hire any new employee or increase the salaries, social insurance contributions or other costs and benefits of
the employees; 

  

	 	7.1.12	 take any action that may cause any government authority to revoke or refuse to approve, accept or complete any
approval, consent, filing or registration required by the Target Company; or 

  

	 	7.1.13	 receive any amount in cash or through any personal account, including any bank account, AliPay account or
WeChat account of any individual. 

  

	7.2	 During the Transitional Period, Party B shall procure the Target Company to continue to operate its current
business in the ordinary course as a going concern, not to suspend its business or change the nature, scope or mode of its business, and to adopt sound business principles and strictly comply with all applicable laws and regulations.

  

	7.3	 During the Transitional Period, Party B and Party D shall procure the Target Company not to enter into any new
contract without the prior written consent of Party A. 

  

	7.4	 The Parties agree that any and all profits and losses in respect of the shares of the Target Company shall be
attributable to Party B and Party D during the Transitional Period, and to Party A after the Completion Date of Transfer of the Target Shares. 

Section 8 Representations and Warranties 

 

	8.1	 Representations and warranties of Party B and Party D 

 

	 	8.1.1	 Each of Party B and Party D is a natural person of the PRC having the full civil capacity and the capacity to
enter into this Agreement in his or her own name, and perform and assume his or her duties and obligations hereunder. 

  

	 	8.1.2	 Each of Party B and Party D covenants that he or she has performed all requisite corporate procedures and
approval procedures for his or her execution of this Agreement or the execution of this Agreement falls within his or her powers. 

	 	8.1.3	 Each of Party B and Party D warrants that all disclosures, representations and warranties made by him or her in
this Agreement, the Disclosure Schedule attached hereto as Exhibit 2 and the Representations and Warranties of Shareholders of the Target Company attached hereto as Exhibit 9, and all disclosures made by him or her to the agents
appointed by Party A are true, complete, valid and free from any misrepresentation, misleading statement or material omission. If any representation or warranty made by Party B and Party D contains any misrepresentation or misleading statement or
omits to state any material fact or Party B and Party D fail to perform any of their obligations, Party B and Party D shall be deemed to have breached this Agreement, be held liable for breach of agreement and indemnify Party A and the Target
Company for all losses arising therefrom, and Party A shall have the right to rescind this Agreement. 

  

	 	8.1.4	 If Party B and Party D become aware that any representation, warranty or covenant made by them has been or
might be breached, Party B and Party D shall immediately notify Party A and the Target Company, explaining the particulars and reason of such breach and its possible effect on this Agreement. 

 

	 	8.1.5	 Party B and Party D undertake to execute or issue such further documents (other than the documents expressly
required hereunder) and take such further actions as may be required by this Agreement or reasonably required by Party A to give full effect to the rights of Party A hereunder. 

 

	 	8.1.6	 Party B and Party D acknowledge that after the completion of the transfer of the Target Shares contemplated
hereby, Party A shall become the sole and legal owner of the Target Shares, and that the sale, transfer and assign by Party B and Party D of the Target Shares and their title and other interest in the Target Shares are not subject to any restriction
and do not require the consent of any other person. 

  

	 	8.1.7	 Party D undertakes to assume the joint and several liability for all obligations of Party B hereunder,
including without limitation the liability of Party B for breach of agreement, if any. 

  

	8.2	 Representations and warranties of Party C 

 

	 	8.2.1	 Party C has the full capacity to enter into this Agreement in its own name, and perform and assume its duties
and obligations hereunder. 

  

	 	8.2.2	 Party C covenants that it has performed all requisite corporate procedures and approval procedures for its
execution of this Agreement, and the person executing this Agreement on its behalf has been duly authorized by Party C, and has the authority to execute this Agreement on behalf of and bind upon Party C. 

 

	 	8.2.3	 The execution and performance of this Agreement by Party C will not violate any judgment, ruling, contract,
agreement or other document binding upon Party C or infringe on the rights and interests of any third party. 

  

	 	8.2.4	 Party C undertakes to execute or issue such further documents (other than the documents expressly required
hereunder) and take such further actions as may be required by this Agreement or reasonably required by Party A to give full effect to the rights of the Parties hereunder. 

 

	 	8.2.5	 Party C warrants that all disclosures, representations and warranties made by it in this Agreement and the
Disclosure Schedule attached hereto as Exhibit 2, and all disclosures made by it to the agents appointed by Party A are true, complete, valid and free from any misrepresentation, misleading statement or material omission.

  

	 	8.2.6	 If Party C becomes aware that any representation, warranty or covenant made by it has been or might be
breached, Party C shall immediately notify Party A, explaining the particulars and reason of such breach and its possible effect on this Agreement. 

	 	8.2.7	 Party C undertakes to execute or issue such further documents (other than the documents expressly required
hereunder) and take such further actions as may be required by this Agreement or reasonably required by Party A to give full effect to the rights of Party A hereunder. 

 

	8.3	 Representations and warranties of Party A 

 

	 	8.3.1	 Party A has the full capacity to enter into this Agreement in its own name, and perform and assume its duties
and obligations hereunder. 

  

	 	8.3.2	 Party A covenants that it has performed all requisite corporate procedures and approval procedures for the
execution of this Agreement, and the person executing this Agreement on its behalf has been duly authorized by Party A, and has the authority to execute this Agreement on behalf of and bind upon Party A. 

 

	 	8.3.3	 The execution and performance of this Agreement by Party A will not violate any judgment, ruling, contract,
agreement or other document binding upon Party A or infringe on the rights and interests of any third party. 

  

	 	8.3.4	 Party A undertakes to execute or issue such further documents (other than the documents expressly required
hereunder) and take such further actions as may be required by this Agreement or reasonably required by Party B to give full effect to the rights of the Parties hereunder. 

 

	 	8.3.5	 Party A covenants that, to the extent that that there isn’t any material breach on the part of Party B,
the Target Company (prior to the completion of the share transfer contemplated hereby) and Party D hereunder, or such material breach (if any) has been remedied and compensated for, with respect to 30% of the shares of Henan Junen held by the Target
Company, within ten (10) working days after Party B notifies Party A that such shares will be transferred to Party B or the designee of Party B, Party A will cooperate with Party B to execute the relevant share transfer documents and go through
the applicable registration and filing procedures, so as to effectuate the transfer of such shares to Party B or the designee of Party B, provided that Party B and Party D shall bear the taxes and fees incurred and payable by Party A or the Target
Company in connection with such share transfer. Party A shall have the right to deduct such taxes and fees from the price for such share transfer and remit the balance thereof to Party B or the designee of Party B. Party B and Party D shall bear all
losses incurred by the Target Company in connection with the shares held by it in Henan Junen. 

 
Section 9 Taxes and Expenses 
  

	9.1	 Unless otherwise agreed by the Parties, each Party shall bear its own taxes and fees imposed by the applicable
laws and competent government authorities of the PRC in connection with the share transfer contemplated hereby, and the attorney’s fee and other expenses incurred by it in connection with the negotiation, execution and performance of this
Agreement. 

  

	9.2	 If any Party is in breach of this Agreement, the breaching Party shall be solely responsible for any additional
taxes and expenses arising out of the share transfer contemplated hereby, and if any non-breaching Party is directly required by any administrative authority to pay any additional taxes and fees as a result of
such breach, the non-breaching Party shall have the right to recover such additional taxes and fees from the breaching Party in full. 

Section 10 Breach of Agreement 

 

	10.1	 A Party (the “Breaching Party”) shall be deemed to have breached this Agreement if:

  

	 	10.1.1	 it fails to perform its obligations hereunder in whole or in part, including without limitation the obligations
under its representations, warranties and covenants; 

  

	 	10.1.2	 any representation or warranty made by it to the other Parties hereunder proves to be false, untrue or
misleading or omits to state any material fact; or 

  

	 	10.1.3	 it otherwise violates the provisions hereof which constitute a breach of this Agreement. 

	10.2	 Unless otherwise provided herein, where a Party is in breach of this Agreement, each non-breaching Party shall have the right to take one or several remedial actions set forth below to safeguard its rights: 

  

	 	10.2.1	 to suspend the performance of its obligations hereunder until the Breaching Party is no longer in breach of
this Agreement, which suspension of performance shall not constitute any failure or delay on the part of the non-breaching Party to perform its obligations; 

 

	 	10.2.2	 to request the Breaching Party to pay the applicable penalty pursuant to the provisions hereof;

  

	 	10.2.3	 to request the Breaching Party to indemnify the non-breaching Party for
all costs and expenses incurred in connection with this Agreement and all losses arising therefrom, including without limitation attorney’s fee, notarial charges, litigation costs and arbitration costs; and 

 

	 	10.2.4	 unless otherwise provided herein, if the Breaching Party still fails to perform its obligations within thirty
(30) calendar days after receiving a notice from the non-breaching Party requesting it to do so, the non-breaching Party shall have the right to unilaterally
rescind this Agreement by written notice with immediate effect. 

  

	10.3	 Breach of agreement by Party B and Party D 

 

	 	10.3.1	 If Party B and Party D fail to fulfill their obligations and covenants hereunder in whole or in part for any
reason, including without limitation failure to perform the obligation to register the transfer of the Target Shares to Party A with the industrial and commercial registration authority under Section 4 or fulfill the representations and
warranties contained in Section 8.1 in whole or in part, Party A shall have the right to take one or several remedial actions set forth below to safeguard its rights: 

 

	 	(1)	 to request the Breaching Parties to continue to perform their obligations, and pay the Transferee a penalty at
the rate of 0.5‰ of the total provisional transaction price per day from the date of such breach till the date of discharge of their obligations; 

  

	 	(2)	 if Party B and Party D fail to fulfill the representations and warranties contained in Section 8.1 in
whole or in part, to request Party B and Party D to pay a penalty of RMB ten million (¥10,000,000.00) to Party A; 

  

	 	(3)	 to request the Breaching Parties to indemnify Party A and/or the Target Company for all losses arising
therefrom, including without limitation attorney’s fee, notarial charges, litigation costs and arbitration costs; and 

  

	 	(4)	 if Party B and Party D fail to perform their obligations hereunder for more than thirty (30) calendar
days, to rescind this Agreement by written notice with immediate effect. 

