Document:

Exhibit 10.41

 

This is an English translation

 

EQUITY PLEDGE AGREEMENT

 

 

Among

 

 

Qizhi Software (Beijing) Co., Ltd.

 

 

And

 

 

Jie Chen

 

Su Zou

 

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TABLE OF CONTENTS

 

	
ARTICLE 1 DEFINITIONS
    	
 
    
	
 
    	
 
    
	
ARTICLE 2 PLEDGE
    	
 
    
	
 
    	
 
    
	
ARTICLE 3 COMPLETION
    	
 
    
	
 
    	
 
    
	
ARTICLE 4   REPRESENTATIONS AND WARRANTIES
    	
 
    
	
 
    	
 
    
	
ARTICLE 5   RIGHTS AND REMEDIES
    	
 
    
	
 
    	
 
    
	
ARTICLE 6   CONFIDENTIALITY
    	
 
    
	
 
    	
 
    
	
ARTICLE 7   EARLIER TERMINATION
    	
 
    
	
 
    	
 
    
	
ARTICLE 8   INDEMNITY
    	
 
    
	
 
    	
 
    
	
ARTICLE 9   DURATION
    	
 
    
	
 
    	
 
    
	
ARTICLE 10   LIABILITIES FOR BREACH OF CONTRACT
    	
 
    
	
 
    	
 
    
	
ARTICLE 11   FORCE MAJEURE
    	
 
    
	
 
    	
 
    
	
ARTICLE 12   GOVERNING LAW AND DISPUTE SETTLEMENT
    	
 
    
	
 
    	
 
    
	
ARTICLE 13 NOTICE
    	
 
    
	
 
    	
 
    
	
ARTICLE 14 ASSIGNMENT
    	
 
    
	
 
    	
 
    
	
ARTICLE 15 INURE
    	
 
    
	
 
    	
 
    
	
ARTICLE 16   WAIVER
    	
 
    
	
 
    	
 
    
	
ARTICLE 17   REMEDIES
    	
 
    
	
 
    	
 
    
	
ARTICLE 18   ENTIRE AGREEMENT
    	
 
    
	
 
    	
 
    
	
ARTICLE 19   SEVERABILITY AND ENFORCEABILITY
    	
 
    
	
 
    	
 
    
	
ARTICLE 20   TIME OF ESSENCE
    	
 
    
	
 
    	
 
    
	
ARTICLE 21   FURTHER ASSURANCE
    	
 
    
	
 
    	
 
    
	
ARTICLE 22   COUNTERPARTS
    	
 
    
	
 
    	
 
    
	
ARTICLE 23   EFFECTIVENESS
    	
 
    

 

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EQUITY PLEDGE AGREEMENT

 

THIS EQUITY PLEDGE AGREEMENT (hereinafter referred to as “Agreement”) is made and entered into on this 2nd day of September, 2009 by and among:

 

(1) Qizhi Software (Beijing) Co., Ltd., a wholly foreign owned enterprise duly established under the laws of the People’s Republic of China (“Party A”), with its registered address at East Suite, 4/F, C&W Plaza, No.14 Jiu Xian Qiao Road, Chaoyang District, Beijing;

 

(2) Jie Chen (“Party B”), a Chinese citizen, now being a shareholder of Shanghai Qitai Network Technology Co., Ltd. (“Shanghai Qitai”) and holding 50% shares of Shanghai Qitai;

 

(3) Su Zou (“Party C”), a Chinese citizen, now being a shareholder of Shanghai Qitai and holding 50% shares of Shanghai Qitai;

 

WHEREAS,

 

(1) Party A signed series of Restructuring Agreements (as defined in Article 1 below) with Shanghai Qitai and its shareholders;

 

(2) Party A wishes Party B and Party C will pledge their shares in Shanghai Qitai to Party A totally, to secure the performance of the Restructuring Agreements by Party B and Party C.

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

ARTICLE 1 DEFINITIONS

 

1. For the purpose of this Agreement, unless it is otherwise required by the context, the following terms shall have the meaning defined below:

 

1.1 “Pledgee” shall mean Party A, i.e. Qizhi Software (Beijing) Co., Ltd.

 

1.2 “Pledgor” shall mean Party B or Party C, or any party among them, as the case may be.

 

1.3 “China” shall mean the People’s Republic of China, and for the purpose of this Agreement, it shall exclude Hong Kong SAR, Macau SAR and Taiwan.

 

1.4 “Pledged Equity” shall mean 100% equity of Shanghai Qitai jointly held and pledged by the Pledgor to the Pledgee.

 

1.5 “Restructuring Agreements” shall mean series of contracts, agreements and legal documents signed by Party A and Shanghai Qitai for the purpose of reorganization (refer to the list contained attached hereto).

