Common use of Performance Commitment Clause in Contracts

Performance Commitment. (a) Each of the Parties hereby acknowledges, confirms and agrees that, the pre-money valuation of the Company on a fully-diluted and as-converted basis (the “Pre-Money Valuation”) applied for the subscription of the Series B Preferred Shares contemplated hereunder at the Closing, which is RMB1,600,000,000 in equivalent US Dollars (the “Initial Pre-Money Valuation”), is based on the following performance projections of the Group Companies: (i) the audited sales revenue of the Group Companies’ primary business on a consolidated basis of the fiscal year of 2017 of the Company (commencing from January 1, 2017 till December 31, 2017) prepared in accordance with the PRC GAAP and audited and certified by an accounting firm acceptable to the Investors (the “Qualified Auditor”, and such audited sales revenue, the “Sales Revenue of 2017”) would be no less than RMB160,000,000 (the “Qualified Sales Revenue”), and (ii) the net loss of the Group Companies on a consolidated basis of the fiscal year of 2017 of the Company (commencing from January 1, 2017 till December 31, 2017) prepared in accordance with the PRC GAAP and audited and certified by the Qualified Auditor (the “Net Loss of 2017”) would be no more than RMB50,000,000 (the “Qualified Net Loss”). The Warrantors shall cause the Qualified Auditor to provide the Sales Revenue of 2017 and the Net Loss of 2017 in reasonable details to the Investors no later than March 31, 2018. For the avoidance of doubt, any reasonable fees, costs and expenses incurred by the Company in connection with the transactions as contemplated under any employee share incentive plan of the Company (including but not limited to the Option Plan) shall not be calculated as the Net Loss of 2017. (b) If the Sales Revenue of 2017 is less than the Qualified Sales Revenue (such Sales Revenue of 2017, the “Non-Qualified Sales Revenue”), the Pre-Money Valuation shall be immediately adjusted to according to the following formula: the adjusted Pre-Money Valuation = ten (10) times of the Non-Qualified Sales Revenue. For the purpose of this Section 6.13, the decrease from the Initial Pre-Money Valuation to the above adjusted Pre-Money Valuation, the “Sales Revenue Adjustment”. (c) If the Net Loss of 2017 is more than the Qualified Net Loss (such Net Loss of 2017, the “Non-Qualified Net Loss”, and the difference between the Non-Qualified Net Loss and the Qualified Net Loss, the “Net Loss Difference”), the holders of at least fifty percent (50%) of the then issued and outstanding Series B Preferred Shares (including Sequoia and LYFE as long as they hold any Series B Preferred Share) is entitled to request the Pre-Money Valuation to be immediately adjusted according to the following formula by serving a written notice upon the Company: the adjusted Pre-Money Valuation = the Initial Pre-Money Valuation – 10 × the Net Loss Difference. For the purpose of this Section 6.13, the decrease from the Initial Pre-Money Valuation to the above adjusted Pre-Money Valuation, the “Net Loss Adjustment”. (d) For avoidance of doubt, the Sales Revenue Adjustment and the Net Loss Adjustment set forth in Section 6.13(b) and Section 6.13(c) above are cumulative with each other, and not in lieu thereof. Therefore, in the event of occurrence of the Sales Revenue Adjustment and/or the Net Loss Adjustment, the Pre-Money Valuation shall be immediately adjusted according to the following formula: the adjusted Pre-Money Valuation (the “Adjusted Pre-Money Valuation”) = the Initial Pre-Money Valuation – the Sales Revenue Adjustment (if any) – the Net Loss Adjustment (if any). (e) In the event of occurrence of the Sales Revenue Adjustment and/or the Net Loss Adjustment, each Investor is entitled to request the Company to issue additional new Series B Preferred Shares at nil consideration such that after the new issuance the total number of Series B Preferred Shares held by such Investor is adjusted according to the following formula: total number of Series B Preferred Shares held by such Investor immediately after the adjustment = total number of Series B Preferred Shares held by such Investor immediately prior to the adjustment × the Pre-Money Valuation / the Adjusted Pre-Money Valuation, and further, the Series B Preferred Issue Price with respect to such Investor as defined in the Amended M&A shall also be adjusted and amended according to the following formula: Series B Preferred Issue Price immediately after such adjustment = Series B Preferred Issue Price (as defined in the Amended M&A) / the Pre-Money Valuation × the Adjusted Pre-Money Valuation. (f) If (i) the Sales Revenue of 2017 is no less than RMB190,000,000, and (ii) the ratio of the Net Loss of 2017 to the Sales Revenue of 2017 is no more than the ratio of the Qualified Net Loss to the Qualified Sales Revenue, each of the Parties hereby agrees that, additional Ordinary Shares shall be reserved for issuance under the Option Plan and additional Ordinary Shares shall be issued to the Holding Entity at nil consideration, which results that (i) the shareholding percentage of the total Ordinary Shares reserved for issuance under the Option Plan in the Company on a fully-diluted and as-converted basis shall be increased by 0.5% immediately after the foregoing reservation and issuance; (ii) the shareholding percentage of the Holding Entity then in the Company on a fully-diluted and as-converted basis shall remain the same as that immediately prior to the foregoing reservation and issuance, and (iii) the shareholding percentage of the Preferred Shareholders (other than the Holding Entity) then in the Company on a fully-diluted and as-converted basis shall be diluted on a pro rata basis as a result of the foregoing reservation and issuance.

