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4.2.5 enter into any agreement, arrangement, commitment or understanding to, or actually, make loans or advances to any third party;
4.2.6 enter into any agreement, arrangement, commitment or understanding to, or actually, assume, guarantee, endorse or otherwise become liable for the obligation of any third party or other entity; or
4.2.7 permit the Domestic Company to conduct any business not expressly described in Recital B of their Agreement.
4.3 Rights of Party A.
4.3.1 Party B agrees that she shall obtain Party A's written approval prior to undertaking any of the following, namely:
4.3.1.1 appointing and removing the directors of the Domestic Company;
4.3.1.2 appointing and removing the general manager of the Domestic Company; and
4.3.1.3 approving the terms of employment of the general manager.
4.3.2 Party B agrees that she shall obtain Party A's written approval prior to undertaking any of the following, namely:
4.3.2.1 appointing and removing of the senior management personnel and any key personnel of the Domestic Company; and
4.3.2.2 approving the terms of employment of the senior management personnel and key personnel of the Domestic Company.
5. SHARE PLEDGE
5.1 Share Pledge. As security for the performance in full of the obligations of Party B under their Agreement, Party B hereby pledges to Party A, and creates in favor of Party A or the Designee (as appropriate), a first priority security interest in all of the rights, title and interest in and to:
5.1.1 the Shares; and
5.1.2 all of her incidental rights with respect to the Shares, now or hereafter acquired.
Such security interest to be perfected by compliance by Party B with Article 3.1.9 of their Agreement.
5.2 Power of Attorney. Party B hereby irrevocably grants to Party A or the Designee (as appropriate) full power of attorney for the purpose of carrying out the provisions of their Agreement, as well as taking any action and executing any instrument which Party A in good faith deems necessary to accomplish for purposes of their Agreement.
6. EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute a default of the Loan hereunder and a breach of their Agreement by Party B (as appropriate) (an "Event of Default"):
6.1 a Share Transfer has not been effected by Party B within 20 working days after the corresponding Conversion Date or such time as may otherwise be agreed upon by the Parties;
6.2 Party B is in breach of any of the terms and conditions hereof, and such breach has not been rectified for a period of 10 days after receipt of Party A's written notice requesting such rectified;
6.3 any undertaking or warranty made by Party B herein shall prove to have been false or misleading in any material respect;
6.4 Party B makes any arrangement with her respective creditors or takes or suffers any similar action in consequence of debt; or
6.5 any judgment is made under any applicable law against Party B which exceeds USD 50,000.
7. LOAN CONVERSION
7.1 Share Conversion. As of the Repayment Date, the Loan shall be convertible into Shares on the basis that 100 percent of the Loan amount equals 100 percent of the Shares. For the avoidance of doubt, if 10 percent of the Loan were repayable by Party B, then such Party, as the case may be, would be required to transfer 10% of the total number of the Shares to Party A. The Loan shall become repayable to such extent as Party A may from time to time request, until the entire Loan amount has been repaid. Party A shall request to convert all or a percentage of the Loan by means of a written notice to Party B that specifies the percentage of the Loan to be converted into Shares ("Conversion Notice").
7.2 Share Transfer.
7.2.1 Within 20 working days after receipt of a Conversion Notice ("Conversion Date"), Party B shall effect the transfer of the portion of the Shares designated in the Conversion Notice, either to Party A directly or to the Designee specified by Party A in the Conversion Notice (each a "Share Transfer").
7.2.2 For the avoidance of doubt, upon the completion of the conversion of the Loan and the transfer of all of the Shares of Party B (whether pursuant to their Article 7 or an Event of Default), Party A shall hold as many of the Shares as is permissible under _________(PLACENAME) Law, and the remainder of the Shares (if applicable) shall be held by the Designees, with Party B no longer holding any Shares. At such time, their Agreement shall be deemed to have terminated, and the obligations of Party B hereunder to have been fulfilled (with the exception of those under 3.1.13 and 3.1.14).
7.3 Delay. Party B undertakes to notify Party A immediately of any delay in effecting a Share Transfer or completing the procedures described in Article 7.2 above, together with the reason for such delay and revised effective date of the Share Transfer.
