SFWL Shengfeng Development Ltd

As filed with the U.S. Securities and Exchange Commission on August 4, 2023

Registration No. 333-            

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

SHENGFENG DEVELOPMENT LIMITED

(Exact name of registrant as specified in its charter)

 

Cayman Islands		4210		Not Applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

Shengfeng Building, No. 478 Fuxin East Road

Jin’an District, Fuzhou City

Fujian Province, People’s Republic of China, 350001

+86-591-83672798

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

212-947-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

With a Copy to:

 

Ying Li, Esq. Lisa Forcht, Esq. Hunter Taubman Fischer & Li LLC 950 Third Avenue, 19th Floor New York, NY 10022 212-530-2206

David E. Danovitch Aaron M. Schleicher Sullivan & Worcester LLP 1633 Broadway New York, NY 10019 212-660-3060

 

Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933

 

Emerging growth company ☒

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. 

 

 

 

The information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED AUGUST 4, 2023

 

 

 

SHENGFENG DEVELOPMENT LIMITED

 

Up to 8,000,000 Units (each Unit contains One Class A Ordinary Share and One

Warrant to Purchase One Class A Ordinary Share)

 

Up to 8,000,000 Class A Ordinary Shares Underlying the Warrants

 

We are offering in a best-efforts offering up to 8,000,000 units (the “Units”), with each Unit consisting of one Class A ordinary share, or “Class A Ordinary Share” and one warrant to purchase one Class A Ordinary Share(s) (the “Warrant”) at an assumed public offering price of $7.50 per Unit. Each Class A Ordinary Share is being sold together with one Warrant. Each share exercisable pursuant to the Warrants will have an exercise price per share of $8.25, equal to 110% of the public offering price per Unit in this offering. The Warrants will be immediately exercisable and will expire on the 5^th anniversary of the original issuance date. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The Class A Ordinary Shares and related Warrants are immediately separable and will be issued separately in this offering.

 

Our Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “SFWL.” On July 11, 2023, the closing trading price of our Class A Ordinary Shares, as reported on the Nasdaq Capital Market, was $9.15 per Class A Ordinary Share. There is no established public trading market for the Warrants, and we do not expect a market to develop. We do not intend to apply to list the Units or the Warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Warrants will be limited.

 

The number of Units offered in this prospectus and all other applicable information has been determined based on an assumed public offering price of $7.50 per Unit. The public offering price per Unit is an assumed price only. The actual number of Units sold in the offering and actual public offering price per Unit will be determined between us, the placement agent and purchasers based on market conditions at the time of pricing and may be at a discount to the current market price of our Class A Ordinary Shares. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the actual public offering price. The assumed public offering price is used so that we can provide certain disclosures, which require a calculation based on the public offering price.

 

Because there is no minimum offering amount required as a condition to closing this offering, we may sell fewer than all of the Units offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of Units sufficient to pursue the business goals outlined in this prospectus. Because there is no minimum offering amount, investors could be in a position where they have invested in our company, but we are unable to fulfill our objectives due to a lack of interest in this offering. Also, any proceeds from the sale of Units offered by us will be available for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan. See “Risk Factors” on page 24 and “Item 3. Key Information — D. Risk Factors” in our annual report on Form 20-F for the year ended December 31, 2022 for more information. We intend to complete one closing of this offering but may undertake one or more additional closings for the sale of the additional Units to the investors in the initial closing. We expect to hold an initial closing on [●], 2023, but the offering will be terminated by [●], 2023, provided that the closing(s) of the offering for all of the Units have not occurred by such date, and may be extended by written agreement of the Company and the placement agent. Any extensions or material changes to the terms of the offering will be contained in an amendment to this prospectus.

 

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 24 and “Item 3. Key Information — D. Risk Factors” in our annual report on Form 20-F for the year ended December 31, 2022 for a discussion of information that should be considered in connection with an investment in our securities.

 

Unless otherwise stated, as used in this prospectus, the terms “we,” “us,” “our,” “Shengfeng Cayman,” “our Company,” and the “Company” refer to Shengfeng Development Limited, a Cayman Islands exempted company, and the terms “Shengfeng Logistics” or the “VIE” refer to Shengfeng Logistics Group Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China (the “PRC”).

 

 

Shengfeng Development Limited, or “Shengfeng Cayman,” is a holding company incorporated under the laws of the Cayman Islands and it is not a Chinese operating company. As a holding company with no material operations of its own, its operations are conducted through our subsidiary in China, the VIE, and the VIE’s subsidiaries. The Units being offered hereunder are those of the offshore holding company in the Cayman Islands, Shengfeng Cayman. You are not investing in Shengfeng Logistics, the VIE, or the VIE’s subsidiaries. For accounting purposes, we control and receive the economic benefits of the VIE and the VIE’s subsidiaries’ business operations through certain contractual arrangements (the “VIE Agreements”), which enables us to consolidate the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statement under generally accepted accounting principles in the United States, or U.S. GAAP. Neither we nor our subsidiaries own any equity interests in the VIE or the VIE’s subsidiaries. As an investor in this offering, you may be subject to unique risks due to our VIE structure. The contractual arrangements are designed to provide our wholly owned subsidiary, Tianyu Shengfeng Logistics Group Co., Ltd., or “Tianyu” or “WFOE,” with the power, rights, and obligations to Shengfeng Logistics, including control rights and the rights to the assets, property, and revenue of the VIE, as set forth under the VIE Agreements. We have evaluated the guidance issued by the Financial Accounting Standards Board, or the “FASB,” in FASB ASC 810 and determined that we are regarded as the primary beneficiary of the VIE, for accounting purposes, as a result of our direct ownership in Tianyu and the provisions of the VIE Agreements. Accordingly, we treat the VIE and the VIE’s subsidiaries as our consolidated entities under U.S. GAAP. We have consolidated the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. The VIE structure is used to provide contractual exposure to foreign investment in China-based companies, as Chinese law prohibits direct foreign investment in the domestic express mail business sector, which is a sector we do not currently engage in, as of the date of this prospectus, but may choose to do so in the future. Our VIE Agreements have not been tested in a court of law in China, as of the date of this prospectus.

 

Shengfeng Cayman transfers cash to its wholly-owned Hong Kong subsidiary, Shengfeng Holding Limited, or “Shengfeng HK”, by making capital contributions or providing loans, and the Hong Kong subsidiary transfers cash to the subsidiary in China by making capital contributions or providing loans to it. Because Shengfeng Cayman consolidates the financial statements of the VIE under the U.S. GAAP in reliance upon contractual arrangements and is regarded as the primary beneficiary of the VIE for accounting purposes, Shengfeng Cayman’s subsidiaries are not able to make direct capital contributions to the VIE and their subsidiaries. However, Shengfeng Cayman’s subsidiaries may transfer cash to the VIE by making loans or by payments to the VIEs for inter-group transactions.

 

We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. As of the date of this prospectus, none of our subsidiaries, nor the consolidated VIE and VIE’s subsidiaries have made any dividends or distributions, or any other transfers, including cash transfers to our Company. See “Prospectus Summary — Consolidating Schedule” and our consolidated financial statements.

 

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amounts, provided that in no circumstance may a dividend be paid if such payment would result in the company being unable to pay its debts due in the ordinary course of business. If we determine to pay dividends on any of our Class A Ordinary Shares or Class B Ordinary Shares in the future, in the absence of available profits or share premium, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, Shengfeng HK.

 

Current PRC regulations permit our PRC subsidiary to pay dividends to Shengfeng HK only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our Affiliated Entities (defined herein) in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other things, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Furthermore, if our Affiliated Entities in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our PRC subsidiary is unable to receive all of the revenue from the operations of the VIE and the VIE’s subsidiaries, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares, should we desire to do so in the future.

 

Cash dividends, if any, on our Class A Ordinary Shares or Class B Ordinary Shares would be paid in U.S. dollars. Shengfeng HK may be considered a non-resident enterprise for tax purposes, so that any dividends Tianyu pays to Shengfeng HK may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10%. See “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation” in our annual report on Form 20-F for the year ended December 31, 2022.

 

In order for us to pay dividends to our shareholders, we will rely on payments made from Shengfeng Logistics to Tianyu, pursuant to contractual arrangements between such parties, and the distribution of such payments to Shengfeng HK as dividends from Tianyu. Certain payments from Shengfeng Logistics to Tianyu are subject to PRC taxes, including Value-Added Tax. If Shengfeng Logistics or the VIE’s subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict any such party’s ability to pay dividends or make other distributions to us. See “Prospectus Summary— Dividend Distributions, Cash Transfer, and Tax Consequences.”

 

We conduct substantially all of our business in China through the VIE, Shengfeng Logistics, and the VIE’s subsidiaries. Substantially all of Shengfeng Development Limited’s revenues, costs and net income in China are directly or indirectly generated through the VIE and the VIE’s subsidiaries. We maintain our bank accounts and balances primarily in licensed banks in mainland China. In addition, cash transfers from our Cayman Islands holding company are subject to applicable PRC laws and regulations on loans and direct investment. For restrictions and limitations on our ability to distribute earnings to our Cayman Islands holding company and the investors, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiary and to make loans to Shengfeng Logistics, which could materially and adversely affect our liquidity and our ability to fund and expand our business” in our annual report on Form 20-F for the year ended December 31, 2022 and “Use of Proceeds.” In addition, current PRC regulations permit our PRC subsidiary to pay dividends to its shareholders only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. For details, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business” in our annual report on Form 20-F for the year ended December 31, 2022.

 

  

If needed, cash can be transferred between our holding company and its subsidiaries through intercompany fund advances, and there are currently no restrictions on transferring funds between our Cayman Islands holding company and its subsidiaries in Hong Kong and mainland China, other than certain restrictions and limitations imposed by the PRC government. Under existing PRC foreign exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or “SAFE,” by complying with certain procedural requirements. Therefore, our PRC subsidiary is able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however, required where the RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Current PRC regulations permit our PRC subsidiary to pay dividends to shareholders only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. See “Item 3. Key Information — D. Risk Factors—Risks Relating to Doing Business in the PRC—Governmental control of currency conversion may affect the value of your investment and our payment of dividends” and “Item 3. Key Information — D. Risk Factors—Risks Relating to Doing Business in the PRC — Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business” in our annual report on Form 20-F for the year ended December 31, 2022. For the fiscal years ended December 31, 2022, 2021 and 2020, no cash transfers, dividends, or distributions have occurred among our Company, our subsidiaries, and the VIE. As of the date of this prospectus, none of our subsidiaries or the VIE have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders.

 

Our Class A Ordinary Shares offered in this offering are shares of our offshore holding company in the Cayman Islands instead of shares of the VIE or the VIE’s subsidiaries in China, therefore, you will not directly hold equity interests in the VIE or the VIE’s subsidiaries, and you may never directly hold equity interests in the VIE or the VIE’s subsidiaries through your investment in this offering. For a description of the VIE contractual arrangements, see “Corporate History and Structure—Our VIE Arrangements.”

 

Because of our corporate structure, we do not directly hold equity interests in the VIE and the VIE’s subsidiaries, and we are subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including, but not limited to, limitations on foreign ownership of businesses covered by the Special Measures for Foreign Investment Access (2021 version), regulatory review of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations and the value of our Class A Ordinary Shares, including risks that could cause the value of our Class A Ordinary Shares to significantly decline or become worthless.

 

Our VIE Agreements may not be effective in providing control over Shengfeng Logistics and the VIE’s subsidiaries. We may also be subject to sanctions imposed by PRC regulatory agencies, including the Chinese Securities Regulatory Commission, or CSRC, if we fail to comply with their rules and regulations. Additionally, the VIE Agreements may not be enforceable in China if the PRC government authorities or courts take a view that such VIE Agreements contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event that we are unable to enforce these VIE Agreements, we may not be able to exert effective control over Shengfeng Logistics, and our ability to conduct our business may be materially and adversely affected. See “Risk Factors — Risks Relating to Our Corporate Structure,” “Risk Factors — Risks Relating to Doing Business in the PRC,” “Risk Factors — Risks Relating to This Offering” and “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Corporate Structure,” “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC,” “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Class A Ordinary Shares and the Trading Market” in our annual report on Form 20-F for the year ended December 31, 2022 for more information. In particular, see “Risk Factors — Risks Relating to Our Corporate Structure — If the PRC government deems that the contractual arrangements in relation to the VIE do not comply with applicable PRC law or PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” “Risk Factors — Risks Relating to Our Corporate Structure — Our VIE Agreements with Shengfeng Logistics and the Shengfeng Logistics Shareholders may not be effective in providing control over Shengfeng Logistics,” “Risk Factors — Risks Relating to Doing Business in the PRC —PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us. Any changes in such laws and regulations may impair our ability to operate profitably,” “Risk Factors — Risks Relating to Doing Business in the PRC — We may be required to obtain permission from Chinese authorities (i) to issue our Class A Ordinary Shares to foreign investors in this offering and/or (ii) for the VIE’s operations, and if either or both are required and we are not able to obtain such permission in a timely manner, the securities currently being offered may substantially decline in value and become worthless,” and “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — The approval of the China Securities Regulatory Commission, or the “CSRC,” may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for this offering” in our annual report on Form 20-F for the year ended December 31, 2022.

 

 

We are subject to certain legal and operational risks associated with the VIE’s operations in China. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in the VIE’s operations, significant depreciation of the value of our Class A Ordinary Shares, or a significantly limit or complete hindrance of our ability to offer or continue to offer our securities to investors. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using the variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. We believe we are not subject to cybersecurity review by the Cyberspace Administration of China, or “CAC,” pursuant to the Cybersecurity Review Measures, which were jointly promulgated by the CAC and other relevant PRC governmental authorities on December 28, 2021 and became effective on February 15, 2022, because (i) we presently maintain fewer than one (1) million individual clients in their business operations as of the date of this prospectus; and (ii) data processed in the VIE’s business is less likely to have a bearing on national security, thus it may not be classified as core or important data by the authorities. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on a U.S. exchange or other foreign exchange. See “Risk Factors” and “Item 3. Key Information — D. Risk Factors” in our annual report on Form 20-F for the year ended December 31, 2022 for more information. In particular, see “Risk Factors — Risks Relating to Our Business and Our Industry --Our business generates and processes a large quantity of data, and improper handling of or unauthorized access to such data may adversely affect our business. In light of recent events indicating greater oversight by the Cyberspace Administration of China, or CAC, over data security, particularly for companies seeking to list on a foreign exchange, we are subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, our continued listing on Nasdaq, our financial condition, results of operations, and the subsequent offering,” “Risk Factors — Risks Relating to Doing Business in the PRC — We may be required to obtain permission from Chinese authorities (i) to issue our Class A Ordinary Shares to foreign investors in this offering and/or (ii) for the VIE’s operations, and if either or both are required and we are not able to obtain such permission in a timely manner, the securities currently being offered may substantially decline in value and become worthless,” “Risk Factors — Risks Relating to Doing Business in the PRC —PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us. Any changes in such laws and regulations may impair our ability to operate profitably” and “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC —The approval of the China Securities Regulatory Commission, or the “CSRC,” may be required in connection with this offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be able to obtain such approval, in which case we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek the CSRC approval for this offering,” “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — China’s economic, political and social conditions, laws and regulations, as well as possible interventions and influences of any government policies and actions are uncertain and their changes may be quick with little advance notice. Therefore, such uncertainties and changes could have a material adverse effect on our business, operations and the value of our Class A Ordinary Shares” in our annual report on Form 20-F for the year ended December 31, 2022.

 

Furthermore, Our Class A Ordinary Shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the Holding Foreign Companies Accountable Act, or the HFCA Act, if the Public Company Accounting Oversight Board (United States), or the PCAOB, determines that it cannot inspect or fully investigate our auditors for three consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. For example, on December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. As of the date of this prospectus, the Company’s auditor, Friedman LLP (“Friedman”), headquartered in New York, New York, with no branches or offices outside the United States, has been inspected by the PCAOB on a regular basis, with the last inspection in October 2020. Our new auditor, Marcum Asia CPAs LLP (“Marcum Asia”), has been inspected by the PCAOB on a regular basis, with the last inspection in 2020. Neither Friedman nor Marcum Asia is subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed the Statement of Protocol (SOP) Agreements with the China Securities Regulatory Commission (CSRC) and China’s Ministry of Finance. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreements”), establish a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act, or the Accelerating HFCA Act, was signed into law, which amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, legislation titled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to Accelerating HFCA Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Recent joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” rule changes by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering” in our annual report on Form 20-F for the year ended December 31, 2022.

 

 

We are an “emerging growth company” as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 20 of this prospectus for more information.

 

Following the completion of this offering, our largest shareholder will beneficially own approximately 89.62% of the aggregate voting power of our issued and outstanding Class A and Class B Ordinary Shares as a group, assuming the sale of all Units offered hereby. As such, we will be deemed a “controlled company” under Nasdaq Listing Rules 5615(c). However, even if we are deemed to be a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Listing Rules. See “Risk Factors” and “Item 3. Key Information — D. Risk Factors,” “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Controlled Company” in our annual report on Form 20-F for the year ended December 31, 2022.

 

		Per Unit				Total (assuming maximum offering)
Public offering price		$				$
Placement agent fees (1)		$				$
Proceeds, before expenses, to us (2)		$				$

 

(1)	We have agreed to pay Univest Securities, LLC (the “placement agent”) a cash fee of 7.0% of the aggregate gross proceeds raised in this offering, in the event that the offering amount reaches or exceeds $30 million (6.0% if the offering amount is below $30 million). We have also agreed to (i) reimburse the placement agent for certain expenses; and (ii) provide a non-accountable expense allowance equal to 1.0% of the gross proceeds of this offering payable to the placement agent. For a description of compensation payable to the placement agent, see “Plan of Distribution.”
(2)	We estimate the total expenses of this offering payable by us, excluding the placement agent’s fees, will be approximately $1.2 million.

 

We have engaged Univest Securities, LLC as our exclusive placement agent to use its reasonable best efforts to solicit offers to purchase the securities offered by this prospectus (the “Securities”). The placement agent has no obligation to buy any of the Units from us or to arrange for the purchase or sale of any specific number or dollar amount of the Units. Because there is no minimum offering amount required as a condition to closing in this offering the actual public offering amount, the placement agent’s fee, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above and throughout this prospectus. We have agreed to pay the placement agent the placement agent’s fees set forth in the table above and to provide certain other compensation to the placement agent. See “Plan of Distribution” of this prospectus for more information regarding these arrangements.

 

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Placement Agent

 

 

 

Prospectus dated [●], 2023

 

 

TABLE OF CONTENTS  

 

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PROSPECTUS SUMMARY	1
THE OFFERING	22
RISK FACTORS	24
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS	39
ENFORCEABILITY OF CIVIL LIABILITIES	40
USE OF PROCEEDS	41
DIVIDEND POLICY	42
CAPITALIZATION	43
DILUTION	44
CORPORATE HISTORY AND STRUCTURE	45
BUSINESS	51
REGULATIONS	77
RELATED PARTY TRANSACTIONS	91
DESCRIPTION OF SHARE CAPITAL	93
SHARES ELIGIBLE FOR FUTURE SALE	113
PLAN OF DISTRIBUTION	114
EXPENSES RELATING TO THIS OFFERING	122
LEGAL MATTERS	123
EXPERTS	123
WHERE YOU CAN FIND ADDITIONAL INFORMATION	123
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE	124

 

 

About this Prospectus

 

Neither we nor the placement agent have authorized anyone to provide any information or to make any representations other than those contained in or incorporated by reference into this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell the Class A Ordinary Shares and the Warrants offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for the Class A Ordinary Shares and the Warrants is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

 

Neither we nor the placement agent have taken any action to permit this offering of the Class A Ordinary Shares and the Warrants outside the United States or to permit the possession or distribution of this prospectus or any filed free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Class A Ordinary Shares and the Warrants and the distribution of this prospectus or any filed free-writing prospectus outside the United States.

 

Conventions that Apply to this Prospectus

 

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

 

	●	“Affiliated Entities” are to our subsidiaries and Shengfeng Logistics (defined below) and the VIE’s subsidiaries (defined below);
	●	“China” or the “PRC” are to the People’s Republic of China, and “mainland China”, unless otherwise specified herein, are to the People’s Republic of China excluding, for the purpose of this prospectus only, Taiwan, the Hong Kong Special Administrative Region, and the Macau Administrative Region;
	●	“Class A Ordinary Shares” are to Class A ordinary shares of Shengfeng Cayman (defined below), par value $0.0001 per share;
	●	“Class B Ordinary Shares” are to Class B ordinary shares of Shengfeng Cayman, par value $0.0001 per share;
	●	“Nasdaq” are to the Nasdaq Stock Market LLC;
	●	“Our subsidiaries” are to Shengfeng HK (defined below) and Tianyu (defined below), each a subsidiary of Shengfeng Cayman;
	●	“RMB” are to the legal currency of China;
	●	“SEC” are to the U.S. Securities and Exchange Commission;
	●	“Shengfeng HK” are to our wholly owned subsidiary, Shengfeng Holding Limited, a Hong Kong corporation;
	●	“Shengfeng Logistics” or “the VIE” are to Shengfeng Logistics Group Co., Ltd., a limited liability company organized under the laws of the PRC, which we control via a series of contractual arrangements among Tianyu (defined below), Shengfeng Logistics, and shareholders of Shengfeng Logistics;
	●	“Shengfeng WFOE,” “Tianyu,” or “our PRC subsidiary” are to Tianyu Shengfeng Logistics Group Co., Ltd., formerly known as Fujian Tianyu Shengfeng Logistics Co., Ltd., a limited liability company organized under the laws of the PRC, which is wholly owned by Shengfeng HK;
	●	“U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States;
	●	“VIE’s subsidiaries” are to the 30 subsidiaries of Shengfeng Logistics as listed in the section entitled “Prospectus Summary;”
	●	“we,” “us,” “our,” “Shengfeng Cayman,” “our Company,” or the “Company” are to Shengfeng Development Limited, an exempted company with limited liability incorporated under the laws of Cayman Islands; and
	●	“WFOE” are to wholly foreign-owned enterprise.

 

Our business is conducted by Shengfeng Logistics, the VIE in the PRC, and the VIE’s subsidiaries and branch offices, using RMB. Our consolidated financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in U.S. dollars. These dollar references are based on the exchange rate of RMB to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars). 

 

 

 

 

 

 

 

 

 

 

RISK FACTORS

 

An investment in our Class A Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Class A Ordinary Shares, you should carefully consider the risk factors set forth in our most recent Annual Report on Form 20-F for the fiscal year ended December 31, 2022 on file with the SEC, which is incorporated by reference into this prospectus, as well as the following risk factors, which augment the risk factors set forth in our most recent Annual Report. Before making an investment decision, you should carefully consider these risks as well as other information we include or incorporate by reference in this prospectus. The risks and uncertainties not presently known to us or that we currently deem immaterial may also materially harm our business, operating results and financial condition and could result in a complete loss of your investment.

 

Risks Relating to Our Business and Our Industry

 

Our business generates and processes a large quantity of data, and improper handling of or unauthorized access to such data may adversely affect our business. In light of recent events indicating greater oversight by the Cyberspace Administration of China, or CAC, over data security, particularly for companies seeking to list on a foreign exchange, we are subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, our continued listing on Nasdaq, our financial condition, results of operations, and the subsequent offering.

 

Our business involves collecting and retaining certain internal and end customer personal data. For example, our PRC Subsidiaries collect end customer’s personal information in the ordinary course of business. We and our PRC Subsidiaries also maintain information about various aspects of our operations as well as regarding our employees. The integrity and protection of our customers, employees and company data is critical to our business. Our customers and employees expect that we and our PRC Subsidiaries will adequately protect their personal information. We and our PRC Subsidiaries are required by applicable laws to keep strictly confidential the personal information that we and our and our PRC Subsidiaries collect, and to take adequate security measures to safeguard such information. However, we face risks related to complying with applicable laws, rules, and regulations relating to the collection, use, disclosure, and security of personal information, as well as any requests from regulatory and government authorities relating to such data. We could be subject to cybersecurity review in the future.

 

The PRC regulatory and enforcement regime with regard to data security and data protection has continued to evolve. There are uncertainties on how certain laws and regulations will be implemented in practice. PRC regulators have been increasingly focused on regulating data security and data protection. We expect that these areas will receive greater attention from regulators, as well as attract public scrutiny and attention going forward. This greater attention, scrutiny, and enforcement, including more frequent inspections, could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, our reputation and results of operations could be materially and adversely affected.

 

The Cybersecurity Law, which was adopted by the National People’s Congress on November 7, 2016 and came into force on June 1, 2017 provide that network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. The Cybersecurity Law also provides that personal information and important data collected and generated by a critical information infrastructure operator (“CIIO”) in the course of its operations in China must be stored in China. Due to the lack of further interpretations, the exact scope of what constitute a “CIIO” remains unclear. 

 

 

On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law which took effect in September 2021. The Data Security Law requires that data shall not be collected by theft or other illegal means, and it also provides that a data classification and hierarchical protection system. The data classification and hierarchical protection system protects data according to its importance in economic and social development, and the damages it may cause to national security, public interests, or the legitimate rights and interests of individuals and organizations if the data is falsified, damaged, disclosed, illegally obtained or illegally used, which protection system is expected to be built by the state for data security in the near future. In addition, on November 14, 2021, CAC published the Administration Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft)” and accepted public comments until December 13, 2021. The Cyber Data Security Measure (Draft) provides that data processors shall apply for cybersecurity review under certain circumstances, such as mergers, restructurings, divisions of internet platform operators that hold large amount of data relating to national security, economic development or public interest which affects or may affect the national security, overseas listings of data processors that process personal data for more than one million individuals, Hong Kong listings of data processors that affect or may affect national security, and other data processing activities that affect or may affect the national security. In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of each year.

 

On December 28, 2021, the CAC, the NDRC, the Ministry of Industry and Information Technology, or “MIIT,” the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, the Ministry of Commerce, People’s Bank of China, or “PBOC,” the State Administration for Market Regulation, or “SAMR,” the State Administration of Radio and Television, CSRC, the State Secrecy Administration and the State Cryptography Administration jointly promulgated the Cybersecurity Review Measures, or the “Cybersecurity Review Measures,” which became effective on February 15, 2022. Pursuant to the Cybersecurity Review Measures, if critical information infrastructure operators purchase network products and services, or network platform operators conduct data processing activities that affect or may affect national security, they will be subject to cybersecurity review. A network platform operator holding more than one million users/users’ individual information also shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments and risk of network data security after going public overseas. The Cybersecurity Review Measures also provide the following key points: (i) companies who are engaged in data processing are also subject to the regulatory scope; (ii) the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism; and (iii) the risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity review process.

 

On July 7, 2022, the CAC published the Outbound Data Transfer Security Assessment Measures (the “Outbound Data Transfer Security Assessment Measures”), which became effective on September 1, 2022, specifies the circumstances in which data processors providing data outbound shall apply for outbound data transfer security assessment coordinated by the CAC, and applies to: (i) any data processor that transfers important data overseas; (ii) any critical information infrastructure operator or data processor that processes personal information of over 1 million people and provides such personal information overseas; (iii) any data processor that provides personal information overseas and has already provided personal information of more than 100,000 people or sensitive personal information of more than 10,000 people overseas since January 1st of the previous year and; and (iv) other circumstances under which the data cross-border transfer security assessment is required as prescribed by the CAC. However, the Outbound Data Transfer Security Assessment Measures do not clarify the other circumstances under which the CAC would require the outbound data transfer security assessment, which leaves additional uncertainty in its application and enforcement. If we are deemed to be a data handler providing important data outbound, we could be subject to the outbound data security assessment with the national Cyberspace Administration as mentioned above. As of the date of this prospectus, we believe we do not meet the circumstances mentioned above that would require an application for a security assessment for outbound data transfer to the CAC.

 

 

As of the date of this prospectus, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity review by the CAC. We also believe we are not subject to the cybersecurity review by the CAC for this offering, given that: (i) we presently possesses personal information of less than one (1) million individual users in our business operations as of the date of this prospectus; and (ii) each of our PRC Subsidiaries is not a CIIO, as neither of them has been notified by the competent PRC government authorities for such purposes; and (iii) data processed in our business is less likely to have a bearing on national security, thus it may not be classified as core or important data by the authorities.  However, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to take all reasonable measures and actions to comply. We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws should they be deemed applicable to our operations. We may be required to suspend new user registration in China or experience other disruptions to our operations should we be required to have a cybersecurity review by the CAC. Any cybersecurity review could also result in negative publicity with respect to our Company, diversion of our managerial and financial resources, and decrease in value of our Class A Ordinary Shares. There is no certainty as to how such review or prescribed actions would impact our operations and we cannot guarantee that any clearance can be obtained or any actions that may be required can be taken in a timely manner, or at all.  For instance, if we or any of our PRC Subsidiaries are deemed to be a critical information infrastructure operator or if the number of individual end customers in our business operations increases to or even exceeds one (1) million, we and/or our PRC Subsidiaries may be still required to undertake a cybersecurity review by the CAC, and if so, we or our PRC Subsidiaries may not be able to pass such review in relation to this offering in a timely manner or at all. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which could materially and adversely affect our business and impede our ability to continue our operations.

  

We, through the VIE and the VIE’s subsidiaries, currently offer our mobile and desktop applications in China, and use authorization systems which granted different users with different access authority based on their positions and roles, to protect personal information in our system for data security protection. Although we have taken measures to protect personal information and privacy in our systems and platforms, we can provide no assurance that the measures we have taken are effective and that our systems and platforms are not subject to data breach. The regulatory requirements with respect to cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations, and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of our operations, among other things.

 

We also grant limited access to specified data on our technology platform to certain other ecosystem participants. These third parties face the same challenges and risks inherent in handling and protecting large volumes of data. Any system failure or security breach or lapse on our part or on the part of any of such third parties that results in the release of user data could harm our reputation and brand and, consequently, our business, in addition to exposing us to potential legal liability.

 

See “Regulations—Regulations relating to Internet Information Security and Privacy Protection.”

 

Risks Relating to Our Corporate Structure

 

Our corporate structure, in particular the VIE Agreements with Shengfeng Logistics and the Shengfeng Logistics Shareholders, together holding 100% of the shares in Shengfeng Logistics, are subject to significant risks, as set forth in the following risk factors.

 

If the PRC government deems that the contractual arrangements in relation to the VIE do not comply with applicable PRC law or PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

 

We currently operate our business through Shengfeng Logistics, a VIE, pursuant to the VIE Agreements, and the VIE’s subsidiaries. As a result of these contractual arrangements, under generally accepted accounting principles in the United States, or “U.S. GAAP,” the assets and liabilities of Shengfeng Logistics are treated as our assets and liabilities and the results of operations of Shengfeng Logistics are treated in all aspects as if they were the results of our operations.

 

 

In the opinion of our PRC counsel, based on its understandings of the relevant PRC laws and regulations, (i) the ownership structures of Shengfeng Logistics in China and Tianyu, our wholly owned subsidiary in China, both currently and immediately after giving effect to this offering, are not in violation of applicable PRC laws and regulations currently in effect; and (ii) each of the contracts among Tianyu, Shengfeng Logistics, and the Shengfeng Logistics Shareholders is legal, valid, binding, and enforceable in accordance with its terms and applicable PRC laws. However, our PRC counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. In addition, our VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Accordingly, the PRC regulatory authorities may ultimately take a view contrary to the opinion of our PRC counsel in the future. It is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or, if adopted, what they would provide. Furthermore, it is uncertain whether any future actions by the government of China will significantly affect the enforceability of the VIE Agreements.

 

If (i) the applicable PRC authorities invalidate the VIE Agreements for violation of PRC laws, rules and regulations, (ii) the VIE or its shareholders terminate the contractual arrangements (iii) the VIE or its shareholders fail to perform their respective obligations under such VIE Agreements, or (iv) if these regulations change or are interpreted differently in the future, our business operations in China would be materially and adversely affected, and the value of our Class A Ordinary Shares would substantially decrease or even become worthless. Further, if we fail to renew such VIE Agreements upon their expiration, we would not be able to continue our business operations unless the then current PRC law allows us to directly operate businesses in China.

 

In addition, if the VIE or the VIE’s subsidiaries or all or part of their respective assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If any of the VIE or the VIE’s subsidiaries undergoes a voluntary or involuntary liquidation proceeding, its respective shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business and our ability to generate revenue. 

 

All of the VIE Agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. The legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce such VIE Agreements.

 

If our corporate structure and the VIE Agreements are determined to be illegal or invalid by a PRC court, arbitral tribunal, or regulatory authorities, we may lose control of the VIE and have to modify such structure to comply with regulatory requirements. However, there can be no assurance that we can achieve a structural modification without material disruption to our business. Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, or we or Shengfeng Logistics fails to obtain or maintain any required permits or approvals, the relevant regulatory authorities would have broad discretion in dealing with such violations, including:

 

	●	revoking the business or operating licenses or both of Tianyu or Shengfeng Logistics;
	●	discontinuing or restricting the operations of Tianyu or Shengfeng Logistics;

 

	●	imposing conditions or requirements with which we, Tianyu, or Shengfeng Logistics may not be able to comply;
	●	requiring us, Tianyu, or Shengfeng Logistics to change our corporate structure and contractual arrangements;
	●	restricting or prohibiting our use of the proceeds from this offering to finance our business and operations in China; and
	●	imposing fines.

 

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of Shengfeng Logistics in our consolidated financial statements, if the PRC government authorities were to find our legal structure and VIE Agreements to be in violation of PRC laws and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of Shengfeng Logistics or our right to receive substantially all the economic benefits and residual returns from Shengfeng Logistics and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of Shengfeng Logistics in our consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, would have a material adverse effect on our financial condition and results of operations.

 

 

Furthermore, if the PRC government determines that the contractual arrangements constituting part of our VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, our Class A Ordinary Shares may decline in value or become worthless if we are unable to assert our contractual control rights over the assets of the VIE and the VIE’s subsidiaries that conduct substantially all of our operations in China. 

 

Our VIE Agreements with Shengfeng Logistics and the Shengfeng Logistics Shareholders may not be effective in providing control over Shengfeng Logistics.

 

Shengfeng Development Limited is a holding company incorporated under the laws of the Cayman Islands and it is not a Chinese operating company. As a holding company with no material operations of its own, its operations have been conducted in China by its subsidiaries and through contractual arrangements, or VIE Agreements, with a VIE, Shengfeng Logistics, and the VIE’s subsidiaries. For accounting purposes, we control and receive the economic benefits of the VIE and the VIE’s subsidiaries’ business operations through the VIE Agreements, which enable us to consolidate the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statement under U.S. GAAP. Neither we nor our subsidiaries own any equity interests in the VIE or the VIE’s subsidiaries. As an investor in this offering, you may be subject to unique risks due to our VIE structure. The VIE Agreements are designed to provide our wholly owned subsidiary, Tianyu, with the power, rights, and obligations to Shengfeng Logistics, including control rights and the rights to the assets, property, and revenue of the VIE, as set forth under the VIE Agreements. Our VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. We have evaluated the guidance in FASB ASC 810 and determined that we are regarded as the primary beneficiary of the VIE, for accounting purposes, as a result of our direct ownership in Tianyu and the provisions of the VIE Agreements. Accordingly, we treat the VIE and the VIE’s subsidiaries as our consolidated entities under U.S. GAAP. We have consolidated the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

 

Our Class A Ordinary Shares offered in this offering are shares of our offshore holding company in the Cayman Islands instead of shares of the VIE or the VIE’s subsidiaries in China, therefore, you will not directly hold equity interests in the VIE or the VIE’s subsidiaries, and you may never directly hold equity interests in the VIE or the VIE’s subsidiaries through your investment in this offering.

 

We primarily have relied, and expect to continue to rely on the VIE Agreements to control and operate the business of Shengfeng Logistics. However, the VIE Agreements may not be as effective in providing us with the necessary control over Shengfeng Logistics and its operations. For example, Shengfeng Logistics and the Shengfeng Logistics Shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of Shengfeng Logistics, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of Shengfeng Logistics, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current VIE Agreements, we rely on the performance by Shengfeng Logistics and the Shengfeng Logistics Shareholders of their respective obligations under the contracts to exercise control over Shengfeng Logistics. As of the date of this prospectus, Shengfeng Logistics is owned by Fujian Yunlian Shengfeng Industry Co., Ltd. as to 54.58%, Yongxu Liu, our chief executive officer, chairman of the board and president, as to 30.99%, and the other Shengfeng Logistics Shareholders who collectively own 14.43% of the VIE. Fujian Yunlian Shengfeng Industry Co., Ltd. is 90% owned by Yongxu Liu. As a result, Mr. Liu directly and indirectly owns 80.12% of Shengfeng Logistics. The Shengfeng Logistics Shareholders may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the VIE Agreements with Shengfeng Logistics. Furthermore, failure of the VIE shareholders to perform certain obligations could compel the Company to rely on legal remedies available under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which may not be effective. If any disputes relating to these contracts remain unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation, and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system and the Company may incur substantial costs to enforce the terms of such contracts. Therefore, our VIE Agreements with Shengfeng Logistics and the Shengfeng Logistics Shareholders may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be. Additionally, our VIE Agreements have not been tested in a court of law in China, as of the date of this prospectus, and may not be effective in providing control over the VIE. We are, therefore, subject to risks due to the uncertainty of the interpretation and application of the laws and regulations of the PRC, regarding the VIE and the VIE structure, including, but not limited to, regulatory review of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangements with the VIE. The VIE Agreements may not be enforceable in China if the PRC government authorities or courts take a view that such VIE Agreements contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event that we are unable to enforce the VIE Agreements, we may not be able to exert effective control over Shengfeng Logistics, and our ability to conduct our business may be materially and adversely affected.

 

 

Our VIE Agreements are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under these contractual arrangements.

 

As our VIE Agreements are governed by PRC laws and provide for the resolution of disputes through arbitration in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. Disputes arising from the VIE Agreements will be resolved through arbitration in the PRC, although these disputes do not include claims arising under the United States federal securities law and thus do not prevent you from pursuing claims under the United States federal securities law. The legal environment in the PRC is not as developed as in the United States. As a result, uncertainties in the PRC legal system could further limit our ability to enforce these contractual arrangements, through arbitration, litigation, and other legal proceedings remain in the PRC, which could limit our ability to enforce these contractual arrangements and exert effective control over Shengfeng Logistics. Furthermore, these contracts may not be enforceable in the PRC if the PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over Shengfeng Logistics, and our ability to conduct our business may be materially and adversely affected. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. 

 

We may not be able to consolidate the financial results of Shengfeng Logistics or such consolidation could materially and adversely affect our operating results and financial condition.

 

Our business is conducted through Shengfeng Logistics, which currently is considered for accounting purposes as a VIE, and we are considered the primary beneficiary for accounting purposes, enabling us to consolidate the financial results of Shengfeng Logistics in our consolidated financial statements. In the event that in the future Shengfeng Logistics would no longer meet the definition of a VIE, or we are deemed not to be the primary beneficiary for accounting purposes, we would not be able to consolidate line by line its financial results in our consolidated financial statements for PRC purposes. Furthermore, if in the future an affiliate company becomes a VIE and we become the primary beneficiary for accounting purposes, we would be required to consolidate that entity’s financial results in our consolidated financial statements for PRC purposes. If such entity’s financial results were negative, this could have a corresponding negative impact on our operating results for PRC purposes. However, any material variations in the accounting principles, practices, and methods used in preparing financial statements for PRC purposes from the principles, practices, and methods generally accepted in the United States and in the SEC accounting regulations must be discussed, quantified, and reconciled in financial statements for the United States and SEC purposes.

 

The VIE Agreements may result in adverse tax consequences.

 

PRC laws and regulations emphasize the requirement of an arm’s length basis for transfer pricing arrangements between related parties. The laws and regulations also require enterprises with related party transactions to prepare transfer pricing documentation to demonstrate the basis for determining pricing, the computation methodology, and detailed explanations. Related party arrangements and transactions may be subject to challenge or tax inspection by the PRC tax authorizes.

 

 

Under a tax inspection, if our transfer pricing arrangements between Tianyu and Shengfeng Logistics are judged as tax avoidance, or related documentation does not meet the requirements, Tianyu and Shengfeng Logistics may be subject to material adverse tax consequences, such as transfer pricing adjustment. A transfer pricing adjustment could result in a reduction, for PRC tax purpose, of adjustments recorded by Tianyu, which could adversely affect us by (i) increasing Shengfeng Logistics’ tax liabilities without reducing Tianyu’s tax liabilities, which could further result in interest being levied to us for unpaid taxes; or (ii) imposing late payment fees and other penalties on Shengfeng Logistics for the adjusted but unpaid taxes according to the applicable regulations. In addition, if Tianyu requests the Shengfeng Logistics Shareholders to transfer their equity interests in Shengfeng Logistics at nominal or no value pursuant to the VIE Agreements, such transfer may be viewed as a gift and subject Tianyu to PRC income tax. As a result, our financial position could be materially and adversely affected if Shengfeng Logistics’ tax liabilities increase or if it is required to pay late payment fees and other penalties.

 

The Shengfeng Logistics Shareholders have potential conflicts of interest with our Company which may adversely affect our business and financial condition.

 

The Shengfeng Logistics Shareholders may have potential conflicts of interest with us. These shareholders may not act in the best interest of our Company or may breach, or cause Shengfeng Logistics to breach the existing contractual arrangements we have with them and Shengfeng Logistics, which would have a material and adverse effect on our ability to effectively control Shengfeng Logistics and receive economic benefits from it. For example, the shareholders may be able to cause our agreements with Shengfeng Logistics to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our Company or such conflicts will be resolved in our favor. 

 

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our Company, except that we could exercise our purchase option under the exclusive call option agreements with these shareholders to request them to transfer all of their equity interests in Shengfeng Logistics to a PRC entity or individual designated by us, to the extent permitted by PRC law. If we cannot resolve any conflicts of interest or disputes between us and those shareholders, we would have to rely on legal proceedings, which may materially disrupt our business. There is also substantial uncertainty as to the outcome of any such legal proceeding.

  

We rely on the approvals, certificates, and business licenses held by Shengfeng Logistics and any deterioration of the relationship between Tianyu and Shengfeng Logistics could materially and adversely affect our overall business operations.

 

Pursuant to the VIE Agreements, our business in the PRC will be undertaken on the basis of the approvals, certificates, business licenses, and other requisite licenses held by Shengfeng Logistics. There is no assurance that Shengfeng Logistics will be able to renew its licenses or certificates when their terms expire with substantially similar terms as the ones they currently hold.

 

Further, our relationship with Shengfeng Logistics is governed by the VIE Agreements, which are intended to provide us, through our indirect ownership of Tianyu, with effective control over the business operations of Shengfeng Logistics. However, the VIE Agreements may not be effective in providing control over the applications for and maintenance of the licenses required for our business operations. Shengfeng Logistics could violate the VIE Agreements, go bankrupt, suffer from difficulties in its business, or otherwise become unable to perform its obligations under the VIE Agreements and, as a result, our operations, reputation, business, and stock price could be severely harmed.

 

The exercise of our option to purchase part or all of the shares in Shengfeng Logistics under the exclusive call option agreement might be subject to certain limitations and substantial costs.

 

Our exclusive call option agreement with Shengfeng Logistics and the Shengfeng Logistics Shareholders gives Tianyu the option to purchase up to 100% of the shares in Shengfeng Logistics. Such transfer of shares may be subject to approvals from, filings with, or reporting to competent PRC authorities, such as the Ministry of Commerce of the PRC, or “MOFCOM,” the State Administration for Market Regulation, and/or their local competent branches. In addition, the shares transfer price may be subject to review and tax adjustment by the relevant tax authorities. The shares transfer price to be received by Shengfeng Logistics under the VIE Agreements may also be subject to enterprise income tax, and these amounts could be substantial.

 

 

 

Risks Relating to Doing Business in the PRC

  

PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us. Any changes in such laws and regulations may impair our ability to operate profitably.

 

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

 

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The legislation over the past three decades has significantly increased the protection afforded to various forms of foreign or private-sector investment in China. Our PRC Affiliated Entities are subject to various PRC laws and regulations generally applicable to companies in China. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, however, the interpretations of many laws, regulations, and rules are not always uniform and enforcement of these laws, regulations, and rules involve uncertainties.

 

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, however, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

 

For example, recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems, will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure to the CSRC; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. The New Overseas Listing Rules further require Chinese domestic enterprises to complete filings with relevant governmental authorities and report related information under certain circumstances, such as: a) an issuer making an application for initial public offering and listing in an overseas market; b) an issuer making an overseas securities offering after having been listed on an overseas market; and c) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap, transfer of shares or other means. The required filing scope is not limited to the initial public offering, but also includes subsequent overseas securities offering, single or multiple acquisition(s), share swap, transfer of shares or other means to seek an overseas direct or indirect listing and a secondary listing or dual major listing of issuers already listed overseas. If a domestic company fails to complete the required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as orders to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

 

 

According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as the Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic company obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior to March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC. Based on the foregoing, according to our PRC counsel, since our registration statement on Form F-1 was declared effective on March 30, 2023, and we completed our IPO and listing before September 30, 2023, we were not required to complete the filing procedures pursuant to the Trial Measures for our IPO, but will be required to file with the CSRC within three working days after the completion of this offering.

 

On February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions, which were issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies”, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including, but not limited to, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions came into effect and we are not aware of any PRC laws or regulations in effect requiring that we obtain permission from any PRC authorities to issue securities to foreign investors, nor have we received any inquiry, notice, warning, sanction or any regulatory objection to this offering from the CSRC, the CAC, or any other Chinese authorities that have jurisdiction over our operations. However, any failure or perceived failure by the Company, its PRC Subsidiary or the VIE to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime. The Opinions, the Trial Measures, the revised Provisions and any related implementing rules to be enacted may subject us to compliance requirement in the future. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of the Opinions, the Trial Measures or any future implementation rules on a timely basis, or at all.

 

Uncertainties regarding the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk that the Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or the value of our Class A Ordinary Shares or impair our ability to raise money.

 

 

We may be required to obtain permission from Chinese authorities (i) to issue our Class A Ordinary Shares to foreign investors in this offering and/or (ii) for the VIE’s operations, and if either or both are required and we are not able to obtain such permission in a timely manner, the securities currently being offered may substantially decline in value and become worthless.

 

On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the “Opinions.” The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Furthermore, they proposed to take measures, including promoting the construction of relevant regulatory systems to control the risks and handle the incidents from China-based overseas-listed companies. On February 17, 2023, the CSRC promulgated the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure to the CSRC; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. The New Overseas Listing Rules further require Chinese domestic enterprises to complete filings with relevant governmental authorities and report related information under certain circumstances, such as: a) an issuer making an application for initial public offering and listing in an overseas market; b) an issuer making an overseas securities offering after having been listed on an overseas market; and c) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap, transfer of shares or other means. The required filing scope is not limited to the initial public offering, but also includes subsequent overseas securities offering, single or multiple acquisition(s), share swap, transfer of shares or other means to seek an overseas direct or indirect listing and a secondary listing or dual major listing of issuers already listed overseas. If a domestic company fails to complete the required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as orders to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

 

On February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions, which were issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies”, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including, but not limited, to (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have come into effect and we are not aware of any PRC laws or regulations in effect requiring that we obtain permission from any PRC authorities to issue securities to foreign investors, nor have we received any inquiry, notice, warning, sanction or any regulatory objection to this offering from the CSRC, the CAC, or any other Chinese authorities that have jurisdiction over our operations. However, any failure or perceived failure by the Company, its PRC Subsidiary or the VIE to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime The Opinions, the Trial Measures, the revised Provisions and any related implementing rules to be enacted may subject us to compliance requirement in the future. We are currently not required to obtain any permission or approval from Chinese authorities to list on U.S. exchanges nor to execute the VIE Agreements. However, if we inadvertently conclude that such permission or approval is not required, or applicable laws, regulations, or interpretations change and the VIE or the holding company are required to obtain such permission or approval in the future and are denied such permission or approval from the Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchanges or continue to offer securities to investors, which could cause significant depreciation of the price of our Class A Ordinary Shares and materially affect the interest of the investors.

 

 

According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as the Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic company obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior to March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC. Based on the foregoing, according to  our PRC counsel, since our registration statement on Form F-1 was declared effective on March 30, 2023, and we completed our IPO and listing before September 30, 2023, we were not required to complete filing procedures pursuant to the Trial Measures for our IPO, but will be required to file with the CSRC within three working days after the completion of this offering.

 

On February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions, which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions is issued under the title the “Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies”, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including, but not limited to, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Any new rules or regulations promulgated in the future in that regard may impose additional requirements or restrictions on us. If we fail to comply with these regulatory requirements, relevant regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from this offering into China, or even take other actions that could materially and adversely affect our business, financial condition, results of operations, prospects and the trading price of our shares.

 

The Chinese government has exercised and continued to exercise substantial control over virtually every sector of the Chinese economy through regulations and state ownership. Our ability to operate in the PRC may be significantly harmed by changes in its laws and regulations, including those relating to taxation, environment, land use rights, property, cybersecurity and other matters. The central or local governments of these jurisdictions may impose new and stricter regulations or interpretations of existing regulations with little or no advance notice that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including regional or local variations in the implementation of economic policies, could have a significant effect on the economic conditions in China or particular regions thereof, and could result in our divesting ourselves of any interest we then hold in our operations in China.

