Document:

Exhibit 10.5

 

	
 
    

 

Sun Qin

 

Chen Lei

 

Zhang Zhen

 

Linzhi Tencent Technology Co., Ltd.

 

Hangzhou Weimi Network Technology Co., Ltd.

 

and

 

Hangzhou Aimi Network Technology Co., Ltd.

 

Third Amended and Restated Equity Pledge Agreement

 

	
 
    

 

April 25, 2018

 

 

Third Amended and Restated Equity Pledge Agreement

 

This Third Amended and Restated Equity Pledge Agreement (this “Agreement”) is executed by and among the following parties on April 25, 2018

 

(1)                                Sun Qin, with the ID No. ***;

 

(2)                                Chen Lei, ID No. ***;

 

(3)                               Zhang Zhen, ID No. ***;

 

(4)                               Linzhi Tencent Technology Co., Ltd., with its registered address at ***.

 

(Sun Qin, Chen Lei, Zhang Zhen, and Linzhi Tencent Technology Co., Ltd. are hereinafter respectively and collectively referred to as the “Pledgor(s)”.)

 

(5)                               Hangzhou Weimi Network Technology Co., Ltd. (the “Pledgee”), with its registered address at ***; and

 

(6)                               Hangzhou Aimi Network Technology Co., Ltd. (the “Company”), with its registered address at ***.

 

(In this Agreement, each of the above parties shall be respectively referred to as a “Party”, and they shall be collectively referred to as the “Parties”.)

 

Whereas:

 

1.                                               The Pledgors are the shareholders on record of the Company, aggregately holding 100% of the equity interest in the Company (the “Company Equity Interest”). As of the date hereof, their capital contributions in the registered capital of the Company and shareholding percentage are set out in Schedule I hereto.

 

2.                                               Huang Zheng, Sun Qin, Zhang Yi, Zhang Zhen, Beijing Ju Xin Yuan Ye Investment Consulting Co., Ltd., Linzhi Tencent Technology Co., Ltd., the Pledgee and the Company entered into a Second Amended and Restated Equity Pledge Agreement on June 28, 2017 (the “Original Agreement”).

 

3.                                               In accordance with the Third Amended and Restated Exclusive Option Agreement (the “Third Amended and Restated Exclusive Option Agreement”) executed on April 25, 2018 by and among the Parties, the Pledgors shall, to the extent permitted by the PRC Laws and at the request of the Pledgee, transfer all or part of their equity interest in the Company and/or all or part of the assets of the Company to the Pledgee and/or any other entity or individual designated by it.

 

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4.                                               In accordance with the Third Amended and Restated Shareholders’ Voting Rights Proxy Agreement (the “Third Amended and Restated Shareholders’ Voting Rights Proxy Agreement”) executed on April 25, 2018 by and among the Parties, the Pledgors have granted full authority to the persons designated by the Pledgee to exercise all of their shareholders’ voting rights in the Company on behalf of the Pledgors.

 

5.                                               In accordance with the Exclusive Consulting and Services Agreement (the “Services Agreement”) executed in July, 2016 by and between the Company and the Pledgee, the Company has, on an exclusive basis, engaged the Pledgee to provide it with relevant technical consulting and services and agreed to pay corresponding service fees to the Pledgee for such services.

 

6.                                               As security for the performance of their Contractual Obligations (as defined below) and the repayment of the Secured Indebtedness (as defined below) by the Pledgors and the Company, the Pledgors intend to pledge all their Company Equity Interest to the Pledgee and offer the Pledgee with right of first ranking repayment.

 

Now, Therefore, upon mutual discussion and negotiation, the Parties agree as follows:

 

1.                                         Definition

 

1.1.                               Unless otherwise required by the context, the following terms shall have the following meanings in this Agreement:

 

	
“Contractual Obligations”:
    	
 
    	
means all of the Pledgors’ and/or the   Company’s contractual obligations under the Services Agreement, Third   Amended and Restated Exclusive Option Agreement and Third Amended and   Restated Shareholders’ Voting Rights Proxy Agreement (collectively   referred to as “Transaction Agreements”).
    
	
 
    	
 
    	
 
    
	
“Secured Indebtedness”:
    	
 
    	
means all losses of direct, indirect,   derivative or predictable benefits suffered as a result of any Event of   Default (as defined below) of the Pledgors and/or the Company and all costs   incurred by the Pledgee for enforcing the performance of the Contractual   Obligations by the Pledgors and/or the Company.
    

 

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“Event of Default”:
    	
 
    	
means the breach by any Pledgors or the   Company of any contractual obligations under the Contractual Obligations, the Transaction Agreements and/or this   Agreement.
    
	
 
    	
 
    	
 
    
	
“Pledge”:
    	
 
    	
means all the equity interest in the Company   lawfully   owned by the Pledgors on the date of this Agreement and pledged pursuant to   this Agreement to the Pledgee as security for the performance of the   Contractual Obligations and any increased capital contributions and dividends   under Sections 2.6 and 2.7 of this Agreement.
    
	
 
    	
 
    	
 
    
	
“PRC Laws”:
    	
 
    	
means the then effective laws, administrative   regulations, administrative rules, local regulations, judicial   interpretations and other binding regulatory documents of the People’s   Republic of China.
    

 

1.2.                               In this Agreement, any reference to any PRC Laws shall be deemed to include (i) a reference to such PRC Laws as modified, amended, supplemented or reenacted, effective before or after the date of this Agreement; and (ii) a reference to any other decisions, circulars or rules made pursuant to such PRC Laws or effective as a result of such PRC Laws.

 

1.3.                               Unless otherwise stated in the context of this Agreement, a reference to a provision, clause, section or paragraph shall refer to a corresponding provision, clause, section or paragraph of this Agreement.

 

2.                                         Equity Pledge

 

2.1.                               The Pledgors hereby agree to pledge, in accordance with the terms of this Agreement, their lawfully owned and disposable Pledge, to the Pledgee as the security for the performance of the Contractual Obligations and the repayment of the Secured Indebtedness. The Company hereby agrees that the Pledgors who hold its equity to pledge the Pledge to the Pledgee in accordance with the terms of this Agreement.

