Document:

Exhibit 10.9

 

Equity Interest Pledge Agreement

 

This Equity Interest Pledge Agreement (“Agreement”) is executed by and among the following Parties as of September 15th, 2014 in Beijing, the People’s Republic of China (“China” or the “PRC”, excluding Hong Kong SAR, Macau SAR and Taiwan region solely for the purpose of this Agreement):

 

Pledgee: Ku Tian Xia (Beijing) Information Technology Co., Ltd., a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its Business License No.: 110000450172811 and its address at Suite 2407, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing;

 

Pledgor:   HUANG Zhaohui, a Chinese citizen with Identification No.: 362201197406073879, with his residence at No. 133, Gulou Road, Yuanzhou Disctict, Yichun, Jiangxi Province, the PRC; and

 

The Company:        Beijing Wo Mai Wo Pai Auction Co., Ltd., a limited liability company organized and existing under the laws of the PRC, with its Business License No.: 110101017889908 and its address at No. 9, Floor 1, Building 18, Chaoyangmen South Street, Dongcheng District, Beijing.

 

Whereas:

 

1.              Pledgor is citizen of China who as of the date hereof holds 10% of equity interests of the Company, representing RMB 100,000.00 in the registered capital of the Company. The Company is a limited liability company registered in Beijing, China, engaging in the auction business. The Company acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the establishment of such pledge of the Equity Interest;

 

Strictly Confidential

 

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

 

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

 

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

 

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

 

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1.                  Definitions

 

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

 

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

 

1.2                     Equity Interest, shall refer to 10% equity interests in the Company currently held by Pledgor, representing RMB100,000.00 in the registered capital of the Company, and all of the equity interest hereafter acquired by Pledgor in the Company.

 

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

 

1.4                     Transaction Documents, shall refer to the Exclusive Business Cooperation Agreement executed by and between Pledgee and the Company on September 15th, 2014 (the “Exclusive Business Cooperation Agreement”), the Exclusive Option Agreement executed by and among the Company, Pledgee and Pledgor on September 15th, 2014 (the “Exclusive Option Agreement”), the Loan Agreement executed on September 15th, 2014 by and between Pledgee and Pledgor (the “Loan Agreement”), and the Power of Attorney executed on September 15th, 2014 by Pledgor (the “Power of

 

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Attorney”) and any modification, amendment and restatement to the aforementioned documents.

 

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

 

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

 

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

 

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

 

2.                     Pledge

 

2.1                 Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under

 

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this Agreement. The Company hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

 

2.2                 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee.  Dividends received by Pledgor on Equity Interest after deduction of individual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

 

2.3                 Pledgor may subscribe for capital increase in the Company only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as a result of Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest, and for this purpose, the Parties shall conduct the pledge modification registration of the Equity Interest or the pledge establishment registration of the increased equity interest under relevant laws and regulations.

 

2.4                 In the event that the Company is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon the Company’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to

 

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Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

 

3.                  Term of Pledge

 

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

 

3.2                     During the Term of Pledge, in the event Pledgor and/or the Company fails

 

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to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have the right, but not the obligation, to exercise the Pledge in accordance with the provisions of this Agreement.

 

4.                  Custody of Records for Equity Interest Subject to Pledge

 

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

 

5.                  Representations and Warranties of Pledgor and the Company

 

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

 

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

 

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

 

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

 

5.4                 Pledgor and the Company have obtained any and all requisite approvals and

 

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consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

 

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

 

6.                  Covenants of Pledgor and the Company

 

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

 

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

 

6.1.2                     Pledgor and the Company shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within

 

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five (5) days upon receipt of any notice, order or recommendation issued or prepared by relevant competent governmental authorities regarding the Pledge, shall present the foregoing notice, order or recommendation to Pledgee, and shall comply with the foregoing notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee’s reasonable request or upon consent of Pledgee;

 

6.1.3                     Pledgor and the Company shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on any representations, warranties and covenants, and the performance of other obligations of Pledgor arising out of this Agreement.

 

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

 

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

 

6.3                 To protect or perfect the security interest granted by this Agreement for the Contract Obligations and Secured Indebtedness, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in

 

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

 

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

 

7.                  Event of Breach

 

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

 

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

 

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

 

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

 

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

 

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8.                      Exercise of Pledge

 

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

 

8.2                 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge at any time after the issuance of the Notice of Default in accordance with Section 8.1. Once Pledgee elects to enforce the Pledge, Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.