7.4 Repayment of Loan. The corresponding portion of the Loan shall be deemed to have been repaid as of the effective date of each Share Transfer. Once Party B have completed the Share Transfers in accordance with the provisions of their Article 7, the Loan shall be deemed to have been repaid in full and Party B shall be deemed to have performed her repayment obligations hereunder.
8. MISCELLANEOUS
8.1 Notices and Delivery. All notices and communications among the Parties shall be made in writing and in the English language by facsimile transmission with confirmation of transmission, delivery in person (including courier service) or registered airmail letter to the appropriate correspondence addresses set forth below:
Party A
AAA, Inc.
_________(address)
Tel : _________
Fax : _________
Party B
BBB(individual)
Tel : _________
8.2 Timing. The time of receipt of the notice or communication shall be deemed to be:
8.2.1 If by facsimile transmission with confirmation of transmission, at the time displayed in the corresponding transmission record, unless such facsimile is sent after 5:00 p.m. or on a non-business day in the place where it is received, in which case the date of receipt shall be deemed to be the following business day;
8.2.2 if in person (including express mail), on the date that the receiving Party or a person at the receiving Party's address signs for the document; or
8.2.3 if by registered mail, on the 10th day after the date that is printed on the receipt of the registered mail.
8.3 Foreign Exchange. All amounts payable by Party B hereunder shall be paid in USD. If, as a result of foreign exchange restrictions in the _________(PLACENAME), it becomes illegal for Party B to make any payment to Party A in USD, then she shall make that payment in any other currency permitted for such purposes, as shall be stipulated by Party A at its sole discretion. In such an event, the amount of the payment shall be calculated at the rate published by the Bank of China on the relevant payment date, and shall be free and clear of all expenses, withholding taxes and commissions.
8.4 Amendments. The provisions of their Agreement may not be waived, modified or amended except by an instrument in writing signed by the Parties (which instrument shall be attached as an Appendix hereto).
8.5 No Waiver. Failure or delay on the part of any Party to exercise any right under their Agreement shall not operate as a waiver thereof.
8.6 Severability. The invalidity of any provision of their Agreement shall not affect the validity of any other provision of their Agreement which is unrelated to that provision.
8.7 Survival. The confidentiality obligations of the Parties hereunder shall remain in full force and effect regardless of the termination of their Agreement for any reason.
8.8 Taxes and Duties. Party A shall be responsible for all stamp duties and other governmental fees, taxes and reasonable out-of-pocket expenses (including reasonable legal fees) incurred by the Parties in connection with the conversion of the Loan and each Share Transfer made hereunder and in the preparation of their Agreement.
8.9 Successors. Their Agreement shall be binding upon the Parties and upon their respective successors and assigns (if any).
8.10 Assignment. Party B cannot assign or otherwise transfer her rights or obligations under their Agreement without the prior written consent of Party A.
8.11 Governing Law. The execution, validity, interpretation and implementation of their Agreement and the settlement of disputes thereunder shall be governed by _________(PLACENAME) Law.
8.12 Arbitration. All disputes arising out of or in connection with their Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce as administered by the International Court of Arbitration of the International Chamber of Commerce in Hong Kong by a sole arbitrator appointed in accordance with the said Rules conducted in the English language.
8.13 Entire Agreement. Their Agreement and the Appendix hereto constitute the entire agreement between the Parties and supersede all prior discussions, negotiations and agreements. The Appendix form an integral part hereof and have the same legal effect as their Agreement. If there is any inconsistency between the provisions of their Agreement and any of the Appendixes, the provisions of their Agreement shall prevail to the extent of such inconsistency.
8.14 Language. Their Agreement will be signed in 2 sets of originals in English language, with 1 original for each Party
IN WITNESS WHEREOF, the Parties hereto have executed or caused their Agreement to be executed by their duly authorized representatives (as the case may be) as of the date first indicated above.
For and on behalf of AAA, Inc.
By :_________ BBB(individual)
Name:_________ By :_________
Title:_________