  

	 	10.3.2	 If Sanfang Yuantai fails to register the change in its address with the industrial and commercial registration
authority prior to March 1, 2020 or evacuate and return to the Target Company the No. 2 R&D Building prior to May 31, 2020, Party B and Party D shall pay Party A a penalty of RMB fifty thousand (¥50,000.00) for each day of
delay till Sanfang Yuantai has registered the change in its address with the industrial and commercial registration authority or evacuated and returned to the Target Company the No. 2 R&D Building (as the case may be). Party A shall have
the right to deduct such penalty from the share transfer price payable to Party B hereunder. 

  

	 	10.3.3	 If the Target Company delays in discharging the debts owed to its creditors as set forth in the List of
Debts of the Target Company attached hereto as Exhibit 4, due to any reason attributable to Party B and Party D, Party B and Party D shall bear any and all penalties and losses arising therefrom, and Party A shall have the right to deduct such
penalties and losses from the share transfer price payable to Party B hereunder. 

	10.4	 Breach of agreement by Party A 

If Party A fails to pay the share transfer price pursuant to Section 5.4, Party B shall have the right to request the Breaching Party to
continue to perform its obligations hereunder, and pay Party B a penalty at the rate of 0.5‰ of the amount then payable per day from the date of such breach till the date of discharge of its obligations. 

 

	10.5	 Unless otherwise provided herein, the rights and remedies provided herein are cumulative and are not exclusive
of any other right or remedy provided by law. 

  

	10.6	 Any waiver by a Party of any breach committed by the Breaching Party shall be valid only if it is made in
writing. Any failure or delay on the part of a Party to exercise any right or remedy shall not operate as a waiver of such right or remedy, nor shall any partial exercise of any right or remedy preclude the exercise of any other right or remedy.

  

	10.7	 The provisions of this Section 10 shall survive any termination or rescission of this Agreement.

 Section 11 Confidentiality and Announcement 

 

	11.1	 Confidentiality 

  

	 	11.1.1	 For purpose of this Agreement, the term “Confidential Information” means any non-public information relating to or in connection with any Party hereto, including without limitation any and all information relating to the corporate structure, shareholding structure, business and financial
data, business or development plan, market research information, marketing channels, prices, bank account information and other financial records and information of any Party, business information, proposals, data, standards and procedures owned by
any Party, any contracts, agreements, memoranda, schedules, drafts or records executed by the Parties for purpose of this Agreement (including without limitation this Agreement and the exhibits hereto and the documents of whatever kind mentioned or
referred to herein and therein), and other non-public information provided by any Party to the other Parties for purpose of this Agreement. 

 

	 	11.1.2	 Subject to Section 11.1.3, neither Party may disclose any Confidential Information to any third party in
any manner, or disclose the execution and performance of this Agreement to the public or media in any manner. 

  

	 	11.1.3	 A Party shall not be deemed to have disclosed or divulged the Confidential Information if it discloses any
Confidential Information: 

  

	 	(1)	 that has become known to the public prior to the disclosure thereof (not due to any disclosure in violation of
this Section 11); 

  

	 	(2)	 with the prior written consent of the Parties hereto; 

 

	 	(3)	 to its professional advisors for purpose of the transactions contemplated hereby, so long as such Party has
requested such advisors to assume the obligation of confidentiality; or 

  

	 	(4)	 to the extent mandatorily required by any government authority or applicable laws, provided that the request of
such government authority shall be made in the form of an official document in writing, otherwise such Party shall refuse to disclose or divulge any Confidential Information. 

 

	 	11.1.4	 Each Party shall take necessary measures to ensure that it will only disclose the Confidential Information
known to or obtained by it to its relevant employees, agents or advisors, and request such persons to strictly comply with the provisions of this Section 11 and not to disclose the Confidential Information to any third party. Each Party
undertakes not to disclose or divulge any Confidential Information obtained from the other Parties to any irrelevant employee. 

  

	 	11.1.5	 A Party who will disclose any Confidential Information externally pursuant to Section 11.1.3 shall notify
the other Parties in advance. 

	 	11.1.6	 Any Party who violates the provisions of this Section 11 shall indemnify the other Parties for the losses
arising therefrom. 

  

	11.2	 Announcement 

  

	 	11.2.1	 Subject to Section 11.2.2, without the prior written approval of the other Parties (which approval shall
not be unreasonably withheld or delayed), neither Party or any of its representatives or affiliates may issue any official announcement or hold any press conference in respect of the execution of this Agreement or other matters hereunder (except as
mandatorily required by the applicable laws or any government authority to be disclosed subject to Section 11.2.2). 

  

	 	11.2.2	 If a Party has the obligation to issue an announcement according to the requirement of the applicable laws or
any government authority, such Party shall notify the other Parties before submitting the relevant announcement or report to the relevant government authority for examination, and give the other Parties reasonable opportunities to comment on such
announcement or report, provided that the final content of such announcement or report shall be decided by the relevant government authority. 

Section 12 Force Majeure 
  

	12.1	 Any Party who is affected by an event of force majeure shall immediately notify the other Parties, provide
appropriate proofs of such event of force majeure and its effect, and take all necessary measures to terminate or reduce such event of force majeure and its effect. 

 

	12.2	 If the Parties are prevented from registering the changes in the ownership of shares pursuant to Section 4
by an event of force majeure, Party A shall have the right to rescind this Agreement, in which case, neither Party shall be liable to any other Party for the consequences of the rescission hereof. 

Section 13 Notices 
  

	13.1	 All notices hereunder shall be made in Chinese and in writing. 

 

	13.2	 Each Party shall give written notices to the other Parties at the following addresses. Any Party who changes
its mailing address or contact information shall notify the other Parties three (3) working days in advance, failing which, any notice given by any other Party to such Party at its address set forth below shall be deemed effectively given at
such time as provided in Section 13.3: 

 If to Party A: 

Mailing address: ***** 
 Postal
code: ***** 
 Telephone: ****** 

Email: ******* 
 Attention: ****

 If to Party B1: 
 Mailing
address: ****** 
 Postal code: ****** 

Telephone: ****** 
 Email:
****** 
 Attention: ****** 

If to Party B2: 

 Mailing address: ****** 

Postal code: ****** 
 Telephone:
***** 
 Email: ****** 

Attention: ***** 
 If to Party
C/ the Target Company: 
 Mailing address: ******* 

Postal code: ****** 
 Telephone:
****** 
 Email: ***** 

Attention: ****** 
 If to Party
D: 
 Mailing address: ***** 

Postal code: ***** 
 Telephone:
***** 
 Email: ****** 

Attention: ***** 
  

	13.3	 A notice shall be deemed effective given: if sent by facsimile, when the sender has transmitted such notice and
receives a confirmation of delivery; if delivered in person, when received by the recipient; if sent by mail or express delivery, three (3) working days after posting. Any notice that is rejected by the receiving Party shall be deemed effective
given on the date of rejection as indicated on the return receipt. 

 Section 14
Governing Law and Dispute Resolution 
  

	14.1	 The formation, validity, interpretation, performance and dispute resolution in respect of this Agreement shall
be governed by the laws and regulations of the PRC officially enacted. 

  

	14.2	 Any dispute arising out of or in connection with this Agreement shall be settled by the Parties through
friendly consultation. In case the Parties fail to reach a settlement within thirty (30) calendar days, either Party may submit the dispute to the China International Economic and Trade Arbitration Commission (the “Commission”)
in Beijing for settlement by arbitration in accordance with then effective arbitration rules of the Commission. 

 
Section 15 Miscellaneous 
  

	15.1	 Independence. Each of warranties and covenants contained herein is made separately and independently,
and unless otherwise provided herein or agreed by the Parties in writing, shall not be restricted by any statement to the contrary that may be contained herein. 

 

	15.2	 Amendment and rescission. Any amendment to this Agreement must be made with mutual consent of the
Parties and in writing. Except as otherwise permitted to unilaterally rescind this Agreement according to law or the provisions hereof, after entering into force, this Agreement may not be rescinded other than by agreement executed by the Parties
through consultation. 

  

	15.3	 Supersession. This Agreement, after entering into force, shall supersede all prior contracts,
agreements, letters of intent, memoranda and other documents, written or oral, between Party A and Party B or among the Parties and such contracts, agreements, letters of intent, memoranda and other documents as superseded shall no longer have legal
binding force as between Party A and Party B or among the Parties (as applicable). 

	15.4	 No assignment. Without the express approval of the other Parties in writing, neither Party may assign
all or part of its rights and obligations hereunder. 

  

	15.5	 Entire agreement. This Agreement constitutes the entire instrument of the Parties with respect to the
subject matter hereof. This Agreement, together with the exhibits hereto, constitutes the entire agreement of the Parties. 

  

	15.6	 Severability. If any one or more of the provisions contained in this Agreement are held invalid, void or
illegal or become unenforceable or non-executable in any respect at any time, the validity, legality, enforceability and fulfillment of the remaining provisions hereof shall in no way be affect or prejudiced.

  

	15.7	 Joint and several liability for guarantee. Party B and Party D shall jointly and severally guarantee the
performance of their respective duties and obligations hereunder. 