 

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

 

8.4                 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest and to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance if any shall be returned to Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where Pledgor resides, with all expenses incurred being borne by Pledgor.  To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

 

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

 

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

 

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

 

9.                      Breach of Agreement

 

9.1                    If Pledgor or the Company conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/or require Pledgor or the Company to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein;

 

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

 

10.               Assignment

 

10.1             Without Pledgee’s prior written consent, Pledgor and the Company shall not have the right to assign or delegate their rights and obligations under this Agreement.

 

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

 

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

 

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

 

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

 

11.               Termination

 

11.1           Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgor and the Company, Pledgee shall release the Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgor to de-register the Pledge from the shareholders’ register of the Company and with relevant AIC.

 

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

 

12.               Handling Fees and Other Expenses

 

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

 

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13.            Confidentiality

 

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

 

14.            Governing Law and Resolution of Disputes

 

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

 

14.2              In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations.  In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules.  The arbitration shall be conducted in Beijing.  The arbitration award shall be final and binding on all Parties.

 

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

 

15.            Notices

 

15.1              All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. A confirmation copy of each notice shall also be sent by E-mail.  The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

 

15.2              Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

 

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

 

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

 

Pledgee: Ku Tian Xia (Beijing) Information Technology Co., Ltd.

 

	
Address:
    	
Suite 2407,   Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing
    
	
 
    	
 
    
	
Attn:
    	
[Li Rixue ]
    
	
 
    	
 
    
	
Phone:
    	
[010-85894218 ]
    
	
 
    	
 
    
	
Pledgor:
    	
HUANG Zhaohui
    
	
 
    	
 
    
	
Address:
    	
Suite 2405,   Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing
    
	
 
    	
 
    
	
Phone:
    	
[010-85894218 ]
    
	
 
    	
 
    
	
The Company:   Beijing Wo   Mai Wo Pai Auction Co., Ltd.
    
	
 
    	
 
    
	
Address:
    	
No. 9, Floor 1, Building 18, Chaoyangmen   South Street, Dongcheng District, Beijing
    
	
 
    	
 
    
	
Attn:
    	
[Li Rixue]
    
	
 
    	
 
    
	
Phone:
    	
[010-85894218]
    

 

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

 

16.               Severability

 

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

 

17.           Effectiveness

 

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

 

17.2              Any amendments, changes and supplements to this Agreement shall be in writing and shall become effective upon completion of the governmental filing procedures (if applicable) after the affixation of the signatures or seals of the Parties.

 

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18.           Language and Counterparts

 

This Agreement is written in Chinese and English in four copies. Pledgor, Pledgee and the Company shall hold one copy respectively and the other one copy shall be used for registration. The Chinese version and English version shall have equal legal validity. In the case of any conflict between the Chinese version and the English version, the Chinese version shall prevail.

 

[The Remainder of This Page is Left Intentionally Blank]

 

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

 

Pledgee: Ku Tian Xia (Beijing) Information Technology Co., Ltd.

 

(Company Seal)

 

 

	
By:
    	
/s/ Li   Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Legal   Representative
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Party   B:
    	
HUANG   Zhaohui
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   HUANG Zhaohui
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Party C:
    	
Beijing Wo Mai Wo Pai Auction Co., Ltd.
    	
 
    
	
 
    	
 
    	
 
    
	
(Company Seal)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Li   Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Legal Representative
    	
 
    
				

 

Signature Page to Equity Interest Pledge Agreement

 

 

Equity Interest Pledge Agreement

 

This Equity Interest Pledge Agreement (“Agreement”) is executed by and among the following Parties as of September 15th, 2014 in Beijing, the People’s Republic of China (“China” or the “PRC”, excluding Hong Kong SAR, Macau SAR and Taiwan region solely for the purpose of this Agreement):

 

Pledgee: Ku Tian Xia (Beijing) Information Technology Co., Ltd., a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its Business License No.: 110000450172811 and its address at Suite 2407, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing;

 

Pledgor:   LI Rixue, a Chinese citizen with Identification No.: 362201197406073879, with his residence at No. 133, Gulou Road, Yuanzhou Disctict, Yichun, Jiangxi Province, the PRC; and

 

The Company:        Beijing Wo Mai Wo Pai Auction Co., Ltd., a limited liability company organized and existing under the laws of the PRC, with its Business License No.: 110101017889908 and its address at No. 9, Floor 1, Building 18, Chaoyangmen South Street, Dongcheng District, Beijing.