 

2.2.                               The Pledgors shall record the equity pledge arrangement (“Equity Pledge”) under this Agreement on the Company’s shareholder register upon the execution date of this Agreement, and provide the record evidence to the Pledgee with a form satisfied to the Pledgee, and provide the Pledgee with the shareholders’ resolutions passed and signed by the Pledgors in the form as set out in Schedule III of this Agreement within 15 days from the execution date of this Agreement or within other time periods agreed by the Parties, and provide other industrial and commercial registration certificate which reflects the Equity Pledge under this Agreement. This Agreement shall prevail if there is any discrepancy between the agreement used to complete the industrial and commercial registration of the Equity Pledge and this Agreement.

 

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2.3.                             During the term of this Agreement, the Pledgee shall not be liable in whatsoever manner for any decrease in the value of the Pledge and the Pledgors are not entitled to seek any form of recourse or file any claims against the Pledgee, except where such decrease arises out of any willful conduct of the Pledgee or out of its gross negligence which has an immediate causal link with such result.

 

2.4.                             Subject to Section 2.3 above, if there is such possibility of significant decrease in the value of the Pledge as to impair the rights of the Pledgee, the Pledgee may demand the Pledgors to provide other assets as security, and at any time auction or sell the Pledge on behalf of the Pledgors and may, as agreed with the Pledgors, apply the proceeds from such auction or sale towards advance repayment of the Secured Indebtedness, or deposit such proceeds with a notary organ where the Pledgee is located (any costs thereby incurred shall be entirely borne by the Pledgee).

 

2.5.                             The Pledgee is entitled to the first order of security interest to the Pledge. When any Event of Default occurs, the Pledgee has the right to dispose of the Pledge in the form applied in Section 4 of this Agreement.

 

2.6.                             The Pledgors may increase the capital of the Company with the Pledgee’s prior written consent. The amount of capital contributed by the Pledgors in the Company’s registered capital as a result of the capital increase of the Company is also automatically attributed to the Pledge.

 

2.7.                             The dividends or bonus which the Pledgors receive in respect of the Pledge shall be deposited in the account designated by the Pledgee, supervised by the Pledgee, as the pledge firstly used for the repayment of the Secured Indebtedness.

 

2.8.                             Upon the occurrence of any Event of Default, the Pledgee shall be entitled to dispose of the Pledge of any Pledgors in such manner as provided in Section 4 of this Agreement.

 

3.                                         Release of Equity Pledge

 

After full and complete performance of all the Contractual Obligations and full repayment of all the Secured Indebtedness by the Pledgors and the Company, the Pledgee shall, at the request of the Pledgors, release the Equity Pledge under this Agreement and cooperate with the Pledgors to deregister and release the Equity Pledge with the administration for industry and commerce. The Pledgee shall bear the reasonable costs incurred in connection with the release of the Equity Pledge.

 

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4.                                         Disposal of Pledge

 

4.1.                           The Pledgors, the Company and the Pledgee hereby agree that upon occurrence of any Event of Default, the Pledgee shall, upon giving a written notice to the Pledgors, be entitled to exercise all rights and power of remedies for breach of contract under the PRC Laws, the Transaction Agreements and this Agreement, including without limitation the right to auction or sell the Pledge and to be compensated on a preferential basis with the proceeds thereof. The Pledgee shall not be held liable for any losses from its reasonable exercise of such rights and power.

 

4.2.                           The Pledgee shall be entitled to appoint in writing its counsels or other agents to exercise any and all of its foregoing rights and power and the Pledgors and the Company shall not raise objections thereto.

 

4.3.                           The Pledgors shall bear the reasonable costs incurred in connection with the exercise of any or all of the aforesaid rights and power by the Pledgee and the Pledgee is entitled to deduct such costs on an actual basis from the proceeds obtained from such exercise of rights and power.

 

4.4.                           The proceeds obtained from the exercise by the Pledgee of its rights shall be applied in the following order of precedence:

 

(i)                           payment of all costs arising out of the disposal of the Pledge and the exercise by the Pledgee of its rights (including fees paid to its counsels and agents);

 

(ii)                        payment of the taxes payable in connection with the disposal of the Pledge; and

 

(iii)                     repayment of the Secured Indebtedness to the Pledgee;

 

and any balance after the deduction of the aforesaid payments shall either be returned by the Pledgee to the Pledgors or any other person who is entitled to such balance under relevant laws and regulations or be deposited with a notary organ where the Pledgee is located (any costs thereby incurred shall be entirely borne by the Pledgors).

 

4.5.                           The Pledgee shall be entitled to exercise, at its option, concurrently or successively, its right of pledge towards the equity interest in the Company held by any of the Pledgors, or any of remedies for breach of contract it is entitled to. The Pledgee shall not be required to firstly exercise other remedies for breach of contract prior to exercising its right to auction or sell the Pledge under this Agreement. Neither the Pledgors nor the Company shall object to whether the Pledgee exercises part of its pledge right or to the sequence of exercising the pledge right by the Pledgee.

 

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5.                                         Fees and Expenses

 

All actual costs and expenses arising in connection with the creation of the equity pledge under this Agreement, including without limitation the stamp duty, any other taxes and all legal fees, shall be borne by the Parties respectively.

 

6.                                         Continuity and No Waiver

 

The Equity Pledge hereunder shall be a continuous security and shall remain valid until the full performance of the Contractual Obligations, and the full repayment of the Secured Indebtedness. Neither exemption or grace period granted by the Pledgee to the Pledgors in respect of any breach, nor delay by the Pledgee in exercising any of its rights under the Transaction Agreements and this Agreement, shall affect the rights of the Pledgee under this Agreement, relevant PRC Laws and the Transaction Agreements to demand at any time thereafter the strict performance by the Pledgors  of the Transaction Agreements and this Agreement, or the rights the Pledgee may be entitled to due to any subsequent breach by the Pledgors of the Transaction Agreements and/or this Agreement.

 

7.                                         Representations and Warranties of the Pledgors

 

The Pledgors hereby severally but not jointly represent and warrant to the Pledgee that:

 

7.1.                               They are natural persons with full civil capacity or corporate legal person; they have full and independent legal status and legal capacity, and have been duly authorized to execute, deliver and perform this Agreement, and may sue or be sued as an independent party.

 

7.2.                               The Company in which they hold equity interest is a limited liability company lawfully incorporated and existing, having independent legal person qualification. It has full and independent legal status and legal capacity to execute, deliver and perform this Agreement, and may sue or be sued as an independent party. It has full power and authorization to execute and deliver this Agreement, all other documents they will sign related to the transactions contemplated under this Agreement, and has full power and authorization to complete the transactions contemplated under this Agreement.

