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Call Option Agreement

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YOU ON DEMAND HOLDINGS, INC. | Tianjin Sevenstarflix Network Technology Limited | YOU On Demand (Beijing) Technology Co, Ltd

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Title: Call Option Agreement
Date: 5/16/2016
Industry: Broadcasting and Cable TV     Sector: Services

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________________________________________________

Call Option Agreement

________________________________________________

by and between

YOU On Demand (Beijing) Technology Co., Ltd.

and

Yang Lan

and

Zhu Yun

and

Tianjin Sevenstarflix Network Technology Limited

April 5, 2016


TABLE OF CONTENTS

Article

 

Page

1.

DEFINITIONS AND INTERPRETATIONS

1

2.

OPTION

2

3.

UNDERTAKINGS

3

4.

REPRESENTATIONS AND WARRANTIES

5

5.

TERM

6

6.

BREACH OF CONTRACT

6

7.

CONFIDENTIALITY

6

8.

FORCE MAJEURE

7

9.

GOVERNING LAW

8

10.

DISPUTE RESOLUTION

8

11.

MISCELLANEOUS

8

 


This CALL OPTION AGREEMENT (“ Agreement ”) is entered into on this 5th day of April, 2016 in Beijing, People’s Republic of China (“ PRC ”), by and between:

(1)

YOU On Demand (Beijing) Technology Co., Ltd. , a limited liability company incorporated under the laws of the PRC, with its registered address at Suite 2603, 26/F, Tower A, 10 Jintongxi Road, Chaoyang District, Beijing, PRC (“ Party A ”);

 

 

(2)

Yang Lan, a PRC citizen and holder of identity card number 110108196803315727 (“ Party B ”);

 

 

(3)

Zhu Yun, a PRC citizen and holder of identity card number 630104197402260543 (“ Party C ”); and

 

 

(4)

Tianjin Sevenstarflix Network Technology Limited , a limited liability company incorporated under the laws of the PRC, with its registered address at Suite 305-55, 3/F, Zonghe Service Building D, Nangang Industrial Zone of Tianjin Economic Development Zone, Tianjin, PRC (“ Company ”).

WHEREAS :

A.

The Company is engaged in certain business activities in the PRC (“ Business ”). Party A has the expertise in consulting, and Party A and the Company have entered into a Technical Services Agreement dated as of 1 April 2016 to provide the Company with various technical, marketing and management consulting and other services in connection with the Business.

 

 

B.

Party B holds 99% and Party C holds 1% of the equity interests of the Company (collectively, “ Equity Interests ”). The Equity Interests represent RMB 50 million in the registered capital of the Company.

 

 

C.

Party B and Party C wish to grant Party A the option to purchase the entire Equity Interests, and Party A is willing to accept such option, in accordance with the terms and conditions set out below.

NOW THEREFORE , the parties agree as follows:

1.

DEFINITIONS AND INTERPRETATIONS

 

 

1.1

Definitions . Unless otherwise provided in this Agreement, the following terms shall have the meanings set forth below:

 

Business Day

means a day on which commercial banks are open for business in the PRC;

 

 

Call Notice

means the written notice sent by Party A to exercise the Option;

 

Call Option Agreement

- 1 -

 

 


 

Confidential Information

means any information of a confidential nature relating to the parties and the Company, including without limitation any confidential information concerning their respective structure, business activities (including financial information, client lists and business policies), technology, released or unreleased software or hardware products, and marketing plans, regardless of the format in which such information is stored or communicated, and including any excerpts, summaries or other derivative forms of the same;

 

 

Designated Person

means any person designated by Party A in writing;

 

 

Equity Pledge Agreement

means the Equity Pledge Agreement entered into between Party A, Party B and Party C on 1 April 2016;

 

 

Force Majeure

means any fire, flood, war, act of government or other natural or man-made event which is unforeseen by the parties (or if foreseen, reasonably unavoidable) and which prevents the performance of this Agreement by any or all of the parties, but excluding any shortage of credit;

 

 

Option

means the option for Party A or any Designated Person to purchase, at any time, all or part of the Equity Interests; and

 

 

Security Interest

means any security, right or interest of a third party, any purchase right, right of acquisition, right of set-off, or other security arrangement, including any security interest subject to this Agreement or the Equity Pledge Agreement.

