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Equity Pledge Agreement

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YOU ON DEMAND HOLDINGS, INC. | Beijing Sino Top Scope Technology Co, Ltd, Company | YOU On Demand (Beijing) Technology Co, Ltd

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Title: Equity Pledge Agreement
Date: 3/30/2016
Industry: Broadcasting and Cable TV     Sector: Services

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Equity Pledge Agreement

 

by and between

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

and

Wu Bing

and

Zhu Yun

January 25, 2016


TABLE OF CONTENTS

Article

Page

1.

DEFINITIONS AND INTERPRETATIONS

1

2.

PLEDGE

3

3.

REGISTRATION

3

4.

EXERCISE OF PLEDGE

3

5.

REPRESENTATIONS AND WARRANTIES OF PARTY B AND PARTY C

3

6.

COVENANTS OF PARTY B AND PARTY C

4

7.

EVENTS OF DEFAULT

4

8.

TERM

5

9.

BREACH OF CONTRACT

6

10.

FEES AND EXPENSES

6

11.

CONFIDENTIALITY

6

12.

FORCE MAJEURE

7

13.

GOVERNING LAW

8

14.

DISPUTE RESOLUTION

8

15.

MISCELLANEOUS

8

 


This EQUITY PLEDGE AGREEMENT (“ Agreement ”) is entered into on this 25 day of January, 2016 (“ Signing Date ”) 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)

Wu Bing, a PRC citizen and holder of identity card number 310104196806292016 (“ Party B ”); and

 

 

(3)

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

(collectively, the “ Parties ”, individually, a “ Party ”)

WHEREAS :

A.

Party B holds 95% and Party C holds 5% of the equity interests (“ Equity Interests ”) of Beijing Sino Top Scope Technology Co., Ltd., “ Company ”), a limited liability company incorporated and doing certain business activities in the PRC (“ Business ”). The Equity Interests represent RMB 4.5 million in the registered capital of the Company.

 

 

B.

On 25 January 2016, Party A and the Company entered into a Technical Services Agreement (“ Technical Services Agreement ”), pursuant to which the Company shall pay service fees to Party A for various technical, marketing and management consulting and other services in connection with the Business.

 

 

C.

On 25 January 2016, Party A, Party B, Party C and the Company entered into a Call Option Agreement (“ Call Option Agreement ”), pursuant to which Party B and Party C grant to Party A an option to purchase all or any part of their Equity Interests.

 

 

D.

As security for a total debts of RMB 4.5 million: (a) the performance by the Company of its obligations under the Technical Services Agreement for a security of RMB 2.25 million; and (b) the performance by Party B and Party C of their obligations under the Call Option Agreement for a security of RMB 2.25 million, Party B and Party C have agreed to pledge the entire Equity Interests to Party A, and Party A has agreed to accept such a pledge, in accordance with the terms and conditions set out in this Agreement.

NOW THEREFORE, the Parties agree as follows:

1.

DEFINITIONS AND INTERPRETATIONS

 

Equity Pledge Agreement

- 1 -

 

 


 

 

1.1

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

 

Business Day

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

 

 

Call Option Agreement

means the Call Option Agreement entered into by the Parties and the Company on 25 January 2016, as described in Paragraph C of the Recitals;

 

 

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, 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;

 

 

Event of Default

means an event described in Article 7;

 

 

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;

 

 

Pledge

means the pledge created over each of Party B’s and Party C’s entire share of the Equity Interests in favor of Party A under Article 2.1;

 

 

Technical Services
Agreement

means the Technical Services Agreement entered into by Party A and the Company, as described in Paragraph B of the Recitals.

 

 

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 include the Special Administrative Regions of Hong Kong and Macau or the territory of Taiwan. References to the masculine shall include the feminine and vice versa.

 

Equity Pledge Agreement

- 2 -

 

 


 

2.

PLEDGE

 

 

 

2.1

Pledge . Each of Party B and Party C hereby agrees to pledge his entire share of the Equity Interests to Party A pursuant to the terms of this Agreement (“ Pledge ”).