 

ARTICLE 2 PLEDGE

 

2.1 In order to secure that Shanghai Qitai will duly and fully perform the Restructuring Agreements, Party B and Party C, as the shareholders of Shanghai Qitai, hereby agree to jointly pledge 100% shares of Shanghai Qitai to Party A, so as to ensure Shanghai Qitai’s performance of its obligations under the Restructuring Agreements. Party B and Party C, by their 100% shares of Shanghai Qitai, hereby jointly warrant to Party A that Shanghai Qitai will duly and fully perform its obligations under the Restructuring Agreements in accordance with the terms and conditions of the Restructuring Agreements.

 

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2.2 The guaranty under the Pledged Equity only covers Shanghai Qitai’s performance of the Restructuring Agreements as listed in Appendix A hereto and all amendments or supplementations thereto; unless it is otherwise agreed by the Parties in written forms, it does not cover the performance of any contract, agreement or arrangement other than the foregoing Restructuring Agreements and all amendments or supplementations thereto.

 

ARTICLE 3 COMPLETION

 

3.1 Party A, Party B and Party C hereby agree that, upon execution of this Agreement, they will cooperate with each other to timely complete all necessary formalities relating to the Equity Pledge.

 

3.2 After the completion of formalities relation to the Equity Pledge, Party A will have the right of pledge in the Equity in accordance with this Agreement; however, unless it is otherwise agreed by the Parties in the Restructuring Agreements, Party A shall not participate in or interfere with Shanghai Qitai’s normal operations.

 

3.3 After the Equity is pledged by Party B and Party C their rights and obligations as the shareholders of Shanghai Qitai will not be affected. Party B and Party C shall take their best efforts to ensure that Shanghai Qitai will carry out business operations normally during the term of this Agreement, and to maintain and increase the value of the Equity.

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES

 

4.1 Each Party hereby represents and warrants to each other that it has full power and authority to execute and perform this Agreement, that the authorized representative with his signature on this Agreement has been duly authorized by a valid power of attorney or by the board of directors to execute this Agreement, and that this Agreement constitutes effective and binding obligations on it in accordance with the terms and conditions hereof.

 

4.3 Party B and Party C hereby make the following representations and warranties to Party A:

 

(1) The Equity pledged to Party A hereunder is free from any other encumbrance on the date of this Agreement;

 

(2) They will procure Shanghai Qitai to perform all obligations under the Restructuring Agreements and comply with all terms and conditions of the Restructuring Agreements;

 

(3) Without the written consent of Party A, Party B and Party C may not dispose of the Pledge Equity in whatever forms;

 

(4) Without the written consent of Party A, Party B and Party C may not permit Shanghai Qitai to merge, consolidate or otherwise reorganize with any other company or entity;

 

(5) They will not commit any act which likely has material adverse effect on the Pledged Equity or Party A’s right of pledge hereunder.

 

ARTICLE 5 RIGHTS AND REMEDIES

 

5.1 Upon occurrence of any of the following circumstances, Party B and Party C agree that Party A may enforce its right of pledge in accordance with Article 5.2 below:

 

(1) Shanghai Qitai fails to perform any obligation under the Restructuring Agreements, and fails to make correction within thirty (30) days upon receipt of a written notice from Party A;

 

(2) Shanghai Qitai’s business or major business decision is obviously harmful to its operations, or Party A reasonably considers that such act will have material adverse effect on Shanghai Qitai, and Shanghai Qitai fails to make correction within (30) days upon receipt of a written notice from Party A;

 

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(3) Shanghai Qitai materially violates any provision of the Restructuring Agreements and constitutes fundamental breach of contract.

 

5.2 If Shanghai Qitai commits any act listed in Article 5.1 above, Party A may dispose of the Pledged Equity by giving a written notice. In that case, Party B and Party C shall cooperate with Party A, and shall execute all necessary documents and take all necessary actions according to Party A’s instructions.

 

ARTICLE 6 CONFIDENTIALITY

 

6.1 Each Party shall reasonably keep (and shall procure its agents, officers and employees, if applicable to reasonably keep) confidentiality of all confidential information, and may not disclose such information to any other person without the written consent of the other Parties.

 

6.2 Notwithstanding Article 6.1 above, the confidentiality obligation shall not be applied to:

 

(a) Any information received from any Party becomes or has become known publicly, without intentional action or negligence or inaction of any Party or its agent, consultant, director, officer, employee or representative;

 

(b) Disclosure of any information is required by any applicable law or any regulation or rule of any government authority, statutory agency or regulatory agency; and

 

(c) Any information disclosed by any Party to its bank, financial consultant, advisor, legal consultant or any other consultant for the purpose of this Agreement.

 

6.4 The confidentiality obligation mentioned above shall survive after termination of this Agreement without limitation of time, until and unless any confidential information enters into the public domain according to the provisions above.

 

ARTICLE 7 EARLIER TERMINATION

 

7.1 Party A may terminate this Agreement by giving a written notice to Party B and Party C. Upon termination of this Agreement, the Pledged Equity shall be disposed of according to the instructions in Party A’s written notice issued at that time.