 

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7.3.                               All reports, documents and information provided by the Pledgors to the Pledgee after the date of this Agreement with respect to the Pledgors and all matters required by this Agreement are true, correct and valid in all substantial respects as of the date of such provision.

 

7.4.                               All reports, documents and information provided by the Pledgors to the Pledgee after the date of this Agreement with respect to the Pledgors and all matters required by this Agreement are true, correct and valid in all substantial respects as of the date of such provision.

 

7.5.                               As of the date of this Agreement, the Pledgors are the only lawful owners of the Pledge free from any existing dispute in relation to the ownership thereof. The Pledgors have the right to dispose of the Pledge or any part thereof.

 

7.6.                               Other than the security interest created on the Pledge under this Agreement and the rights created under the Transaction Agreements, the Pledge is free from any other security interest or third party rights.

 

7.7.                               The Pledge can be lawfully pledged and transferred, and the Pledgors have full rights and power to pledge the Pledge to the Pledgee in accordance with the terms of this Agreement.

 

7.8.                               This Agreement is lawfully and duly executed and delivered by the Pledgors and constitutes lawful and binding obligations of the Pledgors.

 

7.9.                               Any consents, permissions, waivers or authorizations by any third party or any approvals, licenses or exemptions by or any registration or filing formalities with any governmental body (if required by laws), necessary for the execution and performance of this Agreement and the Equity Pledge under this Agreement, have been obtained or handled and will remain in full force during the term of this Agreement.

 

7.10.                        The execution and performance of this Agreement by the Pledgors do not violate or conflict with any law applicable to the Pledgors in effect, any agreement to which the Pledgors are a party or by which their assets are bound, any court judgment, any arbitral award, or any decision of any administrative authority.

 

7.11.                        The Equity Pledge under this Agreement constitutes a first order of security interest on the Pledge.

 

7.12.                        All taxes and fees payable in connection with obtaining the Pledge have been paid in full by the Pledgors.

 

7.13.                        There are no such pending, or to the knowledge of the Pledgors, threatened suits, arbitrations, or other legal proceedings or claims before any court or arbitral tribunal, or administrative proceedings, or other legal proceedings or claims before any governmental body or administrative authority against the Pledgors or their properties and the Pledge, that will have a material adverse effect on the economic conditions of the Pledgors or the Pledgors’ ability to perform their obligations and security liability under this Agreement.

 

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7.14.                        The Pledgors hereby warrant to the Pledgee that the aforesaid representations and warranties will remain true and correct and will be fully complied with under all circumstances prior to the full performance of the Contractual Obligations and the full repayment of the Secured Indebtedness.

 

8.                                         Representations and Warranties of the Company

 

The Company hereby represents and warrants to the Pledgee that:

 

8.1.                               It is a limited liability company lawfully incorporated and existing according to the PRC Laws; it has independent legal personality; it has full and independent legal status and capacity to execute, deliver and perform this Agreement, and may sue or be sued as an independent party.

 

8.2.                               All reports, documents and information provided by the Company to the Pledgee prior to the date of this Agreement with respect to the Pledge and all matters required by this Agreement are true, correct and valid in all substantial respects as of the date of this Agreement.

 

8.3.                               All reports, documents and information provided by the Company to the Pledgee after the date of this Agreement with respect to the Pledge and all matters required by this Agreement are true, correct and valid in all substantial respects as of the date of such provision.

 

8.4.                               It has full powers and authorization to execute and deliver this Agreement and all other documents it will sign related to the transactions contemplated under this Agreement, and has the full power and authorization to complete the transactions contemplated under this Agreement.

 

8.5.                               There are no such pending, or to the knowledge of the Company, threatened suits, arbitrations, or other legal proceedings or claims before any court or arbitral tribunal, or administrative proceedings, or other legal proceedings or claims before any governmental body or administrative authority against the Company or its assets (including without limitation any Pledge), that will have a material adverse effect on the economic conditions of the Company or the Company’s ability to perform its obligations and security liability under this Agreement.

 

8.6.                               The Company hereby agrees to assume joint and several liability with its relevant Pledgors’ with respect to their representations and warranties made under Sections 7.5, 7.6, 7.7, 7.9 and 7.11 of this Agreement to the Pledgee.

 

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8.7.                               The Company hereby warrants to the Pledgee that the aforesaid representations and warranties will remain true and correct and will be fully complied with under all circumstances prior to the full performance of the Contractual Obligations and the full repayment of the Secured Indebtedness.

 

9.                                         Undertakings by the Pledgors

 

The Pledgors hereby severally but not jointly undertake to the Pledgee that:

 

9.1.                               Without prior written consent of the Pledgee, the Pledgors shall not create or permit to be created any new pledge or any other security interest on the Pledge, and any pledge or other security interest created on all or part of the Pledge without prior written consent of the Pledgee shall be null and void.

 

9.2.                               Without prior written notice to and prior written consent of the Pledgee, the Pledgors shall not transfer the Pledge, otherwise all transfer of the Pledge shall be null and void. For transfer of the Pledge with written consent of the Pledgee, the proceeds thereby received shall be first applied towards advance repayment of the Secured Indebtedness to the Pledgee or deposited with a third party agreed with the Pledgee.

 

9.3.                               Where any suits, arbitrations or other legal proceedings or claims arise which are likely to have an adverse effect on the Pledgors’ or the Pledgee’s interests or the Pledge under the Transaction Agreements and this Agreement, the Pledgors undertake that they will promptly and timely send a written notice to the Pledgee and will, in accordance with the reasonable request of the Pledgee, take all necessary measures to ensure the Pledgee’s rights and interests of pledge regarding the Pledge.

 

9.4.                               The Pledgors shall not conduct or permit to be conducted any action or omission which is likely to have a material adverse effect on the Pledgee’s interests or the Pledge under the Transaction Agreements and this Agreement. The Pledgors shall waive their right of first refusal in the realization of the pledge right by the Pledgee.

 

9.5.                               The Pledgors undertake to, in accordance with the reasonable request of the Pledgee, take all necessary measures and execute all necessary documents (including without limitation any supplement to this Agreement) to ensure the Pledgee’s rights and interests of pledge regarding the Pledge as well as the exercise and realization of such rights and interests.

 

9.6.                               If there is any transfer of the Pledge due to the exercise of the pledge right under this Agreement, the Pledgors undertake to take all measures to realize such transfer.