 

Whereas:

 

1.              Pledgor is citizen of China who as of the date hereof holds 90% of equity interests of the Company, representing RMB 900,000.00 in the registered capital of the Company. The Company is a limited liability company registered in Beijing, China, engaging in the auction business. The Company acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the establishment of such pledge of the Equity Interest;

 

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

 

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

 

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

 

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

 

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1.              Definitions

 

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

 

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

 

1.2                     Equity Interest, shall refer to 90% equity interests in the Company currently held by Pledgor, representing RMB900,000.00 in the registered capital of the Company, and all of the equity interest hereafter acquired by Pledgor in the Company.

 

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

 

1.4                     Transaction Documents, shall refer to the Exclusive Business Cooperation Agreement executed by and between Pledgee and the Company on September 15th, 2014 (the “Exclusive Business Cooperation Agreement”), the Exclusive Option Agreement executed by and among the Company, Pledgee and Pledgor on September 15th, 2014 (the “Exclusive Option Agreement”), the Loan Agreement executed on September 15th, 2014 by and between Pledgee and Pledgor (the “Loan Agreement”), and the Power of Attorney executed on September 15th, 2014 by Pledgor (the “Power of

 

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Attorney”) and any modification, amendment and restatement to the aforementioned documents.

 

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

 

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

 

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

 

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

 

2.              Pledge

 

2.1                 Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under

 

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this Agreement. The Company hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

 

2.2                 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee.  Dividends received by Pledgor on Equity Interest after deduction of individual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

 

2.3                 Pledgor may subscribe for capital increase in the Company only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as a result of Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest, and for this purpose, the Parties shall conduct the pledge modification registration of the Equity Interest or the pledge establishment registration of the increased equity interest under relevant laws and regulations.

 

2.4                 In the event that the Company is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon the Company’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to make any other payment; or (2) unconditionally donated to

 

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Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

 

3.                  Term of Pledge

 

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

 

3.2                     During the Term of Pledge, in the event Pledgor and/or the Company fails

 

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to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have the right, but not the obligation, to exercise the Pledge in accordance with the provisions of this Agreement.

 

4.                  Custody of Records for Equity Interest Subject to Pledge

 

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

 

5.                  Representations and Warranties of Pledgor and the Company

 

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

 

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

 

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

 

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

 

5.4                 Pledgor and the Company have obtained any and all requisite approvals and

 

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consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

 

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

 

6.                  Covenants of Pledgor and the Company

 

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

 

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

 

6.1.2                     Pledgor and the Company shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within

 

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five (5) days upon receipt of any notice, order or recommendation issued or prepared by relevant competent governmental authorities regarding the Pledge, shall present the foregoing notice, order or recommendation to Pledgee, and shall comply with the foregoing notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee’s reasonable request or upon consent of Pledgee;

 

6.1.3                     Pledgor and the Company shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on any representations, warranties and covenants, and the performance of other obligations of Pledgor arising out of this Agreement.

 

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

 

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

 

6.3                 To protect or perfect the security interest granted by this Agreement for the Contract Obligations and Secured Indebtedness, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in

 

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

 

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

 

7.                  Event of Breach

 

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

 

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

 

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

 

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

 

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

 

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8.                  Exercise of Pledge

 

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

 

8.2                 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge at any time after the issuance of the Notice of Default in accordance with Section 8.1. Once Pledgee elects to enforce the Pledge, Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.

 

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

 

8.4                 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest and to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance if any shall be returned to Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where Pledgor resides, with all expenses incurred being borne by Pledgor.  To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

 

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

 

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

 

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

 

9.                  Breach of Agreement

 

9.1           If Pledgor or the Company conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/or require Pledgor or the Company to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein;

 

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

 

10.           Assignment

 

10.1          Without Pledgee’s prior written consent, Pledgor and the Company shall not have the right to assign or delegate their rights and obligations under this Agreement.

 

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

 

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

 

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

 

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

 

11.           Termination

 

11.1              Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgor and the Company, Pledgee shall release the Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgor to de-register the Pledge from the shareholders’ register of the Company and with relevant AIC.

 

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

 

12.           Handling Fees and Other Expenses

 

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

 

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13.           Confidentiality

 

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

 

14.           Governing Law and Resolution of Disputes

 

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

 

14.2              In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations.  In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party's request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules.  The arbitration shall be conducted in Beijing.  The arbitration award shall be final and binding on all Parties.