  

	15.8	 Effectiveness. This Agreement shall take effect after being chopped or signed by the legal or authorized
representatives of the Parties respectively. In case of any conflict between any amendment or supplementary document entered into among the Parties with respect to the matters not specifically addressed herein and this Agreement, such amendment or
supplementary document shall prevail. With respect to any matter not specifically addressed in the share transfer agreement confirmed and executed by Party A and Party B or by the Parties (as the case may be) for purpose of registering the relevant
changes with the industrial and commercial registration authority or any conflict between the provisions of such share transfer agreement and the provisions of this Agreement and the exhibits hereto regarding the share transfer contemplated hereby,
the provisions of this Agreement and the exhibits hereto shall prevail. 

  

	15.9	 Counterparts. This Agreement shall be made in ten (10) counterparts, two (2) counterparts to
be held by the Parties respectively with equal legal effect. 

 [End of text] 

 Signature Page to Cooperation Framework Agreement in respect of Transfer of 100% of the Shares of
Zhengzhou Kaitong Kegongmao Co., Ltd. 
 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective authorized
representatives as of the date first above written. 
 Party A: Beijing Baijiahulian Technology Co., Ltd. (seal) 

Legal or authorized representative (signature): /s/ Beijing Baijiahulian Technology Co., Ltd. 

Party B1: SUN Ding 
 Signature: /s/ SUN Ding 

Party B2: LI Congyu 
 Signature: /s/ LI Congyu

 Party C: Zhengzhou Kaitong Kegongmao Co., Ltd. (seal) 

Legal or authorized representative (signature): /s/ Zhengzhou Kaitong Kegongmao Co., Ltd. 

Party D: WANG Taozhu 
 Signature: /s/ WANG Taozhu

 Exhibit 1: Definitions 

Exhibit 2: Disclosure Schedule 
 Exhibit 3: Balance Sheet of the
Target Company 
 Exhibit 4: List of Debts of the Target Company 

Exhibit 5: Resolution of the Shareholders of the Target Company 

Exhibit 6: Share Transfer Agreement 
 Exhibit 7: Handover Form

 Exhibit 8: List of Physical Assets 
 Exhibit 9:
Representations and Warranties of Shareholders of the Target Company 

 Exhibit 1: Definitions 

 

					
	 No.
	  	 Term
	  	 Meaning

	1	  	Agreement	  	means this Cooperation Framework Agreement in respect of Transfer of 100% of the Shares of Zhengzhou Kaitong Kegongmao Co., Ltd. by and among Beijing Baijiahulian Technology Co., Ltd., SUN Ding, LI Congyu and WANG
Taozhu entered into by and among the Parties.
	2	  	Party A/Transferee	  	means Beijing Baijiahulian Technology Co., Ltd.
	3	  	Party B1/ Transferor 1	  	means Mr. SUN Ding,
	4	  	Party B2/ Transferor 2	  	means Ms. LI Congyu.
	5	  	Party C/ Target Company	  	means Zhengzhou Kaitong Kegongmao Co., Ltd.
	6	  	Party D/ Actual Controller	  	means Ms. WANG Taozhu.
	7	  	Transaction	  	means the transfer by Party B of the Target Shares to Party A on the terms and conditions set forth in this Agreement.
	8	  	Project land	  	means the land acquired and owned by the Target Company under the State-owned Land Use Certificate Zheng Guo Yong [2007] No. 0134, located at east of 1st Avenue and north of
Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone, for science and education/ scientific research use, with an area of land use right of 16,709.61 square meters, and the right
to use which will expire on February 6, 2057.
	9	  	No. 2 R&D Building	  	means the property owned by the Target Company under the Property Title Certificate Yu [2016] Zhengzhou Property Right No. 0030729, located at No. 8 Jingnan 3rd Road,
Zhengzhou Economic and Technologic Development Zone, for science and education/ scientific research use, and with a floor area of 5,330.57 square meters.
	10	  	Product Exhibition Center	  	means the property owned by the Target Company under the Property Title Certificate Yu [2016] Zhengzhou Property Right No. 0030561, located at No. 8 Jingnan 3rd Road,
Zhengzhou Economic and Technologic Development Zone, for science and education/ scientific research use, and with a floor area of 12,044.40 square meters.
	11	  	Completed Underground Garage	  	means the underground garage that the Target Company has the right to use, and is located at No. 8 Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone,
under the No. 2 R&D Building, the Product Exhibition Center and the yard between them, with a planned floor area of 8,783.41 square meters and an actually measured floor area of 8,502.19 square meters, and including 170 parking
lots.
	12	  	Entrance to the Completed Underground Garage	  	means the entrance to the Completed Underground Garage that the Target Company has the right to use and covers an actually measured floor area of 307.60 square meters.

					
	13	  	No. 1 R&D Building	  	means the building under construction that is owned by the Target Company, located at No. 8 Jingnan 3rd Road, Zhengzhou Economic and Technologic Development Zone, constructed
by Linjiu Construction, with a total planned floor area of 38,605.25 square meters (including 35,732,72 square meters above the ground (21 floors) and 2,872.53 square meters under the ground (one floor)), whose main structures have been completed
and four-storey skirt building in the west has not yet been constructed (the actual construction area is 39,750.54 square meters).
	14	  	Four-storey Building to Be Constructed in the West	  	means the four-storey podium building in the west of the No. 1 R&D Building that has not yet been constructed as of the Base Date, with an area of about 1,517.38 square meters.
	15	  	Underlying Assets	  	means, collectively, the No. 2 R&D Building, the Product Exhibition Center, the Completed Underground Garage, the Entrance to the Completed Underground Garage and the No. 1 R&D Building.
	16	  	Linjiu Construction	  	means Henan Linjiu Construction Engineering Co., Ltd.
	17	  	Long Brothers	  	means Henan Long Brothers Landscaping Engineering Co., Ltd.
	18	  	Base Date	  	means August 31, 2019, the base date for the financial and legal due diligence investigations conducted for purpose of the transaction contemplated hereby and for Party B to disclose the particulars of the Target
Company.
	19	  	Closing Date	  	means the date that the Parties have completed all matters necessary for the closing pursuant to Section 6 and executed the relevant closing documents.
	20	  	Transitional Period	  	means the period from the Base Date to the Closing Date.
	21	  	Third party	  	means any natural person, corporate or other organization or entity other than the Parties hereto.
	22	  	Government authority	  	means the central government or any government of any province, municipality directly under the central government, municipality, county, prefecture or town of the PRC or any political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
	23	  	PRC	  	means the People’s Republic of China, for purpose of this Agreement, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.
	24	  	RMB or ¥	  	means the lawful currency of the PRC.
	25	  	Working day	  	means any day that is not a Sunday, Saturday or other day on which commercial banks are required or authorized by laws or administrative regulations to be closed in the PRC.
	26	  	Day	  	means calendar day, including working days and non-working days.
	27	  	Force majeure	  	means any objective circumstance that is unforeseeable, unavoidable and insurmountable.Document

═══════════════════════════════════════════════════════

 LOAN AND SECURITY AGREEMENT

By and Between

SMARTFINANCIAL, INC.

and

SERVISFIRST BANK

March 31, 2020

═══════════════════════════════════════════════════════

 LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is made and entered into as of March 31, 2020, by and between SMARTFINANCIAL, INC., a corporation organized under the laws of the State of Tennessee (“Borrower”), and SERVISFIRST BANK, an Alabama banking corporation (“Lender”).
W I T N E S S E T H:
Borrower has requested that Lender extend to the Borrower a revolving line of credit in the maximum principal amount of up to $25,000,000 (the “Loan”), and Lender is willing to make the Loan upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, each intending to be legally bound hereby, agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.01.  Defined Terms.  As used herein:
“Advance” means each loan of money or credit made to Borrower by Lender under the Commitment.
“Affiliate” or “Affiliates” shall mean any Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, Borrower, or (ii) five percent (5%) or more of the equity interest of which is held beneficially or of record by Borrower.  The term “control” means the possession, directly or indirectly, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” means this Loan and Security Agreement, as amended or supplemented from time to time.
“Capital” means, with respect to the Subsidiary Bank, the “tier 1 capital” of the Subsidiary Bank, as reported on Schedule RC-R of the Subsidiary Bank’s most recent quarterly call report.
“Change in Control” means either (i) the acquisition by any Person or any group of Persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of beneficial ownership, directly or indirectly, of 40% or more of the outstanding shares of voting stock of Borrower or (ii) Borrower ceases to own 100% of the outstanding shares of voting stock of the Subsidiary Bank.
“Collateral” is defined in Section 4.01 of this Agreement.
“Collateral Documents” means the documents specified in Section 3.01(B) - (D).