 

7.2 Termination of this Agreement according to this Article 7 will not affect the rights and obligations have been accrued to the Parties.

 

ARTICLE 8 INDEMNITY

 

Without prejudice to other terms and conditions of this Agreement, each Party shall indemnify other Party/Parties against all losses, liabilities, costs, claims, actions, damages, expenses and demands resulting from de facto or alleged misrepresentation or violation of any representation, warranty and/or agreement herein. The Party shall also indemnify the other Party/Parties against all reasonable costs, expenses and fees incurred from investigation, rebutter or defense against any action or claim.

 

ARTICLE 9 DURATION

 

9.1 This Agreement shall become effective as from the date of execution. The duration of this Agreement shall be same as that of the Restructuring Agreements, unless this Agreement is terminated according to Article 7 hereof.

 

9.2 Upon expiration of this Agreement, the Parties hereby agree that this Agreement shall be automatically renewed for another term, and the renewed term shall be same as that of the Restructuring Agreements.

 

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ARTICLE 10 LIABILITIES FOR BREACH OF CONTRACT

 

10.1 Unless it is caused by any event described in Article 11 hereof, if any Party fails to perform, or suspends or delays the performance of any obligation hereunder or any part thereof, and fails to make correction within 30 days upon receipt of a written notice from any other Party, it shall be deemed as breach of contract and the said Party shall be subject to the liabilities accordingly.

 

10.2 If any Party (“Breaching Party”) violates this Agreement and causes any other Party (“Non-breaching Party”) to suffer any losses (including but not limited to losses of profit or interest) or incur any costs or liabilities, in addition to other liabilities stipulated herein, the Breaching Party shall indemnify the Non-breaching Party against and hold the Non-breaching Party harmless from such loses (including but not limited to losses of profit or interest), costs, liabilities and attorney’s fees.

 

ARTICLE 11 FORCE MAJEURE

 

11.1 If any Party (“Affected Party”) can not perform any obligation hereunder due to any event of force majeure (including but not limited to war, civil or political commotion, riot, epidemic, strike (excluding strike affecting the employees of the Affected Party only), fire, typhoon, earthquake, floods or any other event unforeseeable, inevitable and uncontrollable), the Affected Party shall make best efforts to alleviate the influence caused by such event and immediately give a notice to other Parties, and provide other Parties with a certificate of such event issued by the relevant authority within 14 days upon the occurrence of such event by means of registered mail.

 

11.2 The Affected Party is not liable for any failure or delay in performance of any obligation hereunder or any part thereof due to any event of force majeure. However, the Affected Party shall immediately perform its obligations after the end of such event.

 

ARTICLE 12 GOVERNING LAW AND DISPUTE SETTLEMENT

 

12.1 This Agreement shall be governed by and construed in accordance with the applicable laws of China.

 

12.2 Any dispute arising from the formation, performance, termination or validity of this Agreement or in connection with this Agreement shall be settled by the Parties through friendly negotiation. If no settlement can be reached through negotiation, the dispute shall be submitted to Beijing Arbitration Commission for arbitration in accordance with its effective arbitration rules and procedures when the petition for arbitration is filed.

 

One arbitrator shall be appointed according to the foregoing rules and procedures. The arbitral award shall be final and binding upon the Parties. Unless it is otherwise decided in the award, the costs and expenses incurred from the arbitration shall be paid by the losing party to the winning party. If any Party has to enforce the award through action, the losing party shall also indemnify the said Party against all reasonable costs and legal expenses incurred from such enforcement.

 

12.3 During the course of arbitration, the Parties shall continue to perform this Agreement, other than the parts of this Agreement which is involved in the dispute.

 

ARTICLE 13 NOTICE

 

13.1 Any notice sent by a Party to other Parties hereunder shall be sent by means of personal delivery, fax, registered mail with postage prepaid or recognized courier service to the following addresses or fax numbers, which may be changed from time to time. The initial address and fax number of each Party are listed below:

 

Party A: Qizhi Software (Beijing) Co., Ltd.

 

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Add.: East Suite, 4/F, C&W Plaza, No.14, Jiu Xian Qiao Road, Chaoyang District, Beijing

 

Zip Code: 10016

 

Fax: 58781001

 

Party B: Jie Chen

 

Add.:

 

Zip Code:

 

Fax:

 

Party C: Su Zou

 

Add.:

 

Zip Code:

 

Fax:

 

Such notices or communications shall be deemed as being duly delivered at the following date:

 

(a) In case of personal delivery, upon delivery; or

 

(b) In case of mail with postage prepaid, three (3) days after the mail is duly posted; or

 

(c) In case of fax, when the fax transmission report is received by the sender, indicating the notice or communication has been fully transmitted to the fax machine of the receiver or any other similar receiving device; or

 

(d) In case of courier service, two (2) days after the parcel is received by the courier service company.