 

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

 

15.           Notices

 

15.1              All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. A confirmation copy of each notice shall also be sent by E-mail.  The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

 

15.2              Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

 

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

 

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

 

Pledgee: Ku Tian Xia (Beijing) Information Technology Co., Ltd.

 

Address:                 Suite 2407, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing

 

Attn:                                    [Li Rixue ]

 

Phone:                          [010-85894218  ]

 

Pledgor:                    LI Rixue

 

Address:                 Suite 2405, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing

 

Phone:                          [010-85894218 ]

 

The Company:   Beijing Wo Mai Wo Pai Auction Co., Ltd.

 

Address:  No. 9, Floor 1, Building 18, Chaoyangmen South Street, Dongcheng District, Beijing

 

Attn:                                [Li Rixue]

 

Phone:                      [010-85894218]

 

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

 

16.           Severability

 

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

 

17.           Effectiveness

 

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

 

17.2              Any amendments, changes and supplements to this Agreement shall be in writing and shall become effective upon completion of the governmental filing procedures (if applicable) after the affixation of the signatures or seals of the Parties.

 

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18.           Language and Counterparts

 

This Agreement is written in Chinese and English in four copies. Pledgor, Pledgee and the Company shall hold one copy respectively and the other one copy shall be used for registration. The Chinese version and English version shall have equal legal validity. In the case of any conflict between the Chinese version and the English version, the Chinese version shall prevail.

 

[The Remainder of This Page is Left Intentionally Blank]

 

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

 

 

	
Pledgee: Ku Tian Xia (Beijing) Information Technology Co., Ltd.
    
	
 
    	
 
    	
 
    
	
(Company Seal)
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ LI   Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Legal   Representative
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Party   B:
    	
LI   Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ LI   Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Party C:
    	
Beijing Wo Mai Wo Pai Auction Co., Ltd.
    	
 
    
	
 
    	
 
    	
 
    
	
(Company Seal)
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ LI   Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Legal Representative
    	
 
    

 

Signature Page(s) of Equity Interest Pledge AgreementExhibit 10.10

 

Exclusive Option Agreement

 

This Exclusive Option Agreement (“Agreement”) is executed by and among the following Parties as of September 15th, 2014 in Beijing, the People’s Republic of China (“China” or the “PRC”, excluding Hong Kong SAR, Macau SAR and Taiwan region solely for the purpose of this Agreement):

 

Party A:            Ku Tian Xia (Beijing) Information Technology Co., Ltd., a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its address at Suite 2407, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing;

 

Party B:            HUANG Zhaohui, a Chinese citizen with Identification No.: 362201197407310629, with his residence at No. 133, Gulou Road, Yuanzhou Disctict, Yichun, Jiangxi Province, the PRC; and

 

Party C:            Beijing Wo Mai Wo Pai Auction Co., Ltd., a limited liability company organized and existing under the laws of the PRC, with its address at No. 9, Floor 1, Building 18, Chaoyangmen South Street, Dongcheng District, Beijing.

 

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

 

Whereas:

 

Strictly Confidential

 

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1.              Party B is a shareholder of Party C and as of the date hereof holds 10% of the equity interests of Party C, representing RMB100,000.00 in the registered capital of Party C.

 

2.              Party A and Party B executed a Loan Agreement (“Loan Agreement”) on September 15th, 2014, according to which Party A confirmed that it provided to Party B a loan in the amount of RMB100,000.00, to be used for the purpose of subscribing the registered capital of Party C.

 

After mutual discussions and negotiations, the Parties have now reached the following agreement:

 

1.                  Sale and Purchase of Equity Interest

 

1.1       Option Granted

 

In consideration of the payment of RMB 10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party B, Party B hereby irrevocably grants Party A an irrevocably and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase the equity interests in Party C then held by Party B at once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”).

 

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Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B. Party C hereby agrees to the grant by Party B of the Equity Interest Purchase Option to Party A. The term “person” as used herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts, or non-corporate organizations.

 

1.2       Steps for Exercise of the Equity Interest Purchase Option

 

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

 

1.3       Equity Interest Purchase Price

 

The purchase price of all equity interests held by Party B in Party C purchased by Party A by exercising the Equity Interest Purchase Option shall be RMB100,000.00; if Party A exercises the Equity Interest Purchase Option to purchase part of the equity interests held by Party B in Party C, the purchase price shall be calculated on a pro rata basis.  If PRC law requires a minimum price higher than the aforementioned price when Party A exercises the Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the purchase price (collectively, the “Equity Interest Purchase Price”).