“Commitment” means Lender’s commitment to lend to Borrower up to the sum of $25,000,000 in principal amount outstanding from time to time pursuant to, and subject to, the terms of this Agreement.
“Default” means any event described in Section 7.01.
“ERISA” means the Employee Retirement Security Act of 1974, as amended.
“Generally Accepted Accounting Principles” or “GAAP” means generally accepted principles of accounting in the United States in effect from time to time applied in a manner consistent with those used in preparing such financial statements as have theretofore been furnished to Lender by Borrower.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, which has or asserts jurisdiction over Lender, Borrower or any of its Subsidiaries, or over the property of any of them.
“Indebtedness” means all items of indebtedness, obligation or liability, whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, including, but without limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the ordinary course of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or indirectly, through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or
(2) to purchase, sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services primarily for the purpose of enabling the debtor to make payment of such indebtedness or to assure the owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner invest in the debtor.
(C) All indebtedness secured by (or for which the holder of such indebtedness has a right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of goods or services under leases that, in accordance with Generally Accepted Accounting Principles, should not be reflected on the lessee’s balance sheet.
        2

“Interest Rate” is defined in Section 2.05(A)(1) of this Agreement.
“Laws” means all ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees of any governmental or political subdivision or agency thereof, or any court or similar entity established by any thereof.
“Loan” has the meaning set forth in the recitals of this Agreement.
“Maturity Date” means the earlier of September 24, 2021, or the date the maturity of the Note is accelerated pursuant to Section 7.02 of this Agreement.
“Non-Performing Assets” means, with respect to the Subsidiary Bank, the sum of (a) the Subsidiary Bank’s loans and leases which are on nonaccrual status, (b) the Subsidiary Bank’s loans and leases which are at least ninety (90) days past due, (c) all other non-performing loans and leases of the Subsidiary Bank, (d) the other real estate owned by the Subsidiary Bank, and (e) all other non-performing assets of the Subsidiary Bank.
“Non-Performing Assets Ratio” means, with respect to the Subsidiary Bank, the ratio of the Subsidiary Bank’s Non-Performing Assets to the Subsidiary Bank’s Capital plus Reserves.
“Note” means the Revolving Note of even date herewith, in the principal amount of $25,000,000, made by Borrower to evidence Borrower’s obligation to repay the Loan and the interest thereon and includes any amendment to such Note and any promissory note given in extension or renewal of, or in substitution for, such Note evidencing Borrower’s obligation to repay the Loan.
“Obligations” means all of the following.
(A) The Obligation of Borrower to pay the principal of and interest on the Note in accordance with the terms thereof, and to satisfy all of its other liabilities to Lender, whether hereunder or otherwise (including, without limitation, under any swap or other hedging agreement made by Borrower with or in favor of Lender), whether now existing or hereafter incurred, matured or unmatured, direct or contingent, joint or several, including any extensions, modifications, renewals thereof and substitutions therefor.
(B) The Obligation of Borrower to repay to Lender all amounts advanced by Lender hereunder or otherwise on behalf of Borrower, including, but without limitation, advances for principal or interest payments to prior secured parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, repairs to or maintenance or storage of any of the Collateral.
(C) The Obligation of Borrower to reimburse Lender, on demand, for all of Lender’s expenses and costs, including the reasonable fees and expenses of its counsel, in connection with the preparation, administration, amendment, modifications, or enforcement of this Agreement and the documents required hereunder, including, without limitation, any proceeding brought or threatened to enforce payment of any of the obligations referred to in the foregoing paragraphs (A) and (B).
        3

(D) The Obligation of Borrower to comply with the terms of this Agreement, the Note and the Collateral Documents.
“Person” means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, court, or government or political subdivision or agency thereof.
“Pledge Agreement” means that certain Pledge Agreement of even date herewith pursuant to which Lender is granted a security interest in the Pledged Stock.
“Pledged Stock” means one hundred percent (100%) of the capital stock of the Subsidiary Bank.
“Potential Default” means an event of default which but for the lapse of time or the giving of notice, or both, would constitute a Default.
“Prime Rate” means the rate designated as such in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor) on any particular day.  The Prime Rate is not necessarily the lowest interest rate charged by Lender.  
“Records” means instruments, agreements, correspondence, memoranda, tapes, discs, papers, books and other documents, or transcribed information of any type, whether express in ordinary or machine language, and all filing cabinets and other containers in which the foregoing is stored or maintained.
 “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as now or from time to time hereafter in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. 
“Reserves” means, with respect to the Subsidiary Bank, the “allowance for loan and lease losses” of the Subsidiary Bank as reported on Schedule RC of the Subsidiary Bank’s most recent quarterly call report.
“Return on Assets Ratio” means, with respect to the Subsidiary Bank, the ratio of (a) year-to-date “net income” of the Subsidiary Bank for the current calendar year, as reported on Schedule RI of the Subsidiary Bank’s most recent quarterly call report, annualized over the current calendar year, to (b) average “total assets” as reported on Schedule RC-K of the Subsidiary Bank’s most recent quarterly call report.
“Subsidiary” means any corporation, including but not limited to the Subsidiary Bank, of which more than fifty-one percent (51%) of the outstanding voting securities shall, at the time of determination, be owned directly, or indirectly through one or more intermediaries, by Borrower.
“Subsidiary Bank” means SmartBank, a banking corporation organized under the laws of the State of Tennessee, and a wholly-owned Subsidiary of Borrower.
        4

“Tier 1 Leverage Ratio” means, with respect to the Subsidiary Bank, the tier 1 leverage ratio as defined by the capital maintenance regulations of the primary federal bank regulatory agency of the Subsidiary Bank and reported on Schedule RC-R of the Subsidiary Bank’s most recent quarterly call report.
Section 1.02 Construction.  All accounting terms used herein shall have their customary meanings under, and shall be construed in accordance with, GAAP.
Section 1.03 UCC Definitions.  All other capitalized terms contained in this Agreement shall, unless otherwise defined herein or unless the context otherwise indicates, have their respective meanings under the Uniform Commercial Code of Alabama.
ARTICLE 2. THE LOAN
Section 2.01. General Terms.

i.Subject to the terms and conditions of this Agreement, Lender will lend to Borrower the principal sum of up to $25,000,000 on a revolving basis.  Lender shall make Advances under such Loan from time to time until the Maturity Date, upon the request of Borrower made by giving not less than one (1) business days’ notice to Lender, all in integral multiples of $10,000.00.
ii.Subject to the terms hereof, Borrower may borrow, repay without penalty or premium, and reborrow under the Loan, from the date of this Agreement until the Maturity Date provided, however, that any partial payment must be made in integral multiples of $10,000.  If at any time the unpaid principal balance of the Loan exceeds the Commitment, Borrower shall immediately and without demand pay such sums to Lender as are necessary to reduce the principal balance of the Loan to not more than the Commitment.
Section 2.02. The Note.  On the date hereof, Borrower will execute and deliver the Note to Lender to evidence Borrower’s Obligations to repay the Loan and the interest thereon.

Section 2.03. Use of Proceeds; Disbursement of the Loan.  Borrower will use the proceeds of the Loan solely (a) for general working capital purposes, (b) to reimburse Lender for any expenses incurred by Lender in connection with making the Loan, and (c) to otherwise pay Lender sums due to Lender under this Agreement or the other instruments, agreements and documents related to this Agreement.

Section 2.04. Payments of Principal.  If not earlier demanded pursuant to Section 7.02 hereof, the outstanding principal balance of each Advance made under the Loan shall be due and payable to Lender on the Maturity Date. 

Section 2.05. Interest Rate and Payments of Interest.

i.Interest shall be calculated and paid as follows:
        5

1.Interest on the principal balance of the Loan from time to time outstanding will be payable at a per annum rate (the “Interest Rate”) equal to the greater of (i) the Prime Rate in effect from time to time minus .50 percent (50bps); or (ii) a floor rate of four percent (4.0%).
2.Each time a change to the Prime Rate occurs, the Interest Rate shall change concurrently with such change in the Prime Rate.  
3.Interest shall be calculated on the basis of a 360-day year, by multiplying the product of the principal amount outstanding and the applicable rate by the actual number of days elapsed, and dividing by 360, and shall be payable quarterly in arrears, on the 1st day of each and every calendar quarter (that is, on February 1, May 1, August 1, and November 1) commencing with the first calendar quarter following the first Advance and continuing on the 1st day of each calendar quarter thereafter until the outstanding principal balance of all Advances have been repaid in full, with the final payment of accrued and unpaid interest due and payable on the Maturity Date.  
ii.If, at any time, the Interest Rate shall be deemed by any competent Governmental Authority to exceed the maximum rate of interest permitted by any applicable Laws, then, for such time as the Interest Rate would be deemed excessive, its application shall be suspended and there shall be charged instead the maximum rate of interest permissible under such Laws.
Section 2.06. Payment to Lender.  All sums payable to Lender under the Loan shall be paid directly to Lender in United States Dollars and immediately available funds.  If Lender shall send to Borrower statements of amounts due hereunder, such statements shall be considered correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days of its receipt of any statement which it deems to be incorrect.  Alternatively, at its sole discretion, Lender may charge against any deposit account of Borrower all or any part of any amount due hereunder.

Section 2.07. Late Fee/Default Rate of Interest.  Borrower promises to pay to Lender a late fee equal to five percent (5.00%) of the amount of each installment of principal and/or installment of interest which is received more than ten (10) days after the due date thereof; provided, however, that such late fee shall not be less than $20.00 nor more than the maximum amount (if any) permitted by law.  The principal balance of the Loan outstanding after maturity (whether by acceleration or otherwise) shall bear interest at a per annum rate of interest equal to four percent (4.00%) plus the otherwise applicable Interest Rate and shall be calculated pursuant to Section 2.05 hereof.  This section does not extend any payment due date expressly stated in this Agreement or any Collateral Document and does not in any way prevent or estop Lender from requiring that payments be made by Borrower strictly when due.  Unless accepted by Lender, and unless accompanied by all other amounts then due to Lender, the tender of such payment by Borrower shall not cure the Default arising from the payment default upon which such late charge was assessed.
Section 2.08. Non-Use Fee.  Borrower shall pay on an annual basis in arrears to Lender a non-use fee equal to .10 (10 bps) multiplied by the average unused principal amount of the 
        6