 

The certificate proving that the notice or communication has been served by personal delivery, or the envelope containing the notice or communication has been correctly addressed and posted as a mail with postage prepaid, or the fax transmission report proving the successful transmission of notice or communication, or certificate proving the parcel containing notice or document has been correctly addressed and received by the courier service company shall be deemed as the sufficient evidence regarding the service of relevant notice or communication.

 

ARTICLE 14 ASSIGNMENT

 

No Party may assign its rights and obligations hereunder to any third party, without the prior written approval of other Parties. Any attempted assignment of right, obligation or liability hereunder without the aforesaid approval is null and void.

 

ARTICLE 15 INURE

 

This Agreement is inure to and binding upon the Parties and their successors and assigns.

 

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ARTICLE 16 WAIVER

 

No provision of this Agreement may be waived or amended unless it is signed and approved by the interested Parties in written forms. Any delay, failure or procrastination by any Party in exercising its remedies shall not be deemed as waiver, and exercise of any remedy or any part thereof shall not preclude it from taking further remedies. Any waiver or consent of any Party is only effective under the specific conditions and for a specific purpose, and such waiver or consent, regardless of its frequency, shall not be deemed as a further waiver or consent.

 

ARTICLE 17 REMEDIES

 

Any remedy described herein shall not preclude any other remedy granted by the laws, equity laws, regulations or any other rule; all such remedies are cumulative, and will be incorporated into other remedies granted hereunder or other current or future remedies granted by the laws, equity laws, regulations or any other rule.

 

Exercise of one or more than one remedies by any Party hereunder shall not preclude the Party from exercising any other remedies.

 

ARTICLE 18 ENTIRE AGREEMENT

 

18.1 This Agreement (including all annexes hereto) constitutes an entire agreement among the Parties with respect to the subject matter hereof, and no Party relies upon any representation or warranty of any other Party not contained herein. No amendment to this Agreement is effective unless it is signed by the Parties in written forms.

 

18.2 This Agreement shall supersede all prior agreements, arrangements and warranties with respect to the subject matter of this Agreement. Such prior agreements, arrangements and warranties shall become ineffective on the date when this Agreement is executed.

 

ARTICLE 19 SEVERABILITY AND ENFORCEABILITY

 

19.1 If one or several provisions hereof are announced or held (whether officially or non-officially) as illegal or invalid by any competent authority, or are unenforceable under any applicable law of any jurisdiction, then:

 

(i) Such provision shall be deemed as severable from the remaining provisions of this Agreement, and the remaining provisions shall keep full force and effect;

 

(ii) Without prejudice to the right of appeal to the relevant authority for position of such provision, such invalid or unenforceable provision shall be deleted from this Agreement; provided, however, if such deletion substantially affects or changes the commercial basis of this Agreement, the Parties shall reach a good-faith agreement on the new provision to replace such invalid or unenforceable provision. The new provision shall be valid or enforceable, and shall achieve the intent closest to that of the invalid or unenforceable provision.

 

19.2 If any applicable law prohibits or restricts the performance of this Agreement or any part hereof or otherwise affects any right of any Party hereunder, the Parties hereby agree that they will enter into another agreement containing the commercial terms and conditions described herein, so as to ensure full exercise and performance of all rights and obligations hereunder.

 

ARTICLE 20 TIME OF ESSENCE

 

Any time, date or period referred to herein may be extended if the extension is agreed upon by the Parties, but time is of the essence with respect to the time, date or period originally agreed upon and not extended, or any time, date or period extended according to the provision mentioned above.

 

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ARTICLE 21 FURTHER ASSURANCE

 

In order to effectuate the terms and conditions of this Agreement, each Party shall execute and take all necessary actions, and shall procure all other persons, companies or branches (if necessary) to further execute all necessary documents, agreements and covenants, and make all necessary actions and things.

 

ARTICLE 22 COUNTERPARTS

 

This Agreement is written in Chinese and executed in three counterparts, one for each Party hereto and each being of equal legal force.

 

ARTICLE 23 EFFECTIVENESS

 

This Agreement shall become effective as of being duly signed and sealed by the Parties.

 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date indicated first above.

 

 

	
Party   A: Qizhi Software (Beijing) Co., Ltd.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ [Company   Stamp of Qizhi Software (Beijing) Co., Ltd.]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Party   B:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Jie   Chen
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Jie Chen
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Party   C:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Su   Zou
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Su Zou
    	
 
    	
 
    

 

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APPENDIX A

 

LIST OF RESTRUCTURING AGREEMENTS

 

1. Equity Disposition Agreement signed by Party A, Jie Chen, Su Zou and Shanghai Qitai on September 2, 2009;

 

2. Business Operation Agreement signed by Party A, Jie Chen, Su Zou and Shanghai Qitai on September 2 2009.

 

10Exhibit 10.42

 

This is an English translation

 

EQUITY DISPOSITION AGREEMENT

 

THIS EQUITY DISPOSITION AGREEMENT (this “Agreement”) is made and entered into on this 2nd day of September, 2009 in Beijing, China by and among the following parties (the “Parties”):

 

Party A: Qizhi Software (Beijing) Co., Ltd.