 

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9.7.                               If dissolution or liquidation is required according to compulsory provisions in applicable laws, the Pledgors shall, to the extent permitted by the PRC Laws, grant to the Pledgee or the entity/individual designated by it any interests lawfully distributed from the Company after the dissolution and liquidation of the Company in accordance with relevant laws.

 

10.                                  Undertakings by the Company

 

10.1.                        If any consents, permissions, waivers and authorizations by any third party or any approvals, permission, exemption by or any registration or filing formalities with any governmental body (if required by laws), are required for the execution and performance of this Agreement and the equity pledge under this Agreement, the Company will dedicate to help obtain and maintain them in full force during the term of this Agreement.

 

10.2.                        Without prior written consent of the Pledgee, the Company will not assist or permit the Pledgors to establish any new pledge or any other security interest on the Pledge.

 

10.3.                        Without prior written consent of the Pledgee, the Company will not assist or permit the Pledgors to transfer the Pledge.

 

10.4.                        Where any suits, arbitrations or other legal proceedings or claims arise, which are likely to have an adverse effect on the Company, the Company Equity Interest as the Pledge, or the Pledgee’s interests under the Transaction Agreements and this Agreement, the Pledgors undertake that they will promptly and timely send a written notice to the Pledgee and will, in accordance with the reasonable request of the Pledgee, take all necessary measures to ensure the Pledgee’s rights and interests of pledge regarding the Pledge.

 

10.5.                        The Company shall not conduct or permit to be conducted any act or action which is likely to have an adverse effect on the Pledgee’s interests under the Transaction Agreements and this Agreement or the Pledge.

 

10.6.                        The Company shall provide the Pledgee with the Company’s financial statements for the previous quarter within the first month of each calendar quarter, including without limitation balance sheet, income statement and cash flow statement.

 

10.7.                        The Company undertakes to, in accordance with the reasonable request of the Pledgee, take all necessary measures and execute all necessary documents (including without limitation any supplement to this Agreement) to ensure the Pledgee’s rights and interests of pledge regarding the Pledge as well as the lawful and contractual exercise and realization of such rights and interests.

 

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10.8.                        If there is any transfer of the Pledge due to the exercise of the pledge right under this Agreement, the Company undertakes to take all measures to realize such transfer.

 

11.                                  Change of Circumstances

 

As a supplement and without contravening other provisions of the Transaction Agreements and this Agreement, if at any time and as a result of any promulgation of or amendment to any PRC Laws, regulations or rules, or of any change in the interpretation or application of such laws, regulations or rules, or of any change in relevant registration procedures, the Pledgee takes it that the maintenance of the validity of this Agreement and/or the disposal of the Pledge in the manner provided in this Agreement become illegal or contravenes such laws, regulations or rules, the Pledgors and the Company shall immediately take any actions and/or execute any agreements or other documents upon the Pledgee’s written instructions and in accordance with its reasonable request so as to:

 

(1)                     maintain the validity of this Agreement;

 

(2)                     facilitate the disposal of the Pledge in the manner provided under this Agreement; and/or

 

(3)                     maintain or realize the security created or purported to be created under this Agreement.

 

12.                                  Confidentiality

 

12.1.                        During the term of and after the termination of this Agreement, each Party shall maintain in strict confidence the following information:

 

(1)                     The execution, performance of this Agreement and the contents of this Agreement;

 

(2)                     The trade secrets, proprietary information, and customer information (collectively referred to as “Confidential Information”) of the wholly owned company that it knows or receives as a result of the execution and performance of this Agreement.

 

Each Party shall use such Confidential Information only for the purpose of fulfilling its obligations under this Agreement. Without other Parties’ written consent, any Party shall not disclose the above Confidential Information to any third parties; otherwise it shall bear the liability for breach of the Agreement and compensate for the losses.

 

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12.2.                        After the termination of this Agreement, any Party shall return, destroy or otherwise dispose of all documents, materials or software containing Confidential Information upon the request of the other Party and cease the use of such Confidential Information.

 

12.3.                        Notwithstanding otherwise provided in this Agreement, the effectiveness of this section shall not be affected by the dissolution or termination of this Agreement.

 

13.                                  Effectiveness and Term of this Agreement

 

13.1.                        This Agreement shall become effective after being executed or sealed by the Parties or executed by their legal representatives.

 

13.2.                        The term of this Agreement shall continue until the Contractual Obligations are fully performed and the Secured Indebtedness is fully repaid.

 

14.                                  Notice

 

Any notice or other correspondence required by or made pursuant to this Agreement shall be delivered in person, by registered post, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party as set forth below. The dates on which notices shall be deemed effectively given shall be determined as follows:

 

Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery.

 

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).

 

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

 

Pledgor: Sun Qin

Address: ***

Tel.: ***

 

Pledgor: Chen Lei

Address: ***

Tel.: ***

 

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Pledgor: Zhang Zhen

Address: ***

Tel.: ***

 

Pledgor: Linzhi Tencent Technology Co., Ltd.

Address: ***

E-mail: ***

Copy: ***

Email: ***

 

Pledgee: Hangzhou Weimi Network Technology Co., Ltd.

Address: ***

Tel.: ***

 

Company: Hangzhou Aimi Network Technology Co., Ltd.

Address: ***

Tel.: ***

 

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.

 

15.                                  Miscellaneous

 

15.1.                        Without prior written consent of the Pledgee, the Pledgors or the Company shall not transfer any rights, obligations or liabilities under this Agreement to any third parties. However, the Pledgee may, without prior consent of the Pledgors or the Company and with a notice to the Pledgors and the Company, transfer its rights, obligations or liabilities under this Agreement to any third parties. The successors or permitted transferees (if any) of the Parties shall be obligated to continue to perform the Pledgors’ and the Company’s respective obligations under this Agreement.

 

15.2.                        The amount of the Secured Indebtedness shall be determined by the Parties through negotiation and shall constitute the conclusive evidence for the Secured Indebtedness under this Agreement.

 

15.3.                        This Agreement is made in Chinese and executed in six (6) originals. Each Party shall hold one (1) copy, and the number of the executed original copies may be increased accordingly for the purpose of registration or filing (if required).

 

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15.4.                        The entry into, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the PRC Laws.

 

15.5.                        In addition to the written amendments, additions, and amendments made after the signing of this Agreement, this Agreement constitutes the entire contract reached by the Parties to this Agreement in relation to the matters referred to in this Agreement, and supersedes any prior agreement with the matters referred to in this Agreement. All oral or written negotiations, representations and contracts, including but not limited to the Original Agreement.