Commitment for the applicable 18-month period (the “Non-Use Fee”), which amount shall be payable no later than 15 days following the first anniversary date of this Agreement.  The Non-Use Fee shall be waived if Borrower has been in compliance with all terms contained in this Agreement and has an outstanding balance for more than six (6) calendar months of the term of the Loan.
ARTICLE 3. CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to the following conditions precedent:
Section 3.01 Conditions to the Loan.  Prior to the initial disbursement of the Loan, Borrower shall have delivered to Lender the following:
(A)the duly executed Note;
(B)the duly executed Pledge Agreement;
(C)original certificates representing the Pledged Stock, accompanied by stock powers endorsed in blank; 
(D)if requested by Lender, the financing statements described in Section 4.05;
(E)copies, certified as of the date of this Agreement by Borrower’s corporate secretary, of resolutions of Borrower’s board of directors authorizing the execution, delivery and performance of this Agreement, the Note, the Collateral Documents, and each other document to be delivered pursuant hereto;
(F)copies, certified as of the date of this Agreement by their respective corporate secretaries, of the articles of incorporation of Borrower and the Subsidiary Bank, together with a certificate (dated the date of this Agreement) of the their respective corporate secretaries to the effect that such articles of incorporation have not been amended except as provided in such articles;
(G)copies, certified as of the date of this Agreement by their respective corporate secretaries, of the bylaws of Borrower and the Subsidiary Bank, together with a certificate (dated the date of this Agreement) of the their respective corporate secretaries to the effect that such bylaws have not been amended except as provided in such bylaws;
(H)a certificate (dated the date of this Agreement) of Borrower’s corporate secretary as to the incumbency and signatures of the officers of Borrower signing this Agreement, the Note, the Collateral Documents, and each other document to be delivered pursuant hereto;
(I)certificates, as of the most recent dates practicable, of the secretary of state of the state of incorporation of Borrower and the Subsidiary Bank, and, where 
        7

appropriate, the department of revenue or taxation of such state, as to the existence and good standing of Borrower and the Subsidiary Bank;
(J)[Reserved]
(K)[Reserved]
(L)evidence acceptable to Lender that Borrower and the Subsidiary Bank have received all necessary regulatory approvals (or that no regulatory approvals are necessary) for (i) Borrower to obtain the Loan, (ii) Borrower and the Subsidiary Bank to enter into and perform their Obligations under this Agreement and the Collateral Documents, and (iii) payment by the Subsidiary Bank of dividends to Borrower in amounts sufficient to comply with the repayment terms of the Loan;
(M)such other documentation as Lender shall require regarding Borrower or the Subsidiary Bank, including, without limitation, opinions and certificates of Borrower’s independent certified public accountants, appraisals, reports of other independent consultants selected by Lender, and certificates of Borrower’s officers.
Section 3.02 Conditions to Each Advance.  Without limiting the foregoing, at the time of each Advance under the Loan, Borrower shall have furnished such information to Lender as Lender shall reasonably request to evidence that (a) the proceeds of such Advance will be used for the purposes permitted hereunder, (b) the use of the proceeds in such manner will not cause or bring about a Default or Potential Default hereunder, and (c) a certificate signed by the Borrower and the Subsidiary Bank substantially in the form of Exhibit A hereto.
Section 3.03 Certain Events.  Without limiting the foregoing, at the time of the disbursement of each Advance:
(A) No Default or Potential Default shall have occurred and be continuing;
(B) The Collateral Documents shall be in full force and effect;
(C) The Subsidiary Bank’s call report for the most recently-ended calendar quarter, filed by the Subsidiary Bank with any applicable regulatory authority, shall have been delivered to Lender;
(D) All representations and warranties set forth in Article 5 shall be true and correct as of the time of such disbursement; and
(E) There shall have been no material adverse change in the consolidated financial condition or business of Borrower or the Subsidiary Bank (measured against the most current financial statements of Borrower and the Subsidiary Bank delivered to or otherwise reviewed by Lender prior to the date of this Agreement).
        8

Section 3.04 Legal Matters.  At the time of the disbursement of each Advance, all legal matters necessary to preserve and perfect Lender’s security interest in the Collateral and Borrower’s obligation to repay the Loan shall be satisfactory to Lender and its counsel.
Section 3.05 Deposit Accounts.  Borrower shall maintain deposit accounts with Lender and will allow Lender to bid on additional mutually beneficial correspondent services.
ARTICLE 4. COLLATERAL SECURITY
Section 4.01 Composition of the Collateral.  The property in which a security interest is granted pursuant to the provisions of Sections 4.02 and 4.03 is herein collectively called the “Collateral.”  The Collateral, together with all of Borrower’s other property of any kind held by Lender, shall stand as one general, continuing collateral security for all Obligations and may be retained by Lender until all Obligations have been satisfied in full.
Section 4.02 Rights in Property Held by Lender.  As security for the prompt satisfaction of all Obligations, Borrower hereby assigns, transfers and sets over to Lender all of its right, title and interest in and to, and grants Lender a lien on and a security interest in, all amounts that may be owing from time to time by Lender to Borrower in any capacity, including, but without limitation, any balance or share belonging to Borrower of any deposit or other account with Lender, which lien and security interest shall be independent of any right of set-off which Lender may have.
Section 4.03 Security Interest in the Pledged Stock.  As further security for the prompt satisfaction of all Obligations, Borrower hereby assigns and transfers to Lender all of its rights, title and interest in and to, and grants Lender a lien upon and security interest in, all of the Pledged Stock, whether now owned or hereafter acquired, together with all replacements therefor and all proceeds thereof, and all Records pertaining to any of the Collateral.
Section 4.04 Priority of Liens.  The foregoing liens shall be first and prior liens on the Pledged Stock and other Collateral.
Section 4.05 Financing Statements.
(A) Borrower:
(1) Hereby authorizes the filing of such financing statements (including amendments thereto and continuation statements thereof) in form satisfactory to Lender as Lender may hereafter specify in order to perfect Lender’s lien on and security interest in the Collateral;
(2) Will pay or reimburse Lender for all costs and taxes of filing or recording such financing statements (including amendments thereto and continuation statements thereof) in form satisfactory to Lender as Lender may hereafter specify, provided such financing statements are consistent with the provisions of this Agreement; and
        9

(3) Will take such other steps as Lender may direct to perfect Lender’s interest in the Collateral.
(B) In addition to the foregoing, and not in limitation thereof:
(1) A carbon, photographic, or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate public office in lieu thereof; and
(2) To the extent lawful, Borrower hereby appoints Lender as its attorney-in-fact (without requiring Lender to act as such) to file any financing statement and any amendment thereto in the name of Borrower, and to perform all other acts that Lender deems appropriate to perfect and continue its security interest in, and to protect and preserve, the Collateral.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Section 5.01 Original.  To induce Lender to enter into this Agreement, Borrower represents and warrants to Lender as follows:
(A) Borrower owns 100% of the outstanding capital stock of the Subsidiary Bank;
(B) Borrower is a corporation duly organized, validly existing and in good standing under the Laws of the state of its formation; the Subsidiary Bank is a corporation duly organized, validly existing and in good standing under the Laws of the state of its formation; Borrower and the Subsidiary Bank have the lawful power to own their properties and to engage in the business they conduct, and are duly qualified and in good standing as foreign corporations in the jurisdictions wherein the nature of the business transacted by them or property owned by them make such qualification necessary; the states in which Borrower and the Subsidiary Bank are qualified to do business are set forth in Exhibit B; the addresses of Borrower’s and the Subsidiary Bank’s respective principal places of business are set forth in Exhibit B; and neither Borrower nor the Subsidiary Bank has changed its name, been the surviving corporation in a merger, acquired any business, or changed its principal executive office within  three (3) years and one (1) month prior to the date hereof;
(C) Neither Borrower nor the Subsidiary Bank is in default with respect to any of its existing Indebtedness, or under any material lease, contract or commitment of any kind, and all parties (including Borrower and the Subsidiary Bank) to all such material leases, contracts and other commitments to which Borrower or the Subsidiary Bank is a party are in material compliance with the provisions of such leases, contracts and other commitments;
(D) The making and performance of this Agreement, the Note, and the Collateral Documents will not (immediately, or with the passage of time, or with the giving of notice):
(1) Violate any provision of the articles of incorporation or bylaws of Borrower or the Subsidiary Bank, or violate any Laws or result in a default under any 
        10

contract, agreement, or instrument to which Borrower or the Subsidiary Bank is a party or by which Borrower or the Subsidiary Bank or any of their respective properties are bound; or
(2) Result in the creation or imposition of any security interest in, or lien or encumbrance upon, any of the assets of Borrower or the Subsidiary Bank, except in favor of Lender;
(E) Borrower has the power and authority to enter into and perform this Agreement, the Note, and the Collateral Documents, and to incur the Obligations herein and therein provided for, and has taken all corporate action necessary to authorize the execution, delivery, and performance of this Agreement, the Note, and the Collateral Documents;
(F) This Agreement and the Collateral Documents are, and the Note when delivered will be, valid, binding, and enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws, and judicial decisions affecting the rights of creditors generally and by general principles of equity;
(G) There is no pending or, to Borrower’s knowledge, threatened order, notice, claim, litigation, proceeding or investigation against or affecting Borrower or the Subsidiary Bank, whether or not covered by insurance, that would involve the payment of $10,000.00 or more if adversely determined;
(H) Borrower has good and marketable title to all of the Collateral, subject to no security interest, encumbrance or lien, or claim of any third person;
(I) Borrower’s and the Subsidiary Bank’s financial statements (including call reports, in the case of the Subsidiary Bank) furnished to Lender, including any schedules and notes pertaining thereto, have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, and fully and fairly present the financial condition of Borrower at the dates thereof and the results of operations for the periods covered thereby, and there have been no material adverse changes in the consolidated financial condition or business of Borrower from the date of the latest financial statements provided to Lender to the date hereof, or the Subsidiary Bank from its most recently filed call report to the date hereof;
(J) As at the date of this Agreement, neither Borrower nor the Subsidiary Bank has any material Indebtedness of any nature, including, but without limitation, liabilities for taxes and any interest or penalties relating thereto, except to the extent reflected (in a footnote or otherwise) and reserved against in the financial statements of Borrower most recently delivered to Lender or the most recent call report of the Subsidiary Bank, or as disclosed in or permitted by this Agreement, as applicable; Borrower does not know and has no reasonable ground to know of any basis for the assertion against it or the Subsidiary Bank of any material Indebtedness of any nature not fully reflected and reserved against in the above referenced respective financial statements or call reports, as applicable;
        11