 

Address: East Suite, 4/F, C&W Plaza, No.14, Jiu Xian Qiao Road, Chaoyang District, Beijing

 

Party B:

 

Jie Chen

 

Su Zou

 

Party C: Shanghai Qitai Network Technology Co., Ltd.

 

Address: Room 385, No. 2 Building, No.68, Fukang Road, Xianghua Town, Chongming County, Shanghai (Shanghai Yongguan Economic Development Zone)

 

WHEREAS,

 

1. Party A is a wholly foreign owned enterprise duly established and validly existing within the territory of People’s Republic of China;

 

2. Party C is a limited liability company duly established in China;

 

3. All parties in Party B are the shareholders of Party C (collectively the “Grantors”), and Jie Chen and Su Zou hold 50% shares of Party C respectively;

 

4. Party A and Party C will enter into a technology development agreement. To secure the performance of such agreement and in the consideration of the technical support provided by Party A to Party C and the good cooperation relationship among all Parties, the Parties hereby enter into the following agreements:

 

1. GRANT OF OPTION

 

1.1 Grant

 

It is agreed by the Parties that, upon the effectiveness of this Agreement, unless it is disclosed to Party A and expressly approved by Party A in writing, Party A shall have an exclusive option, whereby Party A or its designated third party may, at any time and under the conditions in accordance with this Agreement, purchase all shares held by the Grantors in Party C at the minimum price permitted by the laws and regulations of the People’s Republic of China at the time of exercise. The said option shall be granted to Party A upon signature of the Parties and the effectiveness of this Agreement, and such granting shall not be revoked or changed during the term of this Agreement (including the extension described in Article 1.2 below).

 

 

1.2 Duration

 

This Agreement shall become effective as of the date mentioned first above when this Agreement is signed by the Parties. The term of this Agreement shall be ten (10) years, as from the effective date of this Agreement. Upon request of Party A prior to the expiration of this Agreement, the Parties shall extend the term of this Agreement and an equity disposition agreement shall be signed otherwise or this Agreement shall be performed continuously according to the requirement of Party A.

 

2. EXERCISE OF OPTION AND CLOSING

 

2.1 Exercise Time

 

2.1.1 The Grantors unanimously agree that, to the extent permitted by the laws and regulations of the People’s Republic of China, Party A may exercise the option or any part thereof hereunder at any time after the signature and effectiveness of this Agreement.

 

2.1.2 The Grantors unanimously agree that the times of exercise by Party A are not limited, until and unless Party A has acquired and held all shares of Party C.

 

2.1.3 The Grantors unanimously agree that Party A may designate a third party to exercise the option for and on its behalf, provided that Party A shall give a prior written notice to the Grantors upon exercise of the option.

 

2.2 Disposition of Exercise Price

 

Party A’s parent company, Qihoo Technology Company Limited (“Qihoo Cayman”), signed a Loan Agreement with all parties in Party B on August 20, 2009, whereby Qihoo Cayman lent a total amount of RMB 1 million to all parties in Party B. Party A and Party B hereby agree, upon the exercise of option by Party A, all exercise prices received by the Grantors shall be applied to repay the loan mentioned above in priority, and the remaining amount (if any) shall be given to Party C with no consideration, or such exercise prices shall be transferred from the Grantors to Party C in any other form approved by Party A in writing. After the exercise prices are disposed of by the parties in Party B hereunder, it shall be deemed that the parties in Party B have fulfilled the obligation of repayment under the Loan Agreement.

 

2.3 Assignment

 

The Grantors hereby unanimously agree that, Party A may transfer the option granted hereunder or any part thereof to any third party; such transfer is not required any consent of the Grantors in advance; such third party shall be deemed as a party to this Agreement, and may exercise the option in accordance with the terms and conditions hereof and shall have the rights and obligations of Party A hereunder.

 

2.4 Exercise Notice

 

If Party A exercises the option, it shall give a written notice to the Grantors at least ten business days prior to the Closing Date (as defined below). The notice shall specifically include the following contents:

 

2.4.1 After the exercise of the option, the effective closing date of the equity (the “Closing Date”);

 

2.4.2 After the exercise of the option, the name of the registered holder of the equity;

 

2.4.3 The amount of equity to be purchased from each of the Grantors, and the proportion thereof;

 

2.4.4 Excise price and terms of payment;

 

 

2.4.5 Power of attorney (if exercised by Party A’s designated third party).

 

The Parties hereby agree that Party A may at any time designate a third party to exercise the option and register the equity in the name of such third party.