 

15.6.                        Any dispute arising out of or in connection with this Agreement shall be settled by the Parties through consultations and shall, in the absence of an agreement being reached by the Parties within thirty (30) days from its occurrence, be submitted by any Party to Hangzhou Arbitration Commission for arbitration in accordance with the arbitration rules of Hangzhou Arbitration Commission. The arbitral award shall be final and binding on the Parties to this Agreement.

 

15.7.                        No rights, power or remedies granted to each Party by any provision of this Agreement shall preclude any other rights, power or remedies enjoyed by such Party in accordance with the laws and any other provisions under this Agreement and no exercise by a Party of its rights, power and remedies shall preclude its exercise of its other rights, power and remedies.

 

15.8.                        No failure or delay by a Party in exercising any rights, power or remedies (“Such Rights”) pursuant to this Agreement or any laws shall result in a waiver of Such Rights; and no single or partial waiver of Such Rights shall preclude such Party from exercising Such Rights in any other manner or from exercising other Such Rights.

 

15.9.                        The section headings in this Agreement are for convenience of reference only and shall in no event be used in or affect the interpretation of the provisions of this Agreement.

 

15.10.                 Each provision contained in this Agreement shall be severable and independent from any other provisions of this Agreement, and if at any time any one or more provisions of this Agreement become invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

 

15.11.                 Any amendments or supplements to this Agreement shall be made in writing and shall take effect only if duly signed/sealed by the Parties to this Agreement, except for the Pledgee’s transfer of its rights under this Agreement in accordance with Section 15.1.

 

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15.12.                 This Agreement shall be binding upon the lawful successors of the Parties.

 

15.13.                 Concurrently with the signing of this Agreement, the Pledgors may separately sign a power of attorney (as set out in Schedule II, the “Power of Attorney”), and authorize any person designated by them to sign any and all legal documents required for the Pledgee to exercise its rights under this Agreement. Such Power of Attorney shall be placed in the custody of the Pledgee, and the pledgee may submit the Power of Attorney to the relevant government department at any time when necessary.

 

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(This page is intentionally left as the signature page of the Third Amended and Restated Equity Pledge Agreement)

 

IN WITNESS WHEREOF, this Third Amended and Restated Equity Pledge Agreement has been executed by the Parties as of the date and at the place first above written.

 

	
Sun Qin
    
	
 
    
	
Signature:
    	
/s/ Sun Qin
    	
 
    

 

Hangzhou Weimi Network Technology Co., Ltd.

(Seal)

 

	
Signature:
    	
/s/ Sun Qin
    	
 
    
	
Name: Sun Qin
    
	
Title: Legal Representative
    

 

 

Hangzhou Aimi Network Technology Co., Ltd.

(Seal)

 

	
Signature:
    	
/s/ Sun Qin
    	
 
    
	
Name: Sun Qin
    	
 
    
	
Title: Legal Representative
    	
 
    

 

 

(This page is intentionally left as the signature page of the Third Amended and Restated Equity Pledge Agreement)

 

IN WITNESS WHEREOF, this Third Amended and Restated Equity Pledge Agreement has been executed by the Parties as of the date and at the place first above written.

 

	
Chen Lei
    	
 
    
	
 
    	
 
    
	
Signature:
    	
/s/ Chen Lei
    	
 
    
			

 

 

(This page is intentionally left as the signature page of the Third Amended and Restated Equity Pledge Agreement)

 

IN WITNESS WHEREOF, this Third Amended and Restated Equity Pledge Agreement has been executed by the Parties as of the date and at the place first above written.

 

	
Zhang Zhen
    	
 
    
	
 
    	
 
    
	
Signature:
    	
/s/ Zhang Zhen
    	
 
    
			

 

 

(This page is intentionally left as the signature page of the Third Amended and Restated Equity Pledge Agreement)

 

IN WITNESS WHEREOF, this Third Amended and Restated Equity Pledge Agreement has been executed by the Parties as of the date and at the place first above written.

 

	
Linzhi   Tencent Technology Co., Ltd.
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
Signature:
    	
/s/ Authorized   Signatory
    	
 
    
	
Title: Legal Representative
    	
 
    
			

 

 

Schedule I:

 

Basic Information of the Company

 

Company Name: Hangzhou Aimi Network Technology Co., Ltd.

 

Registered Address: ***

 

Registered Capital: 1,000,000 RMB

 

Legal Representative: Sun Qin

 

Shareholding Structure:

 

	
Name of the Shareholder
    	
 
    	
Amount of Capital 
   Contribution (RMB)
    	
 
    	
Shareholding 
   Percentage
    	
 
    
	
Sun Qin
    	
 
    	
44,100
    	
 
    	
4.41
    	
%
    
	
Chen Lei
    	
 
    	
865,700
    	
 
    	
86.57
    	
%
    
	
Zhang Zhen
    	
 
    	
1,000
    	
 
    	
0.10
    	
%
    
	
Linzhi Tencent   Technology Co., Ltd.
    	
 
    	
89,200
    	
 
    	
8.92
    	
%
    
	
Total
    	
 
    	
1,000,000
    	
 
    	
100
    	
%
    

 

 

Schedule II:

 

Form of Power of Attorney

 

I, Sun Qin, hereby irrevocably authorize                            , with the Identity Card number:                               , as my authorized representative, to sign all necessary or useful legal documents for Hangzhou Weimi Network Technology Co., Ltd. to exercise its rights under the Third Amended and Restated Equity Pledge Agreement entered into by Hangzhou Aimi Network Technology Co., Ltd. and me on     , 2018, and to deal with all the formalities related to the industrial and commercial registration related to the equity pledge.

 

	
 
    	
Signiture:
    	
 
    
	
 
    	
Sun Qin
    
	
 
    	
 
    
	
 
    	
Date:
    

 

 

Form of Power of Attorney

 

I, Zhang Zhen, hereby irrevocably authorize                            , with the Identity Card number:                               , as my authorized representative, to sign all necessary or useful legal documents for Hangzhou Weimi Network Technology Co., Ltd. to exercise its rights under the Third Amended and Restated Equity Pledge Agreement entered into by Hangzhou Aimi Network Technology Co., Ltd. and me on     , 2018, and to deal with all the formalities related to the industrial and commercial registration related to the equity pledge.