(K) Except as otherwise permitted herein, Borrower and the Subsidiary Bank have filed all federal, state and local tax returns and other reports they are required by Law to file prior to the date hereof and which are material to the conduct of their business, have paid or caused to be paid all taxes, assessments and other governmental charges that are due and payable prior to the date hereof, and have made adequate provision for the payment of such taxes, assessments or other charges accruing but not yet payable; Borrower has no knowledge of any deficiency or additional assessment in a materially important amount in connection with any taxes, assessments or charges not provided for on its books or the books of the Subsidiary Bank;
(L) Neither Borrower nor the Subsidiary Bank is in material violation of any applicable Laws; 
(M) No representation or warranty by Borrower or the Subsidiary Bank contained herein or in any certificate or other document furnished by Borrower or the Subsidiary Bank pursuant hereto contains any untrue statement of material fact or omits to state a material fact necessary to make such representation or warranty not misleading in light of the circumstances under which it was made;
(N) Each consent, approval or authorization of, or filing, registration or qualification with, any Person that is required to be obtained or effected by Borrower or the Subsidiary Bank in connection with the execution and delivery of this Agreement, the Note, and the Collateral Documents, or the undertaking or performance of any obligation hereunder or thereunder, has been duly obtained or effected;
(O) The Pledged Stock constitutes all of the issued and outstanding capital stock of the Subsidiary Bank.  There are no outstanding warrants, options, rights or other commitments (including, but without limitation, convertible notes or securities) entitling any Person to purchase or otherwise acquire any shares of capital stock of Borrower or the Subsidiary Bank.  The Pledged Stock does not constitute “Margin Stock” as defined in Federal Reserve Board Regulation U (12 C.F.R. §§ 221.1 et seq.);
(P) Borrower has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finder’s fee as a result of the making of the Loan;
(Q) Borrower does not maintain any “Defined Benefit Pension Plans”, as defined in ERISA; and
(R) Section 5.02 Survival.  All of the representations and warranties set forth in Section 5.01 shall survive and shall remain true and correct until all Obligations are satisfied in full (except, if applicable, to the extent that any such representation or warranty expressly relates solely to an earlier date or period of time).  
ARTICLE 6. THE BORROWER’S COVENANTS
Borrower hereby covenants and agrees with Lender that, so long as any of the Obligations remain unsatisfied, it will comply with the following covenants:
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Section 6.01 Affirmative Covenants.
Unless Lender shall otherwise agree in writing, Borrower shall abide by and perform the following covenants:
(A)[Reserved]
(B)Borrower will use the proceeds of the Loan solely for the purposes described in Section 2.03 of this Agreement.  Borrower will furnish Lender such evidence as it may reasonably require with respect to such use.
(C) Borrower will furnish Lender all of the following:  
(1) with respect to Borrower only, quarterly, within sixty (60) days after the close of each calendar quarter, and at such other times as Lender may request:
(a) a statement of stockholders’ equity and a statement of cash flows of such entity as of and for such quarter;
(b) an income statement of such entity for such quarter; and
(c) a balance sheet (consolidated, in the case of an entity that has one or more Subsidiaries) of such entity as of the end of such period;
all in reasonable detail, subject to year-end audit adjustments and certified by Borrower’s president or principal financial officer to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, except for any inconsistencies explained in such certificate.
(2) with respect to each of Borrower and the Subsidiary Bank, annually, within one hundred twenty (120) days after December 31 of each year:
(a) a statement of stockholders’ equity and a statement of cash flows of such entity as of and for such fiscal year;
(b) an income statement of such entity for such fiscal year; and
(c) a balance sheet (in the case of an entity that has one or more Subsidiaries, such balance sheet shall be delivered on a consolidated basis and, if requested by Lender, also on a parent-only basis) of such entity as of the end of such fiscal year;
all in reasonable detail, including all supporting schedules and comments, audited by an independent public accountant selected by Borrower and reasonably acceptable to Lender, and certified by such accountant to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, except for any inconsistencies explained in such certificate.  In addition, if requested by Lender, 
        13

Borrower will obtain from such independent certified public accountants and deliver to Lender, within one hundred twenty (120) days after the close of each fiscal year, the independent certified public accountants’ written statement that in making the examination necessary to their certification they have obtained no knowledge of any Default or Potential Default by Borrower or the Subsidiary Bank, or disclosed all Defaults or Potential Defaults of which they have obtained knowledge; provided, however, that in making their examination such accountants shall not be required to go beyond the bounds of generally accepted auditing procedures for the purpose of certifying financial statements.  Lender shall have the right, from time to time, to discuss Borrower’s and the Subsidiary Bank’s affairs directly with Borrower’s and the Subsidiary Bank’s independent public accountants after notice to Borrower and the Subsidiary Bank and upon opportunity for Borrower and the Subsidiary Bank to be present at any such discussions.
(3) Contemporaneously with each quarterly and year-end financial report required by the foregoing paragraphs (1) and (2), a certificate of the president or principal financial officer of Borrower and the Subsidiary Bank, in the form of Exhibit A, stating that he or she has individually reviewed the provisions of this Agreement and that a review of the activities of Borrower and the Subsidiary Bank during such year or quarterly period, as the case may be, has been made by or under the supervision of the signer of such certificate with a view to determining whether Borrower and the Subsidiary Bank have kept, observed, performed and fulfilled all their obligations under this Agreement, and that, to the best of his or her knowledge, Borrower and the Subsidiary Bank have observed and performed each and every undertaking contained in this Agreement and are not at the time in default in the observance or performance of any of the terms and conditions hereof or, if Borrower or the Subsidiary Bank shall be so in default, specifying all such defaults and events of which he or she may have knowledge. 
(4) Promptly after receipt thereof, copies of all material reports and documents submitted to Borrower or the Subsidiary Bank by any applicable regulatory authority (other than those which Borrower and the Subsidiary Bank are prohibited from disclosing under applicable Laws), and, simultaneously with the filing thereof, but in any event within forty-five (45) days of the end of each calendar quarter, copies of all financial reports, including but not limited to quarterly call reports, filed by the Borrower and/or the Subsidiary Bank with any applicable regulatory authority.
(5) Promptly after sending or making available or filing of the same, but in any event within fifteen (15) days after issuance, copies of all reports, proxy statements and financial statements that Borrower or the Subsidiary Bank sends or makes available to the stockholders and all registration statements and reports, including, if applicable, but not limited to 8Ks and 10Qs that Borrower or the Subsidiary Bank files with the Securities and Exchange Commission or any successor Person.
(6) Immediately upon the occurrence thereof, notice of (i) any material change in Borrower’s or the Subsidiary Bank’s financial condition or executive management, or 
        14

(ii) any other change internally or externally that could materially affect the capital, earnings or financial condition of Borrower or the Subsidiary Bank.
(7) Such other reports, financial information, projections, budgets, capital plans and other information as Lender may reasonably require.
(D)Borrower will pay or cause to be paid when due all taxes, assessments and charges or levies imposed upon it or the Subsidiary Bank or on any of its property or the Subsidiary Bank’s property or which it or the Subsidiary Bank is required to withhold and pay over, except where contested in good faith by appropriate proceedings with adequate reserve therefor having been set aside on Borrower’s or the Subsidiary Bank’s books, but Borrower shall pay or cause to be paid all such taxes, assessments, charges or levies forthwith whenever foreclosure on any lien that has attached (or any security therefor) appears imminent.
(E) Borrower will, when requested so to do and unless prohibited by any federal, state and/or local Laws, make available for inspection by duly authorized representatives of Lender any of its or the Subsidiary Bank’s Records, and will furnish Lender any information regarding its or the Subsidiary Bank’s business affairs and financial condition within a reasonable time after written request therefor.
(F) Borrower will maintain, and will cause the Subsidiary Bank to maintain, liability insurance, property insurance (including, without limitation, fire and extended coverage insurance on all assets owned by Borrower or the Subsidiary Bank, as applicable), and other types of insurance (including, without limitation, insurance coverage on the directors and officers of Borrower and the Subsidiary Bank), all in such form and amounts as are consistent with industry practices and with such insurers as may be satisfactory to Lender.  All such policies of insurance shall contain a provision whereby they cannot be canceled except after not less than ten (10) days’ written notice to Lender.  Borrower will furnish to Lender such evidence of insurance as Lender may require.  Borrower hereby agrees that, in the event it fails to pay or cause to be paid the premium on any such insurance, Lender may do so and shall be reimbursed by Borrower therefor, along with interest on the amount so paid at the Interest Rate (or default rate, if applicable).  Borrower hereby assigns to Lender any returned or unearned premiums that may be due Borrower upon cancellation of any such policies for any reason whatsoever and directs the insurers to pay Lender any amounts so due.  Lender is hereby appointed Borrower’s attorney-in-fact (without requiring Lender to act as such) to endorse any check which may be payable to Borrower to collect such returned or unearned premiums or the proceeds of such insurance, and any amount so collected may be applied by Lender toward satisfaction of any of the Obligations.
(G) Borrower will take all necessary steps to preserve its and the Subsidiary Bank’s corporate existence and comply with all present and future Laws applicable to it or the Subsidiary Bank in the operation of its or the Subsidiary Bank’s business, and all material leases, contracts and commitments of any kind to which it or the Subsidiary Bank is subject.  Borrower will cause the Subsidiary Bank to comply in all material respects with their respective obligations.
        15