 

 

Furthermore, it is uncertain when and whether we will be required to obtain permission or approval from the PRC government to list on U.S. exchanges or to execute the VIE Agreements in the future, when such permission will be obtained, if at all, or whether it will be denied or rescinded. Although we are currently not required to obtain permission or approval from any of the PRC central or local governments for the VIE’s operations and/or the Company’s issuance of securities to foreign investors, nor have we received any denial to list on the U.S. exchange or to execute the VIE Agreements, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry. As indicated by the recent statements from the PRC government, the PRC government may take actions to exert more oversight and control over the offerings that are conducted overseas and/or foreign investment in PRC-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or become worthless.

  

Risks Relating to This Offering

  

This is a best efforts offering, no minimum number or dollar amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans.

 

The placement agent has agreed to use its reasonable best efforts to solicit offers to purchase the Units in this offering. The placement agent has no obligation to buy any of the Units from us or to arrange for the purchase or sale of any specific number or dollar amount of the Units. There is no required minimum number of Units that must be sold as a condition to completion of this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent’s fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth above. We may sell fewer than all of the Units offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of Units sufficient to fund our business plan. Thus, we may not raise the amount of capital we believe is required for our operations in the short-term and may need to raise additional funds, which may not be available or available on terms acceptable to us.

 

Because there is no minimum required for the offering to close, investors in this offering will not receive a refund in the event that we do not sell an amount of Units sufficient to pursue the business goals outlined in this prospectus.

 

We have not specified a minimum offering amount in connection with this offering. Because there is no minimum offering amount, investors could be in a position where they have invested in our company, but we are unable to fulfill our objectives due to a lack of interest in this offering. Further, any proceeds from the sale of the Units offered by us will be available for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan. Upon closing of this offering, investor funds will not be returned under any circumstances whether during or after this offering.

 

There is no public market for the Units or the Warrants.

 

There is no established public trading market for the Units or the Warrants, and we do not expect a market to develop. In addition, we do not intend to apply to list the Warrants on any national securities exchange or other nationally recognized trading system, including Nasdaq. Without an active market, the liquidity of the Warrants will be limited.

 

The Warrants in this offering are speculative in nature.

 

The Warrants in this offering do not confer any rights of Class A Ordinary Share ownership on their holders, but rather merely represent the right to acquire Class A Ordinary Shares at a fixed price. In addition, following this offering, the market value of the Warrants, if any, is uncertain and there can be no assurance that the market value of the Warrants will equal or exceed their imputed offering price. The Warrants will be not listed or quoted for trading on any market or exchange.

  

Holders of the Warrants will not have rights of holders of our Class A Ordinary Shares until such Warrants are exercised.

 

Until holders of the Warrants acquire Class A Ordinary Shares upon exercise of the Warrants, holders of the Warrants will have no rights with respect to the Class A Ordinary Shares underlying such Warrants.

 

 

The sale or availability for sale of substantial amounts of our Class A Ordinary Shares could adversely affect their market price.

 

Sales of substantial amounts of our Class A Ordinary Shares in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of our Class A Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. The Class A Ordinary Shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements, if any. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our Class A Ordinary Shares. See “Plan of Distribution” and “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.

 

Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on price appreciation of our Class A Ordinary Shares for return on your investment.

 

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the Class A Ordinary Shares as a source for any future dividend income.

 

Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A Ordinary Shares will likely depend entirely upon any future price appreciation of the Class A Ordinary Shares. There is no guarantee that the Class A Ordinary Shares will appreciate in value after this offering or even maintain the price at which you purchased the Class A Ordinary Shares. You may not realize a return on your investment in our Class A Ordinary Shares and you may even lose your entire investment in our Class A Ordinary Shares.

    

You will experience immediate and substantial dilution in the net tangible book value per share of the Class A Ordinary Shares you purchase.

 

Because the public offering price per Unit comprised of a Class A Ordinary Share and related Warrant being offered is substantially higher than the pro forma net tangible book value per share of our Class A Ordinary Shares, you will suffer immediate and substantial dilution of approximately $6.23 per Class A Ordinary Share, with respect to the pro forma net tangible book value of our Class A Ordinary Shares as of December 31, 2022. See “Dilution.”

 

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.

 

We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that will improve our results of operations or increase the price of our Class A Ordinary Shares, nor that these net proceeds will be placed only in investments that generate income or appreciate in value. 

 

 

Our amended and restated memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A Ordinary Shares.

 

Some provisions in our amended and restated memorandum and articles of association, may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including, among other things, the following:

 

●

provisions that permit our board of directors by resolution to create and issue classes of shares with preferred, deferred or other special rights or restrictions as the board of directors determine in their discretion, without any further vote or action by our shareholders. If issued, the rights, preferences, designations and limitations of any class of preferred shares would be set by the board of directors as they may from time to time determine and could operate to the disadvantage of the outstanding Class A Ordinary Shares the holders of which would not have any pre-emption rights in respect of such an issue of preferred shares. Such terms could include, among others, preferences as to dividends and distributions on liquidation, or could be used to prevent possible corporate takeovers; and

 

●

provisions that restrict the ability of our shareholders holding in aggregate less than one-tenth of the paid-up capital in our Company as at the date of the requisition carries the right of voting at general meetings to convene a general meeting.

  

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law and conduct our operations primarily in emerging markets.

 

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.  

 

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

 

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. If we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

 

In addition, we conduct substantially all of our business operations in emerging markets, including China, and substantially all of our directors and senior management are based in China. The SEC, U.S. Department of Justice, or the DOJ, and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain emerging markets, including China. Additionally, our public shareholders may have limited rights and few practical remedies in emerging markets where we operate, as shareholder claims that are common in the United States, including class action securities law and fraud claims, generally are difficult or impossible to pursue as a matter of law or practicality in many emerging markets, including China. For example, in China, there are significant legal and other obstacles for the SEC, the DOJ and other U.S. authorities to obtaining information needed for shareholder investigations or litigation. Although the competent authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation with the securities regulatory authorities in the United States has not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no foreign securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to foreign securities regulators.

 

 

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act (Revised) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Differences in Corporate Law.”

 

As a foreign private issuer, we are not subject to certain U.S. securities law disclosure requirements that apply to a domestic U.S. issuer, and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, which may limit the information publicly available to our investors and afford you less protection than if we were a U.S issuer.

 

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

 

As a foreign private issuer we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and therefore there may be less publicly available information about us than if we were a U.S. domestic issuer. We are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

 

●

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

 

●

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

 

●

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the selective disclosure rules by issuers of material non-public information under Regulation FD.

 

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

 

The dual-class structure of our ordinary shares may adversely affect the trading market for our Class A Ordinary Shares.  

 

Several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A Ordinary Shares.

  

Certain judgments obtained against us by our shareholders may not be enforceable.

 

We are a Cayman Islands company and the majority of our assets are located outside of the United States. The most significant portion of our operations is conducted in China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons may be located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and China, see “Enforceability of Civil Liabilities.” 

 

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus and our SEC filings that are incorporated by reference into this prospectus contain or incorporate by reference forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Many of the forward- looking statements contained in this prospectus can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” and “potential,” among others.

 

Forward-looking statements appear in a number of places in this prospectus and our SEC filings that are incorporated by reference into this prospectus. These forward-looking statements include, but are not limited to, statements regarding our intent, belief, or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled “Item 3. Key Information — D. Risk Factors” in our annual report on Form 20-F for the fiscal year ended December 31, 2022, and the section entitled “Risk Factors” of this prospectus. These risks and uncertainties include factors relating to: 

 

	●	assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;
	●	our ability to execute our growth, and expansion, including our ability to meet our goals;
	●	current and future economic and political conditions;
	●	our capital requirements and our ability to raise any additional financing which we may require;
	●	our ability to attract clients and further enhance our brand recognition;
	●	our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business;
	●	the COVID-19 pandemic;
	●	trends and competition in the contract logistics industry; and
	●	other assumptions described in this prospectus underlying or relating to any forward-looking statements.

 

We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors” and “Item 3. Key Information — D. Risk Factors” in our annual report on Form 20-F for the fiscal year ended December 31, 2022. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it may have on the Company’s operations, the demand for the Company’s services and economic activities in general. We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

 

Industry Data and Forecasts

 

This prospectus contains data related to the contract logistics industry in China. This industry data includes projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The contract logistics industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on our business and the market price of our Class A Ordinary Shares. In addition, the rapidly changing nature of the contract logistics industry subjects any projections or estimates relating to the growth prospects or future condition of our industry to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

 

 

ENFORCEABILITY OF CIVIL LIABILITIES

 

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We incorporated under the laws of the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. The Cayman Islands, however, has a less developed body of securities laws as compared to the United States and provides significantly less protection for investors than the United States. Additionally, Cayman Islands companies may not have standing to sue in the Federal courts of the United States.

 

Substantially all of our assets are located in the PRC. In addition, a majority of our directors and officers are nationals or residents of the PRC and almost all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

 

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

 

Ogier (Cayman) LLP, our counsel with respect to the laws of the Cayman Islands has advised us that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us, judgments of the United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or (ii) in original actions brought in the Cayman Islands, to impose liabilities against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, so far as the liabilities imposed by those provisions are penal in nature.

 

Ogier (Cayman) LLP has further advised us that, in those circumstances, although there is currently no statutory enforcement or treaty between the United States and the Cayman Islands providing for enforcement of judgments, the courts of the Cayman Islands may recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without a retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the amount for which the judgment was issued, provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive, given by a court of competent jurisdiction (the courts of the Cayman Islands will apply the rules of Cayman Islands private international law to determine whether the foreign court is a court of competent jurisdiction), and must not be in respect of taxes, a fine, or a penalty, inconsistent with a Cayman Islands judgment on the same matter, impeachable on the grounds of fraud, or obtained in a manner or of a kind that would be contrary to natural justice or the public policy of the Cayman Islands. Furthermore, it is uncertain that Cayman Islands courts would enforce: (1) judgments of U.S. courts obtained in actions against us or other persons that are predicated upon the civil liability provisions of the U.S. federal securities laws; or (2) original actions brought against us or other persons predicated upon the Securities Act. Ogier (Cayman) LLP has informed us that there is uncertainty with regard to Cayman Islands law relating to whether a judgment obtained from the U.S. courts under civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

 

AllBright Law Offices, our counsel with respect to PRC law, has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. There are no treaties or other forms of reciprocity between China and the United States or the Cayman Islands for the mutual recognition and enforcement of court judgments. AllBright has further advised us that under PRC law, PRC courts will not enforce a foreign judgment against us or our officers and directors if the court decides that such judgment violates the basic principles of PRC law or national sovereignty, security, or public interest, thus making the recognition and enforcement of a U.S. court judgment in China difficult.

 

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. In China, there are significant legal and other obstacles to obtain information needed for investigations or litigation originated outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with its counterparts of another country or region to monitor and oversee cross-border securities activities, such regulatory cooperation with the securities regulatory authorities may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the State Council and the competent departments of the State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

 

In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against us in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

 

 

USE OF PROCEEDS

 

We estimate that we will receive net proceeds from this offering of approximately $54.6 million, assuming the sales of all of the Units we are offering and no exercise of the Warrants included in the Units, after deducting the placement agent’s fees and non-accountable expense allowance and estimated offering expenses payable by us. However, because this is a best-efforts offering and there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees and net proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth on the cover page of this prospectus.

 

The primary purposes of this offering are to obtain additional capital to further expand our operations. We plan to use the net proceeds of this offering as follows:

 

●

approximately 80% for expanding and increasing the number of our regional sorting centers; and

 

●

approximately 20% for working capital and other general corporate purposes.

 

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions.

 

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

 

In using the proceeds of this offering, we are permitted under PRC laws and regulations to utilize the proceeds from this offering to fund our PRC subsidiary by making loans to or additional capital contributions, and to fund Shengfeng Logistics only through loans, subject to applicable government registration and approval requirements. All of the net proceeds from this offering would be immediately available to be loaned to Shengfeng Logistics and the VIE’s subsidiaries, subject to the respective loan agreements to be entered into between the Company and the VIE and the VIE’s subsidiaries. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See “Item 3. Key Information — D. Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiary and to make loans to Shengfeng Logistics, which could materially and adversely affect our liquidity and our ability to fund and expand our business” in our annual report on Form 20-F for the year ended December 31, 2022.

 

 

Because there is no minimum offering amount required as a condition to closing this offering, we may sell fewer than all or any of the Units offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of Units sufficient to pursue the business goals outlined in this prospectus.

 

 

DIVIDEND POLICY

 

We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.

 

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or the share premium account, provided that in no circumstances may a dividend be paid if such payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business.

 

Subject to the provisions of the Cayman Companies Act and any rights attaching to any class or classes of shares under and in accordance with the amended and restated articles of association: (i) the directors may declare dividends or distributions out of our funds which are lawfully available for that purpose; and (ii) our shareholders may, by ordinary resolution, declare dividends, but no such dividend shall exceed the amount recommended by the directors.

 

Subject to the requirements of the Cayman Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie.

 

Unless provided by the rights attached to a share, no dividend shall bear interest.

 

If we determine to pay dividends on any of our Class A Ordinary Shares or Class B Ordinary Shares in the future, in the absence of available profits or share premium, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, Shengfeng HK.

 

Current PRC regulations permit our PRC subsidiary to pay dividends to Shengfeng HK only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our Affiliated Entities in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other things, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

 

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or “SAFE Circular 3,” issued on January 26, 2017, provides that banks shall, when dealing with dividend remittance transactions from a domestic enterprise to its offshore shareholders of more than $50,000, review the relevant board resolutions, original tax filing form, and audited financial statements of such domestic enterprise based on the principal of genuine transaction. Furthermore, if our Affiliated Entities in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our PRC subsidiary is unable to receive all of the revenue from the operations of the VIE and the VIE’s subsidiaries, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares, should we desire to do so in the future.

 

Cash dividends, if any, on our Class A Ordinary Shares or Class B Ordinary Shares would be paid in U.S. dollars. Shengfeng HK may be considered a non-resident enterprise for tax purposes, so that any dividends Tianyu pays to Shengfeng HK may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. See “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation” in our annual report on Form 20-F for the year ended December 31, 2022.

 

In order for us to pay dividends to our shareholders, we will rely on payments made from Shengfeng Logistics to Tianyu, pursuant to contractual arrangements between such parties, and the distribution of such payments to Shengfeng HK as dividends from Tianyu. Certain payments from Shengfeng Logistics to Tianyu are subject to PRC taxes, including Value-Added Tax. If Shengfeng Logistics or the VIE’s subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict any such party’s ability to pay dividends or make other distributions to us.

 

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC entity. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including, without limitation, the requirement that (a) the Hong Kong entity must be the beneficial owner of the relevant dividends; and (b) the Hong Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by our PRC subsidiary to its immediate holding company, Shengfeng HK. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Shengfeng HK intends to apply for the tax resident certificate if and when Tianyu plans to declare and pay dividends to Shengfeng HK. See “Item 3. Key Information — D. Risk Factors—Risks Relating to Doing Business in the PRC—There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits” in our annual report on Form 20-F for the year ended December 31, 2022.  

 

 

CAPITALIZATION

 

The following table sets forth our capitalization:

 

	●	on an actual basis as of December 31, 2022; and
	●	on a pro forma basis to give effect to the IPO of 2,400,000 Class A Ordinary Shares at $4.00 per share on a firm commitment basis, for net proceeds of approximately $8.5 million, after deducting underwriting discounts and other related expenses, which IPO was completed on April 4, 2023; and
	●	on a pro forma basis as adjusted to give effect to (i) the transactions described above; (ii) the issuance and sale of 8,000,000 Units offered hereby, based on an assumed offering price of $7.50 per Unit, each Unit consisting of one Class A Ordinary Share and one Warrant, assuming the sale of all of the Units we are offering, no exercise of the Warrants included in the Units, and no other change to the number of Units sold by us as set forth on the front cover of this prospectus; and (iii) the application of the net proceeds after deducting the estimated 7% placement agent fees, the placement agent’s 1% non-accountable expense allowance, and approximately $0.6 million of estimated other offering expenses payable by us.

 

In addition, we currently have 41,880,000 Class B Ordinary Shares issued and outstanding. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis. The Class B Ordinary Shares are not being converted as part of this Offering.

 

You should read this capitalization table together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus and “Item 5. Operating and Financial Review and Prospects” in our annual report on Form 20-F for the year ended December 31, 2022, and other financial information included elsewhere in this prospectus.

 

		As of December 31, 2022
		Actual				Pro Forma (1) (unaudited)				Pro Forma As adjusted (2) (unaudited)
		$ in thousands				$ in thousands				$ in thousands
Shareholders’ Equity:
Class A Ordinary Shares, $0.0001 par value, 400,000,000 Class A Ordinary Shares authorized, 38,120,000, 40,520,000 and 48,520,000 Class A Ordinary Shares issued and outstanding - actual, pro forma and pro forma as adjusted basis, respectively		$	4			$	4				5
Class B Ordinary Shares, $0.0001 par value, 100,000,000 Class B Ordinary Shares authorized, 41,880,000 Class B Ordinary Shares issued and outstanding - actual, pro forma and pro forma as adjusted basis			4				4				4
Additional paid-in capital			75,575				84,041				130,174
Statutory reserves			3,974				3,974				3,974
Retained earnings			17,275				17,275				17,275
Accumulated other comprehensive loss			(5,609	)			(5,609	)			(5,609	)
Total Shareholders’ Equity			91,223				99,689				145,823
Total Capitalization		$	91,223			$	99,689				145,823

 

(1)

On April 4, 2023, we completed our IPO of 2,400,000 Class A Ordinary Shares at $4.00 per share on a firm commitment basis. The net proceeds for the sale totaled approximately $8.5 million, after deducting underwriting discounts and other related expenses.

 

(2)

The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital, total shareholders’ equity and total capitalization following the completion of this offering are subject to adjustment based on the actual public offering price and other terms of this offering determined at pricing.

 

Each $1.00 increase (decrease) in the assumed public offering price of $7.50 per Unit, would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total shareholders’ equity, and total capitalization by approximately $7.4 million, assuming the number of Units offered by us, as set forth on the front cover of this prospectus, remains the same, and after deducting the placement agent fees, non-accountable expense allowance, and estimated offering expenses payable by us.

 

Because there is no minimum offering amount required as a condition to closing this offering, we may sell fewer than all or any of the Units offered hereby.

 

 

DILUTION

 

If you invest in the Units being offered in this offering, assuming no value is attributed to the related Warrants, your ownership interest will be diluted to the extent of the difference between the public offering price per share of our Class A Ordinary Shares included in the Units and our pro forma as adjusted net tangible book value per Class A Ordinary Share immediately after this offering. Dilution results from the fact that the public offering price per Class A Ordinary Share included in Units is substantially in excess of the pro forma as adjusted net tangible book value per Class A Ordinary Share attributable to the existing shareholders for our presently outstanding Class A Ordinary Shares. 

 

Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis. The Class B Ordinary Shares are not being converted as part of this Offering.

 

Our net tangible book value as of December 31, 2022, was $0.76 per ordinary share (both Class A and Class B Ordinary Share). Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Class A Ordinary Share (as adjusted for the offering) from the IPO price per Class A Ordinary Share and after deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us.

 

After giving effect to IPO of 2,400,000 Class A Ordinary Shares at $4.00 per share on a firm commitment basis, for net proceeds of approximately $8.5 million, after deducting underwriting discounts and other related expenses, which IPO was completed on April 4, 2023, our pro forma net tangible book value as of December 31, 2022 would have been $0.84 per ordinary share (both Class A and Class B Ordinary Share).

 

After giving effect to the issuance and sale of 8,000,000 Units offered in this offering at an assumed public offering price of $7.50 per Unit, after deducting the placement agent fees and non-accountable expense allowance, and the estimated offering expenses payable by us and assuming the sale of all of the Units we are offering and no exercise of the Warrants included in the Units, our pro forma as adjusted net tangible book value as of December 31, 2022 would have been $115.1 million, or $1.27 per outstanding Class A Ordinary Share. This represents an immediate increase in net tangible book value of $0.43 per ordinary share to the existing shareholders, and an immediate dilution in net tangible book value of $6.23 per Class A Ordinary Share to investors purchasing Units in this offering.

 

The following table illustrates such dilution:

 

		Per Share Post- Offering (1)
Assumed public offering price per share		$	7.50
Pro forma net tangible book value per ordinary share  as of December 31, 2022		$	0.84
Increase in pro forma net tangible book value per ordinary share attributable to this offering		$	0.43
Pro forma as adjusted net tangible book value per ordinary share immediately after this offering		$	1.27
Dilution per share to new investors participating in this offering		$	6.23

 

(1)

Assumes net proceeds of $54,600,000 from this offering of 8,000,000 Units at an assumed public offering price of $7.50 per Unit, calculated as follows: $60,000,000 offering proceeds, less placement agent fee of $4,200,000 and non-accountable expense allowance of $600,000 and offering expenses of approximately $600,000.

 

A $1.00 increase in the assumed public offering price of $7.50 per Unit would increase our pro forma as adjusted net tangible book value as of December 31, 2022 after this offering, assuming the sale of all of the Units we are offering and no exercise of the Warrants included in the Units, by approximately $0.08 per Class A Ordinary Share, and would increase dilution to new investors by $0.92 per Class A Ordinary Share, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated placement agent fees and non-accountable expense allowance, and offering expenses payable by us.

 

A $1.00 decrease in the assumed public offering price of $7.50 per Unit would decrease our pro forma as adjusted net tangible book value as of December 31, 2022 after this offering, assuming the sale of all of the Units we are offering and no exercise of the Warrants included in the Units, by approximately $0.08 per Class A Ordinary Share, and would decrease dilution to new investors by $0.92 per Class A Ordinary Share, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated   placement agent fees and non-accountable expense allowance, and offering expenses payable by us.

 

The pro forma as adjusted information as discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our Units and other terms of this offering determined at the pricing.

 

Because there is no minimum offering amount required as a condition to closing this offering, we may sell fewer than all or any of the Units offered hereby.

 

 

CORPORATE HISTORY AND STRUCTURE

 

Our Corporate History

 

We began our operations in 2001 through Shengfeng Logistics, a limited liability company established pursuant to PRC laws. Shengfeng Logistics formed or controlled 30 majority owned/wholly owned subsidiaries pursuant to PRC laws.

 

In connection with this offering, we have undertaken a reorganization of our corporate structure (the “Reorganization”) in the following steps:

 

	●	on July 16, 2020, we incorporated Shengfeng Cayman under the laws of the Cayman Islands;
	●	on August 18, 2020, we incorporated Shengfeng HK in Hong Kong as a wholly owned subsidiary of Shengfeng Cayman;
	●	on December 16, 2020, we incorporated Tianyu pursuant to PRC laws as a WFOE and a wholly owned subsidiary of Shengfeng HK;
	●	on December 18, 2020, our Company and our shareholders undertook a series of corporate actions, including an amendment and a subdivision of our share capital, among others. See “Corporate History and Structure —History of Share Issuances” below; and
	●	On January 7, 2021, Tianyu entered into a series of contractual arrangements with Shengfeng Logistics and its shareholders, through which Tianyu has gained full control over the management and receives the economic benefits of Shengfeng Logistics. For more details, see “Corporate History and Structure —Our VIE Agreements.”

 

Our shares and per share data as of December 31, 2022 and 2021 have been presented on a retroactive basis to reflect the Reorganization.

 

History of Share Issuances

 

The following is a summary of our share issuances since incorporation.

 

On July 16, 2020, Quality Corporate Services Ltd., the subscriber to our memorandum of association, had initially taken up 1 ordinary share, par value $1.00 per share, which it subsequently transferred to Shengfeng International Limited on the same date. Also on July 16, 2020, we issued 49,999 ordinary shares, par value $1.00 per share, to Shengfeng International Limited, of which 6,000 ordinary shares were transferred to Everbright International Development Limited on September 29, 2020.

 

On December 18, 2020 we undertook the following corporate actions:

 

	(i)	a repurchase of 43,999 ordinary shares held by Shengfeng International Limited and 6,000 ordinary shares held by Everbright International Development Limited;
	(ii)	an amendment of our share capital from $50,000 divided into 50,000 ordinary shares of $1.00 par value per share to $50,000 divided into 40,000 Class A Ordinary Shares of $1.00 par value per share and 10,000 Class B Ordinary Shares of $1.00 par value per share;
	(iii)	a re-designation of one issued ordinary share held by Shengfeng International Limited into one Class B Ordinary Share; and
	(iv)	a subdivision of our share capital from $50,000 divided into 40,000 Class A Ordinary Shares of $1.00 par value per share and 10,000 Class B Ordinary Shares of $1.00 par value per share to $50,000 divided into 400,000,000 Class A Ordinary Shares of $0.0001 par value per share and 100,000,000 Class B Ordinary Shares of $0.0001 par value per share.

 

On December 18, 2020, we issued an aggregate of 38,120,000 Class A Ordinary Shares to 12 investors for an aggregate consideration of $3,812.

 

On December 18, 2020, we issued 41,870,000 Class B Ordinary Shares to Shengfeng International Limited for a consideration of $4,187. After such issuance and as of the date of this prospectus, Shengfeng International Limited holds an aggregate of 41,880,000 of our Class B Ordinary Shares.

 

On April 4, 2023, the Company completed its IPO of 2,400,000 Class A Ordinary Shares at a public offering price of $4.00 per share. The net proceeds raised from the IPO were approximately $8.5 million, after deducting underwriting discounts and the offering expenses payable by the Company.

 

 

Our Corporate Structure

 

Shengfeng Development Limited is a holding company incorporated under the laws of the Cayman Islands and it is not a Chinese operating company. As a holding company with no material operations of its own, its operations have been conducted in China by its subsidiaries and through the VIE Agreements with a VIE, Shengfeng Logistics and the VIE’s subsidiaries. For accounting purposes, we control and receive the economic benefits of the VIE and the VIE’s subsidiaries’ business operations through the VIE Agreements, which enables us to consolidate the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statement under U.S. GAAP. Neither we nor our subsidiaries own any equity interests in the VIE or the VIE’s subsidiaries. 

 

The following diagram illustrates our corporate structure, including our subsidiaries and the VIE and the VIE’s subsidiaries, as of the date of this prospectus.

 

 

 

Notes: All percentages reflect the voting ownership interests instead of the equity interests held by each of our shareholders given that each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share and each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share.

 

(1)	Represents 41,880,000 Class B Ordinary Shares indirectly held by Yongxu Liu, the 100% owner of Shengfeng International Limited as of the date of this prospectus.
(2)	Represents an aggregate of 38,120,000 Class A Ordinary Shares held by 12 shareholders, each one of which holds less than 5% of our voting ownership interests, as of the date of this prospectus.
(3)	As of the date of this prospectus, Shengfeng Logistics is held by Fujian Yunlian Shengfeng Industry Co., Ltd., which is 90% owned by Yongxu Liu, who is our chief executive officer, chairman of the board and president, as to 54.58%, Yongxu Liu directly as to 30.99%, Zhoushan Zhongxin Equity Investment Partnership (Limited Partnership) as to 1.5%, Zhoushan Guancheng Equity Investment Partnership (Limited Partnership) as to 2%, Daqiu Tang as to 0.85%, Yelie Song as to 0.97%, Zhiping Yang as to 1.58%, Chaoxin Yang as to 0.96%, Guangsheng Lin as to 0.85%, Zhuangyuan Lin as to 2.59%, Zhongdeng Pan as to 2.13% and Yufan Chen as to 1%, who collectively hold 100% of the shares of Shengfeng Logistics. We refer to the above shareholders of Shengfeng Logistics as the “Shengfeng Logistics Shareholders.”

 

 

For details of our principal shareholders’ ownership, please see “Item 6. Directors, Senior Management and Employees—E. Share Ownership” in our annual report on Form 20-F for the year ended December 31, 2022.

 

Significant subsidiaries of Shengfeng Cayman and significant subsidiaries of Shengfeng Logistics, as that term is defined under Section 1-02 of Regulation S-X under the Securities Act, consist of the following entities:

 

No.			Name of subsidiaries		Place of incorporation		Date of incorporation or acquisition		Percentage of direct or indirect				Principal activities
1			Shengfeng Holding Limited (“Shengfeng HK”)		Hong Kong		August 18, 2020			100	%		Investment holding of Tianyu
2			Tianyu Shengfeng Logistics Group Co., Ltd. (“Tianyu”)		Fujian, the PRC		December 16, 2020			100	%		Investment holding of Shengfeng VIE
3			Shengfeng Logistics Group Co., Ltd. (“Shengfeng VIE” or “Shengfeng Logistics”)		Fujian, the PRC		December 7, 2001			100	%		Transportation and warehouse storage management service
4			Fuqing Shengfeng Logistics Co., Ltd.		Fujian, the PRC		April 15, 2011			100	%		Transportation and warehouse storage management service
5			Xiamen Shengfeng Logistics Co., Ltd.		Fujian, the PRC		December 22, 2011			100	%		Transportation and warehouse storage management service
6			Guangdong Shengfeng Logistics Co., Ltd.		Guangdong, the PRC		December 30, 2011			100	%		Transportation and warehouse storage management service
7			Hainan Shengfeng Supply Chain Management Co., Ltd.		Hainan, the PRC		August 18, 2020			100	%		Transportation and warehouse storage management service
8			Beijing Tianyushengfeng E-commerce Technology Co., Ltd.		Beijing, the PRC		January 9, 2004			100	%		Transportation and warehouse storage management service
9			Beijing Shengfeng Supply Chain Management Co., Ltd.		Beijing, the PRC		April 13, 2016			100	%		Transportation and warehouse storage management service
10			Shengfeng Logistics (Guizhou) Co., Ltd.		Guizhou, the PRC		August 15, 2017			100	%		Transportation and warehouse storage management service
11			Shengfeng Logistics (Tianjin) Co., Ltd.		Tianjin, the PRC		March 8, 2016			100	%		Transportation and warehouse storage management service
12			Shengfeng Logistics (Shandong) Co., Ltd.		Shandong, the PRC		March 15, 2016			100	%		Transportation and warehouse storage management service
13			Shengfeng Logistics Hebei Co., Ltd.		Hebei, the PRC		February 17, 2016			100	%		Transportation and warehouse storage management service
14			Shengfeng Logistics (Henan) Co., Ltd.		Henan, the PRC		March 28, 2016			100	%		Transportation and warehouse storage management service
15			Shengfeng Logistics (Liaoning) Co., Ltd.		Liaoning, the PRC		March 2, 2016			100	%		Transportation and warehouse storage management service
16			Shengfeng Logistics (Yunnan) Co., Ltd.		Yunnan, the PRC		January 25, 2016			100	%		Transportation and warehouse storage management service
17			Shengfeng Logistics (Guangxi) Co., Ltd.		Guangxi, the PRC		February 1, 2016			100	%		Transportation and warehouse storage management service
18			Hubei Shengfeng Logistics Co., Ltd.		Hubei, the PRC		December 15, 2010			100	%		Transportation and warehouse storage management service
19			Shengfeng Logistics Group (Shanghai) Supply Chain Management Co., Ltd.		Shanghai, the PRC		August 26, 2015			100	%		Transportation and warehouse storage management service
20			Shanghai Shengxu Logistics Co., Ltd.		Shanghai, the PRC		June 4, 2003			100	%		Transportation and warehouse storage management service
21			Hangzhou Shengfeng Logistics Co., Ltd.		Zhejiang, the PRC		June 10, 2010			100	%		Transportation and warehouse storage management service
22			Nanjing Shengfeng Logistics Co., Ltd.		Jiangsu, the PRC		August 30, 2011			100	%		Transportation and warehouse storage management service
23			Suzhou Shengfeng Logistics Co., Ltd.		Jiangsu, the PRC		January 14, 2005			90	%		Transportation and warehouse storage management service
24			Suzhou Shengfeng Supply Chain Management Co., Ltd. (a)		Jiangsu, the PRC		August 9, 2019			100	%		Transportation and warehouse storage management service
25			Shengfeng Supply Chain Management Co., Ltd.		Fujian, the PRC		June 19, 2014			100	%		Transportation and warehouse storage management service
26			Fuzhou Shengfeng Transportation Co., Ltd.		Fujian, the PRC		April 18, 2019			100	%		Transportation and warehouse storage management service
27			Sichuan Shengfeng Logistics Co., Ltd.		Sichuan, the PRC		June 27, 2019			100	%		Transportation and warehouse storage management service

 

 

28			Fujian Shengfeng Logistics Co., Ltd.		Fujian, the PRC		April 2, 2020			100	%		Transportation and warehouse storage management service
29			Fujian Dafengche Information Technology Co. Ltd.		Fujian, the PRC		August 26, 2020			100	%		Software engineering
30			Ningde Shengfeng Logistics Co. Ltd.(b)		Fujian, the PRC		November 12, 2018			51	%		Transportation and warehouse storage management service
31			Fujian Fengche Logistics Co., Ltd.(c)		Fujian, the PRC		October 28, 2020			0	%		Transportation service
32			Shengfeng Logistics (Zhejiang) Co., Ltd		Zhejiang, the PRC		February 1, 2021			100	%		Transportation and warehouse storage management service
33			Chengdu Shengfeng Supply Chain Management Co., Ltd		Sichuan, the PRC		October 12, 2021			100	%		Supply chain service
34			Shengfeng Logistics Group (Ningde) Supply Chain Management Co., Ltd. (d)		Fujian, the PRC		September 23, 2022			100	%		Supply chain service
35			Yichun Shengfeng Logistics Co., Ltd. (e)		Jiangxi, the PRC		December 1, 2022			100	%		Transportation and warehouse storage management service
36			Fujian Shengfeng Smart Technology Co., Ltd. (f)		Fujian, the PRC		April 20, 2023			100	%		Property service
37			Shenzhen Tianyu Shengfeng Supply Chain Management Co., Ltd. (g)		Shenzhen, the PRC		May 19, 2023			100	%		Supply chain service

 

(a)	On July 8, 2021, Suzhou Shengfeng Supply Chain Management Co, Ltd. became a wholly owned subsidiary of Shengfeng Logistics.
(b)	On January 5, 2022, Shengfeng Logistics entered into a share transfer agreement with Fuzhou Puhui Technology Co., Ltd. (“Fuzhou Puhui”), an unrelated third party, to transfer its 49% equity interest in Ningde Shengfeng Logistics Co., Ltd. (“Ningde Shengfeng”) to Fuzhou Puhui. According to the share transfer agreement, instead of paying any cash consideration to Shengfeng Logistics, Fuzhou Puhui was required to make a capital contribution to fulfill the required registered capital (approximately $15.5 million or RMB100 million) based on its 49% ownership interest (approximately $7.6 million or RMB49 million). The aforementioned transaction has been completed. After the transaction, the Company owned a 51% equity interest in Ningde Shengfeng.
(c)	On June 5, 2023, 100% equity interest in Fujian Fengche Logistics Co., Ltd. was transferred to third parties.
(d)	On September 23, 2022, Shengfeng Logistics Group (Ningde) Supply Chain Management Co., Ltd. was set up in Fujian, China. This entity is fully owned by Shengfeng and provides supply chain service in the future.
(e)	On May 29, 2023, Yichun Shengfeng Logistics Co., Ltd. became a wholly owned subsidiary of Tianyu.
(f)	On April 20, 2023, Fujian Shengfeng Smart Technology Co., Ltd was set up in Fujian, China. This entity is fully owned by Tianyu and will provide property service in the future.
(g)	On May 19, 2023, Shenzhen Tianyu Shengfeng Supply Chain Management Co., Ltd. was set up in Shenzhen, China. This entity is fully owned by Tianyu and will provide supply chain service in the future.

 

For details of our principal shareholders’ ownership, please see “Item 6. Directors, Senior Management and Employees—E. Share Ownership” in our annual report on Form 20-F for the year ended December 31, 2022.

 

Our VIE Agreements

 

Neither we nor our subsidiaries own any share in Shengfeng Logistics or the VIE’s subsidiaries. Instead, for accounting purposes, we control and receive the economic benefits of Shengfeng Logistics’ business operation through the VIE Agreements entered into by and among WFOE, Shengfeng Logistics and its shareholders on January 7, 2021, which enables us to consolidate the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statement under U.S. GAAP. The VIE Agreements are designed to provide Tianyu with the power, rights, and obligations to Shengfeng Logistics, including control rights and the rights to the assets, property, and revenue of Shengfeng Logistics, as set forth under the VIE Agreements. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus and may not be effective in providing control over the VIE. We are, therefore, subject to risks due to the uncertainty of the interpretation and application of the laws and regulations of the PRC, regarding the VIE and the VIE structure, including, but not limited to, regulatory review of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangements with the VIE.

 

We have evaluated the guidance in FASB ASC 810 and determined that we are regarded as the primary beneficiary of the VIE, for accounting purposes, as a result of our direct ownership in Tianyu and the provisions of the VIE Agreements. Accordingly, we treat the VIE and the VIE’s subsidiaries as our consolidated entities under U.S. GAAP. We have consolidated the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

 

 

Although we took every precaution available to effectively enforce the contractual and corporate relationship, the VIE structure has its inherent risks that may affect your investment, including less effectiveness and certainties than direct ownership and potential substantial costs to enforce the terms of the VIE Agreements. For example, Shengfeng Logistics and the Shengfeng Logistics Shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of Shengfeng Logistics, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of Shengfeng Logistics, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current VIE Agreements, we rely on the performance by Shengfeng Logistics and the Shengfeng Logistics Shareholders of their respective obligations under the contracts to exercise control over Shengfeng Logistics. The Shengfeng Logistics Shareholders may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the VIE Agreements with Shengfeng Logistics. Furthermore, failure of the VIE shareholders to perform certain obligations could compel the Company to rely on legal remedies available under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which may not be effective. Additionally, if any disputes relating to these contracts remain unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation, and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system and the Company may incur substantial costs to enforce the terms of the VIE Agreements. We, as a Cayman Islands holding company, may have difficulty in enforcing any rights we may have under the VIE Agreements with the VIE, its founders and owners, in PRC because all of our VIE Agreements are governed by the PRC laws and provide for the resolution of disputes through arbitration in the PRC, where legal environment in the PRC is not as developed as in the United States. Also, these VIE Agreements may not be enforceable in China if PRC government authorities or courts take a view that such VIE Agreements contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event we are unable to enforce these VIE Agreements, we may not be able to exert effective control over Shengfeng Logistics, and our ability to conduct our business may be materially and adversely affected. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. See “Risk Factors — Risks Relating to Our Corporate Structure,” “Risk Factors — Risks Relating to Doing Business in the PRC,” and “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Corporate Structure,” “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC” in our annual report on Form 20-F for the year ended December 31, 2022 for more information. In particular, see “Risk Factors—Risks Relating to Our Corporate Structure—Our VIE Agreements with Shengfeng Logistics and the Shengfeng Logistics Shareholders may not be effective in providing control over Shengfeng Logistics,” “Risk Factors—Risks Relating to Our Corporate Structure—The Shengfeng Logistics Shareholders have potential conflicts of interest with our Company which may adversely affect our business and financial condition,” “Risk Factors—Risks Relating to Our Corporate Structure—Our VIE Agreements are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under these contractual arrangements” and “Risk Factors—Risks Relating to Doing Business in the PRC—We may be required to obtain permission from Chinese authorities (i) to issue our Class A Ordinary Shares to foreign investors in this offering and/or (ii) for the VIE’s operations, and if either or both are required and we are not able to obtain such permission in a timely manner, the securities currently being offered may substantially decline in value and become worthless.”

 

Each of the VIE Agreements is described in detail below:

 

Exclusive Technical Consultation and Service Agreement

 

Pursuant to the Technical Consultation and Service Agreement between Shengfeng Logistics and Tianyu, Tianyu provides Shengfeng Logistics with consultation and services in the areas of funding, human, technology and intellectual properties, including, but not limited to, training and technical support, marketing consultation services, general advice and assistance relating to management and operation of Shengfeng Logistics’ business, and other consultation and services which are necessary for Shengfeng Logistics’ business, on an exclusive basis, utilizing its resources. For services rendered to Shengfeng Logistics by Tianyu under the Technical Consultation and Service Agreement, Tianyu is entitled to collect a service fee, or the “Service Fee.” The Service Fees are composed of the basic annual fee, which is equal to 50% of the after-tax income of Shengfeng Logistics, and a floating fee, which shall not exceed the after-tax income after deducting paid basic annual fees. The floating fees shall be determined by both parties based on several factors including the number and the qualifications of the employees used by Tianyu, the time Tianyu spent on providing the services, the costs being paid for providing the services and the content, the value of the services provided and the operation revenue of Shengfeng Logistics.  

 

The Technical Consultation and Service Agreement became effective on January 7, 2021 and will remain effective for 20 years. Such agreement can be extended if Tianyu provides its notice of extension to Shengfeng Logistics unilaterally prior to the expiration date of this agreement. Shengfeng Logistics shall use its best efforts to renew its business license and extend its operation term until and unless otherwise instructed by Tianyu.

 

The Technical Consultation and Service Agreement does not prohibit related party transactions. Upon the establishment of the audit committee at the consummation of this offering, the Company’s audit committee will be required to review and approve in advance any related party transactions, including transactions involving Tianyu or Shengfeng Logistics.

 

Equity Pledge Agreement

 

Under the Equity Pledge Agreement by and among Tianyu, Shengfeng Logistics and the Shengfeng Logistics Shareholders, together holding 100% of the shares in Shengfeng Logistics, the Shengfeng Logistics Shareholders pledged their shares in Shengfeng Logistics to Tianyu to guarantee the performance of Shengfeng Logistics and/or Shengfeng Logistics Shareholders’ obligations under the Technical Consultation and Service Agreement. Under the terms of the Equity Pledge Agreement, in the event that Shengfeng Logistics or the Shengfeng Logistics Shareholders breach their respective contractual obligations under the Technical Consultation and Service Agreement, Tianyu, as pledgee, will be entitled to certain rights, including, but not limited to, the right to collect dividends generated by the pledged shares. The Shengfeng Logistics Shareholders also agreed that upon occurrence of any event of default, as set forth in the Equity Pledge Agreement, Tianyu is entitled to dispose of the pledged shares in accordance with applicable PRC laws. The Shengfeng Logistics Shareholders further agreed not to assign the pledged shares prior to the full payment of the service fees.

 

 

The Equity Pledge Agreement is effective until the full payment of the service fees under the Technical Consultation and Service Agreement and upon termination of Shengfeng Logistics’ obligations under the Technical Consultation and Service Agreement, or upon the transfer of shares of the Shengfeng Logistics Shareholders.

 

The purposes of the Equity Pledge Agreement are to (1) guarantee the performance of Shengfeng Logistics’ obligations under the Technical Consultation and Service Agreement, (2) make sure the Shengfeng Logistics Shareholders do not transfer or assign the pledged shares, or create or allow any encumbrance that would prejudice Tianyu’s interests without Tianyu’s prior written consent, and (3) provide Tianyu control over Shengfeng Logistics under certain circumstances. In the event Shengfeng Logistics breaches its contractual obligations under the Technical Consultation and Service Agreement, Tianyu will be entitled to dispose of the pledged shares in accordance with relevant PRC laws.

 

As of the date of this prospectus, the share pledges under the Equity Pledge Agreement have been registered with the competent PRC regulatory authority.

 

Exclusive Call Option Agreement

 

Under the Call Option Agreement, the Shengfeng Logistics Shareholders, together holding 100% of the shares in Shengfeng Logistics, irrevocably granted Tianyu (or its designee) an exclusive option to purchase, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of their shares in Shengfeng Logistics in consideration of the payment of RMB1. The purchase price shall be the lowest price allowed by the laws of China.

 

Under the Call Option Agreement, Tianyu may at any time under any circumstances, purchase or have its designee purchase, at its discretion, to the extent permitted under PRC law, all or part of the Shengfeng Logistics Shareholders’ shares in Shengfeng Logistics. The Call Option Agreement, together with the Equity Pledge Agreement, the Technical Consultation and Service Agreement, the Voting Rights Proxy Agreement, and the Shareholders’ Powers of Attorney, enable Tianyu to exercise effective control over Shengfeng Logistics.

 

The Call Option Agreement remains effective until all the equity of Shengfeng Logistics is legally transferred under the name of Tianyu and/or other entity or individual designated by it.

 

Shareholders’ Powers of Attorney

 

Under each of the Powers of Attorney, the Shengfeng Logistics Shareholders authorized Tianyu to act on their behalf as their exclusive agent and attorney with respect to all rights as shareholders, including, but not limited to: (a) attending shareholders’ meetings; (b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under the laws of China and the Articles of Association, including, but not limited to, the sale or transfer or pledge or disposition of shares in part or in whole; and (c) designating and appointing on behalf of shareholders the legal representative, the executive director, supervisor, the chief executive officer, and other senior management members of Shengfeng Logistics.

 

The Powers of Attorney is irrevocable and continuously valid from the date of execution of the Powers of Attorney, so long as the Shengfeng Logistics Shareholders are shareholders of Shengfeng Logistics.

 

Voting Rights Proxy Agreement

 

Pursuant to the Voting Rights Proxy Agreements, the Shengfeng Logistics Shareholders unconditionally and irrevocably entrust Tianyu or Tianyu’s designee to exercise all their rights as shareholders of Shengfeng Logistics under the articles of association of Shengfeng Logistics, including without limitation to: (a) propose to hold a shareholders’ meeting in accordance with the articles of association of Shengfeng Logistics and attend shareholders’ meeting of Shengfeng Logistics as the agent and attorney of such shareholders; (b) exercise all shareholders’ voting rights with respect to all matters to be discussed and voted in the shareholders’ meeting of Shengfeng Logistics, including, but not limited to, the right to designate and appoint the director, the chief executive officer and other senior management members of Shengfeng Logistics; (c) exercise other voting rights the shareholders are entitled to under the laws of China promulgated from time to time; and (d) exercise other voting rights the shareholders are entitled to under the articles of associations of Shengfeng Logistics from time to time.

 

The Voting Rights Proxy Agreement became effective on January 7, 2021 and will remain effective for 20 years. Such agreement can be extended if Tianyu provides its notice of extension unilaterally prior to the expiration date of this agreement. All other parties shall agree with such extension without reserve.

 

Spousal Consent Letters

 

The spouses of certain of the Shengfeng Logistics Shareholders agreed, via a spousal consent letter, to the execution of certain of the VIE Agreements, including: (a) the Equity Pledge Agreement entered into with Tianyu and Shengfeng Logistics; (b) the Call Option Agreement entered into with Tianyu and Shengfeng Logistics; and (c) the Voting Rights Proxy Agreement entered into with Tianyu and Shengfeng Logistics, and the disposal of the shares of Shengfeng Logistics held by the Shengfeng Logistics Shareholders and registered in their names.

 

The spouses of certain of the Shengfeng Logistics Shareholders have further undertaken to not to make any assertions in connection with the shares of Shengfeng Logistics which are held by the Shengfeng Logistics Shareholders. The spouses of certain of the Shengfeng Logistics Shareholders have confirmed in spousal consent letters that the Shengfeng Logistics Shareholders can perform, amend, or terminate certain VIE Agreements without their authorization or consent and have agreed to execute all necessary documents and take all necessary actions to ensure appropriate performance of such VIE Agreements. 

  

 

BUSINESS

 

Our Mission

 

The VIE is one of the leading contract logistics service providers in China. Since the establishment of the VIE in 2001, our mission has been to provide logistics solutions to companies in need of storage and delivery assistance in China. Through our experienced management team, we apply our well-established management system and operation procedures to assist companies in China to increase efficiency and improve their own management systems with respect to transportation, warehousing and time management. We aim to provide our clients with superior and customized services. Our business slogan is “When you entrust us with your goods, we cherish them as our own.”

 

Overview

 

Contract logistics is a comprehensive process that merges traditional logistics with supply chain management. Contract logistics companies outsource resource management tasks to third-party companies and handle activities such as planning and designing supply chains, designing facilities, processing orders, collecting payments, managing inventories, and providing client services.

 

We are a contract logistics company with consolidated revenue of approximately $370.3 million and $346.7 million for the fiscal year ended December 31, 2022 and 2021, respectively.

 

Our integrated logistics solutions are comprised of three segments: (1) B2B freight transportation services; (2) cloud storage services; and (3) value-added services. Since the VIE’s inception, we, through the VIE and the VIE’s subsidiaries, have developed extensive and reliable transportation networks in China, covering 341 cities across 31 provinces, as of December 31, 2022. Furthermore, we, through the VIE and the VIE’s subsidiaries, serve more than 4,000 manufacturers and trading companies (medium-scale to large-scale) throughout China, including brand names such as CATL Battery, Bright Dairy, SF Express, Schneider Electric, Tesla and Xiaomi.

 

We, through the VIE and the VIE’s subsidiaries, operate on a scalable integrated network model, which we believe is best suited to support our business and maintain the quality of our comprehensive logistics services. As a contract logistics company, we, through the VIE and the VIE’s subsidiaries, directly operate all of our regional sorting centers, Cloud OFCs and service outlets. We, through the VIE and the VIE’s subsidiaries, also own and operate our fleets. In order to establish broader network and provide more efficient services, we, through the VIE and the VIE’s subsidiaries, cooperate with third-party transportation providers in providing freight transportation services and with some network partners to promote our business. The integrated network model aims to satisfy the need for reliability, visuality, and timeliness; while we concentrate on the establishment of our network, continuous improvement in our comprehensive logistics services, and construction of our logistics ecosystem. We believe this network model allows us to achieve strong operating results while maintaining and minimizing fixed costs and capital requirements, which results in higher return on earnings and equities.

 

Operational efficiency, cost management, and competitive pricing are critical to the success of a contract logistics company. We, through the VIE and the VIE’s subsidiaries, have achieved strong operational efficiency through centralized control and management of 35 regional sorting centers, 22 Cloud OFCs, 36 service outlets, approximately 490 self-owned trucks and vehicles, and over 40,000 transportation providers, route planning and optimization, and transportation and management system.