 

2.5 Equity Transfer

 

When Party A exercises the option by Party A in each time, within ten business days upon receipt of the exercise notice issued by Party A in accordance with Article 2.4 hereof:

 

(1) The Grantors shall cause Party C to convene a shareholders’ meeting and adopt a shareholders’ resolution at the meeting which authorizes the Grantors to transfer the equity to Party A and/or its designated third party;

 

(2) The Grantors shall sign a transfer agreement with Party A (or its designated third party, if applicable) in the substantial form of the equity transfer agreement as listed in Appendix A attached to;

 

(3) The parties in Party B shall execute all other required Agreements, agreements or documents, obtain all required government approvals and consents and take all required actions, transfer the valid ownership of the acquired equity to Party A and/or its designated third party without attachment of any security, make Party A and/or its designated third party become the registered owner of the acquired equity, and provide Party A or its designated third party with the new business license, articles of association, approval certificate (if applicable) and other relevant documents issued by or registered with the relevant authority of China, which shall embody the change of Party C’s equity, directors and legal representative, etc.

 

3. REPRESENTATIONS AND WARRANTIES

 

3.1 The Grantors hereby make the following representations and warranties:

 

3.1.1 They have full power and authority to execute and perform this Agreement;

 

3.1.2 Performance of this Agreement and the obligations hereunder will not violate any law, regulation or any other agreement binding upon them, and does not require any approval or authorization of any government authority;

 

3.1.3 There is no action, arbitration or other judicial or administrative proceeding which is pending or may have substantial effect upon the performance of this Agreement;

 

3.1.4 All possible adverse effects upon the performance of this Agreement have been disclosed to Party A;

 

3.1.5 They are not declared bankrupt, and have a good financial standing;

 

3.1.6 The equity of Party C is not subject to any pledge, mortgage, liability or any other encumbrance, or any recourse of third party;

 

3.1.7 No pledge, liability or any other encumbrance will not set upon the equity of Party C, and the equity will not disposed of by means of transfer, donation, pledge or otherwise assigned to any person other than Party A or its designated third party;

 

3.1.8 The option granted to Party A is exclusive, and the Grantors will grant any same or similar right to any person other than Party A or its designated third party in whatever forms;

 

3.1.9 During the term of this Agreement, the business operated by Party C complies with the applicable laws, regulations, rules and the regulatory provisions and guidelines issued by other government authorities, and there is not any circumstance in violation of the aforesaid provision or having material adverse effect on the business or

 

 

assets of Party C;

 

3.1.10 They will keep the existence of Party C according to the good financial and commercial standards and practices, diligently and effectively operate the businesses and deal with the affairs of Party C, take the best efforts to maintain the permits, licenses and approvals required for the operation of Party C and ensure that such permits, licenses and approvals will not be cancelled, revoked or nullified;

 

3.1.11 Upon request of Party A, they shall provide all materials relating to Party C’s operations and financial status;

 

3.1.12 Prior to exercise of the option and acquisition of the equity or all interests of Party C by Party A (or its designated third party), Party C may not take any of the following actions, without the written consent of Party A (or its designated third party):

 

(a) Sell, transfer, mortgage or otherwise dispose of any asset, business or revenue, or permit to set any encumbrance thereupon (other than the encumbrance during the normal or routine business course or the encumbrance has been disclosed to Party A and expressly approved by Party A in advance);

 

(b) Enter into any transaction which has material adverse effect on its asset, liability, operation, equity or any other lawful right (other than the transaction during the normal or routine business course or the transaction has been disclosed to Party A and expressly approved by Party A in advance and in writing);

 

(c) Distribute any interest or dividend to each shareholder in whatever forms;

 

(d) Incur, succeed, guarantee or permit to incur any debt, other than (i) the debt incurred during the normal or routine business course but not incurred by loan, and (ii) the debt has been disclosed to Party A and expressly approved by Party A in advance;

 

(e) Increase or reduce Party C’s registered capital through a resolution of the shareholders’ meeting, or otherwise change the structure of the registered capital;

 

(f) Supplement, change or amend Party C’s articles of association in whatever forms; or

 

(g) Merge or consolidate with any person, or acquire any person or invest in any person;

 

3.1.13 Prior to exercise of the option and acquisition of the equity or all interests of Party C by Party A (or its designated third party), any party in Party B may not take any of the following actions jointly or individually, without the written consent of Party A (or its designated third party):

 

(a) Supplement, change or amend Party C’s governing documents in whatever forms, if such supplementation, change or amendment will have material adverse effect on Party C’s assets, liabilities, operations, equity or any other legitimate rights (other than the capital increase in the same proportion required by the applicable laws), or will have effect on the effective performance of this Agreement or any other agreement signed by Party A, Party B and Party C;

 

(b) Cause Party C to enter into any transaction which has material adverse effect on Party C’s asset, liability, operation, equity or any other lawful right (other than the transaction during the normal or routine business course or the transaction has been disclosed to Party A and expressly approved by Party A in advance and in writing);

 

(c) Cause Party C’s shareholders to adopt any resolution for distribution of interests or dividends;

 