 

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1.4       Transfer of Optioned Interests

 

For each exercise of the Equity Interest Purchase Option:

 

1.4.1                     Party B shall cause Party C to promptly convene a shareholders’ meeting, at which a resolution shall be adopted approving the transfer of the Optioned Interests from Party B to Party A and/or the Designee(s);

 

1.4.2                     Party B shall obtain written statements from other shareholder(s) giving consent to the transfer of the Optioned Interests to Party A and/or the Designee(s) and waiving any right of first refusal related thereto;

 

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

 

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

 

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1.5       Payment

 

The Parties have agreed in the Loan Agreement that any proceeds obtained by Party B through the transfer of its equity interests in Party C shall be used for repayment of the loan provided by Party A in accordance with the Loan Agreement. Accordingly, upon exercise of the Equity Interest Purchase Option, Party A may elect to make the payment of the Equity Interest Purchase Price through the cancellation of the outstanding amount of the loan owed by Party B to Party A, in which case Party A shall not be required to pay any additional purchase price to Party B, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the applicable laws and regulations.

 

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2.                  Covenants

 

2.1                     Covenants regarding Party C

 

Party B (as a shareholder of Party C) and Party C hereby covenant on the following:

 

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

 

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

 

2.1.3                    Without the prior written consent of Party A, they shall not, at any time following the date hereof, sell, transfer, mortgage, or dispose of in any manner any material assets of Party C of more than RMB500,000.00 or legal or beneficial interest in the material business or revenues of Party C, or allow the encumbrance thereon of any security interests;

 

2.1.4                    Without the prior written consent of Party A, they shall not incur, inherit, guarantee, or suffer the existence of any debt, except for

 

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account payables incurred in the ordinary course of business other than through loans;

 

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

 

2.1.6                    Without the prior written consent of Party A, they shall not cause Party C to execute any major contract, except the contracts in the ordinary course of business (for the purpose of this subsection, a contract with a price exceeding RMB500,000.00 shall be deemed a major contract);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.1.14             At the request of Party A, they shall appoint any person designated by Party A as the director or executive director of Party C.

 

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

 

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

 

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2.2                     Covenants of Party B

 

Party B hereby covenants to the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.2.8                    Party B hereby waives its right of first refusal in regards to the transfer of equity interest by any other shareholder of Party C from time to time in future to Party A (if any), and gives consent to the execution by each other shareholder of Party C with Party A and Party C the exclusive option agreement, the equity interest pledge agreement and the power of attorney similar to this Agreement, Party B’s Equity Interest Pledge Agreement, and Party B’s Power of Attorney, and accepts not to take any actions in conflict with such documents executed by the other shareholders;

 

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2.2.9                   Party B shall promptly donate any profits, interests, dividends, or proceeds of liquidation to Party A or any other person designated by Party A to the extent permitted under PRC law; and

 

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

 

3.                  Representations and Warranties

 

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

 

3.1                    They have the power, capacity, and authority to execute and deliver this Agreement and any equity interest transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each,

 

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a “Transfer Contract”), and to perform their obligations under this Agreement and any Transfer Contracts. Party B and Party C agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid, and binding obligations, and shall be enforceable against them in accordance with the provisions thereof;

 

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

 

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

 

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

 

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

 

3.6                    Party C does not have any outstanding debts, except for (i) debt incurred within its normal business scope; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained.

 

3.7                    Party C has complied with all laws and regulations of China applicable to asset acquisitions; and

 

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

 

4.                  Effective Date and Term

 

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

 

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5.                  Governing Law and Dispute Resolution

 

5.1                    Governing Law

 

The execution, effectiveness, construction, performance, amendment, and termination of this Agreement as well as any dispute resolution hereunder shall be governed by the laws of the PRC.

 

5.2                    Methods of Dispute Resolution

 

In the event of any dispute with respect to the construction andperformance of this Agreement, the Parties shall first resolve the disputethrough friendly negotiations.  In the event the Parties fail to reach anagreement on the dispute within 30 days aftereither Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with itsarbitration rules.  The arbitration shall be conducted in Beijing.  The arbitration award shall be final and binding on all Parties.

 

6.                  Taxes and Fees

 

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

 

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7.                  Notices

 

7.1                    All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, prepaid postage, commercial courier services, or facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

 

7.1.1                     Notices given by personal delivery, courier services, registered mail, or prepaid postage shall be deemed effectively given on the date of receipt or refusal at the address specified for such notices;

 

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

 

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

 

Party A: Ku Tian Xia (Beijing) Information Technology Co., Ltd.