 

 

1.2

Interpretation . All headings used herein are for reference purposes only and shall not affect the meaning or interpretation of any provision. Any reference to an Article or Appendix is to an article or appendix of this Agreement. For purposes of this Agreement, the term “PRC” refers to Mainland China, and unless explicitly provided herein does not refer to the Special Administrative Regions of Hong Kong and Macao or the territory of Taiwan. References to the masculine shall include the feminine and vice versa.

 

Call Option Agreement

- 2 -

 

 


 

2.

OPTION

 

 

2.1

Grant of Option . Each of Party B and Party C hereby irrevocably grants to Party A the Option to acquire his share of the Equity Interests in accordance with this Agreement.

 

 

 

 

2.2

Procedures . Upon Party A’s decision to exercise the Option, it shall send a Call Notice to Party B and Party C setting out: (a) the Equity Interests amount Party A wishes to acquire; (b) details of the corresponding exercise price; and (c) whether the Equity Interests being purchased will be transferred to Party A or to a Designated Person.

 

 

 

 

2.3

Exercise Price . The exercise price for the Equity Interests acquired by Party A or its Designated Person hereunder shall be determined by Party A at its discretion, subject to any restrictions imposed by PRC law.

 

 

 

 

2.4

Exercise of Option Right . Each time that Party A exercises the Option Party B and Party C shall:

 

 

2.4.1

convene a shareholders meeting, and pass the necessary resolutions to transfer the relevant portion of the Equity Interests to Party A or the relevant Designated Person; and

 

 

 

 

2.4.2

cause the Company and its directors to, and shall themselves, take all action necessary to effect the Option, including without limitation executing all documents, obtaining all approvals and performing all required steps to transfer the valid ownership of the Equity Interests to Party A or the Designated Person.

 

3.

UNDERTAKINGS

 

 

3.1

Undertakings of Party B and Party C in Regard to the Company. Each of Party B and Party C undertakes to vote in accordance with its Equity Interests in the Company and to take all other necessary action to ensure that the Company:

 

 

3.1.1

does not supplement or modify its articles of association or other constituent documents, increase or decrease its existing registered capital, change its business activities, or alter its capital structure, without the prior written consent of Party A;

 

 

 

 

3.1.2

manages its business and handles its financial and commercial affairs prudently and in accordance with relevant laws and codes of practice;

 

 

 

 

3.1.3

does not sell, assign, mortgage, or otherwise dispose of any legal or beneficial rights to or in any of its assets, business, or revenue, or permit the creation of any Security Interest at any time, without the prior written consent of Party A;

 

Call Option Agreement

- 3 -

 

 


 

 

3.1.4

does not incur, assume or guarantee any debts, without the prior written consent of Party A;

 

 

 

 

3.1.5

does not enter into any material contract valued in excess of RMB 10,000 without the prior written consent of Party A, except in the ordinary course of business;

 

 

 

 

3.1.6

does not, under any circumstance, enter into any contract valued in excess of RMB 200,000 without the prior written consent of Party A;

 

 

 

 

3.1.7

does not extend any loan or credit to any party, or provide any guarantee or assume any obligation of any party, without the prior written consent of Party A;

 

 

 

 

3.1.8

provides all information relating to its operations and financial affairs to Party A upon Party A’s request;

 

 

 

 

3.1.9

does not merge or consolidate with any third party or acquire or invest in any third party, without the prior written consent of Party A;

 

 

 

 

3.1.0

notifies Party A immediately should any legal action, arbitration or administrative procedure relating to its assets, operations or income arise or become likely to arise;

 

 

 

 

3.1.11

promptly executes all documents and takes all other actions which are reasonably necessary for the lawful performance of the provisions and aim of this Agreement and the documents beneficial to this Agreement;

 

 

 

 

3.1.12

does not pay dividends or distributions of any kind to its shareholders without the prior written consent of Party A.

 

 

3.2

Personal Undertakings of Party B and Party C . Party B and Party C each further undertakes to:

 

 

3.2.1

cause a shareholders meeting of the Company to vote in favor of the transfer of his share of the Equity Interests as contemplated hereunder, at the request of Party A;

 

 

 

 

3.2.2

promptly execute all documents and take all other actions which are reasonably necessary for the lawful performance of the provisions and objective of this


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