 

Our goal is to provide high-quality professional services to our clients. We, through the VIE and the VIE’s subsidiaries, have established proven systems and procedures that are critical in achieving standardization and control over the quality of services rendered by us and third-party transportation providers. We constantly monitor and attempt to improve on our series of key metrics in service-quality control and management such as late delivery rate, complaint rate, and damaged or lost freight rate, as we strive to become the best in the industry by improving each of the stated key metrics. We intend to improve the stated key metrics in the following ways: (i) formulating relevant service standards and training our operators and partners; (ii) monitoring the operation of key indicators through the system and making timely improvements when problems occur; and (iii) reviewing the actual and target values of key indicators every month to find an optimal solution. Our superior service quality was demonstrated when the VIE was ranked 32^nd among the 50 listed privately owned logistics companies by CFLP, the first association in the logistics and procurement industry in China and an association approved by the State Council of China, on August 24, 2022. In September 2020, the VIE was recognized by CFLP as one of the leading freight companies for our high-quality and professional services during the COVID-19 pandemic.

 

 

The VIE and the VIE’s subsidiaries’ total transportation volume increased from approximately 6,360,000 tons for the fiscal year ended December 31, 2021 to approximately 7,800,000 tons for the fiscal year ended December 31, 2022, representing an increase of approximately 22.64%. For the fiscal years ended December 31, 2022 and 2021, net revenue generated from providing our services provided by the VIE and the VIE’s subsidiaries were approximately $370.3 million and $346.7 million, respectively. Our total net revenue increased by approximately 6.8% during 2022 compared to 2021. We, through the VIE and the VIE’s subsidiaries, generated operating profit of approximately $9.8 million and $8.6 million for the fiscal years ended December 31, 2022 and 2021, respectively. Our operating profit margin was approximately 2.7% and 2.5% for the fiscal years ended December 31, 2022 and 2021, respectively. We recorded net profit of approximately $7.8 million and $6.6 million for the fiscal years ended December 31, 2022 and 2021, respectively.  

 

Shengfeng Development Limited is a holding company incorporated under the laws of the Cayman Islands and it is not a Chinese operating company. As a holding company with no material operations of its own, its operations have been conducted in China by its subsidiaries and through contractual arrangements, or the VIE Agreements, with a VIE, Shengfeng Logistics, and the VIE’s subsidiaries. For accounting purposes, we control and receive the economic benefits of the VIE and the VIE’s subsidiaries’ business operations through the VIE Agreements, which enables us to consolidate the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statement under U.S. GAAP. Neither we nor our subsidiaries own any equity interests in the VIE or the VIE’s subsidiaries. As an investor in this offering, you may be subject to unique risks due to our VIE structure. The VIE Agreements are designed to provide our wholly owned subsidiary, Tianyu, with the power, rights, and obligations to Shengfeng Logistics, including control rights and the rights to the assets, property, and revenue of the VIE, as set forth under the VIE Agreements. Our VIE Agreements have not been tested in a court of law in China, as of the date of this prospectus, and may not be effective in providing control over the VIE. We are, therefore, subject to risks due to the uncertainty of the interpretation and application of the laws and regulations of the PRC, regarding the VIE and the VIE structure, including, but not limited to, regulatory review of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangements with the VIE. We have evaluated the guidance in FASB ASC 810 and determined that we are regarded as the primary beneficiary of the VIE, for accounting purposes, as a result of our direct ownership in Tianyu and the provisions of the VIE Agreements. Accordingly, we treat the VIE and the VIE’s subsidiaries as our consolidated entities under U.S. GAAP. We have consolidated the financial results of the VIE and the VIE’s subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

 

Our Class A Ordinary Shares offered in this offering are shares of our offshore holding company in the Cayman Islands instead of shares of the VIE or the VIE’s subsidiaries in China, therefore, you will not directly hold equity interests in the VIE or the VIE’s subsidiaries, and you may never directly hold equity interests in the VIE or the VIE’s subsidiaries through your investment in this offering. For a description of the VIE Agreements, see “Item 3. Key Information—Our VIE Agreements” in our annual report on Form 20-F for the year ended December 31, 2022.

 

Our Competitive Strengths

 

We believe we have the following competitive strengths:

 

Contract Logistics Service Provider with Established Operating History in China

 

Since 2001, and as of the date of this prospectus, we, through the VIE and the VIE’s subsidiaries, have operated as a contract logistics service provider for 22 years. Our main business operates as a less than truckload, or “LTL,” freight carriers in China, and we, through the VIE and the VIE’s subsidiaries, also provide full truckload, “FTL,” freight transportation services.

 

Through years of operation, we, through the VIE and the VIE’s subsidiaries, have developed extensive and reliable transportation networks in China, covering 341 cities across 31 provinces, as of December 31, 2022. We, through the VIE and the VIE’s subsidiaries, have also established a broad clientele base across more than 4,000 manufacturers and trading companies (medium-scale to large-scale) throughout China, including brand names such as CATL Battery, Bright Dairy, SF Express, Schneider Electric, and Xiaomi.

 

We, through the VIE and the VIE’s subsidiaries, have achieved significant growth while maintaining profitability. We had an annual net profit growth of approximately 213.4% in 2020, approximately 10.0% in 2021, and approximately 17.8% in 2022. Our net profit amounted to approximately $7.8 million, $6.6 million and $6.1 million for the fiscal years ended December 31, 2022, 2021 and 2020, respectively; our net profit margins for the fiscal years ended December 31, 2022, 2021 and 2020 were approximately 2.1%, 1.9% and 2.1%, respectively.

 

 

Operational Efficiency Driven by Detailed Operational Guidelines

 

We, through the VIE, have designed and implemented a series of systematic guidelines as part of our daily business operations to ensure efficiency.

 

Systematic Clients Management – Every client’s order is tracked on a real-time basis. Furthermore, we generate a summary report, periodically, for each client with respect to its orders. Our client management systematically allows us to analyze current conditions, which in turn will help us to improve our efficiency and increase our margin. For orders with a gross margin below 5%, we will conduct cost analyzations and adjust unit prices, frights units, frights types, and/or transportation routes accordingly in order to conserve resources and mitigate cost.

 

Through Shengfeng TMS and our Customer Relationship Management System (the “CRM”), we maintain a profile for each client, which includes the client’s information and corresponding contract details, in order to closely and efficiently monitor our performance for each order. We will also follow up with clients on a regular basis to collect feedbacks in order to improve our efficiency. See “Business—Our Technology Infrastructure.”

 

Streamline Purchase Orders Management – Our real-time tracking is available throughout the entire process. Moreover, revenue will be recognized and costs will be incurred at every stage of our operations, i.e. receipt, trunk, and distribution, and split between each cooperative branch. By tracking the whole process, we are able to further meticulously analyze revenue and cost for each order.

 

Prioritize Capacity Arrangement – On a daily basis, every station and routing center will, based on our system’s support and their industry experience, adjust, arrange, and prioritize each and every order based on clients, weights, and routes in order to fulfill every order and maximize cost efficiency.

 

Finance and Accounting Management – We, through the VIE, have retained Marcum Asia to perform annual auditing of our financial statements. Part of our management in finance and accounting management process is to utilize our Shengfeng TMS, which allows us to monitor cash inflows and outflows and costs incurred on a real time basis. This process also allows us to analyze and evaluate the profitability of our line-haul and short-haul routes and execute decisions strategically so that we can improve efficiency.

 

Interdepartmental Management Meeting – In order to connect all departments, from headquarters to our 35 operating branches, we hold monthly business meetings during which we summarize our monthly operations, provide feedbacks to market changes, track business progress, boost employee morals, and ensure meeting objectives.

 

Scalable Integrated Network Model

 

We believe our scalable integrated network model is best suited to support our growth. We believe that we have the capability to utilize our integrated network model to influence, support, and serve these ongoing, high market demands. Our model is well-suited to serve fragmented market clientele base and cope with seasonal demand. Furthermore, our national network’s fast growth allows us to provide clients with greater geographic reach at a lower cost.

 

We, through the VIE and the VIE’s subsidiaries, own and operate our own regional sorting centers, Cloud OFCs and service outlets. We, through the VIE and the VIE’s subsidiaries, also directly own and operate our fleets. In order to establish broader network and provide more efficient services, we, through the VIE and the VIE’s subsidiaries, cooperate with third-party transportation providers in providing freight transportation services and with some network partners to promote our business. As of December 31, 2022, the VIE and the VIE’s subsidiaries’ transportation and sorting network is comprised of 35 regional sorting centers, 22 Cloud OFCs and 42 service outlets. Our network in China covered 341 cities in over 31 provinces as of December 31, 2022.

 

Extensive and Growing Ecosystem

 

Our ecosystem is comprised of the Company, clients, and transportation providers. We, through the VIE and the VIE’s subsidiaries, have established business relationships with over 4,000 medium to large-scale corporate clients, and over 40,000 transportation providers, as of December 31, 2022. Moreover, our reach extends to individual consumers, small and medium corporate clients, and large-cap companies through our network. We, through the VIE and the VIE’s subsidiaries, serve various industries and have developed a strong presence in the manufacturing, fast moving consumer goods and publishing industry.

 

 

Superior Service Quality

 

We endeavor to consistently provide superior services to our clients. We believe we have successfully designed, established and streamlined policies and processes to achieve standardization and control over service quality delivered across our networks. We constantly monitor a variety of key service quality metrics, such as delivery date rate, complaint rate, and damaged or lost freight rate, and we continuously strive to improve each of these rates. In addition, we, through the VIE and the VIE’s subsidiaries, operate a call center system to provide real-time assistance to our clients 10 hours a day, 7 days a week. We believe that our clients choose our services due to our superior service quality.

 

Experienced Management Team with a Proven Track Record

 

Our management has extensive experience, knowledge, and proven track records within the logistics industry, which brings us to a deeper understanding of business operations as well as deep industry connections. The majority of our senior management team has been with the Company for many years, and some of them have been with us since our inception in 2001. Mr. Yongxu Liu, our Chairman, chief executive officer and President, has over 20 years of experience in the logistics industry. Mr. Yongxu Liu founded our Company with a vision to provide accessible, reliable, and high-quality logistics solutions to Chinese businesses and to become a leading player in the industry. Under his leadership, our Company started off in 2001 from being a small-sized logistics service provider with only 60 employees, to becoming one of the largest logistics service providers in China with total transportation volume of approximately 7,800,000 tons for the fiscal year ended December 31, 2022 and we have 1,550 employees as of December 31, 2022. For further details on our directors and senior management, see “Item 6. Directors, Senior Management and Employees” in our annual report on Form 20-F for the year ended December 31, 2022.

  

Our Growth Strategies

 

We aspire to be a leading company in the contract logistics market in China, and we intend to pursue the following strategies in furtherance of our growth:

 

Expand Market Share

 

We currently intend to build our business upon our current position and presence with the goal to become more influential in the contract logistics market in China. We will continue working on enhancing our brand recognition and image, improving value propositions, and achieving greater economies of scale. This will also help us to attract new clients and increase our share of existing clients’ logistics budgets through more frequent use of our services.

 

Broaden Our Service Offerings

 

We intend to broaden our service offerings. Through our existing transportation network, we aim to provide express delivery services and supplement our current cloud storage services with supply chain management solutions. In addition, we plan to continue enhancing the quality of our services in order to meet the individual needs of our clients and enhance client retention.

 

Further Strengthen Our Nationwide Transportation Networks

 

We plan to further strengthen our nationwide transportation networks to cover more geographic areas in China and boost future growth. Specifically, we intend to enhance our network density by penetrating into the greater Beijing area, Yangtze River Delta, western China, and northeastern China by setting up additional regional sorting centers, Cloud OFCs, and service outlets as well as expanding our existing ones.

 

Enhance Our Technology Platform and Infrastructure

 

We intend to continue investing in information technology and equipment in order to enhance our operational efficiency, reliability, and scalability, improve client experience, and reduce costs. Our initiatives include route planning optimization, sorting automation, and supply chain automation. To this end, we plan to hire, train, and retain the best talents in the industry and invest in research and development, including automated, smart, and high-tech warehouse equipment and systems. Our ultimate goal is to be able to fulfill various demands and requests from our clients by providing them with an integrated and one-stop warehousing and distribution services and experience.

 

 

Transition to Focus on B2B Freight Transportation Services and Outsourcing of Transportation Service.

 

We have implemented a new policy to focus on developing B2B freight transportation services in anticipation of using our current resources in a more concentrated and efficient manner, as we pursue lower operating costs and higher profits. We aim to focus mainly on contract logistics, primarily catering to and targeting major corporate clients. Therefore, under the new policy, we plan to gradually reduce the number of our service outlets, as their main function is to provide receipt, collection, and small-scale freight shipment orders for individual clients. As of the date of this prospectus, we have closed six service outlets and reduced the number of relevant employees by removing some positions held by the relevant employees after they resigned voluntarily and have been recruiting fewer workers since May 2023.

 

In addition, as our integration of internal, self-owned, and external, third-party transportation providers’ vehicle resources have become increasingly mature, we have decided to rely more heavily on third-party transportation providers to perform the transportation service and have reduced our fleet of self-owned trucks and vehicles to lower the operating costs. In addition, we intend to gradually phase out a certain proportion of our gasoline-powered trucks and vehicles while simultaneously endeavoring to seek replacement by new energy vehicles to promote the development of green logistics. Consequently, we have disposed of more than 110 self-owned gasoline-powered trucks and vehicles and purchased 16 electric heavy-duty trucks as of the date of this prospectus. We have also reduced the number of relevant employees by removing some positions, including drivers, held by the relevant employees after they resigned voluntarily and we have been recruiting fewer workers to fill in the residual vacancies.

 

Pursue Strategic Alliances and Acquisition Opportunities

 

From time to time, we may selectively form strategic alliances with other logistics companies or other business partners that bring synergies with our business. We may also selectively pursue acquisitions that will complement our business and operations. As of the date of this prospectus, we have not identified any specific strategic alliances or acquisition opportunities.

 

Our Service Offerings

 

Through our integrated network model, we, through the VIE and the VIE’s subsidiaries, provide B2B freight transportation services and cloud storage services to our clients. As an integral part of our freight transportation services and cloud storage services, we, through the VIE and the VIE’s subsidiaries, also provide a wide range of value-added logistics services, such as collection on delivery services, customs declaration services, packaging services, and shipment protection services. We, through the VIE and the VIE’s subsidiaries, execute these service commitments by investing in and retaining talented employees, developing innovative proprietary systems and processes, and utilizing a network of transportation provided by us and third-party transportation providers. While industry definitions vary, given our extensive contracting to create a flexible network of solutions, we are generally referred to in the industry as a contract logistics company. 

 

 

The following chart sets out the services provided by us through the VIE and the VIE’s subsidiaries.

 

 

 

Freight Transportation Services (Transportation Services)

 

Freight transportation service is currently the largest segment in our business and source of income. The revenue from freight transportation service increased from approximately $327.8 million, or 94.6% of the total revenue for the fiscal year ended December 31, 2021 to approximately $346.0 million, or 93.4% of the total revenue for the fiscal year ended December 31, 2022.

 

 

We, through the VIE and the VIE’s subsidiaries, mainly offer FTL freight transportation and LTL freight transportation to enterprises for goods weighing over 500 kilograms as follows:

 

	●	FTL: We provide professional transportation solutions with accurate FTL and special-truck delivery services. FTL freight transportation services are specially designed for heavy shipments which typically weigh over 3,000 kilograms. We have access to dry vans, flatbeds, hazardous parcel vans, and bulk capacity. We may connect our clients with our transportation network and third-party transportation providers that specialize in their transportation lanes and product types, and optimize the usage of our equipment.
	●	LTL: LTL freight transportation involves the shipment of single or multiple pallets of freight. LTL shipments typically weigh between 15 kilograms and 3,000 kilograms. We mainly provide transportation services for B2B LTL shipments weighing between 500 kilograms and 3,000 kilograms.

 

We, through the VIE and the VIE’s subsidiaries, offer FTL freight transportation services when (i) the freight is large enough to require its own truck, (ii) the freight is fragile and it requires special handling, or (iii) the shipment has time critical or time-definite restrictions on the transit time of the freight; otherwise, we, through the VIE and the VIE’s subsidiaries, offer LTL freight transportation services, and our vehicles carry as many different orders of freight as they can manage and deliver them in whichever order best suits the journey. About 30% of our freight transportation services are provided by our self-owned fleet and the rest are provided by third-party transportation providers. For further details on these transportation providers, see “Business—Our Transportation Providers.”

 

To meet our clients’ different needs, we typically provide individualized transportation services on a contractual basis. We, through the VIE and the VIE’s subsidiaries, usually enter into freight transportation agreements directly with our clients for a series of freight transportation orders over a year. The service pricing, freight routes, settlement terms and other terms will be set forth in the agreements. Other than the clients who enter into service agreements with us for LTL or FTL freight transportation services, we also provide LTL freight transportation services to some retail clients based on the shipment orders generated from time to time. 

 

For the fiscal years ended December 31, 2022, 2021, and 2020, we, through the VIE and the VIE’s subsidiaries, provided freight transportation services for 2,291, 2,226 and 2,431 clients, respectively, in the industries of, among others, manufacturing, energy, telecommunications, internet, fashion, fast moving consumer goods, publishing, agriculture and e-commerce.

 

Shipment Flow

 

The following diagram illustrates the process for the completion of a typical freight transportation order.

 

 

 

 

 

 

 

Step 1: Freight Pickup

 

Our regional sorting center arranges for vans to collect the freight from the senders once it receives shipment orders. These vans are provided either by us or by third-party transportation providers. Through each waybill, we assign a unique tracking number and corresponding barcode to each parcel. The waybills, coupled with our automated systems, enable us to track the status of each individual parcel throughout the entire pickup, sorting, transportation, and delivery process. Our service outlets also receive small shipment orders and collect and send freight to our regional sorting centers from time to time.

 

Step 2: Freight Sorting and Line-Haul Transportation

 

Upon receiving freight, the regional sorting center will sort, pack, and dispatch the freights to the destination regional sorting center (line-haul transportation services between our regional sorting centers are provided). Barcodes attached to the freight are scanned as they pass each sorting and transportation gateway so that we and our clients can keep track of real-time delivery progress.

 

Step 3: Freight Delivery

 

Our destination regional sorting center unloads and sorts the freight, which is then delivered directly to the recipients’ sites using vans operated by us or third-party transportation providers. Recipients may also elect to pick up their freight at our delivery outlets. Once the recipient confirms receipt through signature, our whole service cycle is completed and the settlement of delivery service fee promptly appears on our payment settlement system.

 

For FTL shipments, we generally pick up the freight directly from the clients’ sites and transport them to the recipients’ destination using our line-haul transportation, without combining orders from different clients for an FTL shipment. For LTL shipments, we combine orders from different clients into an FTL shipment at our sorting centers and transport them to the designated location. Through our line-haul and short-haul transportation lines, regional sorting centers, and information system, we have consolidated freight and freight information to best provide valuable and concise information to our clients.

 

Freight Transportation Services Pricing

 

Our pricing, for each order of freight transportation, depends on the weight, route, type, and value-added services.

 

We determine our pricing based on various factors, including, but not limited to, operating costs, general market conditions, competitions, and service quality. Our service pricing may also be influenced by market conditions and competitions. From time to time, we may evaluate and adjust our service pricing based on, among other factors, market conditions and operating costs.

 

 

Cloud Storage Services (Warehouse Storage and Management Services)

 

We, through the VIE and the VIE’s subsidiaries, offer warehouse management, order fulfillment, delivery process management, in-warehouse processing, and inventory optimization management services to our clients to optimize their inventory and delivery process management. We, through the VIE and the VIE’s subsidiaries, also provide and arrange transportation services and coordinate shipments from merchants to our Cloud OFCs and from there to other locations designated by our clients as part of our order fulfillment services.

 

Inventory Management

 

Cloud OFCs differ from traditional warehouses in that they can support direct order fulfillment and dispatch operations in addition to storage functions. They are “cloud-based” because we take full responsibility for the optimal allocation of our clients’ inventory into different Cloud OFCs and save our clients from the hassle of day-to-day operations, therefore, from our clients’ point of view, these Cloud OFCs are “in the cloud.” 

 

As of December 31, 2022, we, through the VIE and the VIE’s subsidiaries, directly operated 22 Cloud OFCs across China with a total area of approximately 2,444,000 square feet, among which 5 Cloud OFCs were multistory facilities. All the Cloud OFCs use our technology infrastructure and are connected to various information systems across our platform. Therefore, we can allocate inventory of our clients effectively within our Cloud OFCs and coordinate our services, including subsequent transportation and delivery, accordingly. We constantly monitor the service quality of our Cloud OFCs to ensure we uphold the standard of our services. The following map illustrates our Cloud OFCs network as of December 31, 2022.

 

 

 

 

 

 

By utilizing our Cloud OFCs, we provide the following services to our clients through the VIE and the VIE’s subsidiaries:

 

●

Storage. We offer reliable and convenient storage solutions for a variety of commercial needs through the warehouses owned or leased by us. Our warehouse facilities are temperature-controlled, secured, and fire-preventive to protect the integrity of our client’s products.

 

 

	●	Pick and Pack. After receiving pick tickets from our clients, our team of trained professionals retrieve clients’ orders according to the instructions on the corresponding pick tickets and pack the items in preparation for shipping.
	●	Kitting and Assembly. Based on the instructions of our clients, we arrange individual items and assemble the separate pieces into a single ready-to-ship set according to specified combinations.
	●	Fulfillment. We receive orders from clients via our WMS or e-mail. We then generate pick-up tickets, and send these tickets to the warehouse for packing, before the goods are picked up by the clients’ designated transportation carriers. Ownership and responsibility of the goods are then transferred to such carriers.

 

	●	Delivery Process Management. We conduct the handover of the shipments of our clients to their transportation and distribution carriers pursuant to the standard operating procedures set forth in our agreements with the clients.
	●	Other Value-added Services. We also offer some value-added services such as inbound qualify testing, repackaging, labeling, and inventory shelf life management.
	●	Inventory Optimization Management. We regularly provide to our clients different reports reflecting the status of their storage and inventory so that they can make business decisions accordingly to optimize their inventory structure.

 

With our WMS, we are able to effectively monitor the capacity of our warehouses on a real-time basis and track each and every movement of a good from its entry into our warehouse to its delivery at its destination, including receiving, storing, packing, and shipping. For details of our WMS, see “Business—Our technology infrastructure.”

 

We normally enter into 1-year to 5-year service contracts with our cloud storage service clients. Our contracts specify the details of our services based on the client’s expected sale volumes and the floor areas to be used. Our contracts typically state the unit price of each service we provide. The amount of revenue we generate depends on the unit price and volume.

 

Logistics

 

We, through the VIE and the VIE’s subsidiaries, have integrated our transportation network and Shengfeng TMS with our client’s respective logistics network and systems. By leveraging our technologies and professional expertise, we are capable of creating and designing solutions for optimizing, transforming, and upgrading our clients’ supply chains as well as reducing their costs. Our national footprint allows us to provide these services to our clients and their manufacturing partners across many regions of China.

 

 

The following diagram illustrates the product flow in a typical supply chain. Each client, based on its individual needs and recommendations from our solution design, may elect to use any combination of the various services we provide at each step of the product flow.

 

 

 

●

Inbound Logistics. We craft and optimize inbound logistics networks for our clients to ensure that the flow of goods and materials into their business meets their operational objectives. We use different delivery methods specific to the various goods we handle. For instance, a milk run is a delivery method used to transport mixed loads of raw materials from various suppliers to one client. Instead of having each of our client’s suppliers transport raw materials individually, we will visit the client’s suppliers on a prearranged date, pick up raw materials, and deliver them to the client.

 

	●	Line-haul and Short-haul Distribution. We assist clients in the transportation of intermediate goods and products between their factories and warehouses and between warehouses in different regions. Our line-haul and short-haul transportation network makes the process efficient and keeps the costs low for our clients.
	●	Outbound Logistics. We assist clients in the transportation of products to ender users or distribution centers through line-haul and short-haul transportation, regional distribution, or last mile delivery, depending on the destinations and the amount of freight.
	●	Reverse Logistics. In reverse logistics, the goods move from the end user back to the seller or manufacturer, our clients. We help clients manage activities after the initial sales, including returns, refurbishing, packaging, and unsold goods. Through the process, we aim to reduce storage and distribution costs, improve clients’ reputation among its end users, satisfy client’s needs, and create a more sustainable supply chain for our clients.

 

 

Value-added Services

 

In addition to our B2B freight transportation and cloud storage services, we, through the VIE and the VIE’s subsidiaries, provide a wide range of value-added services to our clients to meet their diversified needs.

 

Collection on delivery services. Under circumstances where a seller ships goods to a buyer, we provide the seller with the option to authorize us to collect payments from the recipient on its behalf. We charge collection fees equal to 4% of the collected payment for a transaction, and we wire the collected payment back to the seller on the same day of collection.

 

Customs declaration services. Some of our clients require international shipping services, in response, we provide customs declaration on an as-needed basis to assist them in meeting the legal requirements such as import and export, and trade. We engage third-party service providers that maintain the licenses required under applicable PRC laws and regulations for providing customs declaration services. 

 

Delivery upstairs services. We offer door-to-door delivery services. In China, it is customary for logistics companies to charge additional fees based on the floor level. The higher the floor, the higher the fees. Fees are calculated based on a number of factors, including, but not limited to, weight of the goods, destination floor, and elevator availability.

 

Packaging services. We provide shipment packaging services to our clients. In addition to regular packaging materials, we provide a few other options. For instance, we have introduced temperature control materials for packing fruits and vegetables or otherwise perishable goods, shock absorbing materials for packing fragile goods in order to reduce damages that may occur during transportation, and wooden materials for carrying heavier goods.

 

Other than the regular and necessary packaging protection on shipments we provide at no additional costs to the clients, we also provide additional packaging protection services in two options: active protection and protection upon request. Active protection will be provided free of charge based on our own judgment and experience without requests from our clients. It mostly involves shipments of special products or under certain extreme natural conditions, such as high precision instruments which need special fixing protection, or liquids being sent to cold areas in the winter which need cold resistant protection. Additional packaging protection upon request from our clients will incur additional fees based on the shipment and the requests.

 

Pay-at-arrival services. We typically require senders to pay for shipment fees as we collect freight from them. Alternatively, senders may select the pay-at-arrival option, which authorizes us to collect shipment fees from recipients upon freight arrival. In this case, the Company will deliver the shipment upon the receipt of shipment fees from the recipients.

 

Return proof of delivery. For this service, we issue receipts with either the recipients’ signatures or other credible documentations back to the senders, which allows senders to obtain proof of receipt from recipients. We also offer senders the option to receive and view such receipts electronically on their desktop or phones.

 

Shipment protection. We provide shipment protection services to our clients. For the clients who enter into service agreements with us, terms and conditions of shipment insurance are generally set forth under the service agreements, and they are usually responsible for the insurance premium in the amounts as set forth under the agreements on a case-by-case basis. For the retail clients, they can decide on whether to purchase shipment protection insurance policy or not at their sole discretion. If they choose to purchase such insurance policy, they will usually be charged an insurance premium of approximately 0.3% of the declared value of the shipments. If a client has purchased shipment protection services, in case of lost, stolen, or damaged shipment during transit, he/she should first provide us with a claim letter and proof of value. Once we verify those materials, we will reimburse the client’s loss accordingly based on the terms and conditions set forth under the service agreements. Afterwards, we will claim for reimbursement from the insurance company based on the insurance policies. The insurance company will then claim for reimbursement from the parties at fault, if the Company is not at fault. If a client has not purchased shipment protection services, then in case of lost, stolen, or damaged shipment during transit, we will reimburse for the client’s loss in the amount equal to 1 to 3 times of the shipping fees.

 

 

Our Network and Infrastructure

 

Our network consists of regional sorting centers, Cloud OFCs, service outlets, the line-haul and short-haul transportation network operated by us, and our network partners across China.

 

Regional Sorting Centers

 

Our regional sorting centers are connected by a line-haul transportation network that we operate. They collect freight directly from clients or from service outlets within their coverage area, sort it according to destinations, and dispatch the freight to the designated regional sorting centers. As of December 31, 2022, we, through the VIE and the VIE’s subsidiaries, operated 35 regional sorting hubs in Fujian, Guangdong, Shanghai, Beijing, Zhejiang, Hubei, and 16 other provinces in China. Under our operational guidelines, our regional sorting centers did not experience any significant service interruption during the COVID-19 pandemic or peak seasons. 

 

The following map shows our nationwide sorting center network as of December 31, 2022.

 

 

 

 

Our centralized planning team coordinates the development and expansion of new and existing regional sorting centers, including site selection, facility layout design, and equipment purchase. As we strive to provide seamless and efficient logistic solutions to our clients, we regularly contemplate our opportunities to improve our services. We will consider adding new regional sorting centers if they help optimize our route or increase our capacity in the surrounding areas. We select the locations based on certain factors, including, but not limited to: (i) client density, (ii) ease of access, (iii) rent pricing, (iv) payment method, (v) regulatory compliance, (vi) safety, and (vii) surrounding infrastructure and environment.

 

We design our regional sorting centers in a uniform manner to deliver a consistent brand image and build in extra capacity for volume growth in the foreseeable future. We hire 20 to 400 employees in each of our regional sorting center, depending on the local freight volume, and we provide each center with sorting and loading equipment.

 

When planning routes, we prioritize the efficiency of the entire network. We dispatch freight to the regional sorting center closest to its destination even if the regional sorting center and the destination are located in different administrative regions. This reduces transportation time and lowers our and our clients’ transportation costs. Our route planning and management benefit from our years of experiences and information technology infrastructures, and they enable us to track freight movement on a real-time basis.

 

Among our regional sorting centers, 2 are located on lands that we own and the remaining 33 are located on leased lands.

 

Cloud OFCs

 

See “Business —Service Offerings by Us—Cloud Storage Services” above. 

 

 

Line-haul and Short-haul Transportation Network

 

We, through the VIE and the VIE’s subsidiaries, operate over 490 line-haul and short-haul routes. We utilize our self-owned fleet in addition to the vehicles owned and operated by third-party transportation providers to form both our line-haul transportation network for long-distance, high-capacity transportation, and our short-haul transportation network for short-distance, low-capacity pickup and delivery. Because we control route planning and vehicle dispatch of our entire line-haul and short-haul transportation system, we plan our routes with the goal to lower transportation costs and transit times.

 

As of December 31, 2022, our own line-haul fleet is comprised of 294 truck headstocks and over 1,000 cabinets for ordinary shipments and 10 truck headstocks and 15 cabinets for hazardous shipments. We, through the VIE and the VIE’s subsidiaries, invest in our fleet with our own funds so we are able to adjust the ratio of different vehicle models swiftly to react to changes based on operational needs. We mostly use 16-meter-long trucks, which have nearly twice the loading capacity of 9.6-meter-long trucks (commonly used in the industry), to minimize marginal costs and lower unit line-haul transportation costs. The uniform design of our regional sorting centers with extra parking space also allows us to lower transportation cost of freight. To increase our transportation efficiency, we utilize the drop and pull transportation method.

 

As of December 31, 2022, we, through the VIE and the VIE’s subsidiaries, also owned 242 vehicles for our short-haul transportation.

 

For the fiscal years ended December 31, 2022 and 2021, approximately 30% and 29% of our freight transportation services were provided by our self-owned fleet and the balance was outsourced and provided by independent third-party transportation providers. For the fiscal years ended December 31, 2022 and 2021, we had 56,370 and 49,036 outsourced vehicles for over 5.54 million and 4.84 million shipments, respectively. The price we pay to third-party transportation providers is based on our market insights on cost factors, including (i) toll cost based on route, (ii) fuel cost based on route, type of truck used, and fuel price, and (iii) other costs such as drivers’ compensation, depreciation, and maintenance cost. For details on third-party transportation providers, see “Business —Our Transportation Providers.”

 

Service Outlets

 

As of December 31, 2022, we, through the VIE and the VIE’s subsidiaries, operated 36 service outlets across China. Our service outlets, in their assigned geographical areas, will (1) create shipment orders and accept goods for shipment from our LTL clients; (2) deliver goods for shipment to our regional sorting centers for freight transportation; and (3) accept shipments from regional sorting centers for the clients to pick up. Each service outlet typically has 3 to 5 employees.

 

We will consider adding new service outlets if they help optimize our route or increase our capacity in the surrounding areas. We select the locations based on certain factors, including, but not limited to: (i) client density, (ii) ease of access, (iii) rent pricing, (iv) internal layout, (v) regulatory compliance, and (vi) surrounding infrastructure and environment.

 

Network Partners

 

To increase our client base and network coverage, we, through the VIE and the VIE’s subsidiaries, have also entered into some network partner agreements. Our network partners will create shipment orders and accept goods for shipment from their clients. Afterwards, they will deliver the goods to our regional sorting centers for our freight transportation. The network partners are solely responsible for the rights and obligations under the service agreements entered into by and between them and their clients. For the fiscal year ended December 31, 2022, our network partners contributed approximately 0.31% of our income from operations. For the year ended December 31, 2021, our network partners contributed approximately 0.49% of our income from operations.

 

Our Ecosystem

 

We have built a growing ecosystem with various types of participants, including the Company, clients, and transportation providers. As our Company continues to expand, we expect that more participants will join our ecosystem, which in turn, we believe, will bring us more business. The current ecosystem has enhanced our user experience and brand value. We expect this will drive our growth. 

 

 

The following graphic illustrates the participants and the network effect of our ecosystem.

 

 

 

Our Clients

 

We, through the VIE and the VIE’s subsidiaries, mainly serve clients in connection with the delivery of their products to consumers and other businesses. We have clients in various industries, including manufacturing, energy, telecommunications, internet, fashion, fast moving consumer goods, publishing, agriculture and e-commerce. Our largest clients include CATL Battery, Bright Dairy, SF Express, Schneider Electric, Tesla and Xiaomi. We served 2,634 and 2,535 clients during the fiscal years ended December 31, 2022 and 2021, respectively, and no client accounted for more than 5% of our total revenue during those years. The following table sets forth the top three industries our clients are in by percentage as of December 31, 2022:

 

Industry		Percentage
Manufacturing			15.37	%
Fast moving customer goods			14.30	%
Publishing			7.00	%
Total			36.67	%

 

 

Client Service

 

We believe that our client service enhances our client loyalty and brand image. Therefore, we provide ongoing trainings to our employees and transportation providers, and we conduct regular performance reviews to ensure the quality of our services.

 

We, through the VIE and the VIE’s subsidiaries, operate a call center system to provide real-time assistance to our clients by our approximately 198  client service representatives 10 hours a day, 7 days a week. Our automated system continues to respond to inquiries outside of the normal business hours and forwards complicated inquiries to our client service representatives for further handling. Our call centers are localized with branch offices in over 20 provinces in China with mostly local hires to leverage their local knowledge. All branches can be reached via a unified number and use the same call system and database. Our call system automatically forwards incoming calls to the local branch near the caller’s location. Our client service representatives adhere to the same client service standards nationwide and their local knowledge contributes to enhanced client service effectiveness. At the end of each call, we ask the caller to grade the quality of our client service and a designated call-back team will follow up on all incidences of dissatisfaction. In addition, we hold regular training sessions for our client service representatives and conduct regular performance reviews to ensure that they provide high quality client service. 

 

Our Transportation Providers

 

During the fiscal years ended December 31, 2022 and 2021, we, through the VIE and the VIE’s subsidiaries, cooperated with approximately 45,558 and 36,736 transportation providers, respectively. These transportation providers are of all sizes, including owner-operators of a single truck, private fleets, and large trucking companies. All these transportation providers provide vehicles to carry out transportation tasks within our line-haul and short-haul transportation network. The table below sets out the number of each category of transportation providers.

 

		Fiscal Years Ended December 31,
		2022				2021
Owner-operators of a single truck (#)			43,932				35,224
Private fleets (#)			25				54
Large trucking companies (#)			1,601				1,458
Total transportation providers			45,558				36,736

 

To strengthen and maintain our relationships with transportation providers, our employees regularly communicate with them and try to assist them by increasing their equipment utilization, reducing their empty miles, and repositioning their equipment.

 

To ensure that we only cooperate and work with qualified transportation providers, our management formed an evaluation standard to control the quality of their services:

 

●

Selection. We carefully examine transportation providers’ operating permits, vehicle condition, vehicle model, and whether the vehicles are connected with the BeiDou Navigation Satellite System, a Chinese satellite navigation system, and select qualified and reliable providers.   Regarding the cooperation with owner-operators of a single truck and private fleets, we also participate in the process to select drivers. We will verify and examine the drivers’ licenses and take into consideration the history of cooperation between the Company and the drivers.

 

●

Inspection. After a transportation provider begins cooperating with us, we regularly inspect its performance during different stages of the cooperation according to detailed specifications and timeline for services in our agreement.

 

 

●

Review. We review the performance of each provider and rate them according to quality of services, timeliness, prices, and client services. Depending on the performance, we can increase, decrease, or terminate the cooperation with a provider.

 

We, through the VIE and the VIE’s subsidiaries, typically enter into transportation contracts with providers (i) for a specific period of time, typically one year, or (ii) for a specific order. Our contracts will specify the rights and obligations of the Company and the service providers, including, but not limited to, quantities, specification, unit price, delivery timeline, payment date, liabilities and remedies. Service providers shall be responsible for accidents, including economic loss caused to the Company, if they are at fault.

 

We, through Shengfeng Logistics, entered into a Road Freight Transportation Cooperation Agreement with Hubei Luge on June 30, 2019. This agreement provided that Hubei Luge, as an Internet logistics platform, should provide road freight transportation services in China to Shengfeng Logistics, and its designated subsidiaries, through its platform, on the goods agreed upon and confirmed by both parties from time to time. The term of the agreement was from July 1, 2019 to December 31, 2020. Shengfeng Logistics should pay Hubei Luge a shipping fee per shipment equal to the amount of shipping fee paid by Hubei Luge to the actual operator divided by 95.1%.

 

Additionally, we, through Shengfeng Logistics, entered into a Road Freight Transportation Platform Cooperation Agreement with Hefei Weitian Yuntong Information Technology Co., Ltd., or “Hefei Weitian,” on September 1, 2020. This agreement provides that Hefei Weitian, including Hubei Luge and Anhui Luge as its designated subsidiaries, as an Internet logistics platform, shall provide road freight transportation services in China to Shengfeng Logistics, and its designated subsidiaries, through its platform, on the goods agreed upon and confirmed by both parties from time to time. The term of agreement was from September 1, 2020 to August 31, 2021. We, through Shengfeng Logistics, have renewed the agreement in which the new term is from September 1, 2021 to December 31, 2023. Shengfeng Logistics shall pay Hefei Weitian a shipping fee per shipment equal to the amount of shipping fee paid by Hefei Weitian to the actual operator divided by 95.1%. Anhui Luge and Hubei Luge are affiliates under the control of Hefei Weitian. 

 

Security and Safety

 

We have designed and integrated safety policies and procedures across the full scope of our business. Our key safety measures include:

 

Operational Security and Safety

 

We, through the VIE and the VIE’s subsidiaries, have established security screening protocols to inspect freights before acceptance. We have listed prohibited items for ground transportation such as flammables, explosives, gunpowder, and gasoline. We also implement X-ray screenings to find hazardous or prohibited items. Our safety screening system will continue to evolve in order to meet ever changing technologies.

 

Workplace safety and transportation safety are important to our business. We have implemented protocols for safety of ground transportation for the operations of our regional sorting centers, Cloud OFCs, and service outlets to minimize risks of accidents. We provide periodic trainings to our employees and transportation providers to recognize hazards, mitigate risks and avoid injuries of themselves and others at work.

 

Data Privacy and Safety

 

We, through the VIE and the VIE’s subsidiaries, have designed and implemented comprehensive procedures and guidelines to regulate our employees and transportation providers’ actions in relation to confidential data and information to ensure data security. We employ a variety of technical solutions to prevent and detect risks and vulnerabilities in our data privacy and safety, such as encryption and a firewall. We store and transmit all confidential data and information in encrypted format on separate servers and back up our data and information on a regular basis. We do not share our data or allow third parties to access our data stored on our servers without prior authorization, and we periodically test our systems and procedures to detect and eliminate information security risks and privacy risks.

 

 

Our Technology Infrastructure

 

In order to build our core technology systems and software to meet our needs, we, through the VIE and the VIE’s subsidiaries, maintain an in-house team for our technology research and development. For details of our research and development, see “Business —Research and Development.” We, through the VIE and the VIE’s subsidiaries, have also contracted with some third-party software design companies for licenses to use some of the systems they designed and developed, such as some financial reporting and accounting systems. Our goal is to utilize these technologies to increase efficiency in operations, enhance client experience, and contribute to our success.

 

Shengfeng TMS is the main system for our transportation services, which is a comprehensive management system that allows us to effectively monitor and manage the various stages of transportation, payment, and client service. Shengfeng TMS has the following key functions:

 

Shipment transportation and tracking management. Our shipments are sorted and dispatched based on the automatic routing calculation function provided by Shengfeng TMS. Our GPS trackers, attached to every vehicle, is synchronized with Shengfeng TMS, which will allow us to track the status and location of each shipment on a real time basis. We also integrate our GPS tracking with BeiDou Navigation Satellite System, WeChat mini programs, and manual recording, also available on our website and official WeChat account. This integration will allow our clients to track shipments and search our service outlet locations and sorting center locations. 

 

Payment calculation. Shengfeng TMS tracks each client’s order and allows us to view and issue bills to our clients and track client payments.

 

Client portal and service support. We maintain an online client portal, where our clients may register their own accounts. Through our online client portal, our clients may view all of their order histories, track shipment status in real time, and make direct service requests. Our client service representatives have access to Shengfeng TMS’s database through which they can provide a better and more effective service to our clients on a real time basis. In particular, our employees will load and unload the shipments according to the preferences of the clients, stored in the TMS system and sent through the portal, and our drivers will provide delivery services based on the instructions and requirements sent from the portal to cater for the needs of the clients.

 

Portals for third-party transportation providers. Our management relies on Shengfeng TMS to effectively manage transport providers. We create an individual profile for each of our service providers and store all corporate records or other material information into the system. Service providers are required to register for accounts on the system prior to their cooperation with us, which allows them to monitor the real-time status and location of each shipment they have been assigned. This also allows us to keep track of those shipments in the hands of third-party transportation providers, as service providers are required to report location and shipments status of transport to Shengfeng TMS on a regular basis. In addition, Shengfeng TMS is also capable of handling payment settlements.

 

We, through the VIE and the VIE’s subsidiaries, own and operate a data center to support our core operational systems such as Shengfeng TMS and WMS. Our data center provides the network infrastructure for our managerial, network safety, authority authentication, data backup, and other non-core functions.

 

In order to optimize our warehouse storage and management services, we utilize our WMS. It has six core functions: a) storage location management; b) order management; c) “First-In, First-Out” management; d) order and operation review; e) bar code management and tracking; and f) storage management. With WMS, we are able to increase the accuracy of goods dispatching, to enhance the efficiency of the operation, to improve the quality management and to control and realize the warehouse management process visualization.

 

Our WMS operates according to certain rules of warehouse management including rules of pick-up, quality inspection, warehouse and storage separation and arrangement. Rules of the WMS can be set based on the characteristics of different projects on site. Depending on the features of the goods, we perform certain procedures accordingly after their receipt, such as counting, quality inspection, box combination, storage location designation, and storage on the shelves. After the goods are stored in our warehouse, we keep track of their storage locations and we may move them from time to time in preparation of upcoming shipments or for better utilization of storage space. Once we receive any order for shipment, we make plans, create good pick-up orders, pick up the goods and verify the process again to control our accuracy and our service quality. Goods will also be tracked until delivery and such result will be reflected in our system. With our WMS, we are able to effectively monitor the capacity of our warehouses on a real-time basis and track each and every movement of a good from its entry into our warehouse to its delivery at its destination, including receiving, storing, packing, and shipping.

 

 

Intellectual Property

 

We rely on a combination of trademark, patents, copyrights, trade secret, and contractual agreements to protect our proprietary rights.

 

Trademark

 

As of the date of this prospectus, we had registered, through the VIE and the VIE’s subsidiaries, 38 trademarks, including 35 trademarks with the Trademark Office of the State Administration for Industry and Commerce in China, such as our Company’s Chinese name, “Shengfeng (盛丰),” 1 trademark with the Economic Affairs Bureau of Macao Special Administrative Region, 1 trademark with Trade Marks Registry Intellectual Property Department of the Government of the Hong Kong Special Administrative Region and 1 trademark with the Intellectual Property Office of Taiwan. 

 

Copyright

 

As of the date of this prospectus, we had registered, through the VIE and the VIE’s subsidiaries, 95 computer software copyrights, including those that relate to Shengfeng TMS, with the PRC National Copyright Administration.

 

Patent

 

As of the date of this prospectus, we had registered, through Guangdong Shengfeng Logistics Co., Ltd., one of the VIE’s subsidiaries, 3 invention patents and 15 utility model patents with the National Intellectual Property Administration.

 

Domain Name

 

As of the date of this prospectus, we had registered, through the VIE, 8 domain names, including our main website. The following table summarizes our domain name registration:

 

Domain Name		Territory
sfwl.com.cn		China
sfwl.ink		International
sfwl.net		International
sfwl.online		International
sfwl.vip		International
4008556688.cn		China
4008556688.com.cn		China
4008556688.net		International

 

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to infringe upon our intellectual property rights. In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights.

 

As of the date of this prospectus, we have not been subject to any material dispute or claims for infringement upon third-party trademarks, licenses, and other intellectual property rights in China.

 

Competition

 

The contract logistics industry in China is highly fragmented, and we compete with many local, regional, and national logistics companies with more resources including Sinotrans Logistics Ltd., Beijing Changjiu Logistics Co., Ltd., and Kerry Logistics (EAS) Limited. The competitions among contract logistics companies are primarily based off of service pricing, transportation speeds, service offerings, and other factors. We believe our relatively long operating history, superior operational capabilities, well-established national transportation networks, and high-quality services give us the competitive advantages over others.

 

Entry into the contract logistics industry requires significant initial investment in network construction, equipment and vehicle purchases, and formulation and attraction of new business partners. However, other express delivery service providers or e-commerce companies which may be more established, may utilize or further improve their existing proprietary delivery and transportation infrastructure to compete with us. Furthermore, as we look to expand our service offerings and client base, we may face competition from players in those new sectors.

 

 

Branding and Marketing

 

We strive to enhance our brand awareness through high service quality and various marketing initiatives. Shengfeng Logistics was recognized as one of China’s outstanding logistics companies by the China Communications and Transportation Association (the “CCTA”). Furthermore, Shengfeng Logistics was classified as an AAAAA class logistics company and among the top 10 companies with logistics informatization capacity by the China Federation of Logistics and Purchasing in 2018. Shengfeng Logistics was also recognized as a top 100 logistics companies in China by the CCTA in 2016 and 2018, respectively. Shengfeng Logistics was also ranked 32^nd out of the top 50 privately-owned logistics companies in China by CFLP as of December 31, 2022.

 

We, through the VIE and the VIE’s subsidiaries, launched various programs and marketing activities to promote our brand and services. We rely on various social network mobile applications such as WeChat to distribute business updates and corporate news. Additionally, we offer convenient features such as shipment tracking, service outlet locator, shipment booking through our WeChat official account.

 

We participate in conferences and exhibitions in different industries to expand our pool of potential clients. We also design and develop different service packages to cater for the demands of clients in different industries so that we could extend our reach of potential clients in similar industries and upstream and downstream suppliers. We pay close attention to the development of innovative industries such as new energy vehicles, shared bikes and Internet TV, and have formed cooperation relationships with companies in such industries.

 

We bring in new clients through promotion activities by our sales employees, market bidding activities, research on upstream and downstream entities of our current clients, participation in conferences and exhibitions, meetings, calls, referrals, and other activities. In addition, we require our own fleet to apply our logos onto transportation vehicles and personnel uniforms in a consistent and unified manner in order to further enhance our brand recognition during interactions with the clients.

 

We plan to develop and improve our marketing strategies by focusing on the following: a) maintaining existing client relationships; b) establishing new client relationships; c) enhancing our service quality and efficiency; and d) managing our marketing system and expertise. We will make specific marketing plans and take different approaches based on the various industries, sizes, contract amounts and needs of our clients.

 

Employees

 

As of July 1, 2023 and December   31, 2022 and 2021, we, through the VIE and the VIE’s subsidiaries, had a total of 1,302, 1,550 and 1,543 full-time employees located in China, respectively. The following table sets forth the breakdown of our employees by function as of July 1, 2023:

 

Function		Number				% of Total
Stevedore			40				3.07	%
Transportation			192				14.74	%
Management Administration			328				25.19	%
Client Service			198				15.21	%
Operation Support			461				35.41	%
Sales and Marketing			63				4.84	%
Technology and Engineering			20				1.54	%
Total			1,302				100	%

  

In addition to our own full-time employees, our workforce also includes 33 dispatched workers and 978 contractors, as of July 1, 2023. In addition, third-party transportation providers retain their own employees according to their individual operational needs.

 

We believe our employees’ compensation packages are competitive and we have created a merit-based work environment that encourages initiative. As a result, we have generally been able to attract and retain qualified personnel and maintain a stable core management team.

 

 

We are required by applicable PRC laws and regulations to participate in various statutory employee benefit plans, including social insurance, medical insurance, maternity insurance, workplace injury insurance, unemployment insurance, and pension benefits through a PRC government-mandated multi-employer defined contribution plan. Pursuant to PRC regulations, we are required to contribute specific percentage of salaries, bonuses, and allowances (up to a maximum amount, specified by local governmental regulations) to the employee benefit plan. As of the date of this prospectus, we have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, but we have taken measures to comply with related laws and regulations. Such measures include, but are not limited to, outsourcing our labor-related matters and making payments for unpaid social insurance and housing fund contributions, which may increase the costs of our business and operation.   