 

	
Address:
    	
 
    	
Suite 2407, Building 31, No. 25, Yuetan   North Street, Xicheng District, Beijing
    
	
 
    	
 
    	
 
    
	
Attn:
    	
 
    	
[Li Rixue ]
    
	
 
    	
 
    	
 
    
	
Phone:
    	
 
    	
[010-85894218 ]
    
	
 
    	
 
    	
 
    
	
Party B:
    	
 
    	
HUANG Zhaohui
    

 

15

 

	
Address:
    	
 
    	
Suite 2405, Building 31, No. 25, Yuetan   North Street, Xicheng District, Beijing
    
	
 
    	
 
    	
 
    
	
Phone:
    	
 
    	
[010-85894218 ]
    
	
 
    	
 
    	
 
    
	
Party C:
    	
 
    	
Beijing Wo Mai Wo Pai Auction Co., Ltd.
    
	
 
    	
 
    	
 
    
	
Address: 
    	
 
    	
No. 9, Floor 1, Building 18, Chaoyangmen South   Street, Dongcheng District, Beijing
    
	
 
    	
 
    	
 
    
	
Attn:
    	
 
    	
[Li Rixue]
    
	
 
    	
 
    	
 
    
	
Phone:
    	
 
    	
[010-85894218]
    

 

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

 

8.                  Confidentiality

 

The Parties acknowledge that the existence and the terms of this Agreement, and any oral or written information exchanged between the Parties in connection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain the confidentiality of all such confidential information, and without obtaining the prior written consent of other Parties, it

 

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shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be featured in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels, or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels, or financial advisors shall be bound by the confidential obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, directors, employees of, or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and that Party shall be held liable for breach of this Agreement.

 

9.                  Further Warranties

 

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

 

10.           Breach of Agreement

 

10.1                        If Party B and/or Party C conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require Party B and/or Party C to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein;

 

10.2                        Party B and/or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws.

 

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11.           Miscellaneous

 

11.1                       Amendments, changes, and supplements

 

Any amendments, changes, and supplements to this Agreement shall require the execution of a written agreement by all of the Parties.

 

11.2                       Entire agreement

 

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

 

11.3                       Headings

 

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

 

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11.4                       Language

 

This Agreement is written in both Chinese and English, and contains three copies, with each Party having one copy. The Chinese version and English version shall have equal legal validity. In the case of any conflict between the Chinese version and the English version, the Chinese version shall prevail.

 

11.5                       Severability

 

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

 

11.6                        Successors

 

This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties.

 

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11.7                        Survival

 

11.7.1              Any obligations that occur or are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

 

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

 

11.8                       Waivers

 

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

 

[The Remainder of This Page is Left Intentionally Blank]

 

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

 

Party A: Ku Tian Xia (Beijing) Information Technology Co., Ltd.

 

(Company Seal)

 

	
By:
    	
/s/ LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Legal   Representative
    	
 
    
	
 
    	
 
    	
 
    
	
Party B:
    	
HUANG Zhaohui
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ HUANG Zhaohui
    	
 
    
	
 
    	
 
    	
 
    

 

Party C:            Beijing Wo Mai Wo Pai Auction Co., Ltd.

 

(Company Seal)

 

 

	
By:
    	
/s/ LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Legal Representative
    	
 
    

 

Signature Page to Exclusive Option Agreement

 

 

Exclusive Option Agreement

 

This Exclusive Option Agreement (“Agreement”) is executed by and among the following Parties as of September 15 in Beijing, the People’s Republic of China (“China” or the “PRC”, excluding Hong Kong SAR, Macau SAR and Taiwan region solely for the purpose of this Agreement):

 

Party A:          Ku Tian Xia (Beijing) Information Technology Co., Ltd., a wholly foreign-owned enterprise, organized and existing under the laws of the PRC, with its address at Suite 2407, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing;

 

Party B:          LI Rixue, a Chinese citizen with Identification No.: 362201197406073879, with his residence at No. 133, Gulou Road, Yuanzhou Disctict, Yichun, Jiangxi Province, the PRC; and

 

Party C:          Beijing Wo Mai Wo Pai Auction Co., Ltd., a limited liability company organized and existing under the laws of the PRC, with its address at No. 9, Floor 1, Building 18, Chaoyangmen South Street, Dongcheng District, Beijing.