 

	
 
    	
Signiture:
    	
 
    
	
 
    	
Zhang Zhen
    
	
 
    	
 
    
	
 
    	
Date:
    

 

 

Form of Power of Attorney

 

We, Linzhi Tencent Technology Co., Ltd., hereby irrevocably authorize            , with the Identity Card number:                               , as our authorized representative, to sign all necessary or useful legal documents for Hangzhou Weimi Network Technology Co., Ltd. to exercise its rights under the Third Amended and Restated Equity Pledge Agreement entered into by Hangzhou Aimi Network Technology Co., Ltd. and us on     , 2018, and to deal with all the formalities related to the industrial and commercial registration related to the equity pledge.

 

	
 
    	
Linzhi Tencent Technology Co., Ltd. 
   (Seal)
    
	
 
    	
 
    
	
 
    	
Signiture:
    	
 
    
	
 
    	
Title: 
    	
Legal Representative
    
	
 
    	
Date:
    
				

 

 

Schedule III:

 

Hangzhou Aimi Network Technology Co., Ltd. Shareholders Resolutions

 

Date:       , 2018

Location: Hangzhou Aimi Network Technology Co., Ltd.

Participating Shareholders: Sun Qin, Chen Lei, Zhang Zhen, Linzhi Tencent Technology Co., Ltd.

 

After deliberation, the shareholders of the company resolved as follows:

 

1.                  Agreed to pledge the company’s 4.41% equity interest held by shareholder Sun Qin, 86.57% equity interest held by shareholder Chen Lei, 0.10% equity interest held by shareholder Zhang Zhen, and 8.92% equity interest held by Lin Zhi Tencent Technology Co., Ltd.’s to Hangzhou Weimi Network Technology Co., Ltd.;

 

2.                  Agreed to record the above equity pledges in the company’s shareholder register and complete the relevant industrial and commercial registration.

 

These resolutions shall become effective on the date hereof.

 

	
Shareholder signature/seal:
    	
 
    	
 
    
	
 
    	
Sun Qin
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Chen Lei
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Zhang Zhen
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Linzhi Tencent   Technology Co., Ltd.Exhibit 10.6

 

Exclusive Consulting and Services Agreement

 

This Exclusive Consulting and Services Agreement (this “Agreement”) is executed by and among the following parties on June 5, 2015:

 

Hangzhou Weimi Network Technology Co., Ltd. (“Party A”)

 

Registered address: ***

 

Hangzhou Aimi Network Technology Co., Ltd. (“Party B”)

 

Registered address: ***

 

WHEREAS:

 

1.                          Party A is a wholly foreign-owned enterprise incorporated in Hangzhou, the People’s Republic of China (for the purpose of this Agreement, excluding Hong Kong, Macau and Taiwan, hereinafter referred to as “PRC”), which has the necessary resources for technical and consulting services and experience in providing specialized technical and consulting services.

 

2.                          Party B is a domestic limited liability company incorporated in Hangzhou, China, which is interested in developing technology, improving management, enhancing and consolidating its market position.

 

3.                          Party A agrees to provide Party B with technical and consulting services, and Party B agrees to accept such technical and consulting services provided by Party A.

 

Therefore, based on the principles of equality and mutual benefit, upon consultations conducted on a friendly basis, the Parties have reached the following agreements:

 

1.                  Technical and Consulting Services; Exclusive and Proprietary Rights

 

1.1                     Within the term of this Agreement, Party A agrees to provide Party B with relevant technical and consulting services as Party B’s exclusive technology and consulting service provider in accordance with the terms of this Agreement (details set out in Schedule I).

 

1.2                     Party B agrees to accept the technical and consulting services provided by Party A and should provide appropriate cooperation for Party A to complete the aforementioned work, including but not limited to providing relevant data, the required technical requirements, instructions, etc. Party B further agrees that, except with Party A’s prior written consent, Party B shall not accept any technical or consulting services provided by any third party in relation to the above matters under this Agreement, nor may it be licensed or transferred from any third party to any service or improvement that is the same or similar to the services in the technical and consulting services unless they are licensed or transferred with the prior written approval of Party A.

 

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1.3                     All rights, ownership, interests and intellectual property rights (including but not limited to copyrights, patents, technical know-how, trade secrets, and others) arising from the performance of this Agreement, whether developed by Party A on its own, developed by Party B based on Party A’s intellectual property rights, or developed by Party A based on Party B’s intellectual property rights, shall be owned by Party A and for which Party A enjoys exclusive and proprietary rights and Party B shall not claim any rights, ownership, interests and intellectual property rights from Party A. The Parties agree that this section shall survive modifications to and rescission or termination of this Agreement.

 

1.4                     Party B undertakes that if it intends to conduct any business cooperation with other enterprises, it shall obtain Party A’s prior written consent, and Party A or its affiliates have the priority to cooperate under the same conditions.

 

2.                  Obligations of the Parties

 

2.1                     Party A’s Obligations

 

Party A agrees to provide Party B with timely technical and consulting services in accordance with this Agreement within the term hereof.

 

2.2                     Party B’s Obligations

 

2.2.1                 Party B agrees to ascertain the technical and consulting service fees (the “Service Fees”) under this Agreement in the pattern listed in Schedule II and make timely payment to Party A.

 

2.2.2                 Party B shall properly and reasonably accept and use the technical and consulting services provided by Party A.

 

2.2.3                 Upon the occurrence of any incident affecting the normal operation of Party B, Party B shall promptly notify Party A.

 

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2.2.4                 Party B hereby authorizes Party A or any person authorized by Party A to enter Party B’s office or other business premises at a reasonable time.

 

2.2.5                 Party B shall not take and shall procure to the greatest extent other third parties to refrain from any actions that may have an adverse effect on the ownership or intellectual property rights of Party A to provide services under this Agreement.

 

2.2.6                 Party B shall be responsible for obtaining all relevant required approvals and permits (if necessary) from the relevant authorities with respect to Party A’s performance of its obligations under this Agreement.

 

2.2.7                 Party B shall provide Party B with the financial reports, documents, accounts, records, data, etc. for each quarter in five (5) business days after the end of such quarter, for Party A to audit Party B’s accounts and confirm the amount of the Service Fees.