(H) Borrower will give immediate notice to Lender of:
(1) any litigation or proceeding in which it or the Subsidiary Bank is a party if an adverse decision therein would require it or the Subsidiary Bank to pay over more than $500,000.00 or deliver assets the value of which exceeds such sum (whether or not the claim is considered to be covered by insurance); and
(2) the institution of any other suit or proceeding involving Borrower or the Subsidiary Bank that might materially and adversely affect Borrower’s or the Subsidiary Bank’s operations, financial condition, property or business.
(I)Within ten (10) days of Lender’s request therefor, Borrower will furnish Lender with copies of federal income tax returns filed by Borrower or the Subsidiary Bank.
(J)Borrower will cause the Subsidiary Bank at all times to maintain (in accordance with Generally Accepted Accounting Principles):  
4.a “well-capitalized” status in accordance with the regulations of the primary federal bank regulatory agency of the Subsidiary Bank;
5.a Tier 1 Leverage Ratio of at least eight percent (8.0%); 
6.a Non-Performing Assets Ratio of less than fifteen percent (15%); and
7.a Return on Assets Ratio of at least two and one-half tenths of one percent (0.25%).
(K)Borrower will notify Lender immediately if it becomes aware of the occurrence of any Default or Potential Default, or the failure of Borrower to observe any of its undertakings hereunder.
(L)Borrower shall (a) ensure that no Person which owns a controlling interest in or controls Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of any proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, (c) comply with all applicable Bank Secrecy Act laws and regulations, as amended, and (d) provide all information necessary for Lender to comply with the USA Patriot Act, as amended from time to time.
(M)Borrower will maintain direct ownership of one hundred percent (100%) of the issued and outstanding capital stock of the Subsidiary Bank.
(N)Borrower will pay, or cause the Subsidiary Bank to pay, when due (or within applicable grace periods) all Indebtedness due third Persons, except when the amount therefor is being contested in good faith by appropriate proceedings and with adequate reserves therefor 
        16

being set aside on the books of Borrower or the Subsidiary Bank.  If default be made by Borrower or the Subsidiary Bank in the payment of any principal (or installment thereof) of, or interest on, any such Indebtedness, Lender shall have the right, in its discretion, to pay such interest or principal for the account of Borrower or the Subsidiary Bank and be reimbursed by Borrower therefor, along with interest on the amount so paid at the Interest Rate (or default rate, if applicable).  
(O)Borrower shall cause the Subsidiary Bank to pay dividends to Borrower in an amount sufficient to fulfill its Obligations to repay the Loan.  Borrower shall immediately notify Lender within two (2) business days of any regulatory prohibition relative to the payment of dividends to Borrower.
(P)Borrower shall immediately notify Lender in the event of the departure or removal of the current Chief Executive Officer or Chairman of either Borrower or the Subsidiary Bank, and Lender may accelerate the Loan at any time after 90 days following any such departure or removal in accordance with Section 7.02.
(Q)Borrower shall have an interest reserve requirement which will require the Subsidiary Bank to maintain cash on hand of at least $1,000,000 at all times during the term of the Loan.
(R)In the event Borrower fails to maintain a Tier 1 Leverage Ratio of at least eight percent (8.0%) in accordance with this Section 6.01, Borrower shall have a period to cure the failure for thirty (30) days.  In the event Borrower fails to maintain a Non-Performing Assets Ratio of less than fifteen percent (15%) or a Return on Assets Ratio of at least two and one-half tenths of one percent (0.25%) in accordance with this Section 6.01, Borrower shall have a period to cure the failure for ninety (90) days.  Borrower shall not be in violation of this covenant provided Borrower continues to service the Loan.
(S)Borrower shall maintain an interest reserve of at least $2,000,000 at all times during the term of the Loan.  Borrower shall not be in violation of this covenant provided Borrower continues to service the Loan.
Section 6.02 Negative Covenants.
Unless Lender shall otherwise consent in writing, which consent shall not unreasonably be withheld, Borrower shall abide by the following covenants:
(A) Neither Borrower nor the Subsidiary Bank will change its name, enter into any merger, consolidation, or reorganization, reclassify its capital stock, or liquidate or dissolve, except pursuant to a transaction in which Borrower or the Subsidiary Bank, as appropriate, is the acquiror and no Change in Control has occurred.
(B) Neither Borrower nor the Subsidiary Bank will sell, transfer, lease or otherwise dispose of all or any material part of its assets, nor sell any item of Collateral, including but without limitation with respect to Borrower, any of the capital stock of the Subsidiary Bank.  
        17

Further, neither Borrower nor the Subsidiary Bank will purchase any material part of the assets of another Person, except pursuant to a transaction by the Subsidiary Bank in the ordinary course of business or a transaction in which Borrower or the Subsidiary Bank, as appropriate, is the acquiror and no Change in Control has occurred.
(C) Borrower will not mortgage, pledge, grant or permit to exist a security interest in or lien upon any item of Collateral, including, but without limitation any of the capital stock of the Subsidiary Bank, now owned or hereafter acquired.
(D) Neither Borrower nor the Subsidiary Bank will become liable, directly or indirectly, as guarantor or otherwise for any obligation of any Person, except for the Subsidiary Bank’s endorsement of commercial paper for deposit or collection in the ordinary course of business, and the Subsidiary Bank’s issuance of letters of credit in the ordinary course of business.
(E) Neither Borrower nor the Subsidiary Bank (whether acting in its individual capacity or as a joint venture partner) will incur, create, assume, or permit to exist any Indebtedness except:
(1) the Loan;
(2) Indebtedness described in the financial statements of Borrower most recently delivered to Lender, or the most recent call reports of the Subsidiary Bank, as applicable; 
(3) trade indebtedness incurred in the ordinary course of business; and
(4) contingent Indebtedness permitted by Section 6.02(D).
Without limiting the foregoing, the Subsidiary Bank shall not issue commercial paper, subordinated debt or any similar debt instrument, and the Subsidiary Bank shall not obtain any non-traditional funding, without Lender’s prior written consent.
(F) Borrower will not amend, nor cause the Subsidiary Bank to amend, its articles of incorporation or bylaws, or alter, through agreement or otherwise, any voting rights or rights to elect or appoint directors.
(G) Borrower will not declare or pay any dividends, or make any other payment or distribution on account of its capital stock, except that so long as no Default or Potential Default shall have occurred and be continuing, Borrower may pay dividends to its shareholders in amounts consistent with its past practices.
(H) Borrower will not furnish Lender any certificate or other document that will knowingly contain any untrue statement of material fact or that will knowingly omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished.
        18

(I) Borrower will not directly or indirectly apply any part of the proceeds of the Loan to the purchasing or carrying of any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or any regulations, interpretations or rulings thereunder.
(J) Borrower will not enter into any transaction with any Affiliate including, without limitation, the purchase, sale or exchange of property or the rendering of any service, except in the ordinary course of business and pursuant to the reasonable requirements of Borrower’s business and upon terms found by its board of directors to be fair and reasonable and no less favorable to Borrower than would obtain in a comparable arm’s-length transaction with a Person not an Affiliate.
(K) Borrower will not acquire any new indebtedness in excess of $5,000,000 without the prior approval of Lender.
ARTICLE 7. DEFAULT
Section 7.01 Events of Default.  The occurrence of any one or more of the following events shall constitute a Default hereunder:
(A) Borrower shall fail to pay when due any installment of principal or interest or fee payable hereunder or under the Note, or any of Borrower’s other Obligations to Lender.  For the purposes of this paragraph, there shall be a ten (10) day grace period in the event of a late payment.
(B) Borrower shall fail to observe or perform any other obligation to be observed or performed by it hereunder or under the Note or any of the Collateral Documents.   In the event of a failure to meet an obligation under this paragraph, Lender shall give Borrower notice of the failure.  From the date notice is received, Borrower shall have a thirty (30) day period in which to cure such failure.
(C) Borrower or the Subsidiary Bank shall fail to pay any Indebtedness in excess of $10,000.00 due any third Persons and such failure shall continue beyond any applicable grace period, unless any such failure is being contested in good faith by appropriate proceedings with adequate reserve therefor being set aside on Borrower’s or the Subsidiary Bank’s books.
(D) Any financial statement, call report, representation, warranty or certificate made or furnished by Borrower or the Subsidiary Bank to Lender under or in connection with this Agreement, or as an inducement to Lender to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Lender, shall be materially false, incorrect, or incomplete when made.
(E) Borrower shall admit its inability to pay its debts as they mature, or shall make an assignment for the benefit of its or any of its creditors.
        19

(F) Proceedings in bankruptcy, or for reorganization of Borrower or the Subsidiary Bank or for the readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter existing, (i) shall be commenced against Borrower or the Subsidiary Bank and shall not be discharged within thirty (30) days after their commencement, or (ii) shall be commenced by Borrower or the Subsidiary Bank.
(G) Any proceedings shall be instituted for the appointment of a receiver or trustee for Borrower or the Subsidiary Bank or for any substantial part of their respective assets, or any proceedings shall be instituted for the dissolution of or the full or partial liquidation of Borrower or the Subsidiary Bank, or Borrower or the Subsidiary Bank shall discontinue its business or materially change the nature of its business.
(H) Borrower or the Subsidiary Bank shall suffer final judgments for payment of money aggregating in excess of $500,000.00 and shall not discharge the same within a period of thirty (30) days unless, pending further proceedings, execution has been effectively stayed.
(I) A judgment creditor of Borrower shall obtain possession of any of the Collateral by any means, including, but without limitation, levy, distraint, replevin or self-help.
(J) The validity or enforceability of this Agreement, the Note or the Collateral Documents shall be contested by Borrower, the Subsidiary Bank, or any shareholder of Borrower, or the Borrower shall deny that it has any or further liability or Obligation hereunder or thereunder.
(K) Borrower or the Subsidiary Bank shall fail to maintain all regulatory licenses and permits necessary to the conduct of their respective business.
(L) If any of Borrower’s or the Subsidiary Bank’s banking regulators (i) enter into or issue a cease and desist order, consent order, written agreement or similar agreement with or against Borrower or the Subsidiary Bank, (ii) require Borrower or the Subsidiary Bank to enter into a memorandum of understanding, letter agreement or other similar written undertaking, or (iii) take such other action that explicitly states that Borrower or the Subsidiary Bank has acted in an unsafe or unsound manner.
(M) Borrower ceases to own one hundred percent (100%) of the issued and outstanding capital stock of the Subsidiary Bank.
(N) There is a Change in Control with respect to Borrower or the Subsidiary Bank.
Section 7.02 Acceleration.  If a Default shall have occurred and be continuing, or if a departure of executive management occurs under Section 6.01(Q), then, at the option of Lender (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of a Default specified in Sections 7.01(E), (F) or (G)), Lender may terminate all commitments to lend hereunder and may declare, by written notice to Borrower, that all Obligations, whether hereunder or otherwise, are immediately due and payable.
        20