Performance Commitment. (a) Each of the Parties hereby acknowledges, confirms and agrees that, the pre-money valuation of the Company on a fully-diluted and as-converted basis (the “Pre-Money Valuation”) applied for the subscription of the Series B Preferred Shares contemplated hereunder at the Closing, which is RMB1,600,000,000 in equivalent US Dollars (the “Initial Pre-Money Valuation”), is based on the following performance projections of the Group Companies: (i) the audited sales revenue of the Group Companies’ primary business on a consolidated basis of the fiscal year of 2017 of the Company (commencing from January 1, 2017 till December 31, 2017) prepared in accordance with the PRC GAAP and audited and certified by an accounting firm acceptable to the Investors Investor (the “Qualified Auditor”, and such audited sales revenue, the “Sales Revenue of 2017”) would be no less than RMB160,000,000 (the “Qualified Sales Revenue”), and (ii) the net loss of the Group Companies on a consolidated basis of the fiscal year of 2017 of the Company (commencing from January 1, 2017 till December 31, 2017) prepared in accordance with the PRC GAAP and audited and certified by the Qualified Auditor (the “Net Loss of 2017”) would be no more than RMB50,000,000 (the “Qualified Net Loss”). The Warrantors shall cause the Qualified Auditor to provide the Sales Revenue of 2017 and the Net Loss of 2017 in reasonable details to the Investors Investor no later than March 31, 2018. For the avoidance of doubt, any reasonable fees, costs and expenses incurred by the Company in connection with the transactions as contemplated under any employee share incentive plan of the Company (including but not limited to the Option Plan) shall not be calculated as the Net Loss of 2017. (b) If the Sales Revenue of 2017 is less than the Qualified Sales Revenue (such Sales Revenue of 2017, the “Non-Qualified Sales Revenue”), the Pre-Money Valuation shall be immediately adjusted to according to the following formula: the adjusted Pre-Money Valuation = ten (10) times of the Non-Qualified Sales Revenue. For the purpose of this Section 6.136.14, the decrease from the Initial Pre-Money Valuation to the above adjusted Pre-Money Valuation, the “Sales Revenue Adjustment”. (c) If the Net Loss of 2017 is more than the Qualified Net Loss (such Net Loss of 2017, the “Non-Qualified Net Loss”, and the difference between the Non-Qualified Net Loss and the Qualified Net Loss, the “Net Loss Difference”), the holders of at least fifty percent (50%) of the then issued and outstanding Series B Preferred Shares (including Sequoia and LYFE as long as they hold any Series B Preferred Share) is entitled to request the Pre-Money Valuation to be immediately adjusted according to the following formula by serving a written notice upon the Company: the adjusted Pre-Money Valuation = the Initial Pre-Money Valuation – 10 × the Net Loss Difference. For the purpose of this Section 6.136.14, the decrease from the Initial Pre-Money Valuation to the above adjusted Pre-Money Valuation, the “Net Loss Adjustment”. (d) For avoidance of doubt, the Sales Revenue Adjustment and the Net Loss Adjustment set forth in Section 6.13(b6.14(b) and Section 6.13(c6.14(c) above are cumulative with each other, and not in lieu thereof. Therefore, in the event of occurrence of the Sales Revenue Adjustment and/or the Net Loss Adjustment, the Pre-Money Valuation shall be immediately adjusted according to the following formula: the adjusted Pre-Money Valuation (the “Adjusted Pre-Money Valuation”) = the Initial Pre-Money Valuation – the Sales Revenue Adjustment (if any) – the Net Loss Adjustment (if any). (e) In the event of occurrence of the Sales Revenue Adjustment and/or the Net Loss Adjustment, each the Investor is entitled to request the Company to issue additional new Series B Preferred Shares at nil consideration such that after the new issuance the total number of Series B Preferred Shares held by such the Investor is adjusted according to the following formula: total number of Series B Preferred Shares held by such the Investor immediately after the adjustment = total number of Series B Preferred Shares held by such the Investor immediately prior to the adjustment × the Pre-Money Valuation / the Adjusted Pre-Money Valuation, and further, the Series B Preferred Issue Price with respect to such the Investor as defined in the Amended M&A shall also be adjusted and amended according to the following formula: Series B Preferred Issue Price immediately after such adjustment = Series B Preferred Issue Price (as defined in the Amended M&A) / the Pre-Money Valuation × the Adjusted Pre-Money Valuation. (f) If (i) the Sales Revenue of 2017 is no less than RMB190,000,000, and (ii) the ratio of the Net Loss of 2017 to the Sales Revenue of 2017 is no more than the ratio of the Qualified Net Loss to the Qualified Sales Revenue, each of the Parties hereby agrees that, additional Ordinary Shares shall be reserved for issuance under the Option Plan and additional Ordinary Shares shall be issued to the Holding Entity at nil consideration, which results that (i) the shareholding percentage of the total Ordinary Shares reserved for issuance under the Option Plan in the Company on a fully-diluted and as-converted basis shall be increased by 0.5% immediately after the foregoing reservation and issuance; (ii) the shareholding percentage of the Holding Entity then in the Company on a fully-diluted and as-converted basis shall remain the same as that immediately prior to the foregoing reservation and issuance, and (iii) the shareholding percentage of the Preferred Shareholders (other than the Holding Entity) then in the Company on a fully-diluted and as-converted basis shall be diluted on a pro rata basis as a result of the foregoing reservation and issuance.