 

3.                  Representations and Warranties

 

3.1                     Party A hereby represents and warrants as follows:

 

3.1.1                 Party A is a company legally registered and validly existing in accordance with the PRC laws.

 

3.1.2                 Party A has signed and implemented this Agreement within its corporate power and business scope; Party A has taken necessary corporate actions and appropriate authorizations and obtained consent and approval from third parties and governmental authorities, without any violation of the restrictions by the laws and contracts  binding on or affecting Party A.

 

3.1.3                 This Agreement shall constitute Party A’s legal, valid and binding obligations enforceable in accordance with the terms of this Agreement upon its execution.

 

3.2                     Party B hereby represents and warrants as follows:

 

3.2.1                 Party B is a company legally registered and validly existing in accordance with the PRC laws.

 

3

 

3.2.2                 Party B has signed and implemented this Agreement within its corporate power and business scope; Party B has taken necessary corporate actions and appropriate authorizations and obtained consent and approval from third parties and governmental authorities, without any violation of the restrictions by the laws and contracts  binding on or affecting Party B.

 

3.2.3                 This Agreement shall constitute Party B’s legal, valid and binding obligations enforceable in accordance with the terms of this Agreement upon its execution.

 

4.                  Confidentiality

 

4.1                     Party B agrees to try its best to take all reasonable measures to maintain in confidence all the confidential materials and information it knows or accesses as a result of receiving Party A’s exclusive technical and consulting services (the “Confidential Information”). Without prior written consent of Party A, Party B shall not disclose, give or transfer such Confidential Information to any third party. Once this Agreement is terminated, Party B shall return any documents, materials or software containing Confidential Information to Party A as requested by Party A, or destroy them on its own, and delete any Confidential Information from any relevant memory devices, and shall not continue to use these Confidential Information. Party B shall take necessary measures to disclose Confidential Information merely to Party B’s staff, agents or professional advisors who need to know it, and require such Party B’s staff, agents or professional advisors to comply with the confidentiality obligation with the degree no lower than hereof.

 

4.2                     The above restrictions do not apply to:

 

4.2.1                 information which has become generally available to the public at the time of its disclosure;

 

4.2.2                 information which has become generally available to the public after its disclosure not due to Party B’s fault;

 

4.2.3                 information of which Party B is able to prove its ownership prior to its disclosure and which is not directly or indirectly obtained from Party A, Party A’s affiliated companies, or its shareholders and ultimate shareholders;

 

 

 

4

 

4.2.4                 information Party B is obliged to disclose to relevant governmental authorities, stock exchange agencies in accordance with legal requirements; or information Party B discloses to its direct legal and financial advisors for its needs of ordinary business, provided that Party B shall procure the legal and financial advisors to abide by the confidentiality obligations under this section.

 

4.3                     The Parties agree that this Section shall survive modifications to and rescission or termination of this Agreement.

 

5.                  Default

 

5.1                     Any violation by Party B of the terms of this Agreement or failure to perform its obligations under this Agreement in a timely manner shall be deemed as default. Party A may give a written notice to Party B requesting Party B to promptly correct its default and take timely and effective measures to eliminate the consequences of such default, and to compensate Party A for any loss suffered as a result of this default in accordance with applicable laws and this Agreement.

 

5.2                     In the event of Party B’s default, if Party A, based on its reasonable and objective judgment, believes that it is not feasible or unfair for Party A to perform its obligations under this Agreement, Party A may notify Party B in writing that Party A will temporarily suspend the performance of its obligations under this Agreement, until Party B terminates its default and has taken effective measures to eliminate the consequences of such default, and compensated Party A for its losses due to such default in accordance with applicable laws and the terms of this Agreement.

 

5.3                     The waiver by the Parties to this Agreement of the defaulting party’s default is valid only when such waiver is made in writing. No failure or delay by a Party in exercising any right or remedy pursuant to this Agreement shall result in a waiver of such rights; and no partial exercising of any right or remedy shall preclude such Party from exercising other right or remedy.

 

5.4                     Party B shall indemnify Party A in full and hold Party A harmless against any damages for any losses, damages, obligations and expenses resulting from Party A’s lawsuits, claims or other requests arising from or resulting from the contents of the technical and consulting services requested by Party B.

 

5

 

5.5                     The losses suffered by Party A and recoverable from Party B referred to in this section include all direct economic losses, any foreseeable reasonable indirect economic losses and related costs incurred, including but not limited to attorney fees, court costs, arbitration fees, and travel expenses.

 

5.6                     Party B acknowledges and agrees that if it violates any of the obligations under this Agreement, such default may cause irreparable damage to Party A and Party B’s compensation under the law and/or this Agreement may not be sufficient. Therefore, in the event of any such default or expected default, Party A shall have the right to request Party B to continue to perform its obligations under this Agreement in addition to the remedies provided in this Agreement and applicable laws.

 

5.7                     This section shall not be affected by any termination or dissolution of this Agreement.

 

6.                  Effectiveness and Term

 

6.1                     This Agreement shall become effective after being executed by the Parties. Unless terminated in advance in accordance with the terms of this Agreement or relevant agreements entered into by the Parties, the term of this Agreement shall be 10 years.

 

6.2                     When the term of this Agreement expires, unless Party A informs Party B by prior written notice three (3) months in advance, the term of this Agreement shall be automatically extended by ten (10) years, and so forth.

 

7.                  Modification and Termination

 

7.1                     Any modifications to this Agreement must be signed by the Parties in writing. Otherwise, any modifications to this Agreement may not bind the Parties to the Agreement. Unless renewed in accordance with the relevant terms of this Agreement, this Agreement shall be terminated on the date of expiration.

 

7.2                     During the term of this Agreement, Party B shall not terminate this Agreement in advance. Notwithstanding, Party A shall have the right to terminate this Agreement upon a written notice to Party B at any time with 30 days in prior. If Party A cancels this Agreement in advance due to the reasons attributable Party B, Party B shall compensate all losses caused to Party A, and shall pay the relevant Service Fees for the service completed.

 

6

 

7.3                     The rights and obligations of the Parties under Section 1.3, Section 4 and Section 5 shall survive the termination of this Agreement.

 

7.4                     Modifications and rescission of this Agreement shall not affect the Party’s right to claim damages. In the event of any losses to a Party as a result of the modifications or rescission of this Agreement, the liable Party shall be liable for the compensation unless exempted by the laws.

