Common use of Performance Target Clause in Contracts

Performance Target. The Founder Parties hereby covenant to the following performance targets for the Group Companies on a consolidated basis under GAAP: (i) no net loss is recorded for the fourth quarter (Q4) of 2018 (the “2018 Performance Target”); and (ii) the revenue growth for the calendar year of 2019 is 10% or higher compared to revenues in calendar year 2018, and the net profits exceed US$1,500,000 during calendar year of 2019 (the “2019 Performance Target”). If the Group Companies failed to reach the 2018 Performance Target, the Founder Parties shall refrain from exercising any portion of the Annual Sales Quota. If, however, the Group Companies reached the above 2019 Performance Target, regardless whether the Group Companies reached the above 2018 Performance Target, the Founder Parties shall be entitled to exercise the Annual Sales Quota accumulated after the Conversion through the date of confirmation of the 2019 Performance Target. Furthermore, if the Group Companies continued to fail to reach the above 2018 and 2019 Performance Targets, the Founder Parties shall refrain from exercising any portion of the Annual Sales Quota (i.e. 1/3 of the Issued ADSs), unless during the following year (i.e. the calendar year of 2020), the Group Companies see growth in revenue and net profits respectively of at least 10% based on the previous target (which shall mean that the net profits exceeded US$1,650,000) (the “2020 Performance Target”), in which case the Founder Parties shall no longer be subject to any Annual Sales Quota after calendar year 2020. For avoidance of doubt, the Founder Parties are entitled to sell 100% of their ADSs if the 2020 Performance Target is reached, subject to compliance with the limitations on sale under Rule 144 of the Securities Act. If, however, the Group Companies failed to reach the 2020 Performance Target, thereafter the Group Companies shall be subject to a performance target further increased in a similar manner, and the Founder Parties shall continue to refrain from exercising any portion of the Annual Sales Quota.