 

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

 

Whereas:

 

Strictly Confidential

 

1

 

1.              Party B is a shareholder of Party C and as of the date hereof holds 90% of the equity interests of Party C, representing RMB900,000.00 in the registered capital of Party C.

 

2.              Party A and Party B executed a Loan Agreement (“Loan Agreement”) on August 1st, 2014, according to which Party A confirmed that it provided to Party B a loan in the amount of RMB900,000.00, to be used for the purpose of subscribing the registered capital of Party C.

 

After mutual discussions and negotiations, the Parties have now reached the following agreement:

 

1.                  Sale and Purchase of Equity Interest

 

1.1       Option Granted

 

In consideration of the payment of RMB 10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party B, Party B hereby irrevocably grants Party A an irrevocably and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase the equity interests in Party C then held by Party B at once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”).

 

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Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B. Party C hereby agrees to the grant by Party B of the Equity Interest Purchase Option to Party A. The term “person” as used herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts, or non-corporate organizations.

 

1.2       Steps for Exercise of the Equity Interest Purchase Option

 

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

 

1.3       Equity Interest Purchase Price

 

The purchase price of all equity interests held by Party B in Party C purchased by Party A by exercising the Equity Interest Purchase Option shall be RMB900,000.00; if Party A exercises the Equity Interest Purchase Option to purchase part of the equity interests held by Party B in Party C, the purchase price shall be calculated on a pro rata basis.  If PRC law requires a minimum price higher than the aforementioned price when Party A exercises the Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the purchase price (collectively, the “Equity Interest Purchase Price”).

 

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1.4       Transfer of Optioned Interests

 

For each exercise of the Equity Interest Purchase Option:

 

1.4.1                    Party B shall cause Party C to promptly convene a shareholders’ meeting, at which a resolution shall be adopted approving the transfer of the Optioned Interests from Party B to Party A and/or the Designee(s);

 

1.4.2                    Party B shall obtain written statements from other shareholder(s) giving consent to the transfer of the Optioned Interests to Party A and/or the Designee(s) and waiving any right of first refusal related thereto;

 

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

 

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

 

1.5       Payment

 

The Parties have agreed in the Loan Agreement that any proceeds obtained by Party B through the transfer of its equity interests in Party C shall be used for repayment of the loan provided by Party A in accordance with the Loan Agreement. Accordingly, upon exercise of the Equity Interest Purchase Option, Party A may elect to make the payment of the Equity Interest Purchase Price through the cancellation of the outstanding amount of the loan owed by Party B to Party A, in which case Party A shall not be required to pay any additional purchase price to Party B, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the applicable laws and regulations.

 

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2.                  Covenants

 

2.1                     Covenants regarding Party C

 

Party B (as a shareholder of Party C) and Party C hereby covenant on the following:

 

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

 

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

 

2.1.3                    Without the prior written consent of Party A, they shall not, at any time following the date hereof, sell, transfer, mortgage, or dispose of in any manner any material assets of Party C of more than [RMB500,000.00] or legal or beneficial interest in the material business or revenues of Party C, or allow the encumbrance thereon of any security interests;

 

2.1.4                    Without the prior written consent of Party A, they shall not incur, inherit, guarantee, or suffer the existence of any debt, except for

 

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account payables incurred in the ordinary course of business other than through loans;

 

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

 

2.1.6                    Without the prior written consent of Party A, they shall not cause Party C to execute any major contract, except the contracts in the ordinary course of business (for the purpose of this subsection, a contract with a price exceeding RMB500,000.00 shall be deemed a major contract);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.1.14             At the request of Party A, they shall appoint any person designated by Party A as the director or executive director of Party C.

 

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

 

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

 

8

 

2.2                     Covenants of Party B

 

Party B hereby covenants to the following:

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

2.2.8                    Party B hereby waives its right of first refusal in regards to the transfer of equity interest by any other shareholder of Party C from time to time in future to Party A (if any), and gives consent to the execution by each other shareholder of Party C with Party A and Party C the exclusive option agreement, the equity interest pledge agreement and the power of attorney similar to this Agreement, Party B’s Equity Interest Pledge Agreement, and Party B’s Power of Attorney, and accepts not to take any actions in conflict with such documents executed by the other shareholders;

 

10

 

2.2.9                    Party B shall promptly donate any profits, interests, dividends, or proceeds of liquidation to Party A or any other person designated by Party A to the extent permitted under PRC law; and

 

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

 

3.                  Representations and Warranties

 

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

 

3.1                    They have the power, capacity, and authority to execute and deliver this Agreement and any equity interest transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each,  

 

11

 

a “Transfer Contract”), and to perform their obligations under this Agreement and any Transfer Contracts. Party B and Party C agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid, and binding obligations, and shall be enforceable against them in accordance with the provisions thereof;

 

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

 

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

 

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

 

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

 

3.6                    Party C does not have any outstanding debts, except for (i) debt incurred within its normal business scope; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained.