 

 

 

2.2

Effective Date . The Pledge shall be effective on the date on which it has been duly registered pursuant to Article 3. For the avoidance of doubt, until Party A has acquired the entire Equity Interests by means of exercising its option under the Call Option Agreement, the Pledge will continue to be effective.

 

 

 

3.

REGISTRATION

 

 

 

Party B and Party C covenant with Party A that, within 30 Business Days after the execution of this Agreement, Party B and Party C shall complete the registration of the Pledge with the relevant local branch of the PRC Administration for Industry and Commerce (“ AIC ”) as instructed by Party A, and Party A shall provide any necessary assistance to Party B and Party C to register the Pledge in accordance with this Agreement.

 

 

 

4.

EXERCISE OF PLEDGE

 

 

 

4.1

Exercise of Pledge . During the term of this Agreement, Party A shall be entitled to exercise the Pledge if the Company fails to pay any of the service fees due under the Technical Services Agreement, or otherwise breaches the Technical Services Agreement, and fails to rectify such breach within 30 days of Party A’s written demand for the same.

 

 

 

4.2

No Hindrance . Party B and Party C shall render Party A all necessary assistance in exercising the Pledge, and shall not hinder Party A’s exercise thereof hereunder.

 

 

 

5.

REPRESENTATIONS AND WARRANTIES OF PARTY B AND PARTY C

 

 

 

Party B and Party C each hereby represents and warrants that:

 

 

 

5.1

he is the legal owner of the Equity Interests; and

 

 

 

5.2

he has not pledged or encumbered his respective share of the Equity Interests to any person or entity other than Party A.

 

Equity Pledge Agreement

- 3 -

 

 


 

6.

COVENANTS OF PARTY B AND PARTY C

 

 

For the duration of this Agreement, Party B and Party C each covenants to Party A that he will:

 

 

6.1

not transfer or assign his share of the Equity Interests, collect any dividends from the Equity Interests, or create or permit to be created any pledge or other encumbrance on the Equity Interests other than the Pledge, without the prior written consent of Party A;

 

 

 

 

6.2

comply with all laws and regulations governing the Pledge;

 

 

 

 

6.3

deliver to Party A any notice, order, or opinion with respect to the Pledge which is issued by a competent government authority within 5 Business Days of receiving the same, and comply with or object to such notice, order or opinion at the direction of Party A;

 

 

 

 

6.4

notify Party A in a timely manner of any action, omission or other event which may adversely affect the Equity Interests or any of the Parties’ rights therein, or which may change or preclude his performance of any of his obligations under this Agreement;

 

 

 

 

6.5

not initiate, nor authorize any other person to initiate, any legal procedure or other action which could suspend or hamper Party A’s right to exercise the Pledge; and

 

 

 

 

6.6

execute in good faith all title certificates and contracts, perform any necessary actions, and provide any additional assistance necessary to perfect Party A’s rights hereunder as requested by Party A.

 

7.

EVENTS OF DEFAULT

 

 

 

 

7.1

Events of Default . Each of the following events shall be considered to be an Event of Default:

 

 

 

 

7.1.1

the Company fails to make full and timely payment of the service fees under the Technical Service Agreement, or if Party A incurs any economic loss due to the Company’s breach of its obligations under the Technical Services Agreement;

 

 

 

 

7.1.2

Party B and/or Party C breach(es) this Agreement, including by making any material misleading or fraudulent representations, warranties or covenants under Articles 5 and 6;

 

 

 

 

7.1.3

Party B and/or Party C waive his/their rights in or to the Equity Interests, or transfer or assign any portion of the Equity Interests, without the prior written consent of Party A;

 

Equity Pledge Agreement

- 4 -

 

 


 

 

7.1.4

any loan, security, compensation, covenant and/or other liability of Party B and/or Party C is/are required to be repaid or performed prior to the scheduled date, or is/are due but cannot be repaid or performed as scheduled, and


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