Section 7.03 Remedies.  If a Default shall have occurred and be continuing, then whether or not acceleration occurs under Section 7.02, Lender shall have, in addition to the rights and remedies given it by this Agreement and the Collateral Documents, all those allowed by all applicable Laws, including, but without limitation, the Uniform Commercial Code as enacted in any jurisdiction in which any Collateral may be located.  Without limiting the generality of the foregoing, Lender may immediately, without demand of performance and without other notice or demand whatsoever to Borrower or the Subsidiary Bank, all of which are hereby expressly waived (except as specifically required by this Agreement or the Collateral Documents, or as required by applicable Laws), and without advertisement, sell at public or private sale or otherwise realize upon, the whole or, from time to time, any part of the Collateral, or any interest which Borrower or the Subsidiary Bank may have therein.  After deducting from the proceeds of sale or other disposition of the Collateral all expenses (including all reasonable expenses for legal services), Lender shall apply such proceeds toward the satisfaction of the Obligations.  Borrower shall be liable for any deficiency, and any remainder of the proceeds after satisfaction in full of the Obligations shall be distributed as required by applicable Laws.  Notice of any sale or other disposition shall be given to Borrower (and/or to the Subsidiary Bank, if required under applicable Laws) at least five (5) days before the time of any intended public sale or of the time after which any intended private sale or other disposition of the Collateral is to be made, which Borrower hereby agrees shall be reasonable notice of such sale or other disposition.  Borrower agrees to assemble, or to cause to be assembled, at its own expense, the Collateral at such place or places as Lender shall designate.  At any such sale or other disposition, Lender may, to the extent permissible under applicable Laws, purchase the whole or any part of the Collateral, free from any right of redemption on the part of Borrower or the Subsidiary Bank, which right is hereby waived and released.  Without limiting the generality of any of the rights and remedies conferred upon Lender under this section, Lender may, to the full extent permitted by applicable Laws, at Lender’s option, use, operate, manage and control the Collateral in any lawful manner.
ARTICLE 8. MISCELLANEOUS
Section 8.01 Construction.  The provisions of this Agreement shall be in addition to those of any guaranty, pledge or security agreement, note or other evidence of liability held by Lender, all of which shall be construed as complementary to each other.  Nothing herein contained shall prevent Lender from enforcing any or all other notes, guaranty agreements, pledge agreements, or security agreements in accordance with their respective terms.
Section 8.02 Further Assurance.  From time to time, Borrower will, or will cause the Subsidiary Bank to, execute and deliver to Lender such additional documents and will provide such additional information as Lender may reasonably require to carry out the terms of this Agreement and be informed of Borrower’s and/or the Subsidiary Bank’s status and affairs.
Section 8.03 Enforcement and Waiver by Lender.  Lender shall have the right at all times to enforce the provisions of this Agreement and the Collateral Documents in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of Lender in refraining from so doing at any time or times.  The failure of Lender at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not 
        21

be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same.  All rights and remedies of Lender are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy.
Section 8.04 Expenses of Lender.  Borrower will, on demand, reimburse Lender for any and all expenses, fees, taxes, or other costs (including, without limitation, (a) expenses for lien searches and other due diligence searches, (b) any recordation tax, indebtedness tax, documentary stamp tax, intangible tax, or similar tax due in connection with the Loan or any security instrument related to the Loan, (c) any recording fees or other costs due in connection with any security instrument related to the Loan, and (d) the reasonable fees and expenses of legal counsel for Lender) incurred in connection with the enforcement of this Agreement and the Collateral Documents and the collection or attempted collection of the Note and the other Obligations.
Section 8.05 Notices.  Any notice or other communication required or permitted to be given by this Agreement, the Note, the Collateral Documents or any related document, or by applicable Laws, shall be in writing and shall be deemed received (a) on the date delivered, if sent by hand delivery (to the person or department if one is specified below) with receipt acknowledged by the recipient thereof, (b) three (3) business days following the date deposited in U.S. mail, certified or registered, with return receipt requested, or (c) one (1) business day following the date deposited with Federal Express or other national overnight carrier, and in each case addressed as follows:
(A) If to Borrower:

SmartFinancial, Inc. c/o SmartBank
5401 Kingston Pike Ste. 600
Knoxville, Tennessee 37919
Attention: Ron Gorczynski 
   

(B) If to Lender:

ServisFirst Bank
           2500 Woodcrest Place
           Birmingham, Alabama 35209 
Attention: William Mellown
                Assistant Vice President, Correspondent Banking

Section 8.06 Waiver; Release and Indemnity by Borrower.  To the maximum extent permitted by applicable Laws, Borrower:
(A) Waives (1) protest with respect to all Indebtedness at any time held by Lender on which Borrower is in any way liable; and (2) notice and opportunity to be heard before exercise 
        22

by Lender of the remedies of set-off or other summary procedures permitted by any applicable Laws or by any agreement with Borrower, and except where required hereby or by any applicable Laws, notice of any other action taken by Lender; and
(B) Releases Lender and its officers, directors, agents, attorneys and employees from all claims for loss or damage caused by any act or omission on the part of any of them except gross negligence or willful misconduct; and
(C) Indemnifies Lender and its officers, directors, agents, attorneys and employees against, and agrees to hold Lender and all of such other persons harmless from, any claims, demands, liabilities, costs, damages, and judgments (including, without limitation, costs of defense and attorneys’ fees) arising directly or indirectly out of or in connection with any matter involving the Loan, this Agreement, the Note, the Collateral Documents, any related documents, or any of the other matters and transactions contemplated herein or therein, except where such claims, demands, liabilities, costs, damages and judgments arise out of the gross negligence or willful misconduct of Lender.  This agreement of indemnity shall be a continuing agreement and shall survive payment of the Loan, the Note and termination of this Agreement.
Section 8.07 Participation.  Notwithstanding any other provision in this Agreement, Borrower understands and agrees that Lender may enter into participation agreements with participating banks whereby Lender will allocate to them certain percentages of Lender’s interest in the Loan.  Borrower acknowledges that, for the convenience of all parties, this Agreement is being entered into with Lender only and that its obligations under this Agreement are undertaken for the benefit of, and as an inducement to each of any such participating banks as well as Lender, and Borrower hereby grants to each such participating bank, to the extent of its participation in the Loan, the right to set off deposit accounts maintained by Borrower with such bank.
Section 8.08 Applicable Law; Jurisdiction and Venue.  The substantive Laws of the United States and the State of Alabama shall govern the construction of this Agreement and the documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto and thereto.  Borrower hereby consents to the jurisdiction of the State of Alabama; and agrees that venue for any dispute relating to or arising out of the transaction contemplated by this Agreement shall lie exclusively in an appropriate state or federal court located in Jefferson County, Alabama.
Section 8.09 Binding Effect, Assignment and Entire Agreement.  This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and permitted assigns of the parties hereto.  Borrower has no right to assign any of its rights or obligations hereunder without the prior written consent of Lender.  Lender may freely assign the Loan, in whole or in part.  This Agreement and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a writing signed on behalf of each party.
Section 8.10 Severability.  If any provision of this Agreement shall be held invalid under any applicable Laws, such invalidity shall not affect any other provision of this Agreement 
        23

that can be given effect without the invalid provision, and, to this end, the provisions hereof are severable.
Section 8.11 Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.
Section 8.12 Extension and Renewal.  The Loan may, in the sole and absolute discretion of Lender, be renewed or extended beyond the Maturity Date by notice given by Lender to Borrower.  Any such renewal or extension shall be upon the terms and subject to the conditions stated in such notice.  In the absence of such extension or renewal, the obligations of Lender hereunder with respect to the Loan shall terminate on the Maturity Date.
Section 8.13 Seal.  This Agreement is intended to take effect as an instrument under seal.
Section 8.14 No Third Party Beneficiaries, Etc.  Monitoring, inspections and review of financial information by Lender may not be relied upon by Borrower or any other Person and shall be for the sole benefit of Lender.  Further, there are no third party beneficiaries of this Agreement or any documents related hereto, and no person or entity other than Lender and Borrower shall be entitled to rely hereon or thereon or benefit herefrom or therefrom.
Section 8.15 Waiver of Trial by Jury.  EACH OF THE BORROWER AND THE LENDER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATING TO THIS AGREEMENT, THE Note, THE COLLATERAL DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (b) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE Note, THE COLLATERAL DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR IN CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED THEREUNDER, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE BORROWER AND THE LENDER AGREE THAT EITHER OR BOTH OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
[Signature Page Follows]

        24

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

BORROWER:

						
	SMARTFINANCIAL, INC.

	
	By	/s/ William Y. Carroll, Jr.

	Name	William Y. Carroll, Jr.
	Its	President & Chief Executive Officer

LENDER:

						
	SERVISFIRST BANK

	
	By	/s/ William Mellown
	Name	William Mellown
	Its	Assistant Vice President

        Signature Page for Loan and Security Agreement

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