(d) Sell, transfer, mortgage or otherwise dispose of any legal or beneficiary interests in Party C’s equity at any time after the effectiveness of this Agreement, or permit creation of any other encumbrance thereon;

 

 

(e) Cause Party C’s shareholders to sell, transfer, mortgage or otherwise dispose of any legal or beneficiary interests in any equity, or permit creation of any other encumbrance thereon;

 

(f) Cause Party C’s shareholders to merge or consolidate with any person, or acquire any person or invest in any person, or reorganize in any other form;

 

(g) Wind up, liquidate or resolve Party C;

 

3.1.14 Prior to exercise of the option and acquisition of the equity or all interests of Party C by Party A (or its designated third party), each party in Party C hereby undertakes that:

 

(a) Upon occurrence or possible occurrence of any action, arbitration or administrative proceeding relating to its equity, or any circumstance which possibly has any adverse effect on such equity, it will immediately give a written notice to Party A;

 

(b) It will cause Party C’s shareholders to approve the transfer of the equity acquired hereunder, cause Party C to amend its articles of association which embodies transfer of the equity from each party in Party B to Party A and/or its designated third party and other changes described herein and immediately submit an application to the relevant authority of China for approval (if required by the laws) and registration of changes, and cause Party C to adopt a shareholders’ resolution which appoints the persons nominated by Party A and/or its designated third party as the new directors and new legal representative;

 

(c) Execute all documents, take all actions, initiate all allegations or make all defenses necessary or appropriate to keep its lawful and valid ownership of the equity;

 

(d) Upon request of Party A at any time, unconditionally and immediately transfer its equity to Party A’s designated third party, and waive its right of first refusal in such equity transfer against any other existing shareholder;

 

(e) It will strictly comply with all provisions of this Agreement and any other agreements signed by the parties in Party C with Party A jointly or severally, and will fulfill all obligations under such agreement, and will not take any action/inaction which possibly affects the effectiveness or enforceability of such Agreement.

 

3.2 Undertakings

 

The Grantors hereby undertake to Party A that the Grantors will pay all costs and expenses incurred from the equity transfer and go through all necessary formalities to make Party A and/or its designated third party becomes Party C’s shareholder. The aforesaid formalities include but not limited to assisting Party A in obtaining the necessary approval regarding the equity transfer from the government authorities, submission of equity transfer agreement, shareholders’ resolution and other documents to the relevant administration for industry and commerce, so as to amend the articles of association, register of shareholders and other governing documents of Party C.

 

3.3 Each party in Party C hereby makes the following representations and warranties to Party A jointly and severally on the date of this Agreement and on each Closing Date:

 

(1) It has the power and ability to execute and deliver this Agreement and any equity transfer agreement to which it is a party and for each transfer of the equity acquired hereunder (each as “Transfer Agreement”), and to perform its obligations under this Agreement and any Transfer Agreement. This Agreement and any Transfer Agreement to which it is a party constitutes legally effective and binding obligations upon it after this Agreement and such Transfer Agreement are duly executed and may be enforced according to the terms and conditions hereof and thereof;

 

(2) Execution and delivery of this Agreement or any Transfer Agreement and performance of its obligations under

 

 

this Agreement or any Transfer Agreement will not:

 

(i) violate any applicable law or regulation of China;

 

(ii) conflict with its articles of association or any other governing document;

 

(iii) violate any Agreement or instrument to which it is a party or is binding upon it, or constitute violation under any Agreement or instrument to which it is a party or is binding upon it;

 

(iv) violate any condition in relation to the granting of any permit or approval to it and/or any continuously effective condition applicable to it; or

 

(v) cause termination, revocation or additional condition of any permit or approval issued to it;

 

(3) Each party in Party B has the good and sellable ownership in the equity of Party C. No party in Party B has set any encumbrance on such equity.

 

(4) Party C does not have any outstanding debt, other than (i) the debt incurred from the normal business course, and (ii) the debt has been disclosed to Party A and expressly approved by Party A in advance;

 

(5) Party C has complied with all laws and regulations applicable to its equity and assets;

 

(6) There is not any ongoing, pending or threatening action, arbitration or administrative proceeding relating to the Party C or its equity or asset.

 

4. TAXATION

 

All taxes incurred by the Parties from the performance of this Agreement shall be paid by each Party respectively.

 

5. BREACH OF AGREEMENT

 

5.1 If Party B or Party C breaches this Agreement or any representation or warranty made by it herein, Party A may give a written notice to the breaching party, demanding it to make correction within ten days upon receipt of the notice, take appropriate actions to effectively and timely avoid the damages and continue to perform this Agreement. In addition, the breaching party shall indemnify Party A against all damages resulting therefrom, so that Party A may receive all interests as if this Agreement is fulfilled.

 

5.2 If Party B or Party C fails to make correction within ten days upon receipt of the notice as mentioned in Article 5.1 above, the breaching party shall indemnify Party A against all costs, liabilities and damages (including but not limited to the interests paid or lost due to such breach, as well as the attorney’s fee) resulting from the breach. In addition, Party A may enforce the Equity Transfer Agreement attached hereto and transfer the equity held by Party B to Party A and/or its designated third party.

