Common use of Business Operation Clause in Contracts

Business Operation. 1.1 The Company hereby acknowledges and agrees that if any performance guarnatee or current fund loan security is required in the course of the business operation of the Company or its subsidiaries (including any private school sponsored by the Company or its subsidiaries as the sponsor, same below), the Company shall first notify the WFOE in writing to seek the security to be provided by the WFOE. In such case, the WFOE has the right but not the obligation to decide, at its own discretion, whether to provide the security for the Company or its subsidiaries. If the WFOE is not willing to provide the security for the Company or its subsidaries, or fails to reply within fifteen (15) days from the receipt of the Company’s written notice to seek the security, the Company or its subsidiaries may seek the security from a third party. If the WFOE agrees to provide the security to the Company or its subsidiaries, the WFOE may requrie the Company or its subsidiaries to provide relevant counter guarantee and create a pledge or mortgage over its receivables or other assets in its business operation in favor of the WFOE. 1.2 Unless the WFOE’s prior written consent has been obained, the Company shall not, and the Shareholders shall not cause or permit the Company or its subsidiaries to: (a) adopt or revise any business plan or budget; (b) conduct any business or enter into any transaction outside its normal business scope or beyond its business plan or budget; (c) establish any borrowing-lending relationship or other debtor-creditor relationship with a third party (other than the debtor-creditor relationship established in the course of daily business operation), or make any equity investment in any third party, or open any new private school or teaching institution (other than the private schools or teaching institutions which are in the course of opening as of the date of this Agreement); (d) distribute any profits or pay other amounts to its shareholders or sponsors; (e) appoint, remove or replace any director, supervisor or senior management member; (f) approve or amend any call option plan or any arrangement related to the equity interests of the Company; (g) sell any assets or rights to any third party or purchase any assets or rights from any third party (other than the sale and purchase done in the course of daily business operation); (h) create a security or any other guarantee over its assets in favor of any third party, or create a mortgage, pledge or any other encumbrance over its assets; (i) enter into any transaction with its shareholders, directors or senior management members; (j) amend its articles of association; (k) arrange division, merger, consolidation, dissolution and liquidation; (l) change normal business operation or amend any material management rules and regulations; (m) change the auditor; or (n) conduct any other transaction or activitiy which may materially affect its assets, rights or business operation. 1.3 In respect of the teaching plan system service, the intangible asset continuing research & development and implementation supporting service, the business management system software use license, the sale of supplementary books, the operation supporting service and other business services provided by the WFOE to the Company, the Company shall, in addition to the service fees to be paid in accordance with the service agreement (the “Service Agreement”) entered into by the Company and the WFOE on December 1, 2014, pay operation supporting service fee in an amount equal to the balance of the total revenue after the payment has been made by the Company in accordance with the Service Agreement and the costs, taxes and other fees required to be reserved or withdrawn in accordance with relevant laws and regulations have been deducted. Such service fee shall be paid by the Company to the WFOE within 20 days of the end of each financial year. The WFOE may adjust the amount or the payment time of such service fee as appropriate according to the status of its provision of the service to the Company and the actual operation situation of the Company. This Article shall come into force on January 1, 2014.