 

8.                  Dispute Resolution

 

8.1                     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 60 days or any longer period as agreed by the Parties after either Party’s receipt of the other Party’s request for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the Hangzhou Arbitration Commission for arbitration, in accordance with its Arbitration Rules then effective. The arbitration shall be conducted in Hangzhou, and the language used in arbitration shall be Chinese. The arbitration award shall be final and binding on the Parties.

 

8.2                     Except for the matters on dispute between the Parties, the Parties shall continue to perform their respective obligations in accordance with the provisions of this Agreement in good faith.

 

9.                  Force Majeure

 

9.1                     “Force Majeure Event” means any event that is beyond the reasonable control of a Party and is still unavoidable under the reasonable care of the affected Party, including but not limited to government actions, natural forces, fires, explosions, storms, floods, earthquakes, tides, lightning, or war. However, the lack of credit, funds or financing may not be deemed to be beyond the reasonable control of one Party. The Party seeking to waive the performance of the obligations under this Agreement due to force majeure events shall notify the other Party as soon as possible of the exemption and inform them of the steps to be taken to complete the performance.

 

9.2                     When the performance of this Agreement is postponed or hindered due to “force majeure” in the foregoing definition, the Party affected by force majeure shall not bear any responsibility under this Agreement within the scope of being postponed or hindered. The Party affected by force majeure event shall take appropriate measures to mitigate or eliminate the effect of such force majeure event and shall make efforts to resume its performance of obligations that has been so postponed or prevented by such force majeure event. Once the event of force majeure is eliminated, the Parties agree to resume their performance under this Agreement with the utmost efforts.

 

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10.           Notice

 

10.1              All notices issued by the Parties for the implementation of the rights and obligations under this Agreement shall be made in writing and delivered to the address of the relevant Parties by delivering in person, registered post, postage prepaid mail, approved express service, or facsimile at to the address of such Party valid then.

 

10.2              Notices and correspondence shall be deemed delivered in the following circumstances:

 

10.2.1          Notices delivered by facsimile shall be deemed delivered on the date recorded on the fax, but when the fax delivers later than 5 p.m. or on the non-working day of the place, the next business day of the date shown on the record shall be the date on which the notices are deemed delivered;

 

10.2.2          Notices delivered in person including express delivery shall be deemed delivered on the date of receipt;

 

10.2.3          Notices delivered by registered post shall be deemed delivered on the 15th day after the date of receipt of the registered post.

 

11.           Assignment

 

Party B shall not assign its rights and obligations under this Agreement to any third party unless with Party A’s prior written consent. Party A may transfer its rights and obligations under this Agreement to any third party without the consent of Party B, but shall notify Party B of such transfer.

 

12.           Severability

 

If any term under this Agreement is invalid or unenforceable due to inconsistency with the relevant laws, such term shall be invalid or non-enforceable within the relevant jurisdictions, and shall not affect the legal effect of other provisions of this Agreement.

 

8

 

13.           Amendments and Supplements

 

Any amendments and supplements to this Agreement shall be made in writing. The amendment and supplementary agreements duly executed by the Parties  relating to this Agreement shall be an integral part of this Agreement and shall have the same legal effect as this Agreement.

 

14.           Waivers

 

Except for otherwise provided in this Agreement, no failure or delay by a Party in exercising any right, power or privilege under this Agreement shall result in a waiver thereof. No single or partial exercising of any right, power or privilege under this Agreement by any Party shall preclude such Party from exercising any other right, power or privilege under this Agreement.

 

15.           Governing Law

 

The execution, effectiveness, performance and interpretation of this Agreement and the resolution of disputes hereunder shall be governed by and interpreted in accordance with the PRC laws.

 

16.           Others

 

This Agreement is executed in two counterparts, each of which shall have equal legal effect.

 

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

 

(Remainder of this Page Intentionally Left Blank)

 

9

 

(This page is intentionally left as the signature page of the Exclusive Consulting and Services Agreement)

 

Party A: Hangzhou Weimi Network Technology Co., Ltd. (Seal)

 

	
By:
    	
/s/ Sun Qin
    	
 
    

 

Name: Sun Qin

 

Title: Legal Representative

 

Party B: Hangzhou Aimi Network Technology Co., Ltd. (Seal)

 

	
By:
    	
/s/ Sun Qin
    	
 
    

 

Name: Sun Qin

 

Title: Legal Representative

 

 

Schedule I

 

List of Contents of Technical and Consulting Services

 

	
Service Type
    	
 
    	
Service Content
    
	
Design and Development
    	
 
    	
Providing services for designing and developing equipment, software   and systems of computer data communications
    
	
Operation and Maintenance
    	
 
    	
Providing operational maintenance services for equipment,   software and systems of computer data communications
    
	
Product Consulting
    	
 
    	
Providing consulting services on the design, development of   equipment, software and systems of computer data communications
    
	
Management Consulting
    	
 
    	
Daily accounting transaction processing consulting and tax law   consulting, development of financial management and auditing systems,   investment and financing consulting, labor and personnel   consulting, etc.
    
	
Marketing Consulting
    	
 
    	
Providing marketing consulting services on marketing,   merchandising, etc.
    

 

 

Schedule II

 

Methods of Service Fees Calculation and Payment

 

During the term of this Agreement, the Service Fees that Party B shall pay to Party A for the services provided by Party A as set forth in Schedule I shall be denominated in RMB and calculated according to the following formula:

 

Service Fees = Party B’s Income - Turnover Taxes - Party B’s Total Cost - Party B’s Retained Earnings

 

Where:

 

·                                          Party B’s income means Party B’s income received from third parties in the ordinary course of business;

 

·                                          Turnover taxes include but are not limited to business tax, value added tax, urban maintenance and construction tax, and educational surcharges;

 

·                                          Party B’s total costs include all costs and expenses, such as cost of goods sold and the operating costs incurred by Party B in conducting its business; and

 

·                                          The retained earnings of Party B shall be zero except that the amount of the retained earnings has been otherwise agreed by Party A in writing.

 

During the term of this Agreement, Party A is entitled to adjust the above Service Fees at its own discretion without the consent of Party B.

 

Party A shall provide Party B with the written details of the Service Fees incurred by the technical and consulting services in the previous quarter within the first five (5) business days of each quarter. Party B shall confirm to Party A in writing within three (3) business days after receiving such details. Upon the failure in timely confirmation, Party B shall be deemed to have confirmed the details provided by Party A to be correct. Party B shall pay the Service Fees to Party A’s designated account within ten (10) business days after the confirmation of the Service Fees listed by Party A in writing.

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