 

6. GOVERNING LAW AND DISPUTE SETTLEMENT

 

6.1 Governing Law

 

The formation, performance, validity and interpretation of this Agreement shall be governed by the applicable laws of the People’s Republic of China.

 

6.2 Friendly Negotiation

 

Any dispute arising from the interpretation or performance of this Agreement shall be settled by the Parties through friendly negotiation or through the mediation of any independent third party. If no settlement can be reached through

 

 

the means mentioned above within thirty (30) days as from the date of negotiation or mediation, the dispute shall be submitted to the arbitration institution.

 

6.3 Arbitration

 

Any dispute arising from this Agreement shall be submitted to the China International Economic and Trade Arbitration Commission (CIETAC) Beijing Sub-commission for arbitration in accordance with its arbitration rules. The arbitration shall be carried out in Beijing. The arbitral award shall be final and binding upon the Parties.

 

7. CONFIDENTIALITY

 

7.1 Confidential Information

 

The contents of this Agreement and its attachments shall be deemed as confidential information. No Party hereto may disclose any information of this Agreement to any third party, without the prior written consent of the Parties. This Article 7 shall survive after expiration or termination of this Agreement.

 

7.2 Exception

 

If disclosure of any confidential information is required under any law, court judgment, arbitral award or decision of any government authority, such disclosure shall not be deemed as violation of Article 7.1 above.

 

8. MISCELLANEOUS

 

8.1 Entire Agreement

 

The Parties hereby acknowledge that this Agreement is signed by the Parties on the basis of equality and reciprocity and this Agreement is fair and reasonable. This Agreement constitutes an entire agreement among the Parties with respect to the subject matter hereof. In case of any inconsistence between this Agreement and any prior discussion, negotiation or agreement, this Agreement shall control. This Agreement may be amended by the Parties in writing only. Appendices attached hereto are integral parts of this Agreement, and have the same legal force as this Agreement.

 

8.2 Notices

 

8.2.1 All notices for the performance of rights and obligations of the Parties hereunder shall be in writing and sent to the following addresses of the related Party or Parties by means of personal delivery, registered mail, prepaid mail, recognized courier service or facsimile:

 

Party A:

 

Add.:

 

Fax:

 

Tel:

 

Attention:

 

Party B:

 

Add.:

 

 

Fax:

 

Tel:

 

Attention:

 

Add.:

 

Fax:

 

Tel:

 

Attention:

 

Add.:

 

Fax:

 

Tel:

 

Attention:

 

Party C:

 

Add.:

 

Fax:

 

Tel:

 

Attention:

 

8.2.2 Notices and communications shall be deemed as being duly delivered, if:

 

8.2.2.1 In case of facsimile, on the date indicated on the fax, but if the fax is sent after 5:00 PM or on a non-business day at the delivery place, then on the next business day immediately after the date indicated on the fax;

 

8.2.2.2 In case of personal delivery (including EMS), on the date of service with signed confirmation;

 

8.2.2.3 In case of registered mail, on the 15th day after the date indicated on the return receipt of the registered mail.

 

8.2.3 Binding Force

 

This Agreement is binding upon all Parties hereto.

 

8.3 Language

 

This Agreement is written in Chinese and executed in duplicate, one for each party hereto.

 

8.4 Day and Business Day

 

“Day” referred to herein shall mean a calendar day, and “Business Day” mentioned herein shall mean a day from

 

 

Monday to Friday.

 

8.5 Headings

 

All headings contained herein are only for convenience of reference and shall be disregarded in interpretation of all terms and conditions hereof.

 

8.6 Supplementary Provision

 

The obligations, undertakings and liabilities of the Grantors to Party A hereunder are several and joint, and the Grantors shall be subject to the liabilities severally and jointly. With respect to Party A, breach of this Agreement by any party in the Grantors shall constitute the breach of the Grantors.

 

8.7 Matters Not Covered

 

Any issue not covered herein shall be settled by the Parties through negotiation in accordance with the laws of the People’s Republic of China.

 

 

	
Party A: Qizhi Software (Beijing) Co., Ltd.
    	
 
    
	
 
    	
 
    
	
/s/   [Company Stamp of Qizhi Software (Beijing) Co., Ltd.]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party B:
    	
 
    
	
 
    	
 
    
	
Su Zou
    	
 
    
	
 
    	
 
    
	
/s/   Su Zou
    	
 
    
	
 
    	
 
    
	
Jie Chen
    	
 
    
	
 
    	
 
    
	
/s/   Jie Chen
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party C:  Shanghai   Qitai Network Technology Co., Ltd.
    	
 
    
	
 
    	
 
    
	
/s/   [Company Stamp of Shanghai Qitai Network Technology Co., Ltd.]

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