 

We enter into standard labor agreements with our full-time employees with standard confidentiality and non-compete provisions.

 

We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes.

 

Research and Development 

 

As information technology plays an essential role in our business and services, we endeavor to develop and adopt advanced information technology to increase efficiency and accuracy in operations, enhance client experience and satisfaction, and ultimately contribute to our growth and success.

 

We, through the VIE and the VIE’s subsidiaries, maintain an in-house R&D team which consists of four departments in Shengfeng Logistics: Product Department (3 employees and 1 manager), Operation and Maintenance Department (2 employees), TMS Research and Development Department (8 employees and 2 managers) and WMS Research and Development Department (3 employees and 1 manager). All of the said departments are under the supervision of the Director of the Information Section of Shengfeng Logistics. Product Department is mainly responsible for the gathering of product development requests and opinions, coordinating the communication among different parties on product development and providing necessary trainings to support new products. Operation and Maintenance Department is mainly responsible for maintaining the computer network, operating systems, software and hardware, and other equipment to ensure they function properly and are secured. TMS Research and Development Department and WMS Research and Development Department are mainly responsible for the research and development of TMS and WMS. At least once or twice per year, the Director of the Information Section will call for a meeting with certain managers and qualified employees from the R&D departments to discuss the necessity and possibility of new information technology developments and technology upgrades. Any proposal discussed and approved during the meeting will be presented to the management for further discussion and decision.

 

From time to time, we contract with some third-party software design companies for licenses to use some of the systems they designed and developed, such as some financial reporting and accounting systems. They will also maintain the systems and provide necessary supports to us.

 

Our passion and dedication for improvement and innovation have been translated into our ability to develop and introduce new and diversified services with a fast pace, converting our advantage in research and development into our commercial competitive advantage in the logistic industry. Through years of effort, as of December 31, 2022, we have registered 43 computer software copyrights with the PRC National Copyright Administration and 1 invention patent with the National Intellectual Property Administration. Since 2012, Shengfeng TMS has been our main system, which is a comprehensive management system that allows us to effectively monitor and manage the various stages of transportation, payment, and client service. It is the Company’s plan to continue its dedication to the research and development on information technology to enhance efficiency and client experience.

 

For more details on our technology infrastructure and intellectual property, please refer to “Business—Our Technology Infrastructure” and “Business—Intellectual Property.”

 

 

Properties and Facilities 

 

Our principal executive office is located at Shengfeng Building, No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Fujian Province, People’s Republic of China, 350001, where we, through Shengfeng Logistics, lease such property from a related party, Fuzhou Tianyu Shengfeng Industrial Co., Ltd., a company controlled by Yongteng Liu, who is the brother of Yongxu Liu, our CEO and Chairman, with an area of approximately 24,886.16 square feet, with a lease term from November 1, 2020 to October 31, 2022 and was renewed to October 31, 2024 with a monthly rent of RMB115,648 (approximately $17,194). We also need to pay a monthly property management fee of RMB15,564 (approximately $2,314). We have priority to renew the lease as long as we use the property for the same purpose, but we are required to notify the landlord at least two months in advance if we would like to renew the lease.

 

As of December 31, 2022, we, through two of the VIE’s subsidiaries, owned 2 office buildings in China with aggregate gross floor areas of approximately 58,348.58 square feet are on the land we own, and we, through the VIE and the VIE’s subsidiaries, leased 34 office buildings in China with aggregate gross floor areas of approximately 255,868.48 square feet. The terms of such leases range from 1 to 5 years.

 

As of December 31, 2022, we, through one of the VIE’s subsidiaries, owned 4 land use rights with aggregate gross areas of approximately 340,388.43 square feet in Tong Zhou District, Beijing, China. The use terms of such land is 50 years. While we have not commenced construction on the land as of the date of this prospectus, we plan to use this land for warehouse storage and management services and regional sorting centers.

 

In addition, as of December 31, 2022, 2 of the regional sorting centers operated by the VIE and the VIE’s subsidiaries with an aggregate gross floor area of approximate 64,838.16 square feet are on the land we own, and 33 of the regional sorting centers operated by the VIE and the VIE’s subsidiaries with an aggregate gross floor area of approximately 1,626,419.11 square feet are on leased land. The terms of such leases range from 1 to 5 years.

 

As of the date of this prospectus, we, through the VIE and the VIE’s subsidiaries, directly operate 22 Cloud OFCs across China to provide warehouse storage and management services. As of December 31, 2022, 2 of the Cloud OFCs operated by the VIE and the VIE’s subsidiaries with an aggregate gross floor area of approximate 819,989.20 square feet are on the land we own, and 20 of the Cloud OFCs operated by the VIE and the VIE’s subsidiaries with an aggregate gross floor area of approximately 1,623,861.95 square feet are on the land we leased. The terms of such leases range from 1 to 3 years.

 

As of the date of this prospectus, we, through the VIE and the VIE’s subsidiaries, directly operate 36 service outlets across China. As of December 31, 2022, all of the service outlets operated by us with an aggregate gross floor area of approximately 134,476.76 square feet are on the land we leased. The terms of such leases range from 1 to 5 years. 

 

As of the date of this prospectus, we, through one of the VIE’s subsidiaries, hold land use rights with respect to one property with an aggregate gross area of approximately 484,700 square feet in Ningde City, Fujian Province, China. The land is subject to a 50-year use term. While no construction has been conducted on the land as of the date of this prospectus, we plan to use this land for warehouse storage and management services and a regional sorting center.

 

The areas of self-owned properties and leased premises are based on the figures specified in the certificates of land use or the corresponding lease agreements.

 

 

The following table shows the information of the properties we, through three of the VIE’s subsidiaries, own as of the date of this prospectus: 

 

Location		Area (Square Feet)				Term of Use		Current Use
Tong Zhou District, Beijing, China			159,901.66			October 31, 1994 to October 30, 2044		Construction has not been commenced as of the date of this prospectus.
Tong Zhou District, Beijing, China			155,027.65			October 31, 1994 to October 30, 2044		Construction has not been commenced as of the date of this prospectus.
Tong Zhou District, Beijing, China			12,531.02			January 23, 1995 to January 22, 2045		Construction has not been commenced as of the date of this prospectus.
Tong Zhou District, Beijing, China			12,928.10			January 23, 1995 to January 22, 2045		Construction has not been commenced as of the date of this prospectus.
Fuqing City, Fujian Province, China			349,132.7			Until April 10, 2063		318,390.98 for Warehouse Storage and Management Services, 28,588.95 for Regional Sorting Center and 2,152.78 for offices
Suzhou City, Jiangsu Province, China			187,515.50			Until December 30, 2056		131,319.7 for Warehouse Storage and Management Services and 56,195.8 for offices
Suzhou City, Jiangsu Province, China			406,527.71			Until January 29, 2058		370,278.5 for Warehouse Storage and Management Services and 36,249.21 for Regional Sorting Center
Ningde City, Fujian Province, China			484,698.87			Until April 12, 2073		Construction has not been commenced as of the date of this prospectus.

 

We believe that the facilities that we currently own and lease are generally adequate to meet our current needs, but we expect to seek additional space as needed to accommodate our future growth.

 

As of December 31, 2022, we, through the VIE and the VIE’s subsidiaries, operated 35 regional sorting hubs in Fujian, Guangdong, Shanghai, Beijing, Zhejiang, Hubei, and 16 other provinces in China. Among our regional sorting centers, two are located on lands that we own and the remaining 33 are located on leased lands. We provide each center with sorting and loading equipment.

 

As of December 31, 2022, our, through the VIE and the VIE’s subsidiaries, own line-haul fleet is comprised of 262 truck headstocks and over 1,000 cabinets for ordinary shipments and 10 truck headstocks and 15 cabinets for hazardous shipments. We also owned 262 vehicles for our short-haul transportation as of the same date.

 

Tangible properties of our regional sorting centers, Cloud OFCs, service outlets, and line-haul and short-haul transportation network operated by the VIE and the VIE’s subsidiaries across China include transportation and electronic equipment.

 

Seasonality

 

Our operating results have been subject to seasonal trends as a result of, or influenced by, numerous factors, including national holidays, weather patterns, consumer demands, economic conditions, and others. Although seasonal changes have not significantly impacted on our cash flow or affected our operations, we cannot guarantee that it will not adversely impact us in the future.

 

Insurance

 

We, through the VIE and the VIE’s subsidiaries, maintain various insurance policies to safeguard against risks and unexpected events. We have purchased compulsory motor vehicle liability insurance and commercial insurance such as automobile third-party liability insurance, property insurance, and cargo insurance. We have purchased employer liability insurance. We also provide work-related injury insurance to our employees.

 

We do not purchase insurance for items delivered by us. Instead, our clients may purchase shipment protection services for valuable items, and we will compensate those clients based on the declared value in the event of loss or damage that was caused by us. For more details, please see “Business—Value-added Services—Shipment Protection.” Our clients are responsible for purchasing insurance for hazardous items delivered in the shipments, subject to the provisions set forth under the respective shipping agreements. We do not maintain business interruption insurance nor key-man insurance. Our management will evaluate the adequacy of our insurance coverages from time to time and purchase additional insurance policies as needed.

 

Unless otherwise set forth in their respective agreements, third-party transportation providers will be responsible solely for the shipment insurance. When an accident occurs, a transportation provider will reimburse and compensate our loss pursuant to our agreements and any third parties’ loss. If the transportation provider is not able to compensate the full amount of the loss to us or any other third parties, our insurance company will pay for the compensation under our insurance policies. Afterwards, the transportation provider shall reimburse our insurance company.

 

Legal Proceedings

 

From time to time, we are subject to legal proceedings, investigations, and claims incidental to the conduct of our business. We are not a party to, nor are we aware of, any legal proceeding, investigation, or claim which, in the opinion of our management, is likely to have an adverse material effect on our business, financial condition, or operation result. We may periodically be subject to legal proceedings, investigations, and claims relating to our business. We may also initiate legal proceedings to protect our rights and interests.

 

 

REGULATIONS

 

This section sets forth a summary of the principal laws and regulations relevant to our business and operations in the PRC and the U.S.

 

PRC Regulations

 

This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.

 

Regulations Relating to Foreign Investment

 

The Foreign Investment Law, promulgated by the National People’s Congress on March 15, 2019, has come into effect on January 1, 2020 and has replaced the major existing laws and regulations governing foreign investment in the PRC, including the Sino-foreign Equity Joint Ventures Enterprises Law, the Sino-foreign Co-operative Enterprises Law, the Wholly Foreign-invested Enterprise Law, and their implementation rules and ancillary regulations. Pursuant to Foreign Investment Law, the existing foreign invested enterprises established prior to the effective date of the Foreign Investment Law may keep their corporate organization forms within five years after the effective date of the Foreign Investment Law before such existing foreign invested enterprise change their organization forms, organization structures, and their activities of foreign-invested enterprises in accordance with the Company Law, the Partnership Enterprise Law and other laws. According to the Foreign Investment Law, “foreign-invested enterprises” thereof refers to enterprises that are wholly or partly invested by foreign investors and registered within China under the PRC laws, “foreign investment” thereof refers to any foreign investor’s direct or indirect investment in China, including: (1) establishing foreign-invested enterprises in China either individually or jointly with other investors; (2) obtaining stock shares, stock equity, property shares, other similar interests in Chinese domestic enterprises; (3) investing in new projects in China either individually or jointly with other investors; and (4) making investment through other means provided by laws, administrative regulations, or State Council provisions.

 

Investments conducted by foreign investors in the PRC are subject to the Catalogue of Industries for Encouraging Foreign Investment, or the Catalogue, and the Negative List, which were jointly issued by the NDRC and the MOFCOM. The version of the Catalogue currently in force was amended in 2020 and became effective on January 27, 2021, and the version of the Negative List currently in force was amended in 2021 and became effective on January 1, 2022, both of which further reduce restrictions on foreign investment.

 

On December 26, 2019 the State Council issued the Implementation Regulations for the Foreign Investment Law, or the Implementation Regulations which came into effect on January 1, 2020. According to the Implementation Regulations, in the event of any discrepancies between the Foreign Investment Law, the Implementation Regulations and relevant provisions on foreign investment promulgated prior to January 1, 2020, the Foreign Investment Law and the Implementation Regulations shall prevail. The Implementation Regulations also indicated that foreign investors that invest in sectors on the Negative List in which foreign investment is restricted shall comply with special management measures with respect to shareholding, senior management personnel and other matters in the Negative List.

 

Regulations Relating to Road Transportation

 

Pursuant to the PRC Regulations on Road Transportation promulgated by the State Council in April 2004 and most recently amended in March 2022, and the Provisions on Administration of Road Freight Transportation and Stations (Sites) issued by the Ministry of Transportation in June 2005 and most recently amended in September 2022, or the Road Freight Provisions, the business operations of road freight transportation refer to commercial road freight transportation activities that provide public services. The road freight transportation includes general road freight transportation, special road freight transportation, road transportation of large articles, and road transportation of dangerous cargos. Special road freight transportation refers to freight transportation using special vehicles such as vehicles with containers, refrigeration equipment, or tank containers. The Road Freight Provisions set forth detailed requirements with respect to vehicles and drivers.

 

Under the Road Freight Provisions, anyone engaging in the business of operating road freight transportation or stations (sites) must obtain a road transportation operation permit from the local county-level road transportation administrative bureau, and each vehicle used for road freight transportation must have a road transportation certificate from the same authority. The incorporation of a subsidiary of a road freight transportation operator that intends to engage in road transportation business is subject to the same approval procedure. If a road freight transportation operator intends to establish a branch, it should file with the local road transportation administrative bureau where the branch is to be established. 

 

Although the road transportation operation permits have no limitation with respect to geographical scope, several provincial governments in China, including Shanghai and Beijing, promulgated local rules on administration of road transportation, stipulating that permitted operators of road freight transportation registered in other provinces should also make filings with the local road transportation administrative bureau where it carries out its business.

 

The VIE and the VIE’s subsidiaries have obtained road transportation operation permits to operate general road freight transportation or station (sites).

 

Pursuant to the Measures for the Administration of Road Transportation Safety of Hazardous Goods, or the “Measures,” jointly promulgated by the Ministry of Transport, the Ministry of Industry & Information Technology, the Ministry of Public Security, the Ministry of Ecology and Environment, the Ministry of Emergency Management and the State Administration for Market Regulation in China, which took effect on January 1, 2020, the transportation of hazardous goods with road transportation vehicles and relevant activities shall be governed by the Measures. Under the Measures, carriers of hazardous goods shall carry hazardous goods within the business scope permitted by the competent transport departments. Carriers of hazardous goods shall maintain carrier’s liability insurance for the hazardous goods they carry. The Measures set forth detailed requirements with respect to consignors, carriers, loaders and drivers.

 

 

Regulations Relating to Cargo Vehicles

 

Pursuant to the Administrative Provisions concerning the Running of Cargo Vehicles with Out-of-Gauge Goods promulgated by the Ministry of Transportation, or the “Cargo Provisions,” took effect in August 2016 and most recently amended in August 2021, cargo vehicles running on public roads shall not carry cargo weighing more than the limits prescribed by this regulation and their dimensions shall not exceed those as set forth in the same regulation. Vehicle operators who violate this regulation may be subject to a fine of up to RMB30,000 (approximately $4,300) for each violation. In the event of repeated violations, the regulatory authority may suspend the operating license of the vehicle operator and/or revoke the business operation registration of the relevant vehicle. Under the Cargo Provisions and the Regulations on Protecting Highway Safety promulgated by the State Council in China, or the “Highway Regulations,” which took effect on July 1, 2011, in the event of repeated violations, the regulatory authority may suspend the operating license of the vehicle operator and/or revoke the business operation registration of the relevant vehicle. In the event that more than 10% of the total vehicles of any road transportation enterprise are not in compliance with the Highway Regulations in any year, such road transportation enterprise’s business shall be suspended for rectification and its road transportation license may be revoked.

 

We rely on trucks and other vehicles owned and operated by third-party trucking companies, and the operation of our fleet is subject to this new regulation. We have an obligation to educate and manage vehicle operators as well as to urge them to comply with this regulation. We weigh and measure each cargo truck as they enter and leave our hubs and sortation centers to ensure their compliance with this regulation in terms of cargo weight. If any truck is not in compliance with this regulation, we will replace it with another vehicle that complies with this regulation. Otherwise, we may be subject to penalties under this regulation if we operate those trucks that exceed the limits set forth in the regulation.

 

Regulations Relating to Product Quality

 

Pursuant to the Product Quality Law of the PRC, or the Product Quality Law, which was promulgated by the Standing Committee of the National People’s Congress on February 22, 1993, became effective on September 1, 1993, and was recently amended on December 29, 2018, business operators, including manufacturers and sellers, are required to assume certain obligations in respect of product quality. Violations of the Product Quality Law may result in the imposition of fines. In addition, a company in violation of the Product Quality Law may be ordered to suspend its operations and its business license may be revoked. Criminal liability may be incurred under severe circumstances. A consumer or other victim who suffers injury or property losses due to product defects may demand compensation from the manufacturer as well as from the seller. Where the responsibility lies with the manufacturer, the seller shall, after settling compensation with the consumer, have the right to recover such compensation from the manufacturer, and vice versa.

 

Regulations Relating to Pricing

 

In China, the prices of a small number of products and services are guided or fixed by the government. According to the Pricing Law of the PRC, or the Pricing Law promulgated by the SCNPC on December 29, 1997 and became effective on May 1, 1998, business operators must, as required by the government departments in charge of pricing, mark the prices explicitly and indicate the name, origin of production, specifications and other related particulars clearly. Business operators may not sell products at a premium or charge any fees that are not explicitly indicated. Business operators must not commit the specified unlawful pricing activities, such as colluding with others to manipulate the market price, using false or misleading prices to deceive consumers to transact, or conducting price discrimination against other business operators. Any business operator who fails to comply with the Pricing Law may be subject to administrative sanctions such as warning, ceasing unlawful activities, compensation, confiscating illegal gains and fines. The business operators may be ordered to suspend business for rectification or have their business licenses revoked under severe circumstances.

 

We are subject to the Pricing Law as a service provider and believe that our pricing activities are currently in compliance with the law in all material aspects.

 

Regulations Relating to Leasing

 

Pursuant to the Law on Administration of Urban Real Estate of the PRC promulgated by the SCNPC on July 5, 1994, amended on August 30, 2007, August 27, 2009, August 26, 2019 and took effect on January 1, 2020, when leasing premises, the lessor and lessee are required to enter into a written lease contract, containing provisions such as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties. Pursuant to the Administrative Measures for Commodity House Leasing promulgated by the Ministry of Housing & Urban-Rural Development in China promulgated on December 2010 and took effect in February 1, 2011, both lessor and lessee are also required to register the lease with the real estate administration department. If the lessor and lessee fail to complete the registration procedures, both lessor and lessee may be subject to fines ranging from RMB1,000 (approximately $140) to RMB10,000 (approximately $1,400). In addition, although the unregistered lease agreements are considered binding agreements, in practice, some of the remedies generally available to the registered lease agreements may not be fully applicable to the unregistered lease agreements, such as specific performance of lease agreement against new purchasers of the property. Some of our leases have not completed the registration.

 

According to the Civil Code of the PRC, the lessee may sublease the leased and occupies premises to a third party, subject to the consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remains valid. The lessor is entitled to terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition, if the lessor transfers the premises, the lease contract between the lessee and the lessor will still remain valid.

 

Pursuant to the Civil Code of the PRC, if a mortgagor leases the mortgaged property before the mortgage contract is executed, the previously established leasehold interest will not be affected by the subsequent mortgage. The Supreme People’s Court has revised a judicial interpretation regarding disputes over lease contracts on urban buildings, which took effect in January 2021, providing that if the ownership of the leased premises changes during the term of lessee’s occupation in accordance with the lease contract, and the lessee requests the assignee of such premises to continue to perform the original lease contract, the PRC court shall support such request unless the mortgage right has been established before the leasing and the ownership changes due to the mortgagee’s realization of the mortgage right.

 

 

Regulations relating to Internet Information Security and Privacy Protection

 

On December 28, 2000, the SCNPC enacted the Decision on the Protection of Internet Security, as amended on August 27, 2009, which provides that the following activities conducted through the internet are subject to criminal liabilities: (1) gaining improper entry into any of the computer information networks relating to state affairs, national defensive affairs, or cutting-edge science and technology; (2) violation of relevant provisions of the State in the form of unauthorized interruption of any computer network or communication service resulting in the computer network or communication system’s malfunction ; (3) spreading rumors, slanders or other harmful information via the internet for the purpose of inciting subversion of the state political power; (4) stealing or divulging state secrets, intelligence or military secrets via internet; (5) spreading false or inappropriate commercial information; or (6) infringing on the intellectual property.

 

On December 13, 2005, the Ministry of Public Security issued the Provisions on the Technical Measures for Internet Security Protection, which took effect on March 1, 2006. These regulations require internet service providers to take proper measures including anti-virus, data back-up, keeping records of certain information such as the login-in and exit time of users, and other related measures, and to keep records of certain information about their users for at least 60 days. On June 22, 2007, the Ministry of Public Security, State Secrecy Bureau, State Cryptography Administration and the Information Office of the State Council jointly promulgated the Administrative Measures for the Multi-level Protection of Information Security, under which the security protection grade of an information system may be classified into five grades which are (a) Level I, the destruction of such information system will cause damage to the legitimate rights and interests of citizens, legal persons and other organizations, but will cause no damage to national security, social order or public interest; (b) Level II, the destruction of such information system will cause material damage to the legitimate rights and interests of citizens, legal persons and other organizations or cause damage to social order and public interests, but will not damage national security; (c) Level III, the destruction of such information system will cause material damage to social order and public interests or will cause damage to national security; (d) Level IV, the destruction of such information system will cause particularly material damage to social order and public interests or will cause material damage to national security; (e) Level V, the destruction of such information system will cause particularly material damage to national security. Companies operating and using information systems shall protect the information systems and any system equal to or above level II as determined in accordance with these measures, and a record-filing with the competent authority is required.

 

The Cybersecurity Law of the PRC, as adopted by the National People’s Congress on November 7, 2016, has come into force on June 1, 2017. Considered as the fundamental law in the area of cybersecurity in China, the Cybersecurity Law regulates network operators and others from the following perspectives: the principle of Cyberspace sovereignty, security obligations of network operators and providers of network products and services, protection of personal information, protection of critical information infrastructure, data use and cross-border transfer, network interoperability and standardization. Network operators shall, according to the requirements of the rules for graded protection of cybersecurity, fulfill security protection obligations to ensure that the network is free from interference, damage or unauthorized access, and prevent network data from being divulged, stolen or falsified. In addition, any network operators collecting personal information shall follow the principles of legitimacy, rationality and necessity and shall not collect or use any personal information without due authorization of the person whose personal information is collected. Each individual is entitled to request a network operator to delete his or her personal information if he or she finds that the collection and use of such information by such operator violate the laws, administrative regulations or the agreement by and between such network operator and such individual; and is entitled to request any network operator to make corrections if he or she finds errors in such information collected and stored by such network operator. Such network operator shall take measures to delete the information or correct the errors. Pursuant to this law, the violators may be subject to: (i) warning; (ii) confiscation of illegal gains and fines equal to one to ten times of the illegal gains; or if without illegal gains, fines up to RMB1,000,000; or (iii) an order to shut down the website, suspend the business operation for rectification, or revocation of the business license. Besides, responsible persons may be subject to fines between RMB10,000 and RMB100,000. 

 

According to the Regulations for Security Protection of Critical Information Infrastructure, or the CIIO Regulation Promulgated by State Council in July 2021, effective on September 1, 2021, critical information infrastructure refers to any important network facilities or information systems of an important industry or field, such as public communication and information services, energy, transport, water conservation, finance, public services, e-government affairs, science, and technology industry for national defense, among other industries and sectors that may pose a serious threat to national security, people’s livelihood, and public interests in the event of damage, loss of function, or data leakage. In addition, relevant administrative departments of each critical industry and sector are responsible for formulating eligibility criteria and determining the critical information infrastructure in the respective industry or sector. The operators will be informed about the final determination as to whether they are categorized as critical information infrastructure operators, or CIIOs. We have purchased certain server or network facilities for our mobile and desktop application which we believe are less likely to severely jeopardize national security, people’s livelihood and public interests. As of the date of this prospectus, we have not received any notice from any authorities identifying us as a CIIO. Due to the unclear scope of what may constitute a CIIO, we cannot assure you that the PRC regulatory agencies would agree with our conclusion. If we are identified as a CIIO, we may be required to, among others: (i) ensure that our data centers to be constructed have the function of supporting the stable and continuous operation of business; (ii) perform security protection obligations to protect critical information infrastructure from being disturbed, damaged or unauthorized accessed, and to prevent network data from leakage, theft or tampering; (iii) have a dedicated cybersecurity management body and person in charge of cybersecurity, conduct background reviews on the person-in-charge and other persons holding key positions, conduct cybersecurity education, technology trainings and skill assessments for relevant staff on a regular basis, implement disaster recovery backup for important systems and databases, adopt remedial measures to promptly address security risks such as system vulnerabilities, and make emergency plans for cybersecurity incidents and conduct regular rehearsals of these plans; and (iv) establish and improve a security inspection and evaluation system. In addition, if our purchase of a network product or service may affect national security, we have to pass a cybersecurity review conducted by the cybersecurity review authority in advance, and enter into a security and confidentiality agreement with the provider.

 

 

On July 10, 2021, the Office of the Central Cyberspace Affairs Commission and the Office of Cybersecurity Review under the CAC promulgated the Review Measures Draft to solicit public opinion and comments. The Review Measures Draft provides that data processors who engage in data processing activities that affect or may affect national security, are included in the scope of cybersecurity review. The deadline for public comments to the Review Measures Draft was July 25, 2021. The Review Measures Draft further requires that critical information infrastructure operators and services and data processing operators that possess personal data of at least one (1) million users must apply for a review by the Cybersecurity Review Office of PRC, if they plan to conduct listings in foreign countries.

 

In August 2021, the Standing Committee of the National People’s Congress officially promulgated the Personal Information Protection Law, effective on November 1, 2021, which provides detailed rules on handling personal information and legal responsibilities, including, but not limited to the scope of personal information and the ways of processing personal information, the establishment of rules for processing personal information, and the individual’s rights and the processor’s obligations in the processing of personal information. The Personal Information Protection Law also strengthens the punishment for those who illegally process personal information.

 

On November 14, 2021, CAC published the Administration Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft).” The Cyber Data Security Measure (Draft) provides that data processors shall apply for cybersecurity review under certain circumstances, such as mergers, restructurings, divisions of internet platform operators that hold large amount of data relating to national security, economic development or public interest which affects or may affect the national security, overseas listings of data processors that process personal data for more than one million individuals, Hong Kong listings of data processors that affect or may affect national security, and other data processing activities that affect or may affect the national security.

 

On December 28, 2021, the CAC, NDRC, MIIT, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, the Ministry of Commerce, PBOC, SAMR, the State Administration of Radio and Television, CSRC, the State Secrecy Administration and the State Cryptography Administration jointly promulgated the Cybersecurity Review Measures, or the “Cybersecurity Review Measures,” which became effective on February 15, 2022. Pursuant to the Cybersecurity Review Measures, if critical information infrastructure operators purchase network products and services, or network platform operators conduct data processing activities that affect or may affect national security, they will be subject to cybersecurity review. A network platform operator holding more than one million users/users’ individual information also shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments and risk of network data security after going public overseas.

 

As of the date of this prospectus, we have not received any notice from any authorities requiring us to undertake a cybersecurity review by the CAC. Pursuant to the Cybersecurity Review Measures, we believe we are not subject to the cybersecurity review by the CAC for this offering, given that: (i) we presently possesses personal information of less than one (1) million individual users in our business operations, as of the date of this prospectus; and (ii) each of our PRC Subsidiaries is not a CIIO as neither of them has been notified by the competent PRC government authorities for such purposes; and (iii) data processed in our business is less likely to have a bearing on national security, thus it may not be classified as core or important data by the authorities. However, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply. We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws should they be deemed applicable to our operations. There is no certainty as to how such review or prescribed actions would impact our operations and we cannot guarantee that any clearance can be obtained or any actions that may be required can be taken in a timely manner, or at all. As the Cybersecurity Review Measures have not taken effect as of the date of this prospectus and there are no detailed rules or official interpretation being introduced yet, the definition of “online platform operators listing in a foreign country with more than one (1) million users’ personal information data” remains unclear as of the date of this prospectus. It is possible that CAC may require us to file the cybersecurity review. The cybersecurity review procedure usually takes 45-70 business days, and sometimes even longer in special situations, to complete. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Our Industry—Our business generates and processes a large quantity of data, and improper handling of or unauthorized access to such data may adversely affect our business” in our annual report on Form 20-F for the year ended December 31, 2022.

 

 

On December 29, 2011, the MIIT promulgated the Several Provisions on Regulating the Market Order of Internet Information Services, which became effective on March 15, 2012. On December 28, 2012, the SCNPC promulgated the Decision on Strengthening Network Information Protection to enhance the legal protection of information security and privacy on the internet. The Provisions on Protection of Personal Information of Telecommunications and Internet Users promulgated by the MIIT on July 16, 2013 contain detailed requirements on the use and collection of personal information as well as the security measures to be taken by internet service providers. Specifically, (1) the users’ personal information shall not be collected without prior consent; (2) the personal information shall not be collected or used other than those necessary for internet service providers to provide services; (3) the personal information shall be kept strictly confidential; and (4) a series of detailed measures shall be taken to prevent any divulge, damage, tamper or loss of personal information of users.

 

Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in April 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (1) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (2) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (3) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (4) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations. In addition, on May 28, 2020, the National People’s Congress of the PRC approved the PRC Civil Code, which took effect on January 1, 2021. Pursuant to the PRC Civil Code, the collection, storage, use, process, transmission, provision and disclosure of personal information shall follow the principles of legitimacy, properness and necessity. 

 

On March 12, 2021, the CAC, MIIT, the Ministry of Public Security and the SAMR, announced the Provisions on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications, which provide that the operators of mobile internet applications shall not deny the users who do not consent to the collection of unnecessary information from using basic functional services of such applications. Specifically, such provisions further provide that the basic functional service of mail and express delivery refers to “delivery service of items such as mails, packages and printed matters” and the necessary personal information for that category shall include identity information (i.e. name, type and number of ID cards) of the sender, the address and contact phone of the sender, the name and address and contact phone of the recipient as well as the name and nature and amount of the items for delivery. Violations could be reported to the proper authority and will be dealt with in accordance with PRC laws.

 

On July 7, 2022, CAC promulgated the Measures for the Security Assessment of Data Cross-border Transfer, effective on September 1, 2022, which requires the data processors to apply for data cross-border security assessment coordinated by the CAC under the following circumstances: (i) any data processor transfers important data to overseas; (ii) any critical information infrastructure operator or data processor who processes personal information of over 1 million people provides personal information to overseas; (iii) any data processor who provides personal information to overseas and has already provided personal information of more than 100,000 people or sensitive personal information of more than 10,000 people to overseas since January 1st of the previous year and; and (iv) other circumstances under which the data cross-border transfer security assessment is required as prescribed by the CAC.

 

Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in April 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (1) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (2) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (3) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (4) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations. In addition, on May 28, 2020, the National People’s Congress of the PRC approved the PRC Civil Code, which took effect on January 1, 2021. Pursuant to the PRC Civil Code, the collection, storage, use, process, transmission, provision and disclosure of personal information shall follow the principles of legitimacy, properness and necessity.

 

We, through the VIE and the VIE’s subsidiaries, adopted certain policies to protect the privacy of our clients, such as the policies in our software for our client. Our current software and systems are in compliance with PRC laws and regulations in material respects. Any failure, or perceived failure, by us to comply with any regulatory requirements or privacy protection related laws, rules and regulations could result in proceedings or actions against us by governmental entities or other proper authorities. These proceedings or actions could subject us to significant penalties and negative publicity, require us to change our business practices, increase our costs and severely disrupt our business.

 

Regulations relating to Intellectual Property Rights

 

Patent

 

Patents in the PRC are principally protected under the Patent Law of the PRC promulgated by the SCNPC in 1984 and then respectively amended in 1992, 2000, 2008, 2020, of which the amendment in 2020 will be effective on June 1, 2021, and its implementation rules. Novelty, inventiveness and practicality are three essential ingredients of patens in the PRC. The latest amendment provides that, in general, the protection period is 20 years for an invention patent, 10 years for a utility model patent and 15 years for a design patent, commencing from their respective application dates.

 

 

Copyright

 

The PRC Copyright Law, promulgated in 1990 and amended in 2001, 2010 and 2020, of which the amendment in 2020 will be effective on June 1, 2021, or the Copyright Law, and its related implementing regulations, promulgated in 2002 and amended in 2013, are the principal laws and regulations governing copyright related matters. The Copyright Law provides that Chinese citizens, legal persons, or other organizations shall, whether published or not, enjoy copyright of their works, which includes, among others, works of literature, art, natural science, social science, engineering technology and computer software. Under the Copyright Law, the term of protection for copyrighted software is 50 years. The Regulation on the Protection of the Right to Communicate Works to the Public over Information Networks, which was most recently amended on January 30, 2013, provides specific rules on fair use, statutory license, and a safe harbor for the use of copyrights and copyright management technology, and specifies the liabilities of various entities for violations, including copyright holders, libraries and internet service providers.

 

In accordance with the Regulations on the Protection of Computer Software promulgated by the State Council on December 20, 2001 and last amended on January 30, 2013, Chinese citizens, legal persons or other entities own the copyright, including the right of publication, right of authorship, right of modification, right of reproduction, distribution right, rental right, right of network communication, translation right and other rights software copyright owners shall have in software developed by them, regardless of whether it has been published.

 

In accordance with the Measures for the Registration of Computer Software Copyright promulgated by the National Copyright Administration on April 6, 1992 and last amended on February 20, 2002, software copyrights, exclusive licensing contracts for software copyrights and software copyright transfer contracts shall be registered, and the National Copyright Administration shall be the competent authority for the administration of software copyright registration and designates the Copyright Protection Center of China as a software registration authority. The Copyright Protection Center of China shall grant a registration certification to a computer software copyright applicant who complies with regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years.

 

Trademark

 

The PRC Trademark Law was adopted in 1982 and then amended in 1993, 2001, 2013 and 2019 respectively. The implementation rules of the PRC Trademark Law were adopted in 2002 and amended in 2014. Registered trademarks are protected under the Trademark Law of the PRC and related rules and regulations. The Trademark Office of National Intellectual Property Administration handles trademark registrations and grants a protection term of ten years to registered trademarks. Where registration is sought for a trademark that is identical or similar to another trademark which has already been registered or given preliminary examination and approval for use in the same or similar category of commodities or services, such application for registration of this trademark may be rejected. Trademark registrations are effective for a renewable ten-year period, unless otherwise revoked.

 

Domain name

 

The MIIT, promulgated the Administrative Measures on Internet Domain Name, or the Domain Name Measure on August 24, 2017 to protect domain names. According to the Domain Name Measures, domain name applicants are required to duly register their domain names with domain name registration service institutions. The applicants will become the holder of such domain names upon the completion of the registration procedures. The permits for registered domain names are effective for five years, which are subject to renewals, cancellations or revocations.

 

Trade secrets

 

According to the PRC Anti-Unfair Competition Law, promulgated by the SCNPC in September 1993, as amended in November 4, 2017 and April 23, 2019 respectively, the term “trade secrets” refers to technical, operational or other commercial information that is unknown to the public, has utility, may create business interests or profits for its legal owners or holders, and is maintained as a secret by its legal owners or holders through corresponding confidentiality measures. Under the PRC Anti-Unfair Competition Law, business persons are prohibited from infringing others’ trade secrets by: (1) obtaining the trade secrets from the legal owners or holders by any unfair methods such as theft, bribery, fraud, coercion, electronic intrusion, or any other illicit means; (2) disclosing, using or permitting others to use the trade secrets obtained illegally under item (1) above; or (3) disclosing, using or permitting others to use the trade secrets, in violation of any contractual agreements or any requirements of the legal owners or holders to keep such trade secrets in confidence. Pursuant to the PRC Civil Code, if one intentionally infringes upon the intellectual property rights of others and the circumstance is severe, the infringed party is entitled to the corresponding punitive compensation; or (4) abetting a person, or tempting, or aiding a person into or in acquiring, disclosing, using, or allowing another person to use the trade secret of the rightful holder in violation of his or her non-disclosure obligations or the requirements of the rightful holder for keeping the trade secret confidential.

 

Regulations relating to Leasing

 

Pursuant to the Law on Administration of Urban Real Estate of the PRC promulgated by the SCNPC on July 5, 1994, amended on August 30, 2007, August 27, 2009, August 26, 2019 and took effect on January 1, 2020, when leasing premises, the lessor and lessee are required to enter into a written lease contract, containing provisions such as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties. Both lessor and lessee are also required to register the lease with the real estate administration department. If the lessor and lessee fail to complete the registration procedures, both lessor and lessee may be subject to fines ranging from RMB1,000 (approximately USD$155.3) to RMB10,000 (approximately USD$1,553). In addition, although the unregistered lease agreements are considered binding agreements, in practice, some of the remedies generally available under the registered lease agreements may not be fully applicable to the unregistered lease agreements, such as specific performance of lease agreements against new purchasers of the property. Some of our leases have not completed the registration.

 

According to the Civil Code of the PRC, the lessee may sublease the leased and occupied premises to a third party, subject to the consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remains valid. The lessor is entitled to terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition, if the lessor transfers the premises, the lease contract between the lessee and the lessor will still remain valid.

 

 

Regulations relating to Employment

 

The Labor Law and the Labor Contract Law

 

According to the Labor Law of the PRC, or the Labor Law, which was promulgated on July 5, 1994 and last amended and came into effect on December 29, 2018, enterprises and institutions shall establish, provide and improve their system of workplace safety and sanitation, strictly follow state rules and standards on workplace safety and the relevant articles of occupational protection, and educate employees in occupational safety and sanitation in the PRC. Occupational safety and sanitation facilities shall comply with state-fixed standards.

 

The Labor Contract Law of the PRC, or the Labor Contract Law, which was issued on June 29, 2007, amended on December 28, 2012 and became effective on July 1, 2013, and its implementation rules provide requirements concerning employment contracts between an employer and its employees. If an employer fails to enter into a written employment contract with an employee after the lapse of more than one month, but less than one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee’s salary for the period from the date following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations. In addition, if an employer intends to enforce a non-compete provision in an employment contract or non-competition agreement with an employee, it has to compensate the employee on a monthly basis during the term of the restriction period after the termination or expiration of the labor contract. Employers in most cases are also required to provide severance payments to their employees after their employment relationships are terminated. The Labor Contract Law also provides that enterprises accepting labor dispatch services shall strictly control the number of dispatched workers and the proportion of dispatched workers shall not exceed the percentage prescribed by competent labor administrative departments. As of the date of this prospectus, other than that we have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, and that our number of dispatched workers has exceeded the limitation required by PRC regulations, we believe that we are currently compliant with the foregoing laws and regulation in all material respects.

 

The Interim Provisions on Labor Dispatching

 

The Interim Provisions on Labor Dispatching, issued by the Ministry of Human Resources and Social Security of the People’s Republic of China on January 24, 2014, which came into effect on March 1, 2014, require the number of dispatched workers not to exceed 10% of the total number of 1) the employees that are employed directly by an enterprise and 2) the dispatched workers. As of the date of this prospectus, the number of dispatched workers has exceeded 10% of the total number of the employees and the dispatched workers of the Company. Therefore, Company is currently not in compliance with the Interim Provisions on Labor Dispatching.

 

Social Insurance and Housing Funds

 

Pursuant to the Interim Regulations on Levying Social Insurance Premiums, promulgated on January 22, 1999 and revised on March 24, 2019, Decisions of the State Council on Modifying the Basic Endowment Insurance System for Enterprise Employees, promulgated on December 3, 2005, Decision on Establishment of Basic Medical System for Urban Employee, issued by State Council and became effective on December 14, 1998, the Regulations on Unemployment Insurance, became effective on January 22, 1999, Regulations on Work-Related Injury Insurance, promulgated on April 27, 2003, amended on December 20, 2010 and became effective on January 1, 2011, and the Interim Measures concerning the Maternity Insurance for Enterprise Employees, promulgated on December 14, 1994 and became effective on January 1, 1995, employers are required to register with the competent social insurance authorities and provide their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance and medical insurance. 

 

Pursuant to Opinions of the General Office of the State Council on Comprehensively Advancing Combined Implementation of Maternity Insurance and Basic Medical Insurance for Employees, promulgated by the General Office of State Council on March 6, 2019, maternity insurance funds shall merge into the basic medical care insurance funds for employees so as to unify payment and harmonize consolidation level. The new ratio of employers’ contribution to basic medical care insurance for employees is determined based on the aggregate of the ratios of employers’ contribution to maternity insurance and basic medical care insurance for employees, and an individual is not required to pay for maternity insurance. Therefore, after March 6, 2019, our Company has no record of maternity insurance funds in the payment details of social security, since it has been merged into the basic medical care insurance funds.

 

Pursuant to the Social Insurance Law of the PRC, or the Social Insurance Law, which became effective on July 1, 2011 with last amendment on December 29, 2018, all employees are required to participate in basic pension insurance, basic medical insurance schemes and unemployment insurance, which must be contributed by both the employers and the employees. All employees are required to participate in work-related injury insurance and maternity insurance schemes, which must be contributed by the employers. Employers are required to complete registrations with local social insurance authorities. Moreover, the employers must timely make all social insurance contributions. Except for mandatory exceptions such as force majeure, social insurance premiums shall not be paid late, reduced or be exempted. Where an employer fails to make social insurance contributions in full and on time, the social insurance contribution collection agencies shall order it to make all or outstanding contributions within a specified period and impose a late payment fee at the rate of 0.05% per day from the date on which the contribution becomes due. If such employer fails to make the overdue contributions within such time limit, the relevant administrative department may impose a fine equivalent to 1—3 times the overdue amount. We are in compliance with laws and regulations related to social insurance and housing funds in China in material aspects. 

 

 

Pursuant to the Emergency Notice on Practicing Principles of the State Council Executive Meeting and Stabilizing Work on Collecting Social Insurance Premiums, promulgated by the Ministry of Human Resources and Social Security on September 21, 2018, local authorities are prohibited from recovering the unpaid social insurance premiums from enterprises. 

 

Pursuant to the Administrative Regulations on the Housing Provident Fund, which became effective on April 3, 1999 and was amended on March 24, 2002 and March 24, 2019, enterprises are required to register with the competent administrative centers of housing provident fund and open bank accounts for housing provident funds for their employees. Employers are also required to timely pay all housing fund contributions for their employees. Where an employer fails to submit and deposit registration of housing provident funds or fails to complete the formalities of opening housing provident fund accounts for its employees, the housing provident fund management center shall order it to complete the formalities within a prescribed time limit. Failing to comply by the expiration of the time limit will subject the employer to a fine ranging from RMB10,000 (approximately $1,400) to RMB50,000 (approximately $7,200). When an employer fails to pay housing provident funds due in full and on time, housing provident fund center is entitled to order it to rectify, and failing to comply could result in enforcement exerted by the court. 

 

Regulations Relating to Tax

 

Enterprise income tax 

 

According to the Enterprise Income Tax Law of the PRC, or the EIT Law, which was promulgated on March 16, 2007, became effective from January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, an enterprise established outside the PRC with de facto management bodies within the PRC is considered a resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. The Implementing Rules of the Enterprise Income Law of the PRC, or the Implementing Rules of the EIT Law defines a “de facto management body” as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Non-PRC resident enterprises without any branches in the PRC pay an enterprise income tax in connection with their income originating from the PRC at the tax rate of 10%. 

 

Enterprises that are recognized as high and new technology enterprises in accordance with the Administrative Measures for the Determination of High and New Tech Enterprises issued by the Ministry of Science, the MOF, and the State Administration of Taxation, or the SAT, are entitled to enjoy a preferential enterprise income tax rate of 15%. The validity period of the high and new technology enterprise qualification shall be three years from the date of issuance of the certificate. An enterprise can re-apply for such recognition before or after the previous certificate expires.

 

On February 3, 2015, the SAT issued the Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Transfer of Assets by Non-Resident Enterprises, or the SAT Circular 7. The SAT Circular 7 repeals certain provisions in the Notice of the State Administration of Taxation on Strengthening the Administration of Enterprise Income Tax on Income from Equity Transfer by Non-Resident Enterprises, or the SAT Circular 698, issued by SAT on December 10, 2009, and the Announcement on Several Issues Relating to the Administration of Income Tax on Non-resident Enterprises, issued by SAT on March 28, 2011, and clarifies certain provisions in the SAT Circular 698. The SAT Circular 7 provides comprehensive guidelines relating to, and heightens the Chinese tax authorities’ scrutiny on, indirect transfers of assets by a non-resident enterprise (including assets of organizations and premises in PRC, immovable property in the PRC, equity investments in PRC resident enterprises), or the PRC Taxable Assets. For instance, when a non-resident enterprise transfers equity interests in an overseas holding company that directly or indirectly holds certain PRC Taxable Assets and if the transfer is believed by the PRC tax authorities to have no reasonable commercial purpose other than to evade enterprise income tax, the SAT Circular 7 allows the PRC tax authorities to reclassify the indirect transfer of PRC Taxable Assets into a direct transfer and therefore impose a 10% rate of PRC enterprise income tax on the non-resident enterprise. The SAT Circular 7 lists several factors to be taken into consideration by tax authorities in determining if an indirect transfer has a reasonable commercial purpose. However, regardless of these factors, the overall arrangements in relation to an indirect transfer satisfying all the following criteria will be deemed lack of a reasonable commercial purpose: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from PRC Taxable Assets; (ii) at any time during the one-year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC, or during the one-year period before the indirect transfer, 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries and branches that directly or indirectly hold the PRC Taxable Assets are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC Taxable Assets is lower than the potential PRC tax on the direct transfer of those assets. However, indirect transfers falling into the scope of the safe harbors under the SAT Circular 7 may not be subject to PRC tax under the SAT Circular 7. The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties or arrangements.

 

On October 17, 2017, SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or the SAT Circular 37, which took effect on December 1, 2017. Certain provisions of the SAT Circular 37 were repealed by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents. According to the SAT Circular 37, the balance after deducting the equity net value from the equity transfer income shall be the taxable income amount for equity transfer income. Equity transfer income shall mean the consideration collected by the equity transferor from the equity transfer, including various income in monetary form and non-monetary form. Equity net value shall mean the tax computation basis for obtaining the said equity. The tax computation basis for equity shall be: (i) the capital contribution costs actually paid by the equity transferor to a Chinese resident enterprise at the time of investment and equity participation, or (ii) the equity transfer costs actually paid at the time of acquisition of such equity to the original transferor of the said equity. Where there is reduction or appreciation of value during the equity holding period, and the gains or losses may be confirmed pursuant to the rules of the finance and tax authorities of the State Council, the equity net value shall be adjusted accordingly. When an enterprise computes equity transfer income, it shall not deduct the amount in the shareholders’ retained earnings, such as undistributed profits, from the investee enterprise, which may be distributed in accordance with the said equity. In the event of partial transfer of equity under multiple investments or acquisitions, the enterprise shall determine the costs corresponding to the transferred equity in accordance with the transfer ratio, out of all costs of the equity. 

 

 

Under the SAT Circular 7 and the Law of the PRC on the Administration of Tax Collection promulgated by the SCNPC on September 4, 1992 and newly amended on April 24, 2015, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor shall act as withholding agents. If they fail to make withholding or withhold the full amount of tax payable, the transferor of equity shall declare and pay taxes to the relevant tax authorities within seven days from the occurrence of the tax payment obligation. Where the withholding agent does not make the withholding, and the transferor of the equity does not pay the tax payable amount, the tax authority may impose late payment interest on the transferor. In addition, the tax authority may also hold the withholding agents liable and impose a penalty ranging from 50% to 300% of the unpaid tax on them.

 

Value-added Tax

 

Pursuant to the Interim Regulations on Value-Added Tax of the PRC, which was promulgated by the State Council on December 13, 1993 and amended on November 5, 2008, February 6, 2016 and November 19, 2017, and the Implementation Rules for the Interim Regulations on Value-Added Tax of the PRC, which was promulgated by the MOF and SAT on December 15, 2008, became effective on January 1, 2009 and amended on October 28, 2011, entities or individuals engaging in sale of goods, provision of processing services, repairs and replacement services or importation of goods within the territory of the PRC shall pay value-added tax, or the VAT. Unless otherwise provided, the rate of VAT is 17% on sales and 6% on the services. On April 4, 2018, MOF and SAT jointly promulgated the Circular of the MOF and the SAT on Adjustment of Value-Added Tax Rates, or the Circular 32, according to which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11% respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purposes of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%. Circular 32 became effective on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular 32.

 

Since November 16, 2011, the MOF and the SAT have implemented the Pilot Plan for Imposition of Value- Added Tax to Replace Business Tax, or the VAT Pilot Plan, which imposes VAT in lieu of business tax for certain “modern service industries” in certain regions and eventually expanded to nation-wide application in 2013. According to the Implementation Rules for the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax released by the MOF and the SAT on the VAT Pilot Program, the “modern service industries” include research, development and technology services, information technology services, cultural innovation services, logistics support, lease of corporeal properties, attestation and consulting services. The Notice on Comprehensively promoting the Pilot Plan of the Conversion of Business Tax to Value-Added Tax, which was promulgated on March 23, 2016, became effective on May 1, 2016 and was amended on July 11, 2017, sets out that VAT in lieu of business tax be collected in all regions and industries.