 

3.7                    Party C has complied with all laws and regulations of China applicable to asset acquisitions; and

 

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

 

4.      Effective Date and Term

 

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

 

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5.                  Governing Law and Dispute Resolution

 

5.1                     Governing Law

 

The execution, effectiveness, construction, performance, amendment, and termination of this Agreement as well as any dispute resolution hereunder shall be governed by the laws of the PRC.

 

5.2                     Methods of Dispute Resolution

 

In the event of any dispute with respect to the construction andperformance of this Agreement, the Parties shall first resolve the disputethrough friendly negotiations.  In the event the Parties fail to reach anagreement on the dispute within 30 days aftereither Party’s request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with itsarbitration rules.  The arbitration shall be conducted in Beijing.  The arbitration award shall be final and binding on all Parties.

 

6.      Taxes and Fees

 

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

 

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7.      Notices

 

7.1                    All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, prepaid postage, commercial courier services, or facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

 

7.1.1           Notices given by personal delivery, courier services, registered mail, or prepaid postage shall be deemed effectively given on the date of receipt or refusal at the address specified for such notices;

 

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

 

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

 

Party A: Ku Tian Xia (Beijing) Information Technology Co., Ltd.

 

Address:                               Suite 2407, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing

 

Attn:                                                  Li Rixue

 

Phone:                                        010-85894218

 

Party B:                                 LI Rixue

 

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Address:                               Suite 2405, Building 31, No. 25, Yuetan North Street, Xicheng District, Beijing

 

Phone:                                        010-85894218

 

Party C:                                 Beijing Wo Mai Wo Pai Auction Co., Ltd.

 

Address:                               No. 9, Floor 1, Building 18, Chaoyangmen South Street, Dongcheng District, Beijing

 

Attn:                                                  Li Rixue

 

Phone:                                        010-85894218

 

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

 

8.                  Confidentiality

 

The Parties acknowledge that the existence and the terms of this Agreement, and any oral or written information exchanged between the Parties in connection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain the confidentiality of all such confidential information, and without obtaining the prior written consent of other Parties, it

 

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shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be featured in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, directors, employees, legal counsels, or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, directors, employees, legal counsels, or financial advisors shall be bound by the confidential obligations similar to those set forth in this Section. Disclosure of any confidential information by the shareholders, directors, employees of, or agencies engaged by any Party shall be deemed disclosure of such confidential information by such Party and that Party shall be held liable for breach of this Agreement.

 

9.                  Further Warranties

 

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

 

10.           Breach of Agreement

 

10.1                        If Party B and/or Party C conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require Party B and/or Party C to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein;

 

10.2                        Party B and/or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws.

 

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11.           Miscellaneous

 

11.1                       Amendments, changes, and supplements

 

Any amendments, changes, and supplements to this Agreement shall require the execution of a written agreement by all of the Parties.

 

11.2                       Entire agreement

 

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

 

11.3                       Headings

 

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

 

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11.4                       Language

 

This Agreement is written in both Chinese and English, and contains three copies, with each Party having one copy. The Chinese version and English version shall have equal legal validity. In the case of any conflict between the Chinese version and the English version, the Chinese version shall prevail.

 

11.5                       Severability

 

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

 

11.6                       Successors

 

This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties.

 

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11.7                       Survival

 

11.7.1              Any obligations that occur or are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

 

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

 

11.8                       Waivers

 

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

 

[The Remainder of This Page is Left Intentionally Blank]

 

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

 

	
 
    	
 
    
	
Party   A: Ku Tian Xia (Beijing) Information Technology   Co., Ltd.
    
	
(Company Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ LI Rixue
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
Title:
    	
Legal   Representative
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party B:
    	
LI Rixue
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ LI Rixue
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Party C:
    	
Beijing Wo Mai Wo Pai Auction   Co., Ltd.
    	
 
    
	
(Company Seal)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ LI Rixue
    	
 
    
	
Name:
    	
LI Rixue
    	
 
    
	
Title:
    	
Legal Representative
    	
 
    

 

Signature Page to Exclusive Option Agreement

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