 

On March 20, 2019, MOF, SAT and the General Administration of Customs jointly promulgated the Announcement on Relevant Policies for Deepening Value-Added Tax Reform, which became effective on April 1, 2019, and provides that (i) with respect to VAT taxable sales acts or import of goods originally subject to VAT rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%, respectively; (ii) with respect to purchase of agricultural products originally subject to tax rate of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase of agricultural products for the purposes of production or consigned processing of goods subject to tax rate of 13%, such tax shall be calculated at the tax rate of 10%; (iv) with respect to export of goods and services originally subject to tax rate of 16% and export tax refund rate of 16%, the export tax refund rate shall be adjusted to 13%; and (v) with respect to export of goods and cross-border taxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to 9%. 

 

Dividend withholding tax

 

Under the Law of the PRC on Wholly Foreign-Owned Enterprises, which was promulgated by the National People’s Congress of the PRC in 1986, revised by the SCNPC on October 31, 2000 and September 3, 2016 and repealed on January 1, 2020, foreign-invested enterprises in the PRC may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises in the PRC are also required to allocate at least 10% of their respective accumulated profits after tax each year, if any, to certain reserve funds unless these accumulated reserves have reached 50% of the registered capital of such enterprises. These reserves are not distributable as cash dividends.

 

According to the EIT Law and its implementing rules, dividends paid to investors of an eligible PRC resident enterprise can be exempted from EIT and dividends paid to foreign investors are subject to a withholding tax rate of 10%, unless relevant tax agreements entered into by the PRC government provide otherwise.

 

The PRC State Administration of Taxation, or the SAT, and the government of Hong Kong entered into the Arrangement between the Mainland of the PRC and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Incomes, or the Arrangement, on August 21, 2006. According to the Arrangement, 5% withholding tax rate shall apply to the dividends paid by a mainland China company to a Hong Kong resident, provided that such Hong Kong resident directly holds at least 25% of the equity interests in the mainland China company, and 10% of withholding tax rate shall apply if the Hong Kong resident holds less than 25% of the equity interests in the mainland China company.

 

 

Pursuant to the Circular on Relevant Issues Relating to the Implementation of Dividend Clauses in Tax Treaties, which was promulgated by the SAT and became effective on February 20, 2009, all of the following requirements shall be satisfied when a fiscal resident as the other party of a tax agreement needs to be entitled to be taxed at a tax rate specified in the tax agreement for the dividends paid to it by a PRC resident company: (i) such a fiscal resident who obtains dividends shall be a company as provided in the tax agreement; (ii) owner’s equity interests and voting shares of the PRC resident company directly owned by such a fiscal resident reaches a specified percentage; and (iii) the equity interests of the PRC resident company directly owned by such a fiscal resident, at any time during the 12 months prior to obtaining the dividends, reach a percentage specified in the tax agreement.

 

According to the Tentative Administrative Measures on Tax Convention Treatment for Non-Residents which was promulgated by the SAT on August 24, 2009 and became effective on October 1, 2009, if a non-resident enterprise that receives dividends from a PRC resident enterprise wishes to enjoy the favorable tax benefits under the tax arrangements, it shall submit an application for approval to the competent tax authority. Without being approved, the non-resident enterprise may not enjoy the favorable tax treatment provided in the tax agreements.

 

The Tentative Administrative Measures on Tax Convention Treatment for Non-Residents was repealed by the Administrative Measures on Tax Convention Treatment for Non-Resident Taxpayers, which was promulgated by the SAT on August 27, 2015 and became effective on November 1, 2015 with last amendment on June 15, 2018, if a non-resident enterprise receives dividends from a PRC resident enterprise, it could directly enjoy the favorable tax benefits under the tax arrangements at tax returns, and be subject to the subsequent regulation of the competent tax authority. The Administrative Measures on Tax Convention Treatment for Non-Resident Taxpayers has subsequently been repealed by the Administrative Measures on Treaty Benefits Treatment for Non-Resident Taxpayers, promulgated by the SAT on October 14, 2019 and became effective on January 1, 2020, which still adopts the same provisions as the Tentative Administrative Measures on Tax Convention Treatment for Non-Residents.

 

Regulations relating to Foreign Exchange

 

Pursuant to the Foreign Exchange Administration Regulations of the PRC, or the Foreign Exchange Administrative Regulation, as amended in August 2008, Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the SAFE’s prior approval is obtained and prior registration with the SAFE is made. On May 10, 2013, the SAFE promulgated the Circular of the SAFE on Printing and Distributing the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents, or the SAFE Circular No. 21, which was last amended and became effective on December 31, 2019. It provided for and simplified the operational steps and regulations on foreign exchange matters related to direct investment by foreign investors, including foreign exchange registration, account opening and use, receipt and payment of funds, and settlement and sales of foreign exchange. 

 

Pursuant to the Notice of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, or the SAFE Circular No. 59, promulgated by the SAFE on November 19, 2012, became effective on December 17, 2012 and was further amended on May 4, 2015, approval is not required for opening a foreign exchange account and depositing foreign exchange into the account relating to the direct investments. The SAFE Circular No. 59 also simplified the capital verification and confirmation formalities for foreign invested entities, the foreign capital and foreign exchange registration formalities required for the foreign investors to acquire equities from Chinese parties, and further improved the administration on exchange settlement of foreign exchange capital of foreign invested entities.

 

SAFE Circular 37

 

In July 2014, SAFE promulgated SAFE Circular 37, which replaces the previous SAFE Circular 75. SAFE Circular 37 requires PRC residents, including PRC individuals and PRC corporate entities, to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future. 

 

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE with respect to that SPV, to reflect any change of basic information or material events. If any PRC resident shareholder of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiaries in China. In February 2015, SAFE promulgated SAFE Notice 13. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those required under SAFE Circular 37, must be filed with qualified banks instead of SAFE. Qualified banks should examine the applications and process registrations under the supervision of SAFE. As of the date of this prospectus, Mr. Yongxu Liu has completed the initial registrations with the qualified banks as required by the regulations.

 

  

Regulations Relating to Employee Stock Incentive Plan

 

On February 15, 2012, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Issues concerning the Foreign Exchange Administration of Domestic Individuals’ Participation in Equity Incentive Plans of Overseas Listed Companies, or the “Notice”. In accordance with the Notice and relevant rules and regulations, PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with the SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain procedures. We and our employees who are PRC citizens or who reside in China for a continuous period of not less than one year and who participate in our stock incentive plan will be subject to such regulation. In addition, the SAT has issued circulars concerning employee share options or restricted shares. Under these circulars, employees working in the PRC who exercise share options, or whose restricted shares vest, will be subject to PRC individual income tax, or the IIT. The PRC subsidiaries of an overseas listed company have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold IIT of those employees related to their share options or restricted shares. If the employees fail to pay, or the PRC subsidiaries fail to withhold, their IIT according to relevant laws, rules and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC government authorities.

 

Regulations relating to Dividend Distributions 

 

The principal regulations governing distribution of dividends of foreign-invested enterprises include the newly enacted Foreign Investment Law, which came into effect on January 1, 2020, and its implementation rules. Under these laws and regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises in China are required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends. Furthermore, under the EIT Law, which became effective in January 2008, the maximum tax rate for the withholding tax imposed on dividend payments from PRC foreign invested companies to their overseas investors that are not regarded as “resident” for tax purposes is 20%. The rate was reduced to 10% under the Implementing Regulations for the EIT Law issued by the State Council. However, a lower withholding tax rate might be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified by PRC tax authorities are satisfied. 

 

Regulations on Mergers & Acquisitions and Overseas Listings

 

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Rules on the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and were amended on June 22, 2009. The M&A Rules, among other things, require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC domestic enterprises or individuals to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. In September 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CSRC approval procedures require the filing of a number of documents with the CSRC. Although (i) The CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours are subject to the M&A Rules; and (ii) no provision in the M&A Rules clearly classifies contractual arrangements as a type of transaction subject to the M&A Rules, the interpretation and application of the regulations remain unclear, this offering may ultimately require approval from the CSRC. If CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval and any failure to obtain or delay in obtaining CSRC approval for this offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies.

 

The M&A Rules, and other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. For example, the M&A Rules require a foreign investor to obtain the approval from MOFCOM or its local counterpart upon (i) its acquisition of a domestic enterprise’s equity interest; (ii) its subscription of the increased capital of a domestic enterprise; or (iii) establishes and operates a foreign-invested enterprise with assets acquired from a domestic enterprise and such transactions raise “national defense and security” concerns or through such transactions foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns.  It is unclear whether our business would be deemed to be in an industry that raises “national defense and security” or “national security” concerns. However, MOFCOM or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited.

 

In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and became effective on March 4, 2011, the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by MOFCOM on August 25, 2011 and became effective on September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.

 

 

On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the “Opinions.” The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Measures, including promoting the construction of relevant regulatory systems, will be taken to control the risks and handle the incidents from China-concept overseas listed companies. On February 17, 2023, the CSRC promulgated the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure to the CSRC; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. The New Overseas Listing Rules further require Chinese domestic enterprises to complete filings with relevant governmental authorities and report related information under certain circumstances, such as: a) an issuer making an application for initial public offering and listing in an overseas market; b) an issuer making an overseas securities offering after having been listed on an overseas market; and c) a domestic company seeking an overseas direct or indirect listing of its assets through single or multiple acquisition(s), share swap, transfer of shares or other means. The required filing scope is not limited to the initial public offering, but also includes subsequent overseas securities offering, single or multiple acquisition(s), share swap, transfer of shares or other means to seek an overseas direct or indirect listing and a secondary listing or dual major listing of issuers already listed overseas. According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as the Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic company obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their overseas offering and listing prior to March 31, 2023 but have not yet completed their overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their overseas issuance and listing, they shall complete the filing procedures with the CSRC. If a domestic company fails to complete the required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as orders to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

 

On February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions, which were issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title “Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies”, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including, but not limited to, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have come into effect and we are not aware of any PRC laws or regulations in effect requiring that we obtain permission from any PRC authorities to issue securities to foreign investors, nor have we received any inquiry, notice, warning, sanction or any regulatory objection to this offering from the CSRC, the CAC, or any other Chinese authorities that have jurisdiction over our operations. However, any failure or perceived failure by the Company, its PRC Subsidiary or the VIE to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime. The Opinions, the Trial Measures and any related implementing rules to be enacted may subject us to additional compliance requirements in this offering and future financial activities. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in the PRC—The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China” in our annual report on Form 20-F for the year ended December 31, 2022.

 

 

PRINCIPAL SHAREHOLDERS

 

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Class A Ordinary Shares and Class B Ordinary Shares as of the date of this prospectus for:

 

	●	each of our directors and executive officers; and
	●	each person known to us to own beneficially more than 5% of our Class A Ordinary Shares or Class B Ordinary Shares.

 

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Class A Ordinary Shares or and Class B Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person is based on 40,520,000 Class A Ordinary Shares outstanding, and 41,880,000 Class B Ordinary Shares outstanding as of the date of this prospectus. The percentage of beneficial ownership in the table below after this offering is based on 48,520,000 Class A Ordinary Shares assumed to be outstanding after the closing of this offering, after giving effect to the sale of all Units offered hereby (based on an assumed public offering price of $7.50 per Unit), assuming the number of Units offered by us, as set forth on the cover of this prospectus, remains the same.

 

Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of our Class A Ordinary Shares or Class B Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Class A Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Class A Ordinary Shares underlying options, warrants, or convertible securities, including Class B Ordinary Shares, held by each such person that are exercisable or convertible within 60 days of the date of this prospectus are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.

 

		Ordinary shares beneficially owned prior to this offering																Ordinary shares beneficially owned after this offering
		Class A				Class B				Percent of the				Percent of Total Voting Power*				Class A				Class B				Percent of Total Voting
		Number				Number				Class				Number%				Number				Number				Power
Directors And Executive Officers(1):
Yongxu Liu(2)			—				41,880,000				100	%			91.18	%			—				41,880,000				89.62	%
Guoping Zheng			—				—				—				—				—				—				—
Zhiping Yang			—				—				—				—				—				—				—
Dan Liu			—				—				—				—				—				—				—
Wen Li			—				—				—				—				—				—				—
John F. Levy			—				—				—				—				—				—				—
Directors and Executive Officers as a group (6 individuals):			—				41,880,000				100	%			91.18	%			—				41,880,000				89.62	%
5% Shareholders:
Shengfeng International Limited(2)			—				41,880,000				100	%			91.18	%			—				41,880,000				89.62	%
Everbright International Development Limited(3)			8,736,000				—				21.56	%			1.90	%			8,736,000				—				1.87	%
Double Sun Capital Limited(4)			3,928,000				—				9.69	%			0.86	%			3,928,000				—				0.84	%
Changle International Limited(5)			3,904,000				—				9.63	%			0.85	%			3,904,000				—				0.84	%
Chia-Yu Chen			3,880,000				—				9.58	%			0.84	%			3,880,000				—				0.83	%
Yuansheng International Limited(6)			3,784,000				—				9.34	%			0.82	%			3,784,000				—				0.81	%
Mid-Castle Development Limited(7)			3,648,000				—				9.00	%			0.79	%			3,648,000				—				0.78	%
Prime Link Capital International Limited(8)			3,088,000				—				7.62	%			0.67	%			3,088,000				—				0.66	%
Sky Top Capital International Limited(9)			2,880,000				—				7.11	%			0.63	%			2,880,000				—				0.62	%

 

*

Represents the voting power with respect to all of our Class A Ordinary Shares and Class B Ordinary Shares, voting as a single class. Each holder of Class A Ordinary Shares is entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares is entitled to ten votes per one Class B Ordinary Share.

 

(1)

Unless otherwise indicated, the business address of each of the individuals is Shengfeng Building, No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Fujian Province, People’s Republic of China, 350001

 

(2)

The number of Class B Ordinary Shares beneficially owned represents 41,880,000 Class B Ordinary Shares held by Shengfeng International Limited, a British Virgin Islands company, which is 100% owned by Yongxu Liu, our CEO, Chairman and President. The registered address of Shengfeng International Limited is 30 de Castro Street, Wickhams Cay 1, P.O. Box 4519, Road Town, Tortola, British Virgin Islands.

 

 

(3)

The number of Class A Ordinary Shares beneficially owned represents 8,736,000 Class A Ordinary Shares held by Everbright International Development Limited, a British Virgin Islands company. Guangsheng Lin, the general manager of Shengfeng Logistics and one of the Shengfeng Logistics Shareholders, who serves as a director of Everbright International Development Limited, has the dispositive and voting power of the shares held by Everbright International Development Limited. The registered address of Everbright International Development Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.

 

(4)	The number of Class A Ordinary Shares beneficially owned represents 3,928,000 Class A Ordinary Shares held by Double Sun Capital Limited, a British Virgin Islands company, which is 100% owned by Yiping Wu. The registered address of Double Sun Capital Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.
(5)	The number of Class A Ordinary Shares beneficially owned represents 3,904,000 Class A Ordinary Shares held by Changle International Limited, a British Virgin Islands company, which is 100% owned by Rong Zheng. The registered address of Changle International Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.
(6)	The number of Class A Ordinary Shares beneficially owned represents 3,784,000 Class A Ordinary Shares held by Yuansheng International Limited, a British Virgin Islands company, which is 100% owned by Yusheng Yang. The registered address of Yuansheng International Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.
(7)	The number of Class A Ordinary Shares beneficially owned represents 3,648,000 Class A Ordinary Shares held by Mid-Castle Development Limited, a British Virgin Islands company, which is 100% owned by Qing Lin. The registered address of Mid-Castle Development Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.
(8)	The number of Class A Ordinary Shares beneficially owned represents 3,088,000 Class A Ordinary Shares held by Prime Link Capital International Limited, a British Virgin Islands company, which is 100% owned by Jinyuan Huang. The registered address of Prime Link Capital International Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.
(9)	The number of Class A Ordinary Shares beneficially owned represents 2,880,000 Class A Ordinary Shares held by Sky Top Capital International Limited, a British Virgin Islands company, which is 100% owned by Qiang Lin. The registered address of Sky Top Capital International Limited is 4th Floor, Water’s Edge Building, Meridian Plaza, Road Town, Tortola, VG1110, British Virgin Islands.

 

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company 

 

 

RELATED PARTY TRANSACTIONS

 

Contractual Arrangements with The VIE and its Shareholders

 

See “Corporate History and Structure.”

 

Employment Agreements

 

See “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Employment Agreements” in our annual report on Form 20-F for the year ended December 31, 2022.

 

Material Transactions with Related Parties  

 

The relationship and the nature of related party transactions are summarized as follow:

 

The table below sets forth the major related parties and their relationships with the Company as of June 30, 2023 and December 31, 2022 and 2021, and for six months ended June 30, 2023 and for the years ended December 31, 2022, 2021 and 2020:

 

Name of related parties		Relationship with the Company
Fujian Bafang		An equity investee of the Company
Fuzhou Tianyu Shengfeng Industrial Co., Ltd (“Fuzhou Tianyu”)		A company controlled by Yongteng Liu, who is the brother of Yongxu Liu, CEO and Chairman of the Company
Fuzhou Tianyu Shengfeng Property Management Co., Ltd (“Fuzhou Tianyu Management”)		A company under the control of a shareholder
Fuzhou Tianyu Yuanmei Catering Co., Ltd (“Fuzhou Tianyu Catering”)		A company under the control of a shareholder
Beijing Union Logistics Co., Ltd (“Beijing Banglian”) (1)		A company under the control of a shareholder
Fujian Desheng Logistics Co., Ltd (“Fujian Desheng”)		A company under the control of a shareholder
Dongguan Suxing New Material Co., Ltd (“Suxing”) (2)		A company under the control of a non-controlling shareholder
Hainan Tianyi Logistics Distribution Co., Ltd (“Hainan Tianyi”) (3)		An equity investee of the Company
Yongteng Liu		CEO’s brother

 

(1)	In January 2022, the Company’s shareholder sold the equity interest in Beijing Banglian.

 

(2)

On July 14, 2021, Shengfeng Logistics entered into a share transfer agreement with Dongguan Suxing New Material Co., Ltd (“Dongguan Suxing”), a related party, to transfer its 51% equity interest in Fuzhou Shengfeng New Material Technology Co., Ltd. (“New Material Technology”) to Dongguan Suxing. After the transaction, Suxing became a non-related party to the Company.

 

(3)	On September 15, 2021, the Company signed a share purchase agreement with a third party. According to such agreement, the Company sold its 5% equity interests in Hainan Tianyi to such third party. After the transaction, Hainan Tianyi became a non-related party to the Company.

 

 

Share Issuance to Related Parties

 

See “Description of Share Capital—History of Share Issuances.” 

 

Significant Transactions with Related Parties

 

		Six months ended June 30, 2023				Year ended December 31, 2022				Year ended December 31, 2021				Year ended December 31, 2020
Transportation services to Fujian Bafang		$	-			$	18			$	-			$	7
Transportation services to Fujian Desheng			-				-				349				-
Sales of material to Suxing			-				-				-				49
Total		$	-			$	18			$	349			$	56

 

		Six months ended June 30, 2023				Year ended December 31, 2022				Year ended December 31, 2021				Year ended December 31, 2020
Transportation services from Beijing Banglian		$	-			$	-			$	2,265			$	2,750
Transportation services from Hainan Tianyi		$	-			$	-			$	1,207			$	1,109
Transportation services from Fujian Bafang		$	472			$	1,196			$	157			$	144
Purchase raw materials from Suxing		$	-			$	-			$	577			$	781
Lease services from Fuzhou Tianyu		$	109			$	305			$	358			$	296
Lease services from Fuzhou Tianyu Management		$	-			$	35			$	-			$	-

 

Guarantees 

 

The Company’s shareholder, CEO and Chairman, Yongxu Liu, his spouse, Xiying Yang, and his brother, Yongteng Liu, were the guarantors of the Company’s short-term bank loans outstanding.

 

Significant balances with related parties were as follows:

  

		As of June 30, 2023				As of December 31, 2022				As of December 31, 2021
Due from related parties
Fuzhou Tianyu		$	41			$	42			$	46
Beijing Banglian			-				-				4
Total		$	41			$	42			$	50

 

		As of June 30, 2023				As of December 31, 2022				As of December 31, 2021
Due to related parties
Fujian Bafang (a)		$	1,416			$	1,694			$	1,574
Fuzhou Tianyu			123				84				29
Beijing Banglian			-				-				246
Fuzhou Tianyu Management			34				36				24
Hainan Tianyi			-				-				4
Yongteng Liu			-				600				-
Total		$	1,573			$	2,414			$	1,877

 

(a)	On December 10, 2007, the Company entered into an interest-free loan agreement with Fujian Bafang for a principal amount of approximately $1.4 million (RMB 9.6 million). Such loan is due on demand.

 

 

DESCRIPTION OF SHARE CAPITAL

 

The following description of our share capital and provisions of our amended and restated memorandum and articles of association, as amended from time to time, are summaries and do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, copies of which are filed as an exhibit to the registration statement of which this prospectus is a part (and which is referred to in this section as, respectively, the “memorandum” and the “articles”).

 

We were incorporated as an exempted company with limited liability under the Companies Act (Revised) of the Cayman Islands, or the “Cayman Companies Act,” on July 16, 2020. Our affairs are governed by our amended and restated memorandum and articles of association, as amended from time to time, the Cayman Companies Act and the common laws of Cayman Islands. A Cayman Islands exempted company:

 

	●	is a company that conducts its business mainly outside the Cayman Islands;
	●	is prohibited from trading in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman Islands (and for this purpose can effect and conclude contracts in the Cayman Islands and exercise in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands);
	●	does not have to hold an annual general meeting;
	●	does not have to make its register of members open to inspection by shareholders of that company;
	●	may obtain an undertaking against the imposition of any future taxation;
	●	may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
	●	may register as a limited duration company; and
	●	may register as a segregated portfolio company.

 

Units Being Offered

 

We are offering up to 8,000,000 Units, with each Unit consisting of one Class A Ordinary Share and a Warrant to purchase one Class A Ordinary Share(s) at an assumed public offering price of $7.50 per Unit. The Class A Ordinary Shares and the Warrants are being sold in this offering only as part of the Units. However, the Units will not be certificated and the Class A Ordinary Shares and the Warrants comprising such Units are immediately separable, and will be issued separately. Upon issuance, the Class A Ordinary Shares and the Warrants may be transferred independent of one another, subject to applicable law and transfer restrictions.

 

Ordinary Shares

 

General

 

Our authorized share capital is $50,000 divided into 400,000,000 Class A Ordinary Shares, par value $0.0001 per share, and 100,000,000 Class B Ordinary Shares, par value $0.0001 per share. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis.

 

All of our issued and outstanding Class A Ordinary Shares and Class B Ordinary Shares are fully paid and non-assessable. Our Class A Ordinary Shares and Class B Ordinary Shares are issued in registered form, and are issued when registered in our register of members. Unless the board of directors determine otherwise, each holder of our Class A Ordinary Shares or Class B Ordinary Shares will not receive a certificate in respect of such shares. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Class A Ordinary Shares and Class B Ordinary Shares.

 

 

Subject to the provisions of the Cayman Companies Act and our articles regarding redemption and purchase of the shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such authority could be exercised by the directors to allot shares which carry rights and privileges that are preferential to the rights attaching to Class A Ordinary Shares or Class B Ordinary Shares. No share may be issued at a discount except in accordance with the provisions of the Cayman Companies Act. The directors may refuse to accept any application for shares, and may accept any application in whole or in part, for any reason or for no reason.

 

At the completion of this offering, there will be 48,520,000 (if the Warrants are not exercised) or 56,520,000 (if the Warrants are exercised in full) Class A Ordinary Shares issued and outstanding, and 41,880,000 Class B Ordinary Shares issued and outstanding. Class A Ordinary Shares sold in this offering will be delivered against payment from the placement agent upon the closing of the offering in New York, New York, on or about [●].

 

Our Class A Ordinary Shares offered in this offering are shares of our offshore holding company in the Cayman Islands instead of shares of the VIE or the VIE’s subsidiaries in China, therefore, you will not directly hold equity interests in the VIE or the VIE’s subsidiaries, and you may never directly hold equity interests in the VIE or the VIE’s subsidiaries through your investment in this offering.

 

Listing

 

Our Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “SFWL.”  

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our Class A Ordinary Shares and Class B Ordinary Shares is Vstock Transfer, LLC, 18 Lafayette Pl., Woodmere, NY 11598.

 

Dividends

 

Subject to the provisions of the Cayman Companies Act and any rights attaching to any class or classes of shares under and in accordance with the articles:

 

(a)

the directors may declare dividends or distributions out of our funds which are lawfully available for that purpose; and

 

(b)

our shareholders may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors.

 

Subject to the requirements of the Cayman Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie.

 

Unless provided by the rights attached to a share, no dividend shall bear interest.

 

Voting Rights

 

On a poll, every shareholder who is present in person and every person representing a shareholder by proxy shall have one vote for each Class A Ordinary Share and 10 votes for each Class B Ordinary Share of which he or the person represented by proxy is the holder. In addition, all shareholders holding shares of a particular class are entitled to vote at a meeting of the holders of that class of shares. Votes may be given either personally or by proxy.

 

Conversion Rights

 

Class A Ordinary Shares are not convertible. Class B Ordinary Shares are convertible, at the option of the holder thereof, into Class A Ordinary Shares on a one-to-one basis.

 

 

Variation of Rights of Shares

 

Whenever our capital is divided into different classes of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a special resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.

 

Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class.

  

Alteration of Share Capital

 

Subject to the Cayman Companies Act, we may, by ordinary resolution:

 

	(a)	increase our share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution;
	(b)	consolidate and divide all or any of our share capital into shares of larger amount than our existing shares;
	(c)	convert all or any of our paid-up shares into stock, and reconvert that stock into paid up shares of any denomination;
	(d)	sub-divide our shares or any of them into shares of an amount smaller than that fixed, so, however, that in the sub-division, the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; and
	(e)	cancel shares which, at the date of the passing of that ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled or, in the case of shares without nominal par value, diminish the number of shares into which our capital is divided.

 

Subject to the Cayman Companies Act and to any rights for the time being conferred on the shareholders holding a particular class of shares, we may, by special resolution, reduce our share capital in any way.

 

Calls on Shares and Forfeiture

 

Subject to the terms of allotment, the directors may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may waive payment of the interest wholly or in part.

 

We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder’s estate:

 

	(a)	either alone or jointly with any other person, whether or not that other person is a shareholder; and
	(b)	whether or not those monies are presently payable.

 

At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the amended and restated articles of association.

 

 

We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the amended and restated articles of association) and, within 14 days of the date on which the notice is deemed to be given under the amended and restated articles of association, such notice has not been complied with.

 

Unclaimed Dividend

 

A dividend that remains unclaimed for a period of six years after it became due for payment shall be forfeited to, and shall cease to remain owing by, our Company.

 

Forfeiture or Surrender of Shares

 

If a shareholder fails to pay any call, the directors may give to such shareholder not less than 14 clear days’ notice requiring payment and specifying the amount unpaid including any interest which may have accrued, any expenses which have been incurred by us due to that person’s default and the place where payment is to be made. The notice shall also contain a warning that if the notice is not complied with, the shares in respect of which the call is made will be liable to be forfeited.

 

If such notice is not complied with, the directors may, before the payment required by the notice has been received, resolve that any share the subject of that notice be forfeited (which forfeiture shall include all dividends or other monies payable in respect of the forfeited share and not paid before such forfeiture).

 

A forfeited or surrendered share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the directors determine and at any time before a sale, re-allotment or disposition. The forfeiture may be cancelled on such terms as the directors think fit.

 

A person whose shares have been forfeited or surrendered shall cease to be a shareholder in respect of the forfeited or surrendered shares, but shall, notwithstanding such forfeiture or surrender, remain liable to pay to us all monies which at the date of forfeiture or surrender were payable by him to us in respect of the shares, together with all expenses and interest from the date of forfeiture or surrender until payment at the rate of which interest was payable on those monies before forfeiture; or if no interest was so payable, at the rate of 10% per annum, but his liability shall cease if and when we receive payment in full of the unpaid amount.

 

A declaration, whether statutory or under oath, made by a director or the secretary shall be conclusive evidence that the person making the declaration is a director or secretary of the Company and that the particular shares have been forfeited or surrendered on a particular date.

 

Subject to the execution of an instrument of transfer, if necessary, the declaration shall constitute good title to the shares.

 

Share Premium Account

 

The directors shall establish a share premium account in accordance with the Cayman Companies Act and shall carry the credit of such account from time to time to a sum equal to the amount or value of the premium paid on the issue of any share or capital contributed or such other amounts required by the Cayman Companies Act.

 

Redemption and Purchase of Own Shares

 

Subject to the Cayman Companies Act and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:

 

	(a)	issue shares that are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms and in the manner our directors determine before the issue of those shares;
	(b)	with the consent by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in the manner which the directors determine at the time of such variation; and
	(c)	purchase all or any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine at the time of such purchase.

 

 

We may make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Cayman Companies Act, including out of any combination of capital, our profits and the proceeds of a fresh issue of shares.

  

When making a payment in respect of the redemption or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized by the terms of the allotment of those shares or by the terms applying to those shares, or otherwise by agreement with the shareholder holding those shares.

 

Transfer of Shares

 

Provided that a transfer of Class A Ordinary Shares complies with applicable rules of the Nasdaq Capital Market, a shareholder may transfer Class A Ordinary Shares or Class B Ordinary Shares to another person by completing an instrument of transfer in the usual or common form, with respect to Class A Ordinary Shares, or in a form prescribed by Nasdaq, or in any other form approved by the directors, executed:

 

	(a)	where the Class A Ordinary Shares or Class B Ordinary Shares are fully paid, by or on behalf of that shareholder; and
	(b)	where the Class A Ordinary Shares or Class B Ordinary Shares are nil or partly paid, by or on behalf of that shareholder and the transferee.

 

The transferor shall be deemed to remain the holder of a Class A Ordinary Share or Class B Ordinary Share until the name of the transferee is entered into the register of members of the Company.

 

Our board of directors may, in its absolute discretion, decline to register any transfer of any Class A Ordinary Share or Class B Ordinary Share that has not been fully paid up or is subject to a company lien. Our board of directors may also decline to register any transfer of such Class A Ordinary Share or Class B Ordinary Share unless:

 

	(a)	the instrument of transfer is lodged with the Company, accompanied by the certificate (if any) for the Class A Ordinary Shares or Class B Ordinary Shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;
	(b)	the instrument of transfer is in respect of only one class of shares;
	(c)	the instrument of transfer is properly stamped, if required;
	(d)	the Class A Ordinary Share or Class B Ordinary Share transferred is fully paid and free of any lien in favor of us;
	(e)	any fee related to the transfer has been paid to us; and
	(f)	in the case of a transfer to joint holders, the transfer is not to more than four joint holders.

 

If our directors refuse to register a transfer, they are required, within three months after the date on which the instrument of transfer was lodged, to send to each of the transferor and the transferee notice of such refusal.

 

This, however, is unlikely to affect market transactions of the Class A Ordinary Shares purchased by investors in the public offering. Once the Class A Ordinary Shares have been listed, the legal title to such Class A Ordinary Shares and the registration details of those Class A Ordinary Shares in our register of members will remain with DTC/Cede & Co. All market transactions with respect to those Class A Ordinary Shares will then be carried out without the need for any kind of registration by the directors, as the market transactions will all be conducted through the DTC systems.

 

The registration of transfers may, on 14 calendar days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and our register of members closed at such times and for such periods as our board of directors may, in their absolute discretion, from time to time determine. The registration of transfers, however, may not be suspended, and the register may not be closed, for more than 30 days in any year.

 

 

Inspection of Books and Records

 

Holders of our Class A Ordinary Shares and Class B Ordinary Shares will have no general right under the Cayman Companies Act to inspect or obtain copies of our register of members or our corporate records.

 

General Meetings

 

As a Cayman Islands exempted company, we are not obligated by the Cayman Companies Act to call shareholders’ annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings.

 

The directors may convene general meetings whenever they think fit. General meetings shall also be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than ten percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us.

 

At least 14 days’ notice of an extraordinary general meeting and 21 days’ notice of an annual general meeting shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors, the shareholders, and our auditors.

 

Subject to the Cayman Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice.

 

A quorum shall consist of the presence (whether in person or represented by proxy) of one or more shareholders holding shares that represent not less than one-third of the outstanding shares carrying the right to vote at such general meeting.

 

If, within 15 minutes from the time appointed for the general meeting, or at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be cancelled. In any other case it shall stand adjourned to the same time and place seven days or to such other time or place as is determined by the directors. If a quorum is not present within 15 minutes of the time appointed for the adjourned meeting, then the shareholders present in person or by proxy shall constitute a quorum.

 

The chairman may, with the consent of a meeting at which a quorum is present, adjourn the meeting. When a meeting is adjourned for seven clear days or more, notice of the adjourned meeting shall be given within at least seven clear days.

 

At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before, or on, the declaration of the result of the show of hands) demanded by the chairman of the meeting or by at least two shareholders having the right to vote on the resolutions or one or more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution.

 

 

If a poll is duly demanded it shall be taken in such manner as the chairman directs and, on the question of adjournment, shall be taken immediately, and on any other question shall be taken either immediately or at an adjourned meeting at such time and place as directed by the chairman, but not being more than thirty clear days after the poll was demanded. The demand for a poll shall not prevent the meeting from continuing to transact any business other than the question on which the poll was demanded.

 

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall not be entitled to a second or casting vote.

 

Directors

 

We may by ordinary resolution, from time to time, fix the maximum and minimum number of directors to be appointed. Under the amended and restated articles of association, we are required to have a minimum of one director and the maximum number of directors shall be unlimited.

 

A director may be appointed by ordinary resolution or by the directors. Any appointment may be to fill a vacancy or as an additional director.

 

Unless the remuneration of the directors is determined by the Company by ordinary resolution, the directors shall be entitled to such remuneration as the directors may determine.

 

The shareholding qualification for directors may be fixed by ordinary resolution and unless and until so fixed no share qualification shall be required.

 

Unless removed or re-appointed, each director shall be appointed for a term expiring at the next-following annual general meeting, if one is held. At any annual general meeting held, our directors will be elected by an ordinary resolution. At each annual general meeting, each director so elected shall hold office for a one-year term and until the election of their respective successors in office or removed.

 

A director may be removed by ordinary resolution.

 

A director may at any time resign or retire from office by giving us notice in writing. Unless the notice specifies a different date, the director shall be deemed to have resigned on the date that the notice is delivered to us.

 

Subject to the provisions of the articles, the office of a director may be terminated forthwith if:

 

(a)

he is prohibited by the law of the Cayman Islands from acting as a director;

 

(b)

he is made bankrupt or makes an arrangement or composition with his creditors generally;

 

(c)

he resigns his office by notice to us;

 

(d)

he only held office as a director for a fixed term and such term expires;

 

(e)

in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director;

 

(f)

he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director);

 

(g)

he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise; or

 

(h)

without the consent of the other directors, he is absent from meetings of directors for continuous period of six months.

 

Each of the compensation committee and the nominating and corporate governance committee shall consist of at least three directors and the majority of the committee members shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules. The audit committee shall consist of at least three directors, all of whom shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 or Rule 10C-1 of the Exchange Act.

 

 

Powers and Duties of Directors

 

Subject to the provisions of the Cayman Companies Act and our amended and restated memorandum and articles of association, our business shall be managed by the directors, who may exercise all our powers. No prior act of the directors shall be invalidated by any subsequent alteration of our amended and restated memorandum or articles of association. To the extent allowed by the Cayman Companies Act, however, shareholders may by special resolution validate any prior or future act of the directors which would otherwise be in breach of their duties.

 

The directors may delegate any of their powers to any committee consisting of one or more persons who need not be shareholders and may include non-directors so long as the majority of those persons are directors; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors. Upon the closing of this offering, our board of directors will have established an audit committee, compensation committee, and nomination and corporate governance committee.

 

The board of directors may establish any local or divisional board of directors or agency and delegate to it its powers and authorities (with power to sub-delegate) for managing any of our affairs whether in the Cayman Islands or elsewhere and may appoint any persons to be members of a local or divisional board of directors, or to be managers or agents, and may fix their remuneration.

 

The directors may from time to time and at any time by power of attorney or in any other manner they determine appoint any person, either generally or in respect of any specific matter, to be our agent with or without authority for that person to delegate all or any of that person’s powers.

 

The directors may from time to time and at any time by power of attorney or in any other manner they determine appoint any person, whether nominated directly or indirectly by the directors, to be our attorney or our authorized signatory and for such period and subject to such conditions as they may think fit. The powers, authorities and discretions, however, must not exceed those vested in, or exercisable, by the directors under the articles.

 

The board of directors may remove any person so appointed and may revoke or vary the delegation.

 

The directors may exercise all of our powers to borrow money and to mortgage or charge its undertaking, property and assets both present and future and uncalled capital or any part thereof, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of ours or our parent undertaking (if any) or any subsidiary undertaking of us or of any third party.

 

A director shall not, as a director, vote in respect of any contract, transaction, arrangement or proposal in which he has an interest which (together with any interest of any person connected with him) is a material interest (otherwise than by virtue of his interests, direct or indirect, in shares or debentures or other securities of, or otherwise in or through, us) and if he shall do so his vote shall not be counted, nor in relation thereto shall he be counted in the quorum present at the meeting, but (in the absence of some other material interest than is mentioned below) none of these prohibitions shall apply to:

 

	(a)	the giving of any security, guarantee or indemnity in respect of:
		(i)	money lent or obligations incurred by him or by any other person for our benefit or any of our subsidiaries; or
		(ii)	a debt or obligation of ours or any of our subsidiaries for which the director himself has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security;
	(b)	where we or any of our subsidiaries is offering securities in which offer the director is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which the director is to or may participate;
	(c)	any contract, transaction, arrangement or proposal affecting any other body corporate in which he is interested, directly or indirectly and whether as an officer, shareholder, creditor or otherwise howsoever, provided that he (together with persons connected with him) does not to his knowledge hold an interest representing one percent or more of any class of the equity share capital of such body corporate (or of any third body corporate through which his interest is derived) or of the voting rights available to shareholders of the relevant body corporate;

 

 

(d)

any act or thing done or to be done in respect of any arrangement for the benefit of the employees of us or any of our subsidiaries under which he is not accorded as a director any privilege or advantage not generally accorded to the employees to whom such arrangement relates; or

 

(e)

any matter connected with the purchase or maintenance for any director of insurance against any liability or (to the extent permitted by the Cayman Companies Act) indemnities in favor of directors, the funding of expenditure by one or more directors in defending proceedings against him or them or the doing of anything to enable such director or directors to avoid incurring such expenditure.

 

A director may, as a director, vote (and be counted in the quorum) in respect of any contract, transaction, arrangement or proposal in which he has an interest which is not a material interest or as described above.

 

Capitalization of Profits

 

The directors may resolve to capitalize:

 

	(a)	any part of our profits not required for paying any preferential dividend (whether or not those profits are available for distribution); or
	(b)	any sum standing to the credit of our share premium account or capital redemption reserve, if any.

 

The amount resolved to be capitalized must be appropriated to the shareholders who would have been entitled to it had it been distributed by way of dividend and in the same proportions.

 

Liquidation Rights

 

If we are wound up, the shareholders may, subject to the articles and any other sanction required by the Cayman Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:

 

	(a)	to divide in specie among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholders; and
	(b)	to vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up.

 

The directors have the authority to present a petition for our winding up to the Grand Court of the Cayman Islands on our behalf without the sanction of a resolution passed at a general meeting.

 

Register of Members

 

Under the Cayman Companies Act, we must keep a register of members and there should be entered therein:

 

	●	the names and addresses of the members of the Company, a statement of the shares held by each member, which: distinguishes each share by its number (so long as the share has a number); confirms the amount paid, or agreed to be considered as paid, on the shares of each member; confirms the number and category of shares held by each member; and confirms whether each relevant category of shares held by a member carries voting rights under the Articles, and if so, whether such voting rights are conditional;
	●	the date on which the name of any person was entered on the register as a member; and
	●	the date on which any person ceased to be a member.

 

 

Under Cayman Islands law, the register of members of our Company is prima facie evidence of the matters set out therein (that is, the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a shareholder registered in the register of members is deemed as a matter of the Cayman Islands law to have legal title to the shares as set against its name in the register of members. Upon the completion of this offering, the register of members will be immediately updated to record and give effect to the issuance of shares by us. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name.

 

However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by the company should be rectified, where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands courts.

 

Exempted Company

 

We are an exempted company with limited liability under the Cayman Companies Act. The Cayman Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

 

	●	is not required to make its register of members open to inspection by shareholders;
	●	does not have to hold an annual general meeting;
	●	may issue shares with no par value;
	●	may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
	●	may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
	●	may register as a limited duration company; and
	●	may register as a segregated portfolio company.

 

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of the company, except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil.

 

Warrants

 

The following summary of certain terms and provisions of the Warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the Warrants, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of Warrant for a complete description of the terms and conditions of the Warrants.

 

Exercise Price and Duration. Each share exercisable pursuant to the Warrants will have an exercise price per share of $8.25, equal to 110% of the public offering price per Unit in this offering. The Warrants are exercisable immediately upon issuance, and at any time thereafter up to the 5^th anniversary of the issuance date. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our Class A Ordinary Share and also upon any distributions of assets, including cash, stock or other property to our shareholders. No fractional shares will be issued upon exercise of the Warrants. A Warrant holder may exercise its Warrants only for a whole number of shares.

 

 

Exercisability. The Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and by payment in full in immediately available funds for the number of Class A Ordinary Shares purchased upon such exercise.

 

Cashless Exercise. If at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Class A Ordinary Shares underlying the Warrants, then the Warrants may also be exercised, in whole or in part, at such time by means of a cashless exercise, in which case the holder would receive upon such exercise the net number of Class A Ordinary Shares determined according to the formula set forth in the Warrant.

 

Exercise Limitation. A holder will not have the right to exercise any portion of the Warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% (or 9.99% upon the request of the holder) of the number of Class A Ordinary Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants. However, any holder may increase or decrease such percentage, provided that any increase will not be effective until the 61^st day after such election.

  

Transferability. Subject to applicable laws, the Warrants may be offered for sale, sold, transferred or assigned without our consent.

 

Fractional Shares. No fractional Class A Ordinary Shares will be issued upon the exercise of the Warrants. A Warrant holder may exercise its Warrants only for a whole number of shares.

 

Trading Market. There is no established public trading market for the Warrants being issued in this offering, and we do not expect a market to develop. We do not intend to apply for listing of the Warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Warrants will be limited.

 

Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and power that we may exercise and will assume all of our obligations under the Warrants with the same effect as if such successor entity had been named in the Warrant itself. If holders of our Class A Ordinary Shares are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as to the consideration it receives upon any exercise of the Warrant following such fundamental transaction. In addition, in certain circumstances, upon a fundamental transaction, the holder will have the right to require us to repurchase its Warrant at its fair value using the Black Scholes option pricing formula; provided, however, that, if the fundamental transaction is not within our control, including not approved by our board of directors, then the holder shall only be entitled to receive the same type or form of consideration (and in the same proportion), at the Black Scholes value of the unexercised portion of the Warrant, that is being offered and paid to the holders of our Class A Ordinary Shares in connection with the fundamental transaction.

 

Rights as a Shareholder. Except as otherwise provided in the Warrants or by virtue of such holder’s ownership of our Class A Ordinary Shares, the holder of a Warrant does not have the rights or privileges of a holder of our Class A Ordinary Shares, including any voting rights, until the holder exercises the Warrant.

 

Amendment and Waiver. The Warrants may be modified or amended or the provisions thereof waived with the written consent of our company on the one the hand and a holder on the other hand.

 

Differences in Corporate Law

 

The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of the United Kingdom. In addition, the Cayman Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Cayman Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.

 

 

The Cayman Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property, and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a combined company and the vesting of the undertaking, property and liabilities of such companies in the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with, among other documents, a declaration as to the solvency of the consolidated or surviving company, a declaration of the assets and liabilities of each constituent company, and (unless the surviving or consolidated company is to be a non-Cayman Islands company) an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

 

A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders if a copy of the plan of merger is given to every member of each subsidiary company to be merged unless the member agrees otherwise. For this purpose, a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.

 

The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

 

Except in certain limited circumstances, a shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting from a merger or consolidation, providing the dissenting shareholder complies strictly with the procedures set out in the Cayman Companies Act. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

 

Separate from the statutory provisions relating to mergers and consolidations, the Cayman Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement. Any such arrangement must be approved by (a) a majority in number of the creditors or each class of creditors, as the case may be, with whom the arrangement is to be made, and who must, in addition, represent seventy-five percent in value of the creditors or each such class of creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose and (b) seventy-five percent in value of the shareholders of each class of shareholders, as the case may be, with whom the arrangement is to be made that are present and voting either in person or by proxy at a meeting, convened for that purpose, as applicable. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

 

	(a)	the court’s directions and the statutory provisions as to the required majority vote have been met;
	(b)	the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;
	(c)	the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
	(d)	the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman Companies Act.

 

The Cayman Companies Act contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority shareholders upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

 

 

If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

 

Shareholders’ Suits

 

In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English law authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto, which limits the circumstances in which a shareholder may bring a derivative action on behalf of the company or personal action to claim loss which is reflective of loss suffered by the company) which permit a minority shareholder to commence a class action against, or derivative actions in the name of, a company to challenge the following:

 

	(a)	a company act or proposes to act illegally or ultra vires y and is therefore incapable of ratification by the shareholders;
	(b)	an irregularity in the passing of a resolution which requires a qualified majority;
	(c)	an act purporting to abridge or abolish the individual rights of a member; and
	(d)	an act which constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company.

 

In the case of a company (not being a bank) having its share capital divided into shares, the Grand Court may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine the affairs of the company and to report thereon in such manner as the Grand Court shall direct.

 

Indemnification of Directors and Executive Officers and Limitation of Liability

 

Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against the consequences of committing a crime, or against the indemnified person’s own fraud or dishonesty. Our amended and restated articles of association provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against:

 

	(a)	all actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred or sustained by the existing or former director (including alternate director), secretary, or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director), secretary’s or officer’s duties, powers, authorities, or discretions; and
	(b)	without limitation to paragraph (a) above, all costs, expenses, losses, or liabilities incurred by the existing or former director (including alternate director), secretary, or officer in defending (whether successfully or otherwise) any civil, criminal, administrative, or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere.

 

No such existing or former director (including alternate director), secretary, or officer, however, shall be indemnified in respect of any matter arising out of his own actual fraud, willful default or willful neglect.

 

 

To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan, or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary, or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary, or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including alternate director), the secretary, or that officer for those legal costs.

 

This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and executive officers that will provide such persons with additional indemnification beyond that provided in our amended and restated articles of association.

 

Anti-Takeover Provisions in Our Articles

 

Some provisions of our amended and restated articles of association may discourage, delay, or prevent a change in control of our Company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue shares at such times and on such terms and conditions as the board of directors may decide without any further vote or action by our shareholders.

 

Under the Cayman Companies Act, our directors may only exercise the rights and powers granted to them under our amended and restated articles of association for what they believe in good faith to be in the best interests of our Company and for a proper purpose.

 

Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from engaging in any business combination with any interested shareholder for a period of three years following the date the person became an interested shareholder, unless:

 

●

prior to the date of the transaction, the board of directors approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder;

 

●

upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock outstanding at the time the transaction commenced excluding for purposes of determining the number of shares outstanding the shares owned by directors and officers and shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 

●

on or following the date of the transaction, the business combination is approved by the board of directors and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 66% of the outstanding voting stock that is not owned by the interested shareholder.

  

An interested shareholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested shareholder status, did own 15% or more of a corporation’s outstanding voting securities. Such provision could have an anti-takeover effect with respect to transactions that the board of directors do not approve in advance. It could also discourage attempts that might result in a premium over the market price for the shares held by shareholders. A Delaware corporation may opt out of Section 203 with an express provision in its original certificate of incorporation or an express provision in its certification of incorporation or bylaws resulting from amendments approved by the holders of at least a majority of the corporation’s outstanding voting shares.

 

Directors’ Fiduciary Duties

 

Under the Delaware General Corporation Law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of the corporation and its shareholders take precedence over any interest possessed by a director, officer, or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

 

 

As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. A Cayman Islands director’s fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future, and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care, and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care, and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated articles of association, as amended from time to time. We have the right to seek damages where certain duties owed by any of our directors are breached.

 

Shareholder Proposals

 

Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. The Delaware General Corporation Law does not provide shareholders an express right to put any proposal before the annual meeting of shareholders, but in keeping with common law, Delaware corporations generally afford shareholders an opportunity to make proposals and nominations provided that they comply with the notice provisions in the certificate of incorporation or bylaws. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

 

Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our amended and restated articles of association provide that general meetings shall be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than 10 percent of the rights to vote at such general meeting in accordance with the notice provisions in the amended and restated articles of association, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days’ after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our amended and restated articles of association provide no other right to put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders’ annual general meetings.

 

Voting Requirements

 

For the protection of shareholders, certain matters must be approved by special resolution of the shareholders as a matter of Cayman Islands law, including alteration of the memorandum or articles of association, appointment of inspectors to examine company affairs, reduction of share capital (subject, in relevant circumstances, to court approval), change of name, authorization of a plan of merger (other than a merger between a parent and a subsidiary), authorization of a transfer by way of continuation to another jurisdiction or consolidation or voluntary winding up of the company.

 

The Cayman Companies Act requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the memorandum and articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting. The Cayman Companies Act defines “special resolutions” only. A company’s memorandum and articles of association can therefore tailor the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. Under our amended and restated articles of association an ordinary resolution must be passed at a general meeting by a simple majority of shareholders who (being entitled to do so) vote in person or by proxy at that meeting. The expression includes a unanimous written resolution.

 

 

For the protection of shareholders, certain matters must be approved by special resolution of the shareholders as a matter of Cayman Islands law, including alteration of the memorandum or articles of association, appointment of inspectors to examine company affairs, reduction of share capital (subject, in relevant circumstances, to court approval), change of name, authorization of a plan of merger (other than a merger between a parent and a subsidiary), authorization of a transfer by way of continuation to another jurisdiction or consolidation or voluntary winding up of the company.

 

The Cayman Companies Act requires that a special resolution be passed by a majority of at least two-thirds or such higher percentage as set forth in the memorandum and articles of association, of shareholders being entitled to vote and do vote in person or by proxy at a general meeting, or by unanimous written consent of shareholders entitled to vote at a general meeting. The Cayman Companies Act defines “special resolutions” only. A company’s memorandum and articles of association can therefore tailor the definition of “ordinary resolutions” as a whole, or with respect to specific provisions. Under our amended and restated articles of association an ordinary resolution must be passed at a general meeting by a simple majority of shareholders who (being entitled to do so) vote in person or by proxy at that meeting. The expression includes a unanimous written resolution.

 

Cumulative Voting

 

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the Cayman Companies Act, but our amended and restated articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

  

Removal of Directors

 

Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Subject to the provisions of our amended and restated articles of association (which include the removal of a director by ordinary resolution), the office of a director may be terminated forthwith if (a) he is prohibited by the laws of the Cayman Islands from acting as a director, (b) he is made bankrupt or makes an arrangement or composition with his creditors generally, (c) he resigns his office by notice to us, (d) he only held office as a director for a fixed term and such term expires, (e) in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director, (f) he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director), (g) he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise, or (h) without the consent of the other directors, he is absent from meetings of directors for continuous period of six months.

 

Transactions with Interested Shareholders

 

The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation or bylaws that is approved by its shareholders, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

 

 

The Cayman Companies Act has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although the Cayman Companies Act does not regulate transactions between a company and its significant shareholders, under Cayman Islands law such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.

 

Dissolution; Winding Up

 

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.

 

Under Cayman Islands law and our amended and restated articles of association, the company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our Company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

 

Variation of Rights of Shares

 

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our amended and restated articles of association, if our share capital is divided into more than one class of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a special resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.

 

Amendment of Governing Documents

 

Under the Delaware General Corporation Law, a corporation’s certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors. Under the Cayman Companies Act, our articles of association may only be amended by special resolution of our shareholders.

 

Anti-money Laundering—Cayman Islands

 

In order to comply with legislation or regulations aimed at the prevention of money laundering and terrorist financing, we are required to adopt and maintain anti-money laundering procedures and will require subscribers to provide information and evidence to verify their identity, address and source of funds. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.

 

We reserve the right to request such information and evidence as is necessary to verify the identity, address and source of funds of a subscriber. In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited. We will not be liable for any loss suffered by a subscriber arising as a result of a refusal of, or delay in processing, an application from a subscriber if such information and documentation requested has not been provided by the subscriber in a timely manner.

 

 

We also reserve the right to refuse to make any redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.

 

If any person resident in the Cayman Islands knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of their business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) a nominated officer (appointed in accordance with the Proceeds of Crime Act (Revised) of the Cayman Islands) or the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised), if the disclosure relates to criminal conduct or money laundering or (ii) to the Financial Reporting Authority or a police constable or a nominated officer (pursuant to the Terrorism Act (Revised) of the Cayman Islands), if the disclosure relates to involvement with terrorism or terrorist financing and terrorist property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.

 

By subscribing for shares, the subscriber consents to the disclosure of any information about them to regulators and others upon request in connection with money laundering and similar matters both in the Cayman Islands and in other jurisdictions.

 

Economic Substance Legislation of The Cayman Islands

 

The Cayman Islands, together with several other non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Council of the European Union and the OECD as to offshore structures engaged in certain activities which attract profits without real economic activity. The International Tax Co-operation (Economic Substance) Act (Revised) (the “Substance Act”) came into force in the Cayman Islands in January 2019, introducing certain economic substance requirements for in-scope Cayman Islands “entities” which are engaged in certain geographically mobile business activities (“relevant activities”). As we are a Cayman Islands exempted company, compliance obligations include filing annual notifications, in which need to state whether we are carrying out any relevant activities and if so, whether we have satisfied economic substance tests to the extent required under the Substance Act. It is anticipated that our Company will not be engaging in any “relevant activities” and will therefore not be required to meet the economic substance requirements tests or will otherwise by subject to more limited substance requirements. However, it is anticipated that the Substance Act will evolve and be subject to further clarification and amendments. Failure to satisfy applicable requirements may subject us to penalties under the Substance Act.

 

Data Protection in the Cayman Islands – Privacy Notice

 

This privacy notice explains the manner in which we collect, process, and maintain personal data about investors of the Company pursuant to the Data Protection Act (Revised) of the Cayman Islands, as amended from time to time and any regulations, codes of practice, or orders promulgated pursuant thereto (the “DPA”).

 

We are committed to processing personal data in accordance with the DPA. In our use of personal data, we will be characterized under the DPA as a “data controller,” whilst certain of our service providers, affiliates, and delegates may act as “data processors” under the DPA. These service providers may process personal data for their own lawful purposes in connection with services provided to us. For the purposes of this privacy notice, “you” or “your” shall mean the subscriber and shall also include any individual connected to the subscriber.

 

By virtue of your investment in the Company, we and certain of our service providers may collect, record, store, transfer, and otherwise process personal data by which individuals may be directly or indirectly identified. We may combine personal data that you provide to use with personal data that we collect from, or about you. This may include personal data collected in an online or offline context including from credit reference agencies and other available public databases or data sources, such as news outlines, websites and other media sources and international sanctions lists.

 

 

Your personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for us to perform a contract to which you are a party or for taking pre-contractual steps at your request, (b) where the processing is necessary for compliance with any legal, tax, or regulatory obligation to which we are subject, or (c) where the processing is for the purposes of legitimate interests pursued by us or by a service provider to whom the data are disclosed, or (d) where you otherwise consent to the processing of personal data for any specific purpose. As a data controller, we will only use your personal data for the purposes for which we collected it. If we need to use your personal data for an unrelated purpose, we will contact you.

 

We anticipate that we will share your personal data with our service providers for the purposes set out in this privacy notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional circumstances, we will share your personal data with regulatory, prosecuting, and other governmental agencies or departments, and parties to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion, and financial crime or compliance with a court order).

 

Your personal data shall not be held by the Company for longer than necessary with regard to the purposes of the data processing.

 

We will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements of the DPA. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that data.

  

We will only transfer personal data in accordance with the requirements of the DPA, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction, or damage to the personal data.

 

If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation to your investment into the Company, this will be relevant for those individuals and you should transmit this document to those individuals for their awareness and consideration.

 

You have certain rights under the DPA, including (a) the right to be informed as to how we collect and use your personal data (and this privacy notice fulfils our obligation in this respect), (b) the right to obtain a copy of your personal data, (c) the right to require us to stop direct marketing, (d) the right to have inaccurate or incomplete personal data corrected, (e) the right to withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data, (f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial), (g) the right to obtain information as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer, or wish to transfer your personal data, general measures we take to ensure the security of personal data, and any information available to us as to the source of your personal data, (h) the right to complain to the Office of the Ombudsman of the Cayman Islands, and (i) the right to require us to delete your personal data in some limited circumstances.

 

If you do not wish to provide us with requested personal data or subsequently withdraw your consent, you may not be able to invest in the Company or remain invested in the Company as it will affect the Company’ ability to manage your investment.

 

If you consider that your personal data has not been handled correctly, or you are not satisfied with our responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands’ Ombudsman. The Ombudsman can be contacted by email at info@ombudsman.ky or by accessing their website at ombudsman.ky.

 

 

History of Share Issuances

 

The following is a summary of our share issuances since incorporation.

 

On July 16, 2020, Quality Corporate Services Ltd., the subscriber to our memorandum of association, had initially taken up 1 ordinary share, par value $1.00 per share, which it subsequently transferred to Shengfeng International Limited on the same date. Also on July 16, 2020, we issued 49,999 ordinary shares, par value $1.00 per share, to Shengfeng International Limited, of which 6,000 ordinary shares were transferred to Everbright International Development Limited on September 29, 2020.

 

On December 18, 2020 we undertook the following corporate actions:

 

	(i)	a repurchase of 43,999 ordinary shares held by Shengfeng International Limited and 6,000 ordinary shares held by Everbright International Development Limited;
	(ii)	an amendment of our share capital from $50,000 divided into 50,000 ordinary shares of $1.00 par value per share to $50,000 divided into 40,000 Class A Ordinary Shares of $1.00 par value per share and 10,000 Class B Ordinary Shares of $1.00 par value per share;
	(iii)	a re-designation of one issued ordinary share held by Shengfeng International Limited into one Class B Ordinary Share; and
	(iv)	a subdivision of our share capital from $50,000 divided into 40,000 Class A Ordinary Shares of $1.00 par value per share and 10,000 Class B Ordinary Shares of $1.00 par value per share to $50,000 divided into 400,000,000 Class A Ordinary Shares of $0.0001 par value per share and 100,000,000 Class B Ordinary Shares of $0.0001 par value per share.

 

On December 18, 2020, we issued an aggregate of 38,120,000 Class A Ordinary Shares to 12 investors for an aggregate consideration of $3,812.

 

On December 18, 2020, we issued 41,870,000 Class B Ordinary Shares to Shengfeng International Limited for a consideration of $4,187. After such issuance and as of the date of this prospectus, Shengfeng International Limited holds an aggregate of 41,880,000 of our Class B Ordinary Shares.

 

On April 4, 2023, the Company completed its IPO of 2,400,000 Class A Ordinary Shares at a public offering price of $4.00 per share. The net proceeds raised from the IPO were approximately $8.5 million, after deducting underwriting discounts and the offering expenses payable by the Company. 

 

For more details on our share issuances, please refer to “Item 7. Recent Sales of Unregistered Securities.” 

 

 

SHARES ELIGIBLE FOR FUTURE SALE

 

Lock-Up Agreements  

 

We will not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Class A Ordinary Shares or any securities which would entitle the holder thereof to acquire at any time Class A Ordinary Shares, during the 90-day period from the date of completion of this offering, subject to certain exemptions. 

 

We will also, during the 90-day period from the date of completion of this offering, not effectuate or enter into an agreement to effect any issuance of Class A Ordinary Shares or any securities which would entitle the holder thereof to acquire at any time Class A Ordinary Shares (or a combination of units thereof) involving, among other things, transactions in which we (i) issue or sell any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional Class A Ordinary Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Class A Ordinary Shares at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for the Class A Ordinary Shares (but not including antidilution protections related to future share issuances) or (ii) enter into, or effect a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby we may issue securities at a future determined price, subject to certain exemptions.

 

Each of our directors, executive officers, and principal shareholders (5% or more shareholders) has also entered into a similar lock-up agreement for a period of six (6) months from the date of completion of this offering, subject to certain exceptions, with respect to our Class A Ordinary Shares or any securities which would entitle the holder thereof to acquire at any time Class A Ordinary Shares.

 

Rule 144

 

In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who at the time of a sale is not, and has not been during the three months preceding the sale, an affiliate of ours and has beneficially owned our restricted securities for at least six months is entitled to sell the restricted securities without registration under the Securities Act, subject to the availability of current public information about us, and will be entitled to sell restricted securities beneficially owned for at least one year without restriction. Persons who are our affiliates (including persons beneficially owning 10% or more of our outstanding shares) and have beneficially owned our restricted securities for at least six months may sell within any three-month period a number of restricted securities that does not exceed the greater of the following:

 

●

1% of the then outstanding ordinary shares of the same class, which will equal approximately 485,200 Class A Ordinary Shares immediately after this offering, assuming the sales of all of the securities we are offering and no exercise of the Warrants included in the Units; and

 

●

the average weekly trading volume of our ordinary shares of the same class on the Nasdaq Capital Market during the four calendar weeks preceding the date on which notice of the sale on Form 144 is filed with the SEC.

 

Such sales are also subject to manner-of-sale provisions, notice requirements and the availability of current public information about us.

 

Rule 701

 

Beginning 90 days after we became a reporting company, persons other than affiliates who purchased ordinary shares under a written compensatory plan or other written agreement executed prior to the completion of this offering may be entitled to sell such shares in the United States in reliance on Rule 701 under the Securities Act, or Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144.

 

Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 subject only to its manner-of-sale requirements. However, the Rule 701 shares would remain subject to any applicable lock-up arrangements and would only become eligible for sale when the lock-up period expires, if any.

 

Regulation S

 

Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus-delivery requirements of the Securities Act.

 

 

PLAN OF DISTRIBUTION

 

Pursuant to a placement agency agreement, dated [●], 2023, we have engaged Univest Securities, LLC (“Univest”) to act as our placement agent in connection with this offering. The placement agent is not purchasing or selling any such securities, nor is it required to arrange for the purchase and sale of any specific number or dollar amount of such securities, other than to use their “reasonable best efforts,” to arrange for the sale of such securities by us. The terms of this offering are subject to market conditions and negotiations between us, the placement agent, and prospective investors. The placement agency agreement does not give rise to any commitment by the placement agent to purchase any of our securities, and the placement agent will have no authority to bind us by virtue of the placement agency agreement. Further, the placement agent does not guarantee that it will be able to raise new capital in any prospective offering. The placement agent may engage sub-agents or selected dealers to assist with this offering.

 

We will deliver to the investors the Class A Ordinary Shares underlying the Units electronically and will mail such investors physical warrant certificates for the Warrants underlying the Units, upon closing and receipt of investor funds for the purchase of the Units offered pursuant to this prospectus. We intend to complete one closing of this offering, but may undertake one or more additional closings for the sale of the additional Units to the investors in the initial closing. We expect to hold an initial closing on [●], 2023, but the offering will be terminated by [●], 2023, provided that the closing(s) of the offering for all of the Units have not occurred by such date, and may be extended by written agreement of the Company and the placement agent. Any extensions or material changes to the terms of the offering will be contained in an amendment to this prospectus. We expect initial delivery of the Units being offered pursuant to this prospectus against payment in U.S. dollars will be made on or about [●], 2023. 

 

Fees and Expenses

  

The following table shows the total placement agent’s fees we will pay in connection with the sale of the Units in this offering, assuming the purchase of all of the Units we are offering.

  

			Per Unit
Placement agent’s fees
Total

 

We have agreed to pay to the placement agent a cash fee equal to 7.0% of the aggregate gross proceeds raised in this offering, in the event that the offering amount reaches or exceeds $30 million (6.0% if the offering amount is below $30 million). We have agreed to pay to the placement agent by deduction from the net proceeds of this offering a non-accountable expense allocation equal to 1.0% of the aggregate gross proceeds raised in this offering for its out-of- pocket expenses.

 

We have also agreed to pay or reimburse the placement agent up to $150,000 for its actual and accountable out-of-pocket expenses related to the offering, including any fees and disbursements of the placement agent’s legal counsel and, if applicable, any electronic road show service used in connection with the offering.

 

We estimate the total expenses payable by us for this offering to be approximately $            , which amount includes (i) a placement agent’s fee of $          , assuming the purchase of all of the Units we are offering; (ii) the placement agent’s non-accountable expense allowance in the amount of $           in connection with this offering; and (iii) other estimated expenses of approximately $600,000, which include legal, accounting, printing costs and various fees associated with the registration of the Units and listing of our Class A Ordinary Shares.

 

 

Listing

 

Our Class A Ordinary Shares have been listed on the Nasdaq Capital Market since March 31, 2023. Our Class A Ordinary Shares trade under the symbol “SFWL.” There is no established public trading market for the Units or the Warrants and we do not plan to list the Units or the Warrants on the Nasdaq Capital Market or any other securities exchange or trading market. Without an active trading market, the liquidity of such securities will be limited.

  

Regulation M

 

The placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received by it and any profit realized on the sale of the securities by it while acting as principal might be deemed to be underwriting commissions under the Securities Act. The placement agent will be required to comply with the requirements of the Securities Act and the Exchange Act including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of the Units by the placement agent. Under these rules and regulations, the placement agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation in the distribution.

 

Other Relationships

 

From time to time, the placement agent may provide, various advisory, investment and commercial banking and other services to us in the ordinary course of business, for which it may receive customary fees and commissions.

 

In connection with our IPO, we entered into the Underwriting Agreement with Univest, and on the closing of such IPO on April 4, 2023, we issued to Univest and its affiliates warrants, exercisable for a period of one year after the effective date of the IPO registration statement, to purchase an aggregate of up to 144,000 Class A Ordinary Shares at a per share price of $4.46, and paid Univest certain expenses. Pursuant to the Underwriting Agreement, we also granted Univest a right of first refusal for a period of twelve (12) months from the commencement of sales of the IPO, to provide investment banking services to us on an exclusive basis in all matters for which investment banking services are sought by us, which right is exercisable in Univest’s sole discretion. Such investment banking services shall include, without limitation, (a) acting as lead manager for any underwritten public offering; (b) acting as exclusive placement agent, initial purchaser or financial advisor in connection with any private offering of securities of the Company; and (c) acting as financial advisor in connection with any sale or other transfer by the Company, directly or indirectly, of a majority or controlling portion of its capital stock or assets to another entity, any purchase or other transfer by another entity, directly or indirectly, of a majority or controlling portion of the capital stock or assets of the Company, and any merger or consolidation of the company with another entity.

 

Except as disclosed in this prospectus, we have no present arrangements with the placement agent for any services.

     

We have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to payments that the placement agent may be required to make for these liabilities.

 

 

Lock-Up Agreements 

 

We will not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Class A Ordinary Shares or any securities which would entitle the holder thereof to acquire at any time Class A Ordinary Shares, during the 90-day period from the date of completion of this offering, subject to certain exemptions.

 

We will also, during the 90-day period from the date of completion of this offering, not effectuate or enter into an agreement to effect any issuance of Class A Ordinary Shares or any securities which would entitle the holder thereof to acquire at any time Class A Ordinary Shares (or a combination of units thereof) involving, among others, transactions in which we (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional Class A Ordinary Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Class A Ordinary Shares at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for the Class A Ordinary Shares (but not including antidilution protections related to future share issuances) or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby we may issue securities at a future determined price, subject to certain exemptions.

 

Each of our directors, executive officers, and principal shareholders (5% or more shareholders) has also entered into a similar lock-up agreement for a period of six (6) months from the date of completion of this offering, subject to certain exceptions, with respect to our Class A Ordinary Shares or any securities which would entitle the holder thereof to acquire at any time Class A Ordinary Shares.

 

Selling Restrictions 

 

No action may be taken in any jurisdiction other than the United States that would permit a public offering of the Securities or the possession, circulation or distribution of this prospectus in any jurisdiction where action for that purpose is required. Accordingly, the Securities may not be offered or sold, directly or indirectly, and neither the prospectus nor any other offering material or advertisements in connection with the Securities may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable laws, rules and regulations of any such country or jurisdiction.

 

Australia. This document has not been lodged with the Australian Securities & Investments Commission and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

 

(a)

you confirm and warrant that you are either:

 

●

“sophisticated investor” under section 708(8)(a) or (b) of the Corporations Act 2001 (Cth) of Australia, or the Corporations Act;

 

●

“sophisticated investor” under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s certificate to the company which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made;

 

●

person associated with the company under section 708(12) of the Corporations Act; or

 

●

“professional investor” within the meaning of section 708(11)(a) or (b) of the Corporations Act;

 

and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act, any offer made to you under this document is void and incapable of acceptance;

 

you warrant and agree that you will not offer any of the Class A Ordinary Shares issued to you pursuant to this document for resale in Australia within 12 months of those Class A Ordinary Shares being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

 

 

New Zealand. This document has not been registered, filed with, or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (New Zealand), or “FMCA”.  This document is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain.  The Securities are not being offered or sold in New Zealand (or allotted with a view to being offered for sale in New Zealand) other than to a person who is a “wholesale investor” within the meaning of clause 3(2) of Schedule 1 of the FMCA – that is, a person who:

 

●

is an “investment business” within the meaning of clause 37 of Schedule 1 of the FMCA;

 

●

meets the “investment activity criteria” specified in clause 38 of Schedule 1 of the FMCA;

 

●

is “large” within the meaning of clause 39 of Schedule 1 of the FMCA; or

 

●

is a “government agency” within the meaning of clause 40 of Schedule 1 of the FMCA.

 

The Securities are not being offered or sold to retail investors in New Zealand.

 

Canada. The Securities may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

 

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

 

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

  

Cayman Islands. This prospectus does not constitute an invitation or offer to the public in the Cayman Islands of the Securities, whether by way of sale or subscription. The placement agent has not offered or sold, and will not offer or sell, directly or indirectly, any Securities in the Cayman Islands.

  

European Economic Area. In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any shares which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State unless the prospectus has been approved by the competent authority in such Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that an offer to the public in that Relevant Member State of any shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

 

●

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

 

●

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

 

●

by the underwriters to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

 

●

in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of shares shall result in a requirement for the publication by us or any representative of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

 

 

Any person making or intending to make any offer of shares within the EEA should only do so in circumstances in which no obligation arises for us or any of the underwriters to produce a prospectus for such offer. Neither we nor the underwriters have authorized, nor do they authorize, the making of any offer of shares through any financial intermediary, other than offers made by the underwriters which constitute the final offering of shares contemplated in this prospectus.

 

For the purposes of this provision, and your representation below, the expression an “offer to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase any shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

 

Each person in a Relevant Member State who receives any communication in respect of, or who acquires any shares under, the offer of shares contemplated by this prospectus will be deemed to have represented, warranted and agreed to and with us and each underwriter that:

 

●

it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and

 

●

in the case of any shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” (as defined in the Prospectus Directive), or in circumstances in which the prior consent of the representatives has been given to the offer or resale; or (ii) where shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those shares to it is not treated under the Prospectus Directive as having been made to such persons.

 

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this document relates is only available to, and will be engaged in with, relevant persons.

 

Switzerland. The Securities will not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland.

 

Neither this prospectus nor any other offering or marketing material relating to our company or the Securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of the Securities will not be supervised by, the Swiss Financial Market Supervisory Authority, and the offer of the Securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (the “CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the Securities.

 

Dubai International Finance Center. This document relates to an Exempt Offer, as defined in the Offered Securities Rules module of the DFSA Rulebook, or the OSR, in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This document is intended for distribution only to Persons, as defined in the OSR, of a type specified in those rules. It must not be delivered to, or relied on by, any other Person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The Securities to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Securities offered should conduct their own due diligence on the Securities. If you do not understand the contents of this document you should consult an authorized financial adviser.

 

 

Hong Kong. The Securities may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the Securities may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to the Securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.

 

Japan. The Securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan, and the Securities will not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to any exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

  

People’s Republic of China. This prospectus has not been and will not be circulated or distributed in the PRC, and the Securities may not be offered or sold, and will not be offered or sold to any person for re-offering or resale, directly or indirectly, to any resident of the PRC except pursuant to applicable laws and regulations of the PRC.

 

Singapore. This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our securities may not be circulated or distributed, nor may our securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or SFA, (ii) to a relevant person or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

  

Where the Securities are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor; shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Securities under Section 275 of the SFA, except: (1) to an institutional investor (for corporations under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is or will be given for the transfer; or (3) where the transfer is by operation of law.

 

United Kingdom. Each placement agent has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) received by it in connection with the issue or sale of the Securities in circumstances in which Section 21(1) of the FSMA does not apply to us; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom.

 

 

France. Neither this prospectus nor any other offering material relating to the Securities described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The Securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the Securities has been or will be:

 

●

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

 

●

to fewer than 100 or, if the relevant member state has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by us for any such offer; or

 

●

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

 

●

released, issued, distributed or caused to be released, issued or distributed to the public in France; or

 

●

used in connection with any offer for subscription or sale of the Securities to the public in France.

 

Such offers, sales and distributions will be made in France only:

 

●

to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;

 

●

to investment services providers authorized to engage in portfolio management on behalf of third parties; or

 

●

in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne).

 

The Securities may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.

 

Germany. This prospectus does not constitute a Prospectus Directive-compliant prospectus in accordance with the German Securities Prospectus Act (Wertpapierprospektgesetz) and does therefore not allow any public offering in the Federal Republic of Germany (“Germany”) or any other Relevant Member State pursuant to § 17 and § 18 of the German Securities Prospectus Act. No action has been or will be taken in Germany that would permit a public offering of the Securities, or distribution of a prospectus or any other offering material relating to the Securities. In particular, no securities prospectus (Wertpapierprospekt) within the meaning of the German Securities Prospectus Act or any other applicable laws of Germany, has been or will be published within Germany, nor has this prospectus been filed with or approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) for publication within Germany.

 

Each placement agent will represent, agree and undertake, (i) that it has not offered, sold or delivered and will not offer, sell or deliver the Securities within Germany other than in accordance with the German Securities Prospectus Act (Wertpapierprospektgesetz) and any other applicable laws in Germany governing the issue, sale and offering of the Securities, and (ii) that it will distribute in Germany any offering material relating to the Securities only under circumstances that will result in compliance with the applicable rules and regulations of Germany.

 

This prospectus is strictly for use of the person who has received it. It may not be forwarded to other persons or published in Germany.

 

Italy. The offering of Securities has not been registered with the Commissione Nazionale per le Società e la Borsa (“CONSOB”) pursuant to Italian securities legislation and, accordingly, no Securities may be offered, sold or delivered, nor copies of this prospectus or any other documents relating to the Securities may not be distributed in Italy except:

 

●

to “qualified investors”, as referred to in Article 100 of Legislative Decree No. 58 of 24 February 1998, as amended (the “Decree No. 58”) and defined in Article 26, paragraph 1, letter d) of CONSOB Regulation No. 16190 of 29 October 2007, as amended (“Regulation No. 16190”) pursuant to Article 34-ter, paragraph 1, letter. b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended (“Regulation No. 11971”); or

 

●

in any other circumstances where an express exemption from compliance with the offer restrictions applies, as provided under Decree No. 58 or Regulation No. 11971.

  

 

Any offer, sale or delivery of the Securities or distribution of copies of this prospectus or any other documents relating to the Securities in the Republic of Italy must be:

 

●

made by investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of 1 September 1993, as amended (the “Banking Law”), Decree No. 58 and Regulation No. 16190 and any other applicable laws and regulations;

 

●

in compliance with Article 129 of the Banking Law, and the implementing guidelines of the Bank of Italy, as amended; and

 

●

in compliance with any other applicable notification requirement or limitation which may be imposed, from time to time, by CONSOB or the Bank of Italy or other competent authority.

 

Please note that, in accordance with Article 100-bis of Decree No. 58, where no exemption from the rules on public offerings applies, the subsequent distribution of the Securities on the secondary market in Italy must be made in compliance with the public offer and the prospectus requirement rules provided under Decree No. 58 and Regulation No. 11971.

  

Furthermore, Securities which are initially offered and placed in Italy or abroad to qualified investors only but in the following year are regularly (“sistematicamente”) distributed on the secondary market in Italy to non-qualified investors become subject to the public offer and the prospectus requirement rules provided under Decree No. 58 and Regulation No. 11971. Failure to comply with such rules may result in the sale of the Securities being declared null and void and in the liability of the intermediary transferring the Securities for any damages suffered by such non-qualified investors.

 

Israel. This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, and has not been filed with or approved by the Israel Securities Authority. In Israel, this prospectus may be distributed only to, and is directed only at, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds; provident funds; insurance companies; banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange Ltd., underwriters, each purchasing for their own account; venture capital funds; entities with equity in excess of NIS 50 million and “qualified individuals,” each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors. Qualified investors shall be required to submit written confirmation that they fall within the scope of the Addendum.

 

Kuwait. Unless all necessary approvals from the Kuwait Ministry of Commerce and Industry required by Law No. 31/1990 “Regulating the Negotiation of Securities and Establishment of Investment Funds,” its Executive Regulations and the various Ministerial Orders issued pursuant thereto or in connection therewith, have been given in relation to the marketing and sale of the Securities, these may not be marketed, offered for sale, nor sold in the State of Kuwait. Neither this prospectus (including any related document), nor any of the information contained therein is intended to lead to the conclusion of any contract of whatsoever nature within Kuwait.

 

Qatar. In the State of Qatar, the offer contained herein is made on an exclusive basis to the specifically intended recipient thereof, upon that person’s request and initiative, for personal use only and shall in no way be construed as a general offer for the sale of securities to the public or an attempt to do business as a bank, an investment company or otherwise in the State of Qatar. This prospectus and the underlying securities have not been approved or licensed by the Qatar Central Bank or the Qatar Financial Centre Regulatory Authority or any other regulator in the State of Qatar. The information contained in this prospectus shall only be shared with any third parties in Qatar on a need to know basis for the purpose of evaluating the contained offer. Any distribution of this prospectus by the recipient to third parties in Qatar beyond the terms hereof is not permitted and shall be at the liability of such recipient.

 

Taiwan. The Securities have not been and will not be registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that require a registration, filing or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer or sell the Securities in Taiwan.

 

United Arab Emirates. The Securities have not been offered or sold, and will not be offered or sold, directly or indirectly, in the United Arab Emirates, except: (1) in compliance with all applicable laws and regulations of the United Arab Emirates; and (2) through persons or corporate entities authorized and licensed to provide investment advice and/or engage in brokerage activity and/or trade in respect of foreign securities in the United Arab Emirates. The information contained in this prospectus does not constitute a public offer of securities in the United Arab Emirates in accordance with the Commercial Companies Law (Federal Law No. 8 of 1984 (as amended)) or otherwise and is not intended to be a public offer and is addressed only to persons who are sophisticated investors. 

 

 

EXPENSES RELATING TO THIS OFFERING 

 

Set forth below is an itemization of the total expenses, excluding placement agent’s fees, expected to be incurred in connection with the offer and sale of the Units by us. Except for the SEC registration fee and the Financial Industry Regulatory Authority Inc. filing fee, all amounts are estimates.

 

U.S. Securities and Exchange Commission Registration Fee		$	13,885
FINRA Filing Fee		$	19,400
Legal Fees and Other Expenses		$	280,000
Accounting Fees and Expenses		$	30,000
Printing and Engraving Expenses		$	15,000
Transfer Agent Expenses		$	5,000
Miscellaneous Expenses		$	236,715
Total Expenses		$	600,000

 

We will bear these expenses and the placement agent’s fees and expenses incurred in connection with the offer and sale of the securities by us.

 

 

LEGAL MATTERS 

 

We are being represented by Hunter Taubman Fischer & Li LLC with respect to certain legal matters as to United States federal securities and New York State law. The validity of the Units and the Class A Ordinary Shares and the Warrants included in the Units offered in this offering and certain other legal matters as to Cayman Islands law will be passed upon for us by Ogier (Cayman) LLP, our counsel as to Cayman Islands law. Legal matters as to PRC law will be passed upon for us by AllBright Law Offices. Sullivan & Worcester LLP is acting as counsel to the placement agent in connection with this offering. Hunter Taubman Fischer & Li LLC may rely upon Ogier (Cayman) LLP with respect to matters governed by Cayman Islands law, and AllBright Law Offices with respect to matters governed by PRC law.

 

EXPERTS

 

The consolidated financial statements for the fiscal years ended December 31, 2021 and 2020, incorporated by reference into this prospectus from our annual report on Form 20-F for the year ended December 31, 2022, have been so incorporated in reliance on the report of Friedman LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The office of Friedman LLP was located at One Liberty Plaza, 165 Broadway, Floor 21, New York, NY 10006. Effective on September 1, 2022, Friedman LLP combined with Marcum LLP.

 

The consolidated financial statements for the fiscal years ended December 31, 2022, incorporated by reference into this prospectus from our annual report on Form 20-F for the year ended December 31, 2022, have been so incorporated in reliance on the report of Marcum Asia, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The office of Marcum Asia was located at 7 Pennsylvania Plaza Suite 830, New York, NY 10001.

 

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

 

Effective September 1, 2022, Friedman, our then independent registered public accounting firm, combined with Marcum LLP and continued to operate as an independent registered public accounting firm. On November 18, 2022, we engaged Marcum Asia to serve as our independent registered public accounting firm. The services previously provided by Friedman are now provided by Marcum Asia.

 

Friedman’s reports on our consolidated financial statements for the years ended December 31, 2021 and 2020 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. Furthermore, during our two most recent fiscal years and through November 18, 2022, there have been no disagreements with Friedman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Friedman’s satisfaction, would have caused Friedman to make reference to the subject matter of the disagreement in connection with its reports on our financial statements for such periods.

 

For our two most recent fiscal years and the subsequent interim period through November 18, 2022, there were no “reportable events” as that term is described in Item 16F(a)(1)(v) of the Form 20-F, other than the material weaknesses reported by management in the Risk Factors section of our Amendment No.1 to Registration Statement on Form F-1 filed with the SEC on October 31, 2022.

 

We provided Friedman with a copy of the above disclosure and requested that Friedman furnish us with a letter addressed to the U.S. Securities and Exchange Commission stating whether or not it agrees with the above statement. A copy of Friedman’s letter is filed as Exhibit 16.1 to the registration statement of which this prospectus is a part.

 

During our two most recent fiscal years and through November 18, 2022, neither our Company nor anyone acting on our behalf consulted Marcum Asia with respect to any of the matters or reportable events set forth in Item 16F(a)(2)(i) and (ii) of the Form 20-F.

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules under the Securities Act with respect to the Units to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement. You should read the registration statement on Form F-1 and its exhibits and schedules for further information with respect to us and the Units.

 

We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC.

 

As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. All information filed with the SEC can be inspected over the Internet at the SEC’s website at www.sec.gov.

 

 

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

We are allowed to incorporate by reference the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be part of this prospectus. We incorporate by reference in this prospectus the documents listed below:

 

●

Our Annual Report on Form 20-F for the year ended December 31, 2022 filed with the SEC on May 1, 2023; and

 

●

Our Current Reports on Form 6-K filed with the SEC on April 4, 2023 (to the extent expressly incorporated by reference into our effective registration statements filed by us under the Securities Act).

 

The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.

 

As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents and this prospectus, you should rely on the statements made in the most recent document. All information appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents incorporated by reference herein.

 

We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of these filings, at no cost, upon written or oral request to us at the following address:

 

Shengfeng Development Limited

Address: Shengfeng Building, No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Fujian Province, People’s Republic of China, 350001

Tel: +86 591- 83672798

Attention: guoping.zheng@sfwl.com.cn, Company Contact Person

 

You also may access the incorporated reports and other documents referenced above on our website at sfwl.com.cn. The information contained on, or that can be accessed through, our website is not part of this prospectus.

 

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, or such earlier date, that is indicated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

 

Until [●], 2023 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

 

SHENGFENG DEVELOPMENT LIMITED

 

Up to 8,000,000 Units (each Unit contains One Class A Ordinary Share and One

Warrant to Purchase One Class A Ordinary Share)

 

Up to 8,000,000 Class A Ordinary Shares Underlying the Warrants 

Prospectus

 

Placement Agent

 

 

[●], 2023 

 

 

PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

The Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide that, to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against:

 

a)

all actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred or sustained by the existing or former director (including alternate director), secretary, or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director)’s, secretary’s, or officer’s duties, powers, authorities or discretions; and

 

b)

without limitation to paragraph (a) above, all costs, expenses, losses, or liabilities incurred by the existing or former director (including alternate director), secretary, or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere.

 

No such existing or former director (including alternate director), secretary, or officer, however, shall be indemnified in respect of any matter arising out of his own dishonesty.

 

To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing secretary, or any of our officers in respect of any matter identified in above on condition that the secretary, or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the secretary or that officer for those legal costs.

 

Pursuant to indemnification agreements, the form of which will be filed as Exhibit 10.2 to this registration statement, we will agree to indemnify our directors and officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer.

 

The placement agency agreement, the form of which will be filed as Exhibit 1.1 to this registration statement, will also provide for indemnification of us and our officers and directors.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES.

 

Set forth below is the information regarding share capital issued by us during the past three years. None of the below described transactions involved any underwriters, underwriting discounts or commissions, or any public offering. The issuances below were not registered under the Securities Act. We believe that the following offers, sales and issuances of the securities were exempt from registration (a) under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder (including Regulation D and Rule 506), in that the transactions were between an issuer and sophisticated investors or members of its senior executive management and did not involve any public offering within the meaning of Section 4(a)(2), (b) under Regulation S promulgated under the Securities Act in that offers, sales and issuances were not made to persons in the United States and no directed selling efforts were made in the United States, or (c) under Rule 701 promulgated under the Securities Act in that the transactions were underwritten compensatory benefit plans or written compensatory contracts.

 

 

On July 16, 2020, Quality Corporate Services Ltd., the subscriber to our memorandum of association, had initially taken up 1 ordinary share, par value $1.00 per share, which it subsequently transferred to Shengfeng International Limited on the same date.

 

On July 16, 2020, we issued 49,999 ordinary shares, par value $1.00 per share, to Shengfeng International Limited, of which 6,000 ordinary shares were transferred to Everbright International Development Limited on September 29, 2020.

 

On December 18, 2020, as a reorganization of our corporate structure, our shareholders approved and we undertook the following corporate actions:

 

(i)

a repurchase of 43,999 ordinary shares held by Shengfeng International Limited and 6,000 ordinary shares held by Everbright International Development Limited;

 

(ii)

an amendment of our share capital from $50,000 divided into 50,000 ordinary shares of $1.00 par value per share to $50,000 divided into 40,000 Class A Ordinary Shares of $1.00 par value per share and 10,000 Class B Ordinary Shares of $1.00 par value per share;

 

(iii)

a re-designation of one issued ordinary share held by Shengfeng International Limited into one Class B Ordinary Share; and

 

(iv)

a subdivision of our share capital from $50,000 divided into 40,000 Class A Ordinary Shares of $1.00 par value per share and 10,000 Class B Ordinary Shares of $1.00 par value per share to $50,000 divided into 400,000,000 Class A Ordinary Shares of $0.0001 par value per share and 100,000,000 Class B Ordinary Shares of $0.0001 par value per share.

 

After the reorganization, on December 18, 2020, we issued an aggregate of 38,120,000 Class A Ordinary Shares to 12 investors for an aggregate consideration of $3,812.

 

On December 18, 2020, we issued 41,870,000 Class B Ordinary Shares to Shengfeng International Limited for a consideration of $4,187.

 

ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

(a) Exhibits

 

See Exhibit Index beginning on page II-6 of this registration statement.

 

(b) Financial Statement Schedules

 

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial Statements or the Notes thereto.

 

 

ITEM 9. UNDERTAKINGS.

 

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

The undersigned registrant hereby undertakes that:

 

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(4) For the purpose of determining any liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fuzhou, People’s Republic of China, on August 4, 2023.

 

	Shengfeng Development Limited
	By:	/s/ Yongxu Liu
		Yongxu Liu
		Chief Executive Officer, President, Director, and Chairman
		(Principal Executive Officer)

 

Power of Attorney

 

Each person whose signature appears below constitutes and appoints each of Yongxu Liu and Guoping Zheng as attorneys-in-fact with full power of substitution, for him or her in any and all capacities, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the registrant to comply with the Securities Act, and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of Class A Ordinary Shares of the registrant, including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the Registration Statement on Form F-1 (the “Registration Statement”) to be filed with the Securities and Exchange Commission with respect to such Shares, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Yongxu Liu		Chief Executive Officer, President, Director and Chairman		August 4, 2023
Name: Yongxu Liu		(Principal Executive Officer)
/s/ Guoping Zheng		Chief Financial Officer and Vice President		August 4, 2023
Name: Guoping Zheng		(Principal Accounting and Financial Officer)
/s/ Zhiping Yang		Director		August 4, 2023
Name: Zhiping Yang		(Director)

 

 

SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES

 

Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of America of Shengfeng Development Limited, has signed this registration statement or amendment thereto in New York, NY on August 4, 2023.

 

	Cogency Global Inc.
	Authorized U.S. Representative
	By:	/s/ Colleen A. De Vries
	Name:	Colleen A. De Vries
	Title:	Senior Vice President on behalf of Cogency Global Inc.

 

 

EXHIBIT INDEX

 

		Description
1.1*		Form of Placement Agency Agreement
3.1		Amended and Restated Memorandum of Association (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission September 9, 2022)
3.2		Amended and Restated Articles of Association (included in Exhibit 3.1)
4.1		Specimen Certificate for Class A Ordinary Shares (incorporated by reference to Exhibit 4.1 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
4.2*		Form of Warrant
5.1*		Opinion of Ogier (Cayman) LLP regarding the validity of the Class A Ordinary Shares and the Warrants being registered
5.2*		Opinion of Hunter Taubman Fischer & Li LLC regarding the enforceability of the Warrants being registered
10.1		Form of Employment Agreement by and between executive officers and the Registrant (incorporated by reference to Exhibit 10.1 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.2		Form of Indemnification Agreement with the Registrant’s directors and officers (incorporated herein by reference to Exhibit 10.2 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.3		Form of Director Offer Letter between the Registrant and its directors (incorporated herein by reference to Exhibit 10.3 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.4		English Translation of the Technical Consultation and Service Agreement between Tianyu and Shengfeng Logistics dated January 7, 2021 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.5		English Translation of the form of Powers of Attorney granted by shareholders of Shengfeng Logistics, as currently in effect, and a schedule of all executed Powers of Attorney adopting the same form (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.6		English Translation of the form of Equity Pledge Agreement by and among Tianyu, Shengfeng Logistics, and shareholders of Shengfeng Logistics dated January 7, 2021, as currently in effect, and a schedule of all executed Equity Pledge Agreement adopting the same form (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.7		English Translation of the form of Call Option Agreement by and among Tianyu, Shengfeng Logistics, and shareholders of Shengfeng Logistics dated January 7, 2021, as currently in effect, and a schedule of all executed Call Option Agreement adopting the same form (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.8		English Translation of the form of Spousal Consent granted by the spouse of each individual shareholder of Shengfeng Logistics, as currently in effect, and a schedule of all executed Spousal Consents adopting the same form (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)

 

 

10.9		English Translation of the form of Voting Rights Proxy Agreement by and among Tianyu, Shengfeng Logistics, and shareholders of Shengfeng Logistics dated January 7, 2021, as currently in effect, and a schedule of all executed Voting Rights Proxy Agreement adopting the same form (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.10		English Translation of the form of Freight Transportation Agreement between the Registrant and its Clients (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.11		English Translation of the form of Warehouse Service Contract between the Registrant and its Cloud Storage Service Clients (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.12		English Translation of the form of Freight Transportation Contract between the Registrant and its Transportation Providers (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.13		English Translation of the form of House (Warehouse) / Site Lease Contract (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.14		English Translation of the Road Freight Transportation Cooperation Agreement by and between Shengfeng Logistics and Hubei Luge Logistics Co., Ltd. dated June 30, 2019 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.15		English Translation of the Road Freight Transportation Platform Cooperation Agreement by and between Shengfeng Logistics and Hefei Weitian Yuntong Information Technology Co., Ltd. dated January 1, 2022 (File No. 001-41674) initially filed with the Securities and Exchange Commission on May 1, 2023)
10.16*		English Translation of the Short-term Loan Facility Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated June 28, 2021
10.17*		English Translation of the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated March 21, 2023
10.18*		English Translation of the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated March 16, 2022
10.19*		English Translation of the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated May 18, 2022
10.20*		English Translation of the Maximum Mortgage Agreement by and between Suzhou Shengfeng Logistics Co., Ltd. and Bank of China Fuzhou Jin’an Branch dated July 5, 2021
10.21*		English Translation of the Maximum Guarantee Agreement by and between Yongxu Liu and Bank of China Fuzhou Jin’an Branch dated March 15, 2023
10.22*		English Translation of the Short-term Loan Facility Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated  March 15, 2023
10.23*		English Translation of the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated June 7, 2022
10.24*		English Translation of the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated June 15, 2022

  

 

10.25*		English Translation of Supplementary Contract to the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated October 21, 2022
10.26*		English Translation of the Maximum Mortgage Agreement by and between Suzhou Shengfeng Logistics Co., Ltd. and Bank of China Fuzhou Jin’an Branch dated March 15, 2023
10.27*		English Translation of the Maximum Guarantee Agreement by and between Yongxu Liu and Bank of China Fuzhou Jin’an Branch dated July 03, 2021
10.28*		English Translation of the Lease Contract of Shengfeng Building by and between Shengfeng Logistics and Fuzhou Tianyu Shengfeng Industrial Co., Ltd. dated October 31, 2022
10.29		English Translation of the Short-term Loan Facility Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated June 28, 2021 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.30*		English Translation of Supplementary Contract to the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated October 21, 2022
10.31*		English Translation of Supplementary Contract to the Working Capital Loan Agreement by and between Shengfeng Logistics and Bank of China Fuzhou Jin’an Branch dated October 21, 2022
10.32		English Translation of the Maximum Mortgage Agreement by and between Suzhou Shengfeng Logistics Co., Ltd. and Bank of China Fuzhou Jin’an Branch dated July 5, 2021 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.33		English Translation of the Maximum Guarantee Agreement by and between Yongxu Liu and Bank of China Fuzhou Jin’an Branch dated July 3, 2021 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
10.34*		Form of Securities Purchase Agreement
10.35*		Form of Lock-Up Agreement
16.1		Letter of Friedman LLP to the U.S. Securities and Exchange Commission (incorporated by reference to Exhibit 16.1 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
21.1*		List of subsidiaries of the Registrant
23.1*		Consent of Friedman LLP
23.2*		Consent of Marcum Asia CPAs LLP
23.3*		Consent of Ogier (Cayman) LLP (included in Exhibit 5.1).
23.4*		Consent of AllBright Law Offices
23.5*		Consent of Hunter Taubman Fischer & Li LLC (included in Exhibit 5.2)
24.1		Powers of Attorney (included on signature page)
99.1		Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 99.1 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
99.2		Consent of Frost & Sullivan (incorporated by reference to Exhibit 99.1 of our Registration Statement on Form F-1 (File No. 333-267367) initially filed with the Securities and Exchange Commission on September 9, 2022)
107*		Filing Fee Table

  

*	Filed herewith.

 

 

II-8

 

Exhibit 1.1

 

PLACEMENT AGENCY AGREEMENT

 

August [_], 2023

 

Univest Securities, LLC

75 Rockefeller Plaza , Suite 1838

New York, NY, 10019

 

Ladies and Gentlemen:

 

Subject to the terms and conditions of this agreement (this “Agreement”) and the Transaction Documents (as defined below), Shengfeng Development Limited, a Cayman Islands exempted company (the “Company”), hereby agrees to sell an aggregate of [*] units (the “Units”) comprised of one Class A ordinary share (each a “Share” and collectively, the “Shares”), $0.0001 par value per share, of the Company (the “Ordinary Shares”) and one warrant to purchase one Ordinary Share (each a “Warrant” and collectively, the “Warrants”), and the Ordinary Shares underlying the Warrants (the “Warrant Shares”, and collectively with the Units, the Shares and the Warrants, the “Securities”), directly to various investors (each, an “Investor” and, collectively, the “Investors”) through Univest Securities, LLC (the “Placement Agent”), as placement agent. The documents executed and delivered by the Company and the Investors in connection with the Offering (as defined below), including, without limitation, a securities purchase agreement (the “Purchase Agreement”), shall be collectively referred to herein as the “Transaction Documents.” The purchase price to the Investors for each Unit is $[*], and the exercise price to the Investors for each Ordinary Share issuable upon exercise of a Warrant is $[*]. The Placement Agent may retain other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Offering.

 

Notwithstanding anything herein to the contrary, in the event that the Placement Agent determines that any of the terms provided for hereunder do not comply with a Financial Industry Regulatory Authority (“FINRA”) rule, including but not limited to FINRA Rule 5110, then the Company shall agree to amend this Agreement in writing upon the request of the Placement Agent to comply with any such rules; provided that any such amendments shall not provide for terms that are less favorable to the Company than the terms of this Agreement or that such terms are adverse to the Company.

 

The Company hereby confirms its agreement with the Placement Agent as follows:

 

Section 1. Agreement to Act as Placement Agent.

 

(a) On the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions of this Agreement, the Placement Agent shall be the exclusive placement agent in connection with the offering and sale by the Company of the Securities pursuant to the Company’s registration statement on Form F-1 (File No. 333-[*]) (the “Registration Statement”) with the terms of such offering (the “Offering”) to be subject to market conditions and negotiations between the Company, the Placement Agent and the prospective Investors. The Placement Agent will act on a reasonable best-efforts basis and the Company agrees and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion thereof, in the prospective Offering. Under no circumstances will the Placement Agent or any of its “Affiliates” (as defined below) be obligated to underwrite or purchase any of the Securities for its own account or otherwise provide any financing. The Placement Agent shall act solely as the Company’s agent and not as principal. The Placement Agent shall have no authority to bind the Company with respect to any prospective offer to purchase Securities and the Company shall have the sole right to accept offers to purchase Securities and may reject any such offer, in whole or in part. The Placement Agent may employ other FINRA member firms as selected dealers at its discretion. Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the Securities shall be made at one or more closings (each a “Closing” and the date on which each Closing occurs, a “Closing Date”). As compensation for services rendered, on each Closing Date, the Company shall pay to the Placement Agent a cash fee equal to seven percent (7%)¹ of the aggregate gross proceeds received by the Company from the sale of the Securities (the “Cash Fee”). As used in this agreement, “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

1	6%, in the event that the offering amount is below $30 million.

 

 

(b) The term of the Placement Agent’s exclusive engagement shall begin on the date hereof and continue until the earlier of (i) the Final Closing Date of the Offering (the “Exclusive Term”), and (ii) the date the Placement Agent or the Company terminates the engagement according to the terms of the next sentence (such date, the “Termination Date” and the period of time during which this Agreement remains in effect is referred to herein as the “Term”). On and after July 6, 2024, the engagement may be terminated at any time by either party upon sixty (60) days written notice to the other party, effective upon receipt of written notice to that effect by the other party. If the Company elects to terminate this Agreement for any reason even though the Placement Agent was prepared to proceed with the Offering reasonably within the intent of this Agreement, and if within twelve (12) months following such termination, the Company completes any financing of equity, equity-linked or debt or other capital raising activity of the Company (other than the exercise by any person or entity of any options, warrants or other convertible securities) with any of Investors identified or contacted by the Placement Agent during the term of this Agreement, then the Company will pay the Placement Agent upon the closing of such financing the compensation set forth in Section 3 herein which is attributable to such eligible Investors. Unless otherwise provided under this Agreement, the provisions concerning the Company’s obligation to pay any fees actually earned pursuant to Section 1(a) hereof and to pay or reimburse the Placement Agent for any expenses incurred in accordance with Section 6 hereof, the Company’s obligations contained in the indemnification provisions, and the provisions concerning confidentiality, indemnification and contribution contained herein will survive any expiration or termination of this Agreement for any reason. All fees and expense payments or reimbursements due to the Placement Agent shall be paid by the Company to the Placement Agent on or before the Termination Date (in the event such fees and expenses are earned or owed as of the Termination Date). Furthermore, the Company agrees that during the Placement Agent’s engagement hereunder, all inquiries from prospective U.S. Investors and with respect to the Offering will be referred to the Placement Agent. Additionally, except as set forth hereunder or otherwise disclosed to the Placement Agent in writing, the Company represents, warrants and covenants that no brokerage or finder’s fees or commissions are or will be payable by the Company or any subsidiary of the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other third-party with respect to the Offering. The Placement Agent agrees, not to use any confidential information concerning the Company provided to the Placement Agent by the Company for any purposes other than those contemplated under this Agreement.

 

(c) The Company and the Placement Agent hereto acknowledge that there is an ongoing right of first refusal in favor of the Placement Agent, as set forth in that certain underwriting agreement by and between the Company and the Placement Agent, dated March 30, 2023, which shall remain in place until March 30, 2024, and that nothing in this Agreement is intended to, nor shall be deemed to supersede, amend or obviate such right of first refusal.

 

Section 2. Representations, Warranties and Covenants of the Company. The Company hereby represents, warrants and covenants the Placement Agent as of the date hereof, and as of each Closing Date, as follows:

 

(a) Securities Law Filings. The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) the Registration Statement under the Securities Act of 1933, as amended (the “Securities Act”), which was filed on August [_], 2023 and declared effective on August [_], 2023 for the registration of the Securities under the Securities Act. Following the determination of pricing among the Company and the prospective Investors introduced to the Company by the Placement Agent, the Company will file with the Commission pursuant to Rules 430B and 424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder, a final prospectus relating to the placement of the Securities, their respective pricings and the plan of distribution thereof and will advise the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, at any given time, including the exhibits thereto filed at such time, as amended at such time, is hereinafter called the “Registration Statement”; such prospectus in the form in which it appears in the Registration Statement at the time of effectiveness is hereinafter called the “Preliminary Prospectus”; and the final prospectus, in the form in which it will be filed with the Commission pursuant to Rules 430A and/or 424(b) (including the Preliminary Prospectus as it may be amended or supplemented) is hereinafter called the “Final Prospectus.” The Registration Statement at the time it originally became effective is hereinafter called the “Original Registration Statement.” If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing, the term “Registration Statement” shall include such registration statement filed pursuant to Rule 462(b). Any reference in this Agreement to the Registration Statement, the Original Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include the documents incorporated by reference therein (the “Incorporated Documents”), if any, which were or are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as the case may be; and any reference in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Original Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Preliminary Prospectus or the Final Prospectus, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Preliminary Prospectus or the Final Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus or the Final Prospectus, as the case may be. As used in this paragraph and elsewhere in this Agreement, “Time of Sale Disclosure Package” means the Preliminary Prospectus, any subscription agreement between the Company and the Investors, the final terms of the Offering provided to the Investors (orally or in writing) and any issuer free writing prospectus as defined in Rule 433 of the Act (each, an “Issuer Free Writing Prospectus”), if any, that the parties hereto shall hereafter expressly agree in writing to treat as part of the Time of Sale Disclosure Package. The term “any Prospectus” shall mean, as the context requires, the Preliminary Prospectus, the Final Prospectus, and any supplement to either thereof. The Company has not received any notice that the Commission has issued or intends to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Preliminary Prospectus or any prospectus supplement or intends to commence a proceeding for any such purpose.

 

 

(b) Assurances. The Original Registration Statement, as amended, (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Final Prospectus, as of its date, complied or will comply in all material respects with the Securities Act and the applicable Rules and Regulations. The Final Prospectus, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations promulgated thereunder, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the Final Prospectus), in light of the circumstances under which they were made not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. Except for this Agreement and the Transaction Documents, there are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. Except for this Agreement and the Transaction Documents, there are no contracts or other documents required to be described in the Final Prospectus, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required.

 

(c) Offering Materials. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to each Closing Date, any offering material in connection with the offering and sale of the Securities other than the Time of Sale Disclosure Package.

 

(d) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement, the Transaction Documents and the Time of Sale Disclosure Package and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of this Agreement, the Transaction Documents and the Time of Sale Disclosure Package by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company’s Board of Directors (the “Board of Directors”) or the Company’s shareholders in connection therewith other than in connection with the Required Approvals (as defined below). This Agreement and each Transaction Document has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. “Required Approvals” shall mean such filings as are required to be made under applicable state securities laws.

 

 

(e) No Conflicts. The execution, delivery and performance by the Company of this Agreement and each Transaction Document and the transactions contemplated hereby, thereby and pursuant to the Time of Sale Disclosure Package, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of association, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to in: (x) a material adverse effect on the legality, validity or enforceability of this Agreement or any other agreement entered into between the Company and the Investors, (y) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (z) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement or the transactions contemplated under the Prospectus (any of (x), (y) or (z), a “Material Adverse Effect”). As used in this Agreement, “Subsidiary” means all of the direct and indirect subsidiaries of the Company as set forth in the Incorporated Documents. As used in this Section 2(e), “Lien” means liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions.

 

(f) Certificates. Any certificate signed by an officer of the Company and delivered to the Placement Agent or to the Placement Agent’s Counsel shall be deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth therein.

 

(g) Reliance. The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations and warranties and hereby consents to such reliance.

 

(h) Forward-Looking Statements. No forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Time of Sale Disclosure Package has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

(i) FINRA Affiliations. There are no affiliations with any firm that is a member of the FINRA participating in the Offering among the Company’s officers, directors or, to the knowledge of the Company, any 5% or greater shareholder of the Company.

 

(j) Representations and Warranties Incorporated by Reference. Each of the representations and warranties (together with any related disclosure schedules thereto) made by the Company to the Investors in the Purchase Agreement is hereby incorporated herein by reference (as though fully restated herein) and is hereby made to, and in favor of, the Placement Agent.

 

Section 3. Delivery and Payment.

 

(a) Closing for the Offering. Delivery of and payment for the Units shall be made at or around 11:00 A.M., Eastern time, on the third (3rd) Trading Day following the date of the Purchase Agreement in the case of the initial Closing or the date of the written notice delivered by one or more Investors to purchase additional Units pursuant to the Purchase Agreement, or at such other day and/or time as shall be agreed upon by the Placement Agent and the Company. Each Closing shall occur at the offices of Sullivan & Worcester LLP, 1633 Broadway, 32^nd Floor, New York, NY 10019 (“Placement Agent’s Counsel”) (or at such other place as shall be agreed upon by the Placement Agent and the Company). On the Final Closing Date, the Company shall issue the Units subject to such Closing directly to the account designated by the Placement Agent and, upon receipt of such Units, the Placement Agent shall electronically deliver the Shares and Warrants comprising the Units to the applicable Investor and payment shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company. At such Closing, the Company shall deliver a Warrant registered in the name of each Investor to purchase up to an aggregate number of Ordinary Shares equal to 100% of the aggregate number of such Investor’s Shares purchased pursuant to the Offering. Subject to the terms and conditions hereof, at each Closing, payment of the purchase price for the Units sold on such Closing Date shall be made by Federal Funds wire transfer, against delivery of the Shares (with Warrants to follow as provided in the previous sentence), and such Securities shall be registered in such name or names and shall be in such denominations, as the Placement Agent may request at least one (1) business day before such Closing Date. Deliveries of the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Placement Agent’s Counsel; provided, however, that the Company shall be deemed to have satisfied its obligations with respect to the delivery of the Warrants by making available a PDF copy of the executed Warrants at the applicable Closing and delivering the originals thereof within five (5) trading days of the Closing. All actions taken at a Closing shall be deemed to have occurred simultaneously.

 

 

(b) Payment for the Units. The Units are being sold to the Investors at the public offering price as set forth in the Prospectus. The purchase of the Units by each of the Investors shall be evidenced by the receipt of funds in the account designated by the Company and the Placement Agent and execution of a Purchase Agreement by each such Investor and the Company.

 

(c) Delivery of the Shares and Warrants. Delivery of the Shares shall be made through the facilities of The Depository Trust Company unless the Placement Agent shall otherwise instruct. Delivery of the Warrants shall be made as set forth in Section 3(a) above.

 

(d) Offering Period. The Offering Period shall commence on the effective date of the Registration Statement and will continue until the earlier of (i) the completion of the sale of all Securities in the Offering and (ii) the date that is sixty (60) calendar days following such effective date, unless such 60-day period is extended by the mutual written agreement of the Company and the Placement Agent for an additional period of up to thirty (30) calendar days from such date (the “Offering Period”). After the initial Closing, subsequent closings with respect to accepted subscriptions may take place at any time during the Offering Period in accordance with the Purchase Agreement.

 

Section 4. Covenants and Agreements of the Company. The Company further covenants and agrees with the Placement Agent as follows:

 

(a) Registration Statement Matters. During the Prospectus Delivery Period (as defined below), the Company will advise the Placement Agent promptly after it receives notice thereof of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Final Prospectus has been filed and will furnish the Placement Agent with copies thereof. During the Prospectus Delivery Period, the Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any Prospectus. During the Prospectus Delivery Period, the Company will advise the Placement Agent, promptly after it receives notice thereof (i) of any request by the Commission to amend the Registration Statement or to amend or supplement any Prospectus or for additional information, and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or any order directed at any Incorporated Document, if any, or any amendment or supplement thereto or any order preventing or suspending the use of the Preliminary Prospectus or the Final Prospectus or any prospectus supplement or any amendment or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the institution or threatened institution of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or a Prospectus or for additional information. The Company shall use its commercially reasonable efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that during the Prospectus Delivery Period, it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in a timely manner by the Commission.

 

(b) Blue Sky Compliance. The Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Securities for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent and the Investors may reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company shall not be required to produce any new disclosure document. During the Prospectus Delivery Period, the Company will, from time to time, prepare and file such statements, reports and other documents as are or may be required to continue such qualifications in effect. During the Prospectus Delivery Period, the Company will advise the Placement Agent promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible moment.

 

 

(c) Amendments and Supplements to a Prospectus and Other Matters. The Company will comply with the Securities Act and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Securities as contemplated in this Agreement, the Incorporated Documents and any Prospectus. If during the period in which a prospectus is required by law to be delivered in connection with the distribution of Securities contemplated by the Incorporated Documents or any Prospectus (the “Prospectus Delivery Period”), any event shall occur as a result of which, in the judgment of the Company or in the opinion of the Placement Agent or Placement Agent’s Counsel, it becomes necessary to amend or supplement the Incorporated Documents or any Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading, or if it is necessary at any time to amend or supplement the Incorporated Documents or any Prospectus or to file under the Exchange Act any Incorporated Document to comply with any law, the Company will promptly prepare and file with the Commission, and furnish at its own expense to the Placement Agent and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement, the Incorporated Documents or any Prospectus that is necessary in order to make the statements in the Incorporated Documents and any Prospectus as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading, or so that the Registration Statement, the Incorporated Documents or any Prospectus, as so amended or supplemented, will comply with law. Before amending the Registration Statement or supplementing the Incorporated Documents or any Prospectus in connection with the Offering, the Company will furnish the Placement Agent with a copy of such proposed amendment or supplement and will not file any such amendment or supplement to which the Placement Agent reasonably objects.

 

(d) Copies of any Amendments and Supplements to a Prospectus. The Company will furnish the Placement Agent, without charge, during the period beginning on the date hereof and ending upon the completion of the Offering, as many copies of any Prospectus or prospectus supplement and any amendments and supplements thereto, as the Placement Agent may reasonably request.

 

(e) Free Writing Prospectus. The Company covenants that it will not, unless it obtains the prior written consent of the Placement Agent, make any offer relating to the Securities that would constitute a Company Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Securities Act. In the event that the Placement Agent expressly consents in writing to any such free writing prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that it shall (i) treat each Permitted Free Writing Prospectus as an Company Free Writing Prospectus, and (ii) comply with the requirements of Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

 

(f) Transfer Agent. The Company will maintain, at its expense, a registrar and transfer agent for the Ordinary Shares.

 

(g) Earnings Statement. As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event not later than twelve (12) months after the initial Closing Date, the Company will make generally available to its security holders and to the Placement Agent an earnings statement, covering a period of at least twelve (12) consecutive months beginning after the initial Closing Date, that satisfies the provisions of Section 11(a) and Rule 158 under the Securities Act.

 

(h) Periodic Reporting Obligations. During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission and The Nasdaq Stock Market LLC (“Trading Market”) all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required by the Exchange Act.

 

(i) Additional Documents. The Company will enter into any subscription, purchase or other customary agreements as the Placement Agent or the Investors deem necessary or appropriate to consummate each Closing in connection with the Offering, all of which will be in form and substance reasonably acceptable to the Placement Agent and the Investors. The Company agrees that the Placement Agent may rely upon, and each is a third-party beneficiary of, the representations and warranties, and applicable covenants, set forth in any purchase, subscription or other agreement entered into with Investors in connection with the Offering.

 

(j) No Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

 

(k) Acknowledgment. The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement Agent’s prior written consent.

 

(l) Announcement of Offering. The Company acknowledges and agrees that the Placement Agent may at its sole expense, subsequent to the Closing, make public its involvement with the Offering.

 

 

(m) Reliance on Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.

 

(n) Research Matters. By entering into this Agreement, the Placement Agent provides no promise, either explicitly or implicitly, of favorable or continued research coverage of the Company and the Company hereby acknowledges and agrees that the Placement Agent’s selection as the placement agent for the Offering was in no way conditioned, explicitly or implicitly, on the Placement Agent’s providing favorable or any research coverage of the Company. In accordance with FINRA Rule 2711(e), the parties acknowledge and agree that the Placement Agent has not directly or indirectly offered favorable research, a specific rating or a specific price target, or threatened to change research, a rating or a price target, to the Company or inducement for the receipt of business or compensation.

 

Section 5. Conditions of the Obligations of the Placement Agent. The obligations of the Placement Agent hereunder shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of the applicable Closing Date as though then made, to the timely performance by each of the Company of its covenants and other obligations hereunder on and as of such dates, and to each of the following additional conditions:

 

(a) Accountants’ Comfort Letter. On each such Closing Date, the Placement Agent shall have received, and the Company shall have caused to be delivered to the Placement Agent, a letter from each of Friedman LLP and Marcum Asia CPAs LLP (the independent registered public accounting firms of the Company), addressed to the Placement Agent, dated as of such Closing Date, in form and substance reasonably satisfactory to the Placement Agent. The letters shall not disclose any change in the condition (financial or other), earnings, operations, business or prospects of the Company from that set forth in the Incorporated Documents or the applicable Prospectus or prospectus supplement, which, in the Placement Agent’s sole judgment, is material and adverse and that makes it, in the Placement Agent’s reasonable judgment, impracticable or inadvisable to proceed with the Offering of the Securities as contemplated by such Prospectus.

 

(b) Compliance with Registration Requirements; No Stop Order; No Objection from FINRA. Each Prospectus (in accordance with Rule 424(b)) and “free writing prospectus” (as defined in Rule 405 of the Securities Act), if any, shall have been duly filed with the Commission, as appropriate; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no order preventing or suspending the use of any Prospectus shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional information on the part of the Commission shall have been complied with; and FINRA shall have raised no objection to the fairness and reasonableness of the placement terms and arrangements.

 

(c) Corporate Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement and each Prospectus, and the registration, sale and delivery of the Securities, shall have been completed or resolved in a manner reasonably satisfactory to the Placement Agent’s Counsel, and such counsel shall have been furnished with such papers and information as it may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 5.

 

 

(d) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the Placement Agent’s reasonable judgment after consultation with the Company, there shall not have occurred any material adverse change or development involving a prospective material adverse change in the condition or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement and Prospectus (each, a “Material Adverse Change”).

 

(e) Opinion of Counsels for the Company. The Placement Agent shall have received on each such Closing Date the opinion of U.S. legal counsel, PRC legal counsel and Cayman Islands legal counsel to the Company, dated as of such Closing Date and addressed to the Placement Agent, including, without limitation, a negative assurance letter from U.S. legal counsel to the Company, each in form and substance substantially similar to the opinions delivered by U.S. legal counsel, PRC legal counsel and special Cayman Islands legal counsel to the Company in connection with an offering of the type contemplated hereby, which shall be deemed reasonably satisfactory to the Placement Agent.

 

(f) Officers’ Certificate. The Placement Agent shall have received on each such Closing Date, a certificate of the Company, dated as of such Closing Date and which may be relied upon by the Placement Agent, signed by the Chief Executive Officer and Chief Financial Officer of the Company, in their respective capacities as such officers only, in a form reasonably acceptable to the Placement Agent, to the effect that:

 

(i) The representations and warranties of the Company in this Agreement are true and correct in all material respects, as if made on and as of such Closing Date, and the Company has complied in all material respects with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;

 

(ii) No stop order suspending the effectiveness of the Registration Statement or the use of the Final Prospectus has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange in the United States;

 

(iii) When the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement and the Incorporated Documents, if any, when such documents became effective or were filed with the Commission, contained all material information required to be included therein by the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and the Registration Statement and the Incorporated Documents, if any, did not and do not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided, however, that the preceding representations and warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Placement Agent expressly for use therein) and, since the effective date of the Registration Statement, there has occurred no event required by the Securities Act and the rules and regulations of the Commission thereunder to be set forth in the Incorporated Documents which has not been so set forth; and

 

 

(iv) Subsequent to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and the Final Prospectus, there has not been: (a) any Material Adverse Change; (b) any transaction that is material to the Company and the Subsidiaries taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any Subsidiary which has been sustained or will have been sustained which has a Material Adverse Effect.

 

(g) Chief Financial Officer’s Certificate. The Placement Agent shall have received on each such Closing Date, a certificate of the Company, dated as of such Closing Date and which may be relied upon by the Placement Agent, signed by the Chief Financial Officer of the Company, with respect to certain financial data contained in or incorporated by reference into the Registration Statement, in a form reasonably acceptable to the Placement Agent.

 

(h) Secretary’s Certificate. The Placement Agent shall have received on each such Closing Date, a certificate of the Company, dated as of such Closing Date and which may be relied upon by the Placement Agent, signed by the Secretary of the Company, certifying, among others, (i) that each of the Company’s organizational documents is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company’s Board of Directors relating to the Offering are in full force and effect and have not been modified; (iii) as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission; and (iv) as to the incumbency of the officers of the Company, in a form reasonably acceptable to the Placement Agent.

 

(i) Exchange Act Registration and Stock Exchange Listing. The Ordinary Shares shall have been registered under the Exchange Act and shall have been approved for listing on the Trading Market, subject to official notice of issuance, and the Company shall not have taken any action designed to terminate, or likely to have the effect of terminating, the registration of the Ordinary Shares under the Exchange Act or delisting or suspending from trading the Ordinary Shares from the Trading Market, nor shall the Company have received any information suggesting that the Commission or the Trading Market is contemplating terminating such registration or listing.

 

(j) Lock-Up Agreement. On or prior to the date of this Agreement, the Company shall also have furnished to the Placement Agent a letter substantially in the form of Exhibit A hereto (the “Lock-Up Agreement”) from each executive officer, director and 5% shareholder of the Company addressed to the Placement Agent. The Company will use its reasonable best efforts to enforce the terms of each Lock-Up Agreement and will issue stop-transfer instructions to the transfer agent for the Ordinary Shares with respect to any transaction or contemplated transaction that would constitute a breach of or default under the applicable Lock-Up Agreement.

 

(k) Subsequent Equity Sales.

 

(i) From the date hereof until the ninety (90) days after the initial Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Ordinary Shares or any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Ordinary Shares, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares (“Ordinary Share Equivalents”).

 

(ii) From the date hereof until the ninety (90) days after the initial Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Ordinary Shares or Ordinary Share Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (x) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional Ordinary Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the Ordinary Shares at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Ordinary Shares or (y) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. The Placement Agent shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

 

 

(iii) Notwithstanding the foregoing, this Section 5(k) shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. “Exempt Issuance” means the issuance of (a) Ordinary Shares or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder, and/or other securities exercisable or exchangeable for or convertible into Ordinary Shares issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period set forth in Section 4.11(a) of the Purchase Agreement, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

(l)      Additional Documents. On or before each Closing Date, the Placement Agent and Placement Agent’s Counsel shall have received such information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

 

If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement Agent by notice to the Company at any time on or prior to a Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 1(a), Section 1(b), Section 6 (Payment of Expenses), Section 7 (Indemnification and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall at all times be effective and shall survive such termination.

 

Section 6. Payment of Expenses. Subject to compliance with FINRA Rule 5110(f)(2)(D), the Company agrees to pay all reasonable costs, fees and expenses incurred by the Company in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation: (i) all expenses incident to the issuance, delivery and qualification of the Securities (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the Shares; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Securities; (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Preliminary Prospectus, the Final Prospectus and each prospectus supplement, if any, and all amendments and supplements thereto, and this Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred by the Company or the Placement Agent in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Securities for offer and sale under the state securities or blue sky laws or the securities laws of any other country; (vii) if applicable, the filing fees incident to the review and approval by FINRA of the Placement Agent’s participation in the offering and distribution of the Securities; (viii) the fees and expenses associated with including the Securities on the Trading Market; (ix) all costs and expenses incident to the travel and accommodation of the Company’s employees on the “roadshow,” if any; (x) the Placement Agent’s clearing expenses; and (xi) all other fees, costs and expenses referred to in Part II of the Registration Statement. The Company shall be obligated to pay or reimburse the Placement Agent for its actual and accountable out-of-pocket expenses related to the Offering, including any fees and disbursements of the Placement Agent’s legal counsel and, if applicable, any electronic road show service used in connection with the Offering; provided, however, that the maximum amount that the Company shall be required to pay or reimburse the Placement Agreement pursuant to this sentence shall be US$150,000. The Company further agrees that, in addition to the expenses payable pursuant to this Section 6, on each Closing Date it shall pay to the Placement Agent, by deduction from the net proceeds to be received with respect to such Closing, a non-accountable expense allowance equal to 1% of the gross proceeds received by the Company from the sale of the Securities at such Closing.

 

 

Section 7. Indemnification and Contribution.

 

(a) The Company agrees to indemnify and hold harmless the Placement Agent, its affiliates and each person controlling the Placement Agent (within the meaning of Section 15 of the Securities Act), and the directors, officers, agents and employees of the Placement Agent, their respective affiliates and each such controlling person (the Placement Agent, and each such entity or person, an “Agent Indemnified Person”) from and against any losses, claims, damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”), and shall reimburse each Agent Indemnified Person for all fees and expenses (including the reasonable fees and expenses of one counsel for all Agent Indemnified Persons, except as otherwise expressly provided herein) (collectively, the “Expenses”) as they are incurred by an Agent Indemnified Person in investigating, preparing, pursuing or defending any actions, whether or not any Agent Indemnified Person is a party thereto, (i) caused by, or arising out of or in connection with, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Incorporated Document, or any Prospectus or by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (other than untrue statements or alleged untrue statements in, or omissions or alleged omissions from, information relating to an Agent Indemnified Person furnished in writing by or on behalf of such Agent Indemnified Person expressly for use in the Registration Statement, any Incorporated Document, or any Prospectus) or (ii) otherwise arising out of or in connection with advice or services rendered or to be rendered by any Agent Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Agent Indemnified Person’s actions or inactions in connection with any such advice, services or transactions; provided, however, that, in the case of clause (ii) only, the Company shall not be responsible for any Liabilities or Expenses of any Agent Indemnified Person that are finally judicially determined to have resulted solely from such Agent Indemnified Person’s (x) gross negligence or willful misconduct in connection with any of the advice, actions, inactions or services referred to above or (y) use of any offering materials or information concerning the Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the Company and which use constitutes gross negligence or willful misconduct. The Company also agrees to reimburse each Agent Indemnified Person for all Expenses as they are incurred in connection with enforcing such Agent Indemnified Person’s rights under this Agreement.

 

(b) The Placement Agent agrees to indemnify and hold harmless the Company, its affiliates and each person controlling the Company (within the meaning of Section 15 of the Securities Act), and the directors, officers, agents and employees of the Company, its affiliates and each such controlling person (the Company, and each such entity or person, a “Company Indemnified Person”) from and against any Liabilities, and shall reimburse each Company Indemnified Person for all Expenses as they are incurred by a Company Indemnified Person in investigating, preparing, pursuing or defending any actions, whether or not any Company Indemnified Person is a party thereto, (i) caused by, or arising out of or in connection with, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Incorporated Document, or any Prospectus or by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Placement Agent furnished in writing to the Company by or on behalf of such Placement Agent specifically for inclusion therein, or (ii) otherwise arising out of or in connection with advice or services rendered or to be rendered by such Placement Agent pursuant to this Agreement, the transactions contemplated thereby or any Company Indemnified Person’s actions or inactions in connection with any such advice, services or transactions; provided, however, that, in the case of clause (ii) only, such Placement Agent shall not be responsible for any Liabilities or Expenses of any Company Indemnified Person that are finally judicially determined to have resulted solely from such Company Indemnified Person’s (x) gross negligence or willful misconduct in connection with any of the advice, actions, inactions or services referred to above or (y) use of any offering materials or information concerning the Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the Company and which use constitutes gross negligence or willful misconduct. The Placement Agent also agrees to reimburse each Company Indemnified Person for all Expenses as they are incurred in connection with enforcing such Company Indemnified Person’s rights under this Agreement. Notwithstanding the provisions of this Section 7(b), in no event shall any indemnity by a Placement Agent under this Section 7(b) exceed the total commissions received by such Placement Agent in connection with the Offering.

 

 

(c) Upon receipt by an Indemnified Person of actual notice of an action against such Indemnified Person with respect to which indemnity may be sought under this Agreement, such Indemnified Person shall promptly notify the Indemnifying Person in writing; provided that failure by any Indemnified Person so to notify the Indemnifying Person shall not relieve the Indemnifying Person from any liability which the Indemnifying Person may have on account of this indemnity or otherwise to such Indemnified Person, except to the extent the Indemnifying Person shall have been prejudiced by such failure. The Indemnifying Person shall, if requested by the Indemnified Person, assume the defense of any such Action including the employment of counsel reasonably satisfactory to the Indemnified Person, which counsel may also be counsel to the Indemnifying Person. Any Indemnified Person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Indemnifying Person has failed promptly to assume the defense and employ counsel or (ii) the named parties to any such Action (including any impeded parties) include such Indemnified Person and the Indemnifying Person, and such Indemnified Person shall have been advised in the reasonable opinion of counsel that there is an actual conflict of interest that prevents the counsel selected by the Indemnifying Person from representing both the Indemnifying Person (or another client of such counsel) and any Indemnified Person; provided that the Indemnifying Person shall not in such event be responsible hereunder for the fees and expenses of more than one firm of separate counsel for all Indemnified Persons in connection with any Action or related Actions, in addition to any local counsel. The Indemnifying Person shall not be liable for any settlement of any Action effected without its written consent (which shall not be unreasonably withheld). In addition, the Indemnifying Person shall not, without the prior written consent of the Indemnified Person (which shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Person from all Liabilities arising out of such Action for which indemnification or contribution may be sought hereunder. The indemnification required hereby shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. “Action” means any action, suit, inquiry, notice of violation, proceeding or investigation affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign).

 

(d) In the event that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Indemnifying Person shall contribute to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate to reflect (i) the relative benefits to the Indemnifying Person, on the one hand, and to the Indemnified Person and any other Indemnified Person, on the other hand, of the matters contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted by applicable law, not only such relative benefits but also the relative fault of the Indemnifying Person, on the one hand, and the Indemnified Person and any other Indemnified Person, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided that in no event shall the Indemnifying Person contribute less than the amount necessary to ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of fees actually received by the Indemnified Person pursuant to this Agreement. For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement Agent on the other hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid to or received or contemplated to be received by the Company in the transaction or transactions that are within the scope of this Agreement, whether or not any such transaction is consummated, bears to (b) the fees paid to the Representative under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act, as amended, shall be entitled to contribution from a party who was not guilty of fraudulent misrepresentation.

 

(e) The Indemnifying Person also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Indemnifying Person for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services or transactions except for Liabilities (and related Expenses) of the Indemnifying Person that are finally judicially determined to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct in connection with any such advice, actions, inactions or services.

 

 

(f) The reimbursement, indemnity and contribution obligations of the Indemnifying Person set forth herein shall apply to any modification of this Agreement and shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection with, this Agreement.

 

Section 8. Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements of the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Company, or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement. A successor to the Placement Agent, or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Agreement.

 

Section 9. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or e-mailed and confirmed to the parties hereto as follows:

 

If to the Placement Agent to the address set forth above, attention: Edric Yi Guo, Head of Investment Banking, e-mail: yguo@univest.us

 

With a copy to:

 

Sullivan & Worcester LLP

1633 Broadway

New York, NY 10019

Attention: David E. Danovitch, Esq.
Email: ddanovitch@sullivanlaw.com

 

If to the Company:

 

Shengfeng Development Limited

Shengfeng Building, No. 478 Fuxin East Road

Jin’an District, Fuzhou City

Fujian Province, People’s Republic of China, 350001

Attention: Guoping Zheng

Email: guoping.zheng@sfwl.com.cn

 

With a copy to:

 

Hunter Taubman Fischer & Li LLC

950 Third Avenue, 19th Floor

New York, NY 10022
Attention: Ying Li, Esq.
E-mail: yli@htflawyers.com

 

Any party hereto may change the address for receipt of communications by giving written notice to the others.

 

 

Section 10. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative, and no other person will have any right or obligation hereunder.

 

Section 11. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

Section 12. Governing Law Provisions. This Agreement and the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the Placement Agent and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waives any objection which it may have or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed in every respect effective service process upon the Placement Agent, in any such suit, action or proceeding. If either party shall commence an action or proceeding to enforce any provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

Section 13. General Provisions.

 

(a) This Agreement and the Transaction Documents together constitute the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. Notwithstanding anything herein to the contrary, the Engagement Agreement, dated July 6, 2023 (the “Engagement Agreement”), between the Company and the Placement Agent, shall continue to be effective and the terms therein shall continue to survive and be enforceable by the Placement Agent in accordance with its terms, provided that, in the event of a conflict between the terms of the Engagement Agreement or any other Transaction Document and this Agreement, the terms of this Agreement shall prevail. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

 

(b) The Company acknowledges that in connection with the Offering of the Securities: (i) the Placement Agent has acted at arm’s length, is not an agent of, and owes no fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the Company only those duties and obligations set forth in this Agreement and (iii) the Placement Agent may have interests that differ from those of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the Placement Agent arising from an alleged breach of fiduciary duty in connection with the offering of the Securities.

 

[The remainder of this page has been intentionally left blank.]

 

 

If the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

 

	Very truly yours,
	Shengfeng Development Limited
	By:
		Name:	Yongxu Liu
		Title:	Chief Executive Officer

 

Accepted and agreed to as of
the date first written above:
UNIVEST SECURITIES, LLC
By:
	Name:	Yi (Edric) Guo
	Title:	Chief Executive Officer

 

 

Exhibit A

 

Form of Lock-Up Agreement

 

 

 

 

 

 

Exhibit 4.2

 

CLASS A ORDINARY SHARE PURCHASE WARRANT

 

SHENGFENG DEVELOPMENT LIMITED

 

Warrant Shares: [●]

Initial Exercise Date: [●], 2023

 

THIS CLASS A ORDINARY SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on [●], 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Shengfeng Development Limited, an exempted company organized under the laws of the Cayman Islands (the “Company”), up to [●] Class A ordinary shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary Shares are then listed or quoted on a Trading Market, the bid price of the Ordinary Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Ordinary Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Ordinary Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Ordinary Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Ordinary Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Ordinary Share so reported, or (d) in all other cases, the fair market value of an Ordinary Share as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.

 

 

“Commission” means the United States Securities and Exchange Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Ordinary Share(s)” means the Class A ordinary shares of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Ordinary Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Ordinary Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Registration Statement” means the Company’s registration statement on Form F-1 (File No. 333-[*]).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Trading Day” means a day on which the Ordinary Shares are traded on a Trading Market.

 

“Trading Market” means any of the following markets or exchanges on which the Ordinary Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Pl., Woodmere, NY 11598, and any successor transfer agent of the Company.

 

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of an Ordinary Shares for such date (or the nearest preceding date) on the Trading Market on which an Ordinary Shares is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB or OTCQX is not a Trading Market, the volume weighted average price of an Ordinary Shares for such date (or the nearest preceding date) on the OTCQB or OTCQX, (c) if Ordinary Shares s are not then listed or quoted for trading on the OTCQB or OTCQX and if prices for Ordinary Shares s are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of an Ordinary Shares so reported, or (d) in all other cases, the fair market value of an Ordinary Shares as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“Warrants” means this Warrant and other Ordinary Share purchase warrants issued by the Company pursuant to the Securities Purchase Agreement, dated as of even date herewith, between the Company, the Holder and the other purchasers that are parties thereto.

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer of immediate available funds to the bank account as designated by the Company unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 

b) Exercise Price. The exercise price per Ordinary Share under this Warrant shall be $[__], subject to adjustment hereunder (the “Exercise Price”).

 

c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B)(X)] by (A), where:

 

(A)

=

as elected by the Holder: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise, if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Ordinary Shares on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

(B)

=

the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X)

=

the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c).

 

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

d) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Ordinary Shares on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Ordinary Shares as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time after [●], 2023, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder.

 

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Ordinary Shares to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Ordinary Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Ordinary Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Ordinary Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Ordinary Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Ordinary Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

 

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share. Notwithstanding the foregoing, this Warrant can only be exercised in whole or in part for whole Ordinary Shares unless and until certain recapitalization adjustments occur under Section 3 hereof.

 

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii.   Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

 

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Ordinary Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Ordinary Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Ordinary Shares which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Ordinary Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding Ordinary Shares, a Holder may rely on the number of outstanding Ordinary Shares as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Ordinary Shares outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Ordinary Shares then outstanding. In any case, the number of outstanding Ordinary Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Ordinary Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

Section 3. Certain Adjustments.

 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on Ordinary Shares or any other equity or equity equivalent securities payable in Ordinary Shares (which, for avoidance of doubt, shall not include any Ordinary Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Ordinary Shares into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Ordinary Shares into a smaller number of shares, (iv) issues by reclassification of Ordinary Shares any shares of capital stock of the Company, or (v) makes any distribution of its assets, in cash, equity or equity equivalent securities or other property (in which case the Holder will also be entitled to the Purchase Rights pursuant to Section 3(e)), then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Ordinary Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Ordinary Shares or Ordinary Share Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Ordinary Shares or Ordinary Share Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive Ordinary Shares at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to the lower of (i) the Base Share Price or (ii) the lowest VWAP in the five (5) Trading Days (the “Adjustment Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the applicable Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Warrant is exercised, on any given Exercise Date during any such Adjustment Period, solely with respect to such portion of this Warrant converted on such applicable Exercise Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date).  Such adjustment shall be made whenever such Ordinary Shares or Ordinary Share Equivalents are issued; provided that if such Ordinary Shares or Ordinary Share Equivalents are issued in tranches such adjustment shall be made at each closing of such issuance. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance (as defined below). The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Ordinary Shares or Ordinary Share Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. “Exempt Issuance” means the issuance of (a) Ordinary Shares or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by the Board of Directors, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by the Board of Directors, provided that any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

 

c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Ordinary Share Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Ordinary Shares (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of Ordinary Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Ordinary Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Ordinary Shares as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Ordinary Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Ordinary Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Ordinary Shares are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any Ordinary Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Ordinary Shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Ordinary Shares (not including any Ordinary Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of Ordinary Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Ordinary Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Ordinary Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Ordinary Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Ordinary Shares of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Ordinary Shares are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Ordinary Shares of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Ordinary Shares will be deemed to have received ordinary shares of the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within five Business Days of the Holder’s election (or, if later, on the date of consummation of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Ordinary Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

 

 

f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Ordinary Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Ordinary Shares (excluding treasury shares, if any) issued and outstanding.

 

g) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Ordinary Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Ordinary Shares, (C) the Company shall authorize the granting to all holders of the Ordinary Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Ordinary Shares, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Ordinary Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its email address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Ordinary Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Ordinary Shares of record shall be entitled to exchange their Ordinary Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

 

h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

Section 4. Transfer of Warrant.

 

a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5. Miscellaneous.

 

a) No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

 

d) Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Ordinary Shares a sufficient number of Ordinary Shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Ordinary Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of association or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

 

e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. The Company hereby appoints Cogency Global Inc. as its agent for service of process in New York. The choice of the laws of the State of New York as the governing law of this Warrant is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in the Cayman Islands, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the Cayman Islands. The Company or any of their respective properties, assets or revenues does not have any right of immunity under Cayman Islands or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Cayman Islands and New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Warrant; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Warrant and the other Transaction Documents.

 

f)   Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, Shengfeng Development Limited, Shengfeng Building, No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Fujian Province, People’s Republic of China, 350001, Attention: Guoping Zheng, email address: [guoping.zheng@sfwl.com.cn], or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K.

 

i)   Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Ordinary Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

 

j)   Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)   Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder, on the other hand.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	Shengfeng Development Limited
	By:
		Name: Yongxu Liu
		Title: Chief Executive Officer

 

 

NOTICE OF EXERCISE

 

To: SHENGFENG DEVELOPMENT LIMITED

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

[       ] in lawful money of the United States; or

 

[       ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:
	(Please Print)
Address:
	(Please Print)
Phone Number:
Email Address:
Dated: _______________ __, ______

 

Holder’s Signature:
Holder’s Address:

 

 

 

Exhibit 5.1

 

 

 

Shengfeng Development Limited c/o Quality Corporate Services Ltd PO Box 712 Suite 102, Cannon Place, North Sound Road Grand Cayman Cayman Islands		D +1 345 815 1877
		E bradley.kruger@ogier.com
		Reference: 427547.00001/BKR
		4 August 2023

 

Shengfeng Development Limited (Company)

 

We have been requested to provide you with an opinion on matters of Cayman Islands legal law in connection with the Company’s registration statement on Form F-1, including all amendments, supplements and exhibits thereto (the Registration Statement), filed with the United States Securities and Exchange Commission (the Commission) under the U.S. Securities Act of 1933, as amended (the Act) to date related to the offering and sale of:

 

(a)

up to 8,000,000 units (together, the Units), each Unit consisting of one Class A ordinary share of the Company of par value US$0.0001 each (the Class A Ordinary Shares) and one warrant, each whole warrant entitling the holder thereof to purchase one Class A Ordinary Share (the Warrants) issuable upon exercise of the Warrants (as defined in the Registration Statement).

 

This opinion is given in accordance with the terms of the Legal Matters section of the Registration Statement.

 

Unless a contrary intention appears, all capitalised terms used in this opinion have the respective meanings set forth in the Registration Statement. A reference to a Schedule is a reference to a schedule to this opinion and the headings herein are for convenience only and do not affect the construction of this opinion.

 

1

Documents examined

 

For the purposes of giving this opinion, we have examined the corporate and other documents and conducted the searches listed in Schedule 1. We have not made any searches or enquiries concerning, and have not examined any documents entered into by or affecting the Company or any other person, save for the searches, enquiries and examinations expressly referred to in Schedule 1.

 

Ogier (Cayman) LLP 89 Nexus Way Camana Bay Grand Cayman, KY1-9009 Cayman Islands   T +1 345 949 9876 F +1 345 949 9877 ogier.com

A list of Partners may be inspected on our website

 

As from 11 October 2022 Ogier, which was constituted as a general partnership under the laws of the Cayman Islands, converted to a limited liability partnership registered in the Cayman Islands as Ogier (Cayman) LLP.

 

 

Shengfeng Development Limited

4 August 2023

 

2

Assumptions

 

In giving this opinion we have relied upon the assumptions set forth in Schedule 2 without having carried out any independent investigation or verification in respect of those assumptions.

 

3

Opinions

 

On the basis of the examinations and assumptions referred to above and subject to the qualifications set forth in Schedule 3 and the limitations set forth below, we are of the opinion that:

 

Corporate status

 

(a)

The Company has been duly incorporated as an exempted company with limited liability and is validly existing and in good standing with the Registrar of Companies of the Cayman Islands (the Registrar).

 

Corporate power

 

(b)

The Company has all requisite power under its M&A (as defined in Schedule 1) to issue the Class A Ordinary Shares (including the issuance of the Class A Ordinary Shares upon the exercise of the Warrants in accordance with the Warrant Documents (as defined in Schedule 1), to execute and deliver the Documents (as defined in Schedule 1) and to perform its obligations, and exercise its rights, under such documents.

 

Corporate authorisation

 

(c)

The Company has taken all requisite corporate action to authorise:

 

(i)

the issuance of the Class A Ordinary Shares (including the issuance of the Class A Ordinary Shares upon the exercise of the Warrants in accordance with the Warrant Documents; and

 

(ii)

the execution and delivery of the Documents and the performance of its obligations, and the exercise of its rights, under such documents.

 

Shares

 

(d)

The Class A Ordinary Shares to be offered and issued by the Company as contemplated by the Registration Statement (including the issuance of the Class A Ordinary Shares upon the exercise of the Warrants in accordance with the Warrant Documents, when issued by the Company upon:

 

(i)

payment in full of the consideration as set out in the Registration Statement and in accordance with the terms set out in the Registration Statement (including the issuance of the Class A Ordinary Shares upon the exercise of the Warrants in accordance with the Warrant Documents and in accordance with the M&A; and

 

(ii)

the entry of those Class A Ordinary Shares as fully paid on the register of members of the Company,

 

shall be validly issued, fully paid and non-assessable.

 

 

Shengfeng Development Limited

4 August 2023

 

Warrants

 

(e)

With respect to the Warrants to be issued, when:

 

(i)

the directors of the Company have taken all necessary corporate actions to authorise and approve the creation and terms of the Warrants and to approve the issue thereof, the terms of the offering thereof and related matters;

 

(ii)

a Warrant Document relating to the Warrants shall have been duly authorized and validly executed and unconditionally delivered by the Company and the warrant agent thereunder; and

 

(iii)

the certificates representing the Warrants have been duly executed, countersigned, registered and delivered in accordance with the Warrant Document relating to the Warrants and the applicable definitive purchase, underwriting or similar agreement approved by the directors of the Company upon payment of the consideration therefor provided therein,

 

the Warrants will be duly authorized and validly issued and will constitute legal, valid and binding obligations of the Company.

 

4

Matters not covered

 

We offer no opinion:

 

(a)

as to any laws other than the laws of the Cayman Islands, and we have not, for the purposes of this opinion, made any investigation of the laws of any other jurisdiction, and we express no opinion as to the meaning, validity, or effect of references in the Documents to statutes, rules, regulations, codes or judicial authority of any jurisdiction other than the Cayman Islands;

 

(b)

except to the extent that this opinion expressly provides otherwise, as to the commercial terms of, or the validity, enforceability or effect of the documents reviewed (or as to how the commercial terms of such documents reflect the intentions of the parties), the accuracy of representations, the fulfilment of warranties or conditions, the occurrence of events of default or terminating events or the existence of any conflicts or inconsistencies among the documents and any other agreements into which the Company may have entered or any other documents; or

 

(c)

as to whether the acceptance, execution or performance of the Company’s obligations under the documents reviewed by us will result in the breach of or infringe any other agreement, deed or document (other than the Company’s Memorandum and Articles of Association) entered into by or binding on the Company.

 

 

Shengfeng Development Limited

4 August 2023

 

5

Governing law of this opinion

 

5.1

This opinion is:

 

(a)

governed by, and shall be construed in accordance with, the laws of the Cayman Islands;

 

(b)

limited to the matters expressly stated in it; and

 

(c)

confined to, and given on the basis of, the laws and practice in the Cayman Islands at the date of this opinion.

 

5.2

Unless otherwise indicated, a reference to any specific Cayman Islands legislation is a reference to that legislation as amended to, and as in force at, the date of this opinion.

 

6

Consent

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and also consent to the reference to this firm in the Registration Statement under the heading “Legal Matters”. In the giving of our consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the Rules and Regulations of the Commission thereunder.

 

Yours faithfully

 

Ogier (Cayman) LLP

 

 

Shengfeng Development Limited

4 August 2023

 

Schedule 1

 

Documents examined

 

Corporate and other documents

 

1

The Certificate of Incorporation of the Company dated 16 July 2020 issued by the Registrar.

 

2

The amended and restated memorandum and articles of association of the Company adopted by special resolution passed on 18 December 2020 (the M&A).

 

3

A Certificate of Good Standing dated 2 August 2023 (Good Standing Certificate) issued by the Registrar in respect of the Company.

 

4

A certificate dated on the date hereof as to certain matters of fact signed by a director of the Company in the form annexed hereto (the Director’s Certificate), having attached to it a copy of the written resolutions of all of the directors of the Company passed on 29 July 2021, 10 September 2021, 30 March 2023 and on 3 August 2023 (the Board Resolutions).

 

5

The Register of Writs at the office of the Clerk of Courts in the Cayman Islands as inspected by us on 3 August 2023 (the Register of Writs).

 

6

The Registration Statement.

 

7

A draft form of a placement agency agreement to be entered into between the Company and Univest Securities, LLC as placement agent (the Placement Agency Agreement).

 

8

A draft form of a securities purchase agreement to be entered into between the Company and certain purchasers described therein (the Securities Purchase Agreement).

 

9

A draft form of a lock-up agreement to be entered into by the Company and the directors, executive officers and certain shareholders of the Company (the Lock-up Agreement).

 

10

A draft form of the warrant agreement and the warrant certificate constituting the Warrants (the Warrant Documents and, together with the Placement Agency Agreement, Securities Purchase Agreement and the Lock-up Agreement, the Documents).

 

 

Shengfeng Development Limited

4 August 2023

 

Schedule 2

 

Assumptions

 

Assumptions of general application

 

1

All original documents examined by us are authentic and complete.

 

2

All copy documents examined by us (whether in facsimile, electronic or other form) conform to the originals and those originals are authentic and complete.

 

3

All signatures, seals, dates, stamps and markings (whether on original or copy documents) are genuine.

 

4

Each of the Good Standing Certificate and the Director’s Certificate is accurate and complete as at the date of this opinion.

 

5

Where any Document has been provided to us in draft or undated form, that Document has been executed by all parties in materially the form provided to us and, where we have been provided with successive drafts of a Document marked to show changes from a previous draft, all such changes have been accurately marked.

 

Status and Authorisation

 

6

Each of the parties to the Documents other than the Company is duly incorporated, formed or organised (as applicable), validly existing and in good standing under all relevant laws.

 

7

Each Document has been duly authorised, executed and unconditionally delivered by or on behalf of all parties to it in accordance with all applicable laws (other than, in the case of the Company, the laws of the Cayman Islands).

 

8

In authorising the execution and delivery of the Documents by the Company, the exercise of its rights and performance of its obligations under the Documents, each of the directors of the Company has acted in good faith with a view to the best interests of the Company and has exercised the standard of care, diligence and skill that is required of him or her.

 

9

Each Document has been duly executed and unconditionally delivered by the Company in the manner authorised in the Board Resolutions.

 

 

Shengfeng Development Limited

4 August 2023

 

Enforceability

 

10

None of the opinions expressed herein will be adversely affected by the laws or public policies of any jurisdiction other than the Cayman Islands. In particular, but without limitation to the previous sentence:

 

(a)

the laws or public policies of any jurisdiction other than the Cayman Islands will not adversely affect the capacity or authority of the Company; and

 

(b)

neither the execution or delivery of the Documents nor the exercise by any party to the Documents of its rights or the performance of its obligations under them contravene those laws or public policies.

 

11

There are no agreements, documents or arrangements (other than the documents expressly referred to in this opinion as having been examined by us) that materially affect or modify the Documents or the transactions contemplated by them or restrict the powers and authority of the Company in any way.

 

12

None of the transactions contemplated by the Documents relate to any shares, voting rights or other rights that are subject to a restrictions notice issued pursuant to the Companies Act (Revised) (the Companies Act) of the Cayman Islands.

 

Share Issuance

 

13

The Class A Ordinary Shares shall be issued at an issue price in excess of the par value thereof.

 

 

Shengfeng Development Limited

4 August 2023

 

Schedule 3

 

Qualifications

 

Good Standing

 

1

Under the Companies Act annual returns in respect of the Company must be filed with the Registrar, together with payment of annual filing fees. A failure to file annual returns and pay annual filing fees may result in the Company being struck off the Register of Companies, following which its assets will vest in the Financial Secretary of the Cayman Islands and will be subject to disposition or retention for the benefit of the public of the Cayman Islands.

 

2

In good standing means only that as of the date of the Good Standing Certificate the Company is up-to-date with the filing of its annual returns and payment of annual fees with the Registrar. We have made no enquiries into the Company’s good standing with respect to any filings or payment of fees, or both, that it may be required to make under the laws of the Cayman Islands other than the Companies Act.

 

Limited liability

 

3

We are not aware of any Cayman Islands authority as to when the courts would set aside the limited liability of a shareholder in a Cayman Islands company. Our opinion on the subject is based on the Companies Act and English common law authorities, the latter of which are persuasive but not binding in the courts of the Cayman Islands. Under English authorities, circumstances in which a court would attribute personal liability to a shareholder are very limited, and include: (a) such shareholder expressly assuming direct liability (such as a guarantee); (b) the company acting as the agent of such shareholder; (c) the company being incorporated by or at the behest of such shareholder for the purpose of committing or furthering such shareholder’s fraud, or for a sham transaction otherwise carried out by such shareholder. In the absence of these circumstances, we are of the opinion that a Cayman Islands’ court would have no grounds to set aside the limited liability of a shareholder.

 

Non-Assessable

 

4

In this opinion, the phrase “non-assessable” means, with respect to the Class A Ordinary Shares in the Company, that a shareholder shall not, solely by virtue of its status as a shareholder, be liable for additional assessments or calls on the Class A Ordinary Shares by the Company or its creditors (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstance in which a court may be prepared to pierce or lift the corporate veil).

 

Register of Writs

 

5

Our examination of the Register of Writs cannot conclusively reveal whether or not there is:

 

(a)

any current or pending litigation in the Cayman Islands against the Company; or

 

(b)

any application for the winding up or dissolution of the Company or the appointment of any liquidator, trustee in bankruptcy or restructuring officer in respect of the Company or any of its assets,

 

as notice of these matters might not be entered on the Register of Writs immediately or updated expeditiously or the court file associated with the matter or the matter itself may not be publicly available (for example, due to sealing orders having been made). Furthermore, we have not conducted a search of the summary court. Claims in the summary court are limited to a maximum of CI $20,000.

 

 

8

 

Exhibit 5.2

 

 

 

August 4, 2023

 

SHENGFENG DEVELOPMENT LIMITED

Shengfeng Building, No. 478 Fuxin East Road,

Jin’an District, Fuzhou City,

Fujian Province, People’s Republic of China, 350001 

 

Ladies and Gentlemen:

 

We have acted as United States counsel to Shengfeng Development Limited, a company incorporated under the laws of the Cayman Islands (the “Company”), in connection with the filing of a registration statement on Form F-1 (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to the following securities of the Company: (i) up to 8,000,000 units (each a “Unit,” and collectively, the “Units”), with each Unit consisting of one Class A ordinary share (each a “Class A Ordinary Share,” and collectively, the “Class A Ordinary Shares”), par value US$0.0001 per share and one warrant exercisable to purchase one Class A Ordinary Share (each a “Warrant,” and collectively, the “Warrants”), and (ii) up to 8,000,000 Class A Ordinary Shares underlying the Warrants (the “Warrant Shares”). The Units and the Warrant Shares are collectively referred to herein as the “Securities.”

 

In rendering the opinions set forth below, we have assumed that (i) all information contained in all documents reviewed by us is true and correct; (ii) all signatures on all documents examined by us are genuine; (iii) all documents submitted to us as originals are authentic and all documents submitted to us as copies conform to the authentic originals of such documents; (iv) each natural person signing any document reviewed by us had the legal capacity to do so; and (v) the certificates representing the Securities will be duly executed and delivered.

 

We have also assumed that (i) the Company has been duly incorporated, and is validly existing and in good standing; (ii) the Company has requisite legal status and legal capacity under the laws of the jurisdiction of its incorporation, (iii) the Company has complied and will comply with all aspects of the laws of the jurisdiction of its incorporation, in connection with the transactions contemplated by, and the performance of its obligations under the Warrants; (iv) the Company has the corporate power and authority to execute, deliver and perform all its obligations under the Warrants; (v) the Warrants have been duly authorized by all requisite corporate action on the part of the Company; (vi) except to the extent expressly stated in the opinions contained herein, the opinions stated herein are limited to the agreements specifically identified in exhibit 1.1 (Form of Placement Agency Agreement) (the “Placement Agency Agreement”), exhibit 4.2 (Form of Warrant) (the “Form of Warrant”), and exhibit 10.34 (Form of Securities Purchase Agreement) to the Registration Statement without regard to any agreement or other document referenced in such agreement (including agreements or other documents incorporated by reference or attached or annexed thereto); (vii) as provided in Section 5(e) of the Form of Warrant, all questions concerning the construction, validity, enforcement and interpretation of the Warrants shall be governed by the internal laws of the State of New York, without regard to the principles of conflicts of law thereof; (viii) service of process will be effected in the manner and pursuant to the methods of the State of New York at the time such service is effected; and (ix) at the time of exercise of the Warrants, a sufficient number of Class A Ordinary Shares that have been reserved by the Company’s board of directors or a duly authorized committee thereof will be authorized and available for issuance and that the consideration for the issuance and sale of the Class A Ordinary Shares in connection with such exercise is in an amount that is not less than the par value of such Class A Ordinary Shares.

 

www.htflawyers.com | info@htflawyers.com

950 Third Avenue, 19th Floor - New York, NY 10022 | Office: (212) 530-2210 | Fax: (212) 202-6380

 

 

 

 

In connection with this matter, we have examined the Registration Statement, including the exhibits thereto, and such other documents, corporate records, and instruments and have examined such laws and regulations as we have deemed necessary for purposes of rendering the opinions set forth herein.

 

We are members of the Bar of the State of New York. We do not hold ourselves out as being conversant with, or expressing any opinion with respect to, the laws of any jurisdiction other than the federal laws of the United States of America and the laws of the State of New York. Accordingly, the opinions expressed herein are expressly limited to the federal laws of the United States of America and the laws of the State of New York. 

 

Based upon and subject to the foregoing, we are of the opinion that (i) when the Units have been duly executed and delivered by the Company against payment of the consideration therefor pursuant to the Placement Agency Agreement, such Units will constitute binding obligations of the Company, enforceable against the Company in accordance with the respective terms of the Class A Ordinary Shares and the Warrants; and (ii) when the Warrants included in the Units have been duly executed and delivered by the Company against payment of the consideration therefor pursuant to the Placement Agency Agreement, such Warrants will constitute binding obligations of the Company, enforceable against the Company in accordance with their terms.

 

Our opinions set forth above with respect to the validity or binding effect of any security or obligation may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, marshaling, moratorium or other similar laws affecting the enforcement generally of the rights and remedies of creditors and secured parties or the obligations of debtors, (ii) general principles of equity (whether considered in a proceeding in equity or at law), including but not limited to principles limiting the availability of specific performance or injunctive relief, and concepts of materiality, reasonableness, good faith and fair dealing, (iii) the possible unenforceability under certain circumstances of provisions providing for indemnification, contribution, exculpation, release or waiver that may be contrary to public policy or violative of federal or state securities laws, rules or regulations, and (iv) the effect of course of dealing, course of performance, oral agreements or the like that would modify the terms of an agreement or the respective rights or obligations of the parties under an agreement.

 

This opinion letter speaks only as of the date hereof and we assume no obligation to update or supplement this opinion letter if any applicable laws change after the date of this opinion letter or if we become aware after the date of this opinion letter of any facts, whether existing before or arising after the date hereof, that might change the opinions expressed above.

 

This opinion letter is furnished in connection with the Registration Statement and may not be relied upon for any other purpose without our prior written consent in each instance. Further, no portion of this letter may be quoted, circulated or referred to in any other document for any other purpose without our prior written consent.

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name as it appears under the caption “Legal Matters” in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

 

	Very truly yours,
	/s/ Hunter Taubman Fischer & Li LLC

 

www.htflawyers.com | info@htflawyers.com

950 Third Avenue, 19th Floor - New York, NY 10022 | Office: (212) 530-2210 | Fax: (212) 202-6380

 

 

Exhibit 10.16

 

Credit Line Agreement

 

No.fj1122021141

 

Party A: Shengfeng Logistics Group Co., Ltd

 

Unified social credit Code: 9135010073360328XC

 

Legal Representative / Person in Charge: Liu Yongxu

 

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City          Zip Code: 350011

 

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

 

Tel: 0591-83628181          Fax: 0591-83628181

 

Party B: Bank of China Limited Fuzhou Jin’an Sub-branch

 

Legal Representative / Person in Charge: Lin Jie

 

Address: Fusheng Qianlong international annex building, 1F No.3, Middle Changle Road, Wangzhuang Street, Jin’an District, Fuzhou City

 

Zip Code: 350000

 

Tel: 0591-83163662          Fax: 0591-83163662

 

To develop a friendly and mutually beneficial cooperative relationship, this Agreement is signed by Party A and Party B through equal and genuine consultation.

 

Article 1 Business Scope

 

According to this Agreement, Party B shall provide credit lines to Party A. Complying with other relevant single agreements, Party A may apply to Party B for circulation, adjustment or one-time use for short-term loans, overdraft of corporate account, bank acceptance, trade financing, letter of guarantee, capital business and other credit business (collectively referred to as “single credit business”).

 

The trade financing business mentioned in this Agreement includes the opening of domestic and international letter of guarantee, import documentary, delivery guarantee, packaged loans, outward documentary, outward bill discount, buyer’s documentary of domestic letter of credit, seller’s documentary of domestic letter of credit, negotiation of domestic letter of credit and other international and domestic trade financing business.

 

 

The guarantee business mentioned in this agreement includes various international and domestic guarantee businesses such as issuing guarantee and standby letter of credit.

 

Article 2 Type and Amount of Credit Lines

 

Party B agrees to provide Party A with the following credit line:

 

Currency: RMB.

 

Amount: ￥80,000,000.00.

 

This loan is a short term working capital loan of ￥80,000,000.00.

 

Article 3 Application of the Credit Line

 

1. Within the service life of the credit line agreed in this Agreement, Party A may use the corresponding credit line in the following way (1) within the limit of each single credit business agreed in this Agreement:

 

(1) Recycling. The specific type is: short-term working capital loans.

 

(2) One time use. The specific types of quotas are: ///.

 

If Party A needs to adjust the credit line agreed in Article 2, Party A shall submit an application to Party B in writing, and Party B shall decide whether to adjust with specific adjustment method, and notify Party A in writing.

 

2. Credit obtained by Party A from Party B before the effective date of this Agreement in previously valid or similar credit line and single agreements will be deemed as using the credit in this Agreement.

 

Article 4 Situations of Credit Line Use

 

There are three situations of credit line use as stipulated in Article 2 of this Agreement:

 

1. Non Usage: for business under the single agreements, if Party A can provide sufficient margin or guarantee of pledged cash equivalent (including but not limited to Treasury bonds and certificates of deposit), or if the credit risk of the business is completely transferred to the financial institutions recognized by Party B (including but not limited to Party A providing the bank acceptance bill pledge from financial institutions recognized by Party B), then the credit line is not considered to be used.

 

2. Partial Usage: for the part which Party A can provide with sufficient margin or guarantee of pledged cash equivalent (including but not limited to Treasury bonds and certificates of deposit), or if the credit risk of the business is completely transferred to the financial institutions recognized by Party B (including but not limited to Party A providing the bank acceptance bill pledge from financial institutions recognized by Party B), the credit line is not considered to be used; The part not covered by the margin or cash equivalent pledge guarantee and the part of which the business credit risk is not transferred to the financial institutions recognized by Party B, are considered as using the credit line amount.

 

 

3. Full Usage: business other than those specified in Items 1 and 2 above shall be considered using the credit line according to Article 2 in this Agreement.

 

All single agreements mentioned above shall each constitute an integral part of this Agreement unless otherwise agreed in the single agreements.

 

The situations of credit line use also applies to Article 3 (2) in this Agreement.

 

Article 5 Agreements to be Signed for Single Credit Business

 

If Party A applies to Party B for other single credit business under this Agreement, Party A shall submit an application form and/or sign the corresponding contract or agreement with Party B (collectively referred to as the single agreements).

 

Article 6 Term of Use of the Credit Line

 

The term of use of the credit line specified in Article 2 in this Agreement shall be from the effective date of this Agreement to MM/DD/2021.

 

At the expiration of the credit line, Party B can continue to provide Party A with a new credit line by both parties signing a supplementary agreement in writing to specify the new credit line and its term of use. The supplementary agreement constitutes an integral part of this Agreement, and the provisions of this Agreement shall apply to the matters not agreed in the supplementary agreement. The supplementary agreement has the same legal effect as this Agreement.

 

The expiration of the credit line does not affect the legal effect of this Agreement and does not lead to the termination of this agreement. All signed single business agreements under this Agreement between Party A and Party B shall continue to be valid and all rights and obligations shall be fulfilled.

 

Article 7 Preconditions for Single Credit Business

 

To apply for other single credit business, Party A must:

 

1. Reserve relevant company documents, bills, seals, relevant personnel list and signature samples for signing this and the single agreements, and fill in corresponding vouchers;

 

 

2. Have accounts necessary for single credit business opened;

 

3. Have guarantee needed in this Agreement and the single agreements effectively set;

 

4. Meet other preconditions as agreed in the single agreements;

 

5. Meet other conditions as required by Party B.

 

Article 8 Guarantee

 

For liabilities of Party A to Party B occurring in this Agreement and the single agreements, both parties agree with the following guarantee types:

 

☐ Maximum Guarantee:

 

Liu Yongxu shall provide the maximum amount guarantee and sign the corresponding contract, No. fj1122021143, which constitutes the main guarantee contract.

 

☐ Maximum Mortgage:

 

Suzhou Shengfeng Logistics Co., Ltd. shall provide the maximum amount of mortgage and sign the corresponding contract, No. fj1122021142, which constitutes the main guarantee contract.

 

If Party A or the guarantor has an event that Party B thinks that an event happened to Party A or the guarantor may affect its performance capability, the guarantee contract becomes invalid, canceled or terminated, the financial situation of Party A or the guarantor deteriorates, Party A or the guarantor is involved in a major lawsuit or arbitration case, the guarantor breaches the guarantee contract or other contracts with Party B, or the collateral is devalued, damaged or lost, Party B has the right to request Party A to provide a new guarantee, as well as the right to replace the guarantor, etc.

 

Article 9 Declaration and Commitment

 

Party A declares as follows:

 

1. Party A exists and is legally registered. Party A has full capacity and civil rights to conduct the signing and performing of this Agreement;

 

2. The signing and performance of this Agreement and single agreements is based on the true intention of Party A. Party A will not violate any agreement, contract or other legal documents with its obligations in. Party A has obtained or will obtain all relevant approvals, licenses, records or registration required for signing and performing this Agreement;

 

3. All documents, financial statements, vouchers and other information provided by Party A to Party B for this Agreement and the single agreements are true, complete, accurate and valid;

 

 

4. The transaction background provided by Party A in the application is true and legal, and no money laundering or other illegal activities are involved;

 

5. Party A has not concealed any events that may affect the financial status and performance ability of Party A and the guarantor from Party B.

 

Party A promises as follows:

 

1. Party A is going to provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to Party B on a regular basis or timely as required by Party B;

 

2. Party A will accept and cooperate with Party B’s inspection and supervision on the use of the credit line, and on Party A’s related production, operation and financial activities;

 

3. If Party A and the guarantor of this Agreement sign a counter guarantee contract or a similar contract, the contract will not damage any rights of Party B in this Agreement;

 

4. In case of any circumstances that may affect the financial status and performance ability of Party A or the guarantor, including but not limited to any form of separation, merger, joint venture, joint venture with foreign investors, cooperation, contracted operation, reorganization, restructuring, planned listing and other changes in business methods, reduction of registered capital, transfer of major assets or equity, and assumption of major liabilities, setting up new guarantee on the collateral, sealing up, dissolution, cancellation, application for bankruptcy, or involving in major litigation or arbitration cases, Party A shall inform Party B in time;

 

5. The funds obtained under this Agreement and the single agreements will not be used for refinancing or purchases of other financial products for arbitrage.

 

6. Party A will cooperate with Party B to carry out due diligence, provide and update the information of customers and their beneficiaries, and provide background information about the transaction.

 

7. Party A shall provide its environmental and social risk report to Party B. Party A declares and guarantees to strengthen the environmental and social risk management, and undertakes to accept the supervision of Party B. Party A’s violation of the above agreement shall constitute or be deemed as an event of default under this agreement, and Party B may take remedy measures for breach of contract in accordance with this agreement.

 

8. If Party A has plans to increase external financing, provide external guarantee (including guarantee, mortgage, etc.), or carry out shareholders’ dividends and repay shareholders’ loans, party A must inform Party B in advance and obtain Party B’s consent, otherwise Party B has the right to request to recover the loan in advance.

 

9. The purpose of the credit is limited to Party A’s daily payment of fuel fee, road and bridge fee, combined transportation fee, vehicle maintenance fee, etc. If it is used to pay for combined transportation fee to Party A’s subsidiaries, the following requirements shall be implemented:

 

(1) The amount of loans used under related party transactions shall not exceed 40 million yuan, and the accumulated use shall not exceed 70% of the income of corresponding subsidiaries in the same period or the same period of last year;

 

 

(2) When drawing the loan, Party A shall provide Party B with the combined transport contract signed with the subsidiary, the VAT invoice, and relevant supporting materials for the purpose of external payment of the subsidiary;

 

(3) When Party A’s subsidiary receives the loan funds, it shall use the funds on the purpose that was notified to Party B in advance. The purpose is limited to daily operation, payment of fuel, road and bridge fees, combined transport fees, vehicle maintenance fees, etc. Party A shall provide Party B with the corresponding payment voucher on the next day;

 

(4) Within 2 months after the loan is granted, Party A shall provide Party B with the invoice related to the use of the subsidiary’s funds as evidence;

 

10. Party A promises that the settlement amount with Party B (direct or indirect) matches the credit line amount, and the credit balance does not exceed 70% of the debit amount in the previous quarter. In principle, the assessment of settlement is based on the group standard. The funds shall be used for Party A’s daily operation, repayment of financing, etc. Party A shall declare to Party B for the purpose when making external payments.

 

11. Party A agrees with the financial constraints as follows: (1) the current ratio of Party A and its group in the latest financial statement shall not be less than 1; (2) the balance of Party A’s financing exposure shall not exceed 400 million yuan and shall not exceed 25% of the annual income of its group’s consolidated financial statement. If any of the above conditions are not met, Party B has the right to reduce the credit balance to less than 50 million yuan, and consider further measures as needed.

 

12. For matters not mentioned in this Agreement and the single agreements, Party A agrees to handle them in accordance with relevant regulations and business practices of Party B.

 

Article 10 Disclosure of Related Parties and Related Transactions within Party A’s Group

 

Term 1 below is agreed by both parties:

 

1. Party A is not a group customer determined by Party B according to the guidelines on risk management of group customer credit business of commercial banks (hereinafter referred to as the guidelines).

 

2. Party A belongs to the group customer determined by Party B according to the guidelines. Party A shall, in accordance with Article 17 of the guidelines, timely report to Party B about its related party transactions with more than 10% of the net assets, including the related party relationship, transaction items and trading nature, transaction amount or corresponding proportion, and pricing policy (including transactions with no amount or only symbolic amount).

 

 

Article 11 The Breach of Contract

 

Any of the following shall constitute or be deemed as an event of default of Party A under this Agreement and the single agreements:

 

1. Party A fails to perform the payment and discharge obligations to Party B according to this Agreement and the single agreements;

 

2. Party A fails to use the funds obtained for the agreed purpose in accordance with this Agreement and the single agreements;

 

3. The statements made by Party A in this agreement or single agreements are untrue or violate its commitment in this agreement or single agreements;

 

4. In case of any circumstance specified in Item 4 of paragraph 2 of Article 8 of this agreement, if Party B thinks that it may affect the financial status and performance capability of Party A, or the guarantor, but Party A fails to provide new guarantee or replace the guarantor;

 

5. Party A’s termination of business, or dissolution, cancellation and bankruptcy;

 

6. Party A violates other provisions on the rights and obligations of the parties in this Agreement and the single agreements;

 

7. Party A violates other provisions on the rights and obligations of the parties in this Agreement and single agreement;

 

8. Party A breaches any other contract with Party B or other institutions of Bank of China Limited;

 

9. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with Party B or other institutions of Bank of China Limited.

 

In the event of breach of contract as mentioned in the preceding paragraph, Party B has the right to take the following measures respectively or simultaneously according to the specific circumstances:

 

1. Require Party A and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend or terminate the credit line to Party A in whole or in part;

 

3. Suspend or terminate business applications from Party A in whole or in part under this Agreement with the single agreements and other agreements between Party A and Party B; For the loans that have not yet been issued, the trade financing and guarantee business that have not yet been handled, all or part of them shall be suspended or terminated;

 

 

4. Declare that all or part of the outstanding loans, trade financing funds, principal and interest of advance payment of letter of guarantee and other payable funds under this agreement, single agreement or other agreements between Party A and Party B shall become due immediately;

 

5. Terminate or rescind this agreement, and the single agreement and other agreements between Party A and Party B in whole or in part;

 

6. Ask Party A to compensate Party B for the loss caused by its breach of contract, Including but not limited to the loss of litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of creditor’s rights;

 

7. Deduct the balance from the account opened by Party A in Party B to pay off all or part of Party A’s debt to Party B. The unexpired amount in the account shall be regarded as early maturity. If the account currency is different from Party B’s business valuation currency, it shall be converted according to the exchange rate applicable to Party B at the time of deduction;

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that Party B considers necessary.

 

Article 12 Rights Reserved

 

If one party fails to exercise part or all of its rights under this Agreement and the single agreements, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay by one party to the other party in exercising its rights under this Agreement and the single agreements shall not affect any rights it has under this Agreement and the single agreements, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 13 Change, Modification, Termination and Partial Invalidity

 

This agreement can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this agreement.

 

Unless otherwise stipulated by laws and other regulations or agreed by both parties, this Agreement shall not be terminated until all rights and obligations have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this Agreement shall not affect the legal effect of other provisions.

 

 

Article 14 Applications of Law and Settlement of Disputes

 

Unless otherwise agreed by both parties, this Agreement and the agreements shall be governed by the laws of the people’s Republic of China.

 

When this Agreement and the single agreements take effect, unless otherwise agreed by both parties, all disputes arising from the conclusion and performance of this Agreement and the single agreements may be settled by both parties through negotiation. If the negotiation fails, either party may adopt the way 2 as follows:

 

1. Submit an application to the following departments for arbitration:

 

☐ China International Economic and Trade Arbitration Commission

 

☐ Beijing Arbitration Commission (Beijing International Arbitration Center)

 

☐ Other arbitration commissions

 

The arbitration shall be conducted in accordance with the arbitration rules in force at the time of applying for arbitration. Final result of the arbitration shall be binding on all parties.

 

2. Litigation.

 

☐ Bring a lawsuit to the People’s Court of the place where Party B or other institutions of Bank of China limited exercise their rights and obligations.

 

☐ Bring a lawsuit to the International Commercial Court of the Supreme People’s Court (for international commercial disputes with an amount of more than 300 million yuan).

 

☐ Bring a law suit to the people’s court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other provisions of this Agreement and the single agreement, the other provisions shall continue to be performed.

 

Article 15 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

Attachment: credit agreement / contract related to the working capital loan.

 

Article 16 Other Agreements

 

1. Without the written consent of Party B, Party A shall not transfer any rights and obligations under this Agreement and single agreements to a third party.

 

 

2. If Party B has to entrust other institutions of Bank of China Limited to perform the rights and obligations under this Agreement and the single agreements due to business needs, Party A shall recognize it; Other institutions of Bank of China Limited authorized by Party B have the right to exercise all the rights under this Agreement and the single agreements, and have the right to bring a lawsuit to the court or submit to the arbitration organization for adjudication on the disputes under this Agreement and the single agreements.

 

3. Without affecting other provisions of this Agreement and the single agreements, this Agreement shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall recognize the place of residence specified in this Agreement as the effective contact address. The address will serve for all kinds of notices, agreements and other documents when both parties perform the contract, relevant documents and legal documents in case of dispute over this agreement, as well as the first instance, second instance, retrial and execution procedures after the dispute enters into arbitration and civil proceedings.

 

In case of any changes in the address, the changing party shall inform the other party of the changed address in writing 5 working days in advance. During arbitration or civil procedures, when any party changes its address, the changing party shall timely inform the arbitration institution and the Court. If a party fails to perform the obligation of notice in the above manner, its address confirmed in this Agreement shall still be regarded as the effective address.

 

If the legal document is not received by one party due to the inaccuracy of the service address, the failure to inform the other party and the Court in time after the change of the service address, or the refusal of the receiver’s signature, the date of return of the document shall be regarded as the date of reception; if documents are sent directly in person, the date on which the receiver signs on the receipt is considered the date of reception.

 

5. The title and business name in this Agreement are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

6. If Party B is unable to perform the agreement due to changes in laws, regulations and regulatory provisions or other requirements of regulatory authorities, Party B has the right to terminate or change the performance of this Agreement and the single agreements. In case of termination or change of the agreement due to such reasons, Party B shall be exempted from liabilities.

 

7. Party A has the right to make consultants or complaints about the content and the business under this Agreement to Party B by the tel numbers listed in this Agreement.

 

 

Article 17 Effectiveness of the Agreement

 

This Agreement shall come into force on the date when it is signed and sealed by the legal representatives, responsible persons or authorized signers of both parties.

 

This agreement is made in quintuplicate, one for each party and the guarantors. All of the five copies have the same legal effect.

 

Party A: Shengfeng Logistics Group Co., Ltd.

 

Authorized signature:___________________

 

MM/DD/YYYY

 

Party B: Bank of China Limited Fuzhou Jin’an Sub-branch

 

Authorized signature: _____________

 

MM/DD/YYYY

 

11

Exhibit 10.17

 

Working Capital Loan Contract

 

(Applicable to newly signed domestic RMB interest rates other than USD/GBP/EUR/JPY/CHF foreign currency interest rates、USD/GBP/EUR/JPY/CHF new benchmark rate borrowing)

 

No: fj1122023043

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge: Chen Kai

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

This contract is signed by both of the borrower and the lender through equal consultation serves as a single agreement under the Credit Line Agreement (No.fj1122023039) signed between Shengfeng Logistics Group Co., Ltd and Bank of China Limited Fuzhou Jin’an Sub-branch.

 

Article 1 Loan Amount

 

Currency: RMB;

Amount: ￥13,000,000.00.

 

Article 2 Loan Term

 

The term of the loan is 12 months from the date when the money is actually withdrawn; If it is drawn by installments, then life of the loan is 12 months from the first actual drawing date.

 

The borrower should make the withdrawal in strict accordance with the agreed time. If the actual withdrawal date is later than the agreed date, the borrower should still make the repayment on the agreed date in this contract.

 

Article 3 Purpose of loan

 

Purpose of this loan is to pay for combined transport fee.

 

Without the written consent of the lender, the borrower shall not change the purpose of the loan, including but not limited to that the borrower shall not use the loan for fixed assets, equity or other investment, and shall not use it for any fields and purposes prohibited by laws, regulations, regulatory regulations, or the state from producing or operating, nor shall it be used for lending or purchasing other financial products for arbitrage, nor shall it be used for illegally adding implicit local government debts, nor for other purposes prohibited from using bank loans for investment.

 

 

Article 4 Loan Interest Rate and its Calculation

 

The lender shall specify the annualized interest rate of the loan under this contract to the borrower through the attachment “Notification Letter of Loan Annualized Interest Rate”. If the annualized interest rate of the loan under this contract is only calculated based on the loan interest rate specified in paragraph 1 of this article, the aforementioned “Notification Letter of Loan Annualized Interest Rate” shall not apply.

 

1. Loan Interest Rate:

 

The loan interest rate (annualized interest rate, RMB loan is simple interest, foreign currency loan ☐combination of simple interest /☐compound interest (choose one)) is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

(2) Floating rate, with the actual drawing date (or the first actual drawing date in case of separate drawings) as the starting date. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month. If the floating cycle is daily, the repricing date is the day of the next floating cycle.

 

For each withdrawal:

 

Floating rate of RMB loans

 

A. The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted þ1-year/☐5-year (choose one) LPR published by NIFC on the working day before the actual withdrawal date £plus/Rminus (choose one) 115 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the þ1-year/☐5-year (choose one) LPR published by NIFC on the previous working day ☐plus/þminus (choose one) 115 basis points, and will start to serve as the interest rate of the new floating cycle.

 

2. Interest Calculation (1) For item 1 (1) of this article, fixed interest rate, item 1 (2), RMB loan floating interest rate, and foreign currency loan floating interest rate, item A、C:

 

The interest shall be calculated from the actual drawing date, concerning the actual amount withdrawn and the number of days the money is used.

 

The calculation formula is as below:

 

Interest = principal × actual days × daily interest rate.

 

Daily Interest Rate = annual interest rate / 360.

 

3. Interest Settlement

 

The borrower in this contract shall settle the interest in way (1):

 

(1) The interest is settled quarterly. The 20th day of the last month of each quarter is the interest settlement day, and the 21st day is the interest payment day.

 

(2) The interest is settled by month. The 20th day of each month is the interest settlement day, and the 21st day is the interest payment day.

 

The borrower should pay off all the interest on the last repayment day regardless of whether that day is an interest payment day.

 

4. Penalty Interest

 

(1) If the loan is overdue or not used for the purpose specified in the contract, from the date of overdue or misappropriation, the penalty interest shall be calculated and collected according to the penalty interest rate specified in this paragraph for the overdue or misappropriated part until the principal and interest are paid off.

 

 

For overdue and misappropriated loans, the penalty interest shall be calculated and charged at higher penalty interest rate.

 

(2) For the interest and penalty interest that cannot be paid on time by the borrower, compound interest shall be calculated and collected by the interest settlement method described in paragraph 3 of this article.

 

(3) Penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loan

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 50% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

5. Other

 

(1) The “loan interest rate” and “penalty interest rate” under this contract are both tax inclusive interest rates, meaning that the interest charged by the lender to the borrower already includes value-added tax payable in accordance with national laws and regulations.

 

(2) If there is a significant change in the pricing basis of the floating interest rate under this contract, it shall be handled in accordance with the then effective market rules. If the lender requests the borrower to sign a supplementary contract on relevant matters at that time, the borrower shall cooperate.

 

(3) The term “pricing benchmark” in this article has the same meaning as the term “benchmark interest rate”.

 

(4) Under this contract, “TIBOR” refers to the TIBOR published and managed by the Japan Bankers Association (or successor manager) as the manager, and “EURIBOR” refers to the EURIBOR published and managed by the European Monetary Market Research Institute (or successor manager) as the manager, “Overnight SOFR” refers to the overnight SOFR published and managed by the Federal Reserve Bank of New York (or successor manager) as the manager “Overnight SONIA” refers to the overnight SONIA published and managed by the Bank of England (or successor manager) as the manager, and “Overnight TONA” refers to the overnight TONA published and managed by the Bank of Japan (or successor manager) as the manager, Overnight ESTR “refers to an overnight ESTR published and managed by the European Central Bank (or successor manager) as the manager, while” overnight SARON “refers to an overnight SARON published and managed by the Swiss Stock Exchange (or successor manager) as the manager.

 

Article 5 Conditions for Withdrawing

 

The borrower’s withdrawal shall meet the following conditions:

 

1. This contract and its attachments have come into force;

 

 

2. The borrower has provided guarantee as required by the lender, and the guarantee contract has become effective through completed legal approval, registration and filing procedures;

 

3. The borrower has reserved its documents, seals, personnel list and signature samples necessary for the signing and performance of the contract to the lender, and has completed all relevant documents;

 

4. The borrower has opened the account required for the contract as required by the lender;

 

5. The borrower has submitted written application and relevant loan purpose documents to the lender 3 working days before the withdrawal;

 

6. The borrower has submitted a resolution and authorization letter from the board of directors or other authorized departments to the lender agreeing to sign and perform this contract;

 

7. Other conditions of withdrawal as stipulated by law and agreed by both parties.

 

If the conditions above are not met, the lender has the right to refuse the borrower’s application for the withdrawal.

 

Article 6 Time and Method of Withdrawal

 

1. The borrower shall withdrawal the money in way (2) :

 

(1) Make an one-time withdrawal on mm / dd / yyyy.

 

(2) Withdraw within 30 working days from March 21, 2023.

 

(3) Make separate withdrawals as follows:

 

Time of withdrawal	Amount of withdrawal
/ / /	/ / /

 

2. The lender has the right to refuse the withdrawal application if the money is not withdrawn in time by the borrower.

 

3. Loan Commitment Services

 

The lender shall provide commitment services to the borrower during the commitment service period (from the effective date of this loan contract to the withdrawal date specified in this contract) that the borrower can withdraw but has not withdrawn the loan (hereinafter referred to as “unused loan”). By mutual agreement between the borrower and the lender The agreement is as follows:

 

The lender, based on the principle of “reduction of fees and benefits”, waives the commitment fee for the aforementioned promised services, and the assessed exemption amount is RMB 2000.

 

Article 7 Payment of Loan

 

1. The Loan Issuing Account

 

The borrower shall open the following loan account with the lender through which the loan issuance and payment shall be handled.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account Number: 4273675009

 

2. Payment Method

 

(1) The payment method of loan funds shall be implemented in accordance with laws and regulations, regulatory provisions and with the contract. The payment method with a single withdrawal shall be confirmed in the withdrawal application. If the lender considers that the payment method selected in the withdrawal application does not meet the requirements, the lender has the right to change the payment method or stop the issuance and payment of the loan funds.

 

 

(2) Entrusted Payments. According to CBRC’s and the lender’s internal management regulations, the payment of the loan funds meeting one of the following conditions shall be made by the lender through an entrusted payment method:

 

A. A new credit business relationship is established between the lender and the borrower, and the credit rating of the borrower fails to meet the internal requirements of the lender;

 

B. When a single amount of withdrawal exceeds 10 million yuan (exclusive). Foreign currency shall be converted at the exchange rate on the actual withdrawing day);

 

C. Other circumstances stipulated by the lender or agreed with the borrower.

 

(3) Independent Payments. After the lender has released the loan funds to the borrower’s account, the borrower shall make independent payment to the its counter parties for the purpose agreed in the contract. All payments of the loan funds shall be independent except for the situations in which entrusted payment method should be adopted as stipulated in the preceding paragraph..

 

(4) Change of Payment Method. For independent payments, if the conditions of borrower’s external payment or credit rating changes after the withdrawal application is submitted, the payment method of the loan fund shall be changed if the payment meets the conditions specified in Item (2) of paragraph 2 in this article. The borrower is required to provide the lender with a written application for any changes in the payment method, to submit a new withdrawal application with relevant documents.

 

3. Specific Requirements for Entrusted Payment of the Loan Funds

 

(1) Payment Entrustment. The borrower shall clearly specify the payment entrustment in the withdrawal application, that is, to authorize and entrust the lender to directly pay the loan funds to the borrower’s designated counterpart after transferring the loan funds into the borrower’s account. The borrower shall also provide the name of the recipient, the counter party’s account, payment amount and other necessary payment information.

 

(2) Providing Transaction Information. The borrower shall provide the lender with the information of its loan account and the counter party’s account together with supporting materials proving that the withdrawal is in line with the purpose agreed in the loan contract. The borrower shall guarantee that all information provided to the lender is true, complete and valid. If the entrusted payment obligations of the lender are not completed in time due to the untrue, inaccurate or incomplete transaction information provided by the borrower, the lender shall not bear any responsibility, and the repayment obligations of the borrower under this contract shall not be affected.

 

(3) The Performance of the Lender’s Entrusted Payment Obligation

 

A. After the borrower provides the payment entrustment and other relevant information, the lender will pay the loan funds to the borrower’s counter party through the borrower’s account with the borrower’s approval.

 

B. If the lender finds that the relevant transaction materials provided by the borrower do not conform to the contract or have other defects, it has the right to require the borrower to supplement, replace, explain or to re-submit relevant materials. Before the borrower completely submits the materials required by the lender, the lender has the right to refuse the release and payment of the funds.

 

C. In case of a refund from the counter party’s bank, which causes the lender’s failure to make the payment in time, the lender shall not bear any responsibilities, and the repayment obligations of the borrower under this contract shall not be affected. The borrower hereby authorizes the lender to freeze the amount refunded by the the counter party’s bank. In this case, the borrower shall re-submit relevant transaction materials to the lender.

 

 

(4) The borrower shall not avoid the entrusted payment by breaking the whole payment into parts.

 

4. After the loan fund is released, the borrower shall timely provide the lender with the loan fund use records and other information including but not limited to payment vouchers, etc.

 

5. In case of any of the following circumstances, the lender shall have the right to re-determine the conditions for loan issuance and payment or to stop the issuance and payment of loan funds:

 

(1) The borrower violates the contract and avoids the entrusted payment of the lender by breaking the whole payment into parts;

 

(2) The borrower’s credit status declines or the profitability of its main business is not strong;

 

(3) There is abnormal use of the loan funds;

 

(4) The borrower fails to provide the loan fund use records and information in a timely manner as required by the lender;

 

(5) The borrower uses the loan fund in any way that violates the agreement reached in this article.

 

Article 8 Repayment

 

1. The account below is designated as the repayment account. The borrower shall timely provide information about the fund activities in this account to the lender. The lender has the right to require the borrower to explain the inflow or outflow of large or abnormal funds in this account and supervise the account.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account No.: 4273675009

 

2. Unless otherwise agreed by both parties, the borrower shall repay the loan in this contract with repayment plan (1):

 

(1) Pay off all loans in this contract on the expiration date of the loan term.

 

(2) Repay the loan according to the following schedule:

 

Time of Repayment	Repayment Amount
///	///
///	///

 

(3) Other plans of repayment.

 

The borrower shall submit a written application to the lender 10 banking days before the maturity of the corresponding loan. The change of repayment plan shall be confirmed by both parties in writing.

 

3. Unless otherwise agreed by both parties, if the borrower defaults on the principal and interest of the loan at the same time, the lender has the right to decide the order of repayment of the principal and interest; In the case of repayment by installment, if there are multiple due loans or overdue loans under this contract, the lender has the right to determine the order of a certain repayment; If there are more than on loan contracts due, the lender has the right to determine the order of the contract to be performed with the borrower’s each repayment.

 

4. Unless otherwise agreed by both parties, the borrower may prepay the loan, but shall notify the lender in writing 10 banking days in advance. The amount of prepayment is first used to repay the last due loan.

 

 

For loans that apply a single compound interest combination for interest calculation, if prepayment or partial prepayment is involved, the interest corresponding to the prepayment principal should be settled in one lump sum.

 

The lender has the right to charge a penalty for early repayment based on the agreed interest receivable on the repayment date.

 

5. The borrower shall make the repayment in way (1) as below.

 

(1) The borrower shall deposit sufficient funds in the repayment account below no later than 3 banking days before the maturity of each principal and interest, and the lender has the right to withdraw the money from this account on the maturity date.

 

Repayment Account: Shengfeng Logistics Group Co., Ltd.

 

Account number: 4273675009.

 

(2) Other repayment methods agreed by both parties.

 

Article 9 Guarantee

 

1. The guarantee method of the liabilities in the contract is as follows:

 

This contract belongs to the main contract under the Maximum Guarantee Contract (No. fj1122023040) signed by the guarantor Liu Yongxu and the lender. Liu yongxu is going to provide the maximum guarantee.

 

This contract belongs to the main contract under the Maximum Mortgage Contract (No. fj1122023041) signed by the mortgagor Suzhou Shengfeng Logistics Co., Ltd. and the lender. Suzhou Shengfeng Logistics Co., Ltd. is going to provide the maximum guarantee.

 

2. If the borrower or the guarantor has an event that the lender considers may affect its performance ability, the guarantee contract becomes invalid, cancelled or terminated, the financial situation of the borrower or the guarantor deteriorates, the borrower or the guarantor is involved in major litigation or arbitration cases, the guarantor defaults under the guarantee contract or other contracts with the lender, or the collateral is devalued, damaged, lost or sealed up, resulting in the weakening or loss of the guaranteed value, the lender has the right to require the borrower to provide new guarantee, replace the guarantor, etc. as the borrower’s obligation.

 

Article 10 Invoice Issuance

 

1. The borrower can apply to the lender for issuing a value-added tax invoice (þ value-added tax special invoice/☒value-added tax ordinary invoice) after the lender confirms receipt of the payment. The lender can issue value-added tax to the borrower after receiving the application for issuing a value-added tax invoice from the borrower Invoice.

 

2. The borrower can apply for the issuance of value-added tax invoices at the corresponding business processing agency or other institutions designated by the lender.

 

3. The borrower needs to confirm that the payer of the payment, the signatory of the contract, and the purchaser listed in the value-added tax invoice are the same taxpayer. If there is inconsistency, resulting in the borrower being unable to book or deduct input tax in accordance with the law, the relevant losses shall be borne by the borrower Undertake.

 

  

If the borrower loses the invoice after obtaining it, the lender does not need to issue a supplementary value-added tax invoice to the borrower.

 

5. If the lender provides a discount to the borrower through negotiation, the amount of the value-added tax invoice issued shall be based on the discounted price.

 

6. If the lender provides free services to the borrower, the lender will not provide value-added tax invoices.

 

7. The lender shall issue a value-added tax invoice to the borrower, and the borrower shall promptly verify the invoice information. If the invoice information is incorrect,

 

The borrower shall promptly apply to the lender for reissuing the value-added tax invoice.

 

Article 11 Declaration and Commitment

 

1. The borrower hereby declares that:

 

(1) The borrower is registered and exists legally, and has full capacity and civil rights to conduct the signing and performing of this contract;

 

(2) The signing and performance of this contract is based on the true intention of the borrower. The borrower has obtained legal and effective authorization, and will not violate any agreement, contract or other legal documents binding on the borrower; The borrower has obtained or will obtain all relevant approval, permission, records and registration required for signing and performing this contract;

 

(3) All documents, financial statements, vouchers and other information provided by the borrower to the lender for this contract are true, complete, accurate and effective;

 

(4)The transaction background of the borrower’s application to engage in business with the lender is true and legal, and does not involve illegal purposes such as money laundering, terrorist financing, financing for the proliferation of weapons of mass destruction, tax evasion, fraud, etc., and does not violate the United Nations, China, and other applicable sanctions regulations;

 

(5) The transaction background provided by the borrower is true and legal, and no money laundering or other illegal activities is involved;

 

(6) The borrower does not conceal from the lender any event that may affect the financial status and performance ability of the borrower and the guarantor;

 

(7) The borrower and the loan projects meet the national environmental protection standards, and there is no risk of energy over-consumption or pollution identified by the national departments;

 

(8) The purpose of the loan and the source of repayment are true and legal;

 

(9) Other matters declared by the borrower.

 

2. The borrower promises:

 

(1) To provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to the lender on a regular or timely basis; The borrower shall remain to meet the following financial index requirements: A.its asset-liability ratio of the latest single borrower and group consolidated financial statements does not exceed 65%, the current ratio is no less than 0.85; B.The loan financing balance of the borrower flow does not exceed 400 million yuan and does not exceed 25% of the group’s consolidated annual income;

 

(2) If the borrower has entered into or will enter into a counter guarantee agreement or similar agreement with the guarantor as this contract, the agreement will not damage any rights of the lender;

 

(3) To accept the credit inspection and supervision of the lender with assistance and cooperation; If the borrower adopts the independent payment method, it shall regularly summarize and report to the lender; The summary report shall be a monthly report;

 

 

(4) In case of merger, division, capital reduction, equity transfer, foreign investment, substantial increase in debt financing, transfer of major assets and creditor’s rights and other matters that may adversely affect the borrower’s solvency, the borrower shall obtain the written consent of the lender in advance;

 

In case of the following circumstances, the borrower shall timely notify the lender:

 

A. There are changes in the borrower or guarantor’s articles of association, business scope, registered capital and legal representative;

 

B. There are any forms of joint venture, cooperation, contracted operation, restructuring, IPO plans and other changes in the operation mode;

 

C. The borrower or the guarantor is involved in major litigation or arbitration cases, property or collateral is sealed up, detained or supervised, or new security is set on collateral;

 

D. The borrower is to close down, dissolve, liquidate, have its business license revoked, or apply for bankruptcy, etc;

 

E. Shareholders, directors and current senior managers are suspected of major cases or economic disputes;

 

F. The borrower violates other contracts;

 

G. Business difficulties and deterioration of financial situation occur;

 

(5) The repayment order of the borrower’s debt to the lender is prior to that of the borrower’s shareholders, and is no less than that of other creditors;Moreover, from the effective date of this contract until the repayment of the loan principal, interest, and related expenses under this contract, the borrower shall not repay the loan to the borrower’s shareholders;

 

(6) When the net profit after tax of the relevant accounting year is zero or negative, or the profit after tax is insufficient to cover the accumulated losses of previous accounting years, or the profit before tax is not used to repay the principal, interest, and expenses that the borrower should repay in that accounting year, or the profit before tax is insufficient to repay the next period of principal, interest, and expenses, the borrower shall not distribute dividends or bonuses to shareholders in any form;

 

(7) The borrower shall not dispose of its own assets in a way that reduces its solvency. The borrower promises that the total amount of external guarantee shall not be more than twice of its own net assets, and that the total amount of external guarantee and the amount of single guarantee shall not exceed the limit specified in its articles of association;

 

(8) The borrower shall not transfer the loan fund to the account with the same account name or to the account of the related parties except for the purpose specified in this contract or with the consent of the lender.

 

To conduct transfers as mentioned in item (8) above, the borrower must provide the lender with sufficient supporting materials;

 

(9) The loan conditions such as the loan interest rate, guarantee, and repayment order stated in this contract shall not be lower than those given by the borrower to any other financial institution now or in the future;

 

(10) The lender has the right to call in the loan in advance based on the borrower’s fund repayment status;

 

(11) The borrower should submit their environmental (climate) social and governance risk report to the lender. The borrower declares and guarantees to strengthen environmental (climate), social, and governance risk management, and promises to accept the lender’s supervision. The borrower’s breach of the aforementioned agreement shall constitute or be deemed a breach of contract under this contract, and the lender may take remedial measures for breach of contract in accordance with the provisions of this contract;

 

 

(12) Cooperate with the lender in conducting due diligence work, provide and update information on the institution and its beneficial owners, and provide background information related to the transaction;

 

(13) Other items promised by the borrower.

 

Article 12 Disclosure of Related Party Transactions

 

Both parties agree that the following clause 1 shall apply:

 

1. The borrower is not a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

2. The borrower is a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers. The borrower shall timely report to the lender about its related party transactions of more than 10% of its net assets, including the related party relationship, transaction items and nature, transaction amount, and pricing policy (including transactions with no amount or with only symbolic amount).

 

If any one of the following circumstances, the lender has the right to unilaterally decide to stop offering the unused loan and call in part or all of the loan principal and interest in advance: the borrower takes advantage of false contract with related parties to obtain bank funds or credit; The borrower is involved in cases of major merger, acquisition and reorganization where the lender thinks that it may affect the security of the loan; and other circumstances specified in Article 18 of the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

Article 13 Breach of Contract

 

Any of the following events shall constitute or be deemed as an event of default:

 

1. The borrower fails to perform its obligations of payment and settlement as agreed in this contract;

 

2. The borrower fails to use the loan funds in the way or for the purpose agreed in this contract;or fails to use the obtained funds for the purposes specified in this contract;or the borrower uses the loan funds for refinancing or purchasing other financial products for arbitrage; Or the borrower illegally adds implicit local government debts;

 

3. The statement made by the borrower in this contract is untrue or violates its commitment in this contract;

 

4. In case of any circumstance specified in Article 10.2.(4) where the lender thinks that it may affect the financial status and performance ability of the borrower or the guarantor, and the borrower fails to provide new guarantee or replace the guarantor;

 

5. The credit status of the borrower declines, the profitability, solvency, operating capacity, cash flow and other financial indicators of the borrower deteriorate, or the borrower’s financial indicators break through the constraints as stipulated in this contract;

 

6. The borrower breaches any other contract with the lender or other institutions of Bank of China Limited; Any event of breaches of credit business contract happen between the borrower and other financial institutions;

 

 

7. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with the lender or other institutions of Bank of China Limited;

 

8. Termination of business, dissolution, cancellation or bankruptcy happens to the borrower;

 

9. The borrower is involved in or may be involved in major economic disputes, litigation, arbitration, its assets are sealed up, distrained or enforced, it is being investigated or punished by national legal department;

 

10. The borrower’s major investors and key management personnel change abnormally, or become missing, subject to judicial investigation or restriction of personal freedom;

 

11. The lender finds that there are circumstances that may affect the financial status and performance ability of the borrower or the guarantor at the annual review;

 

12. There is a large amount of abnormal capital inflow and outflow in the designated repayment account, and the borrower can not provide supporting materials approved by the lender;

 

13. The construction of energy-saving projects is seriously lagged, the energy-saving technology and equipment have serious defects, stopped or reduced production of the main facilities or equipment results in the actual energy saving significantly lower than the forecast thereafter the energy-saving income can not return to the designated account in time, the borrower participates in private high interest loans, the borrower offers other external guarantee or borrow new debts without the consent of the lender, and the borrower’s key financial indicators are seriously deteriorated;

 

14. The borrower refuses to cooperate with the lender in conducting due diligence, and the borrower or its trading counterparty is suspected of money laundering, terrorist financing, nuclear weapons proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the borrower or guarantor is included in the United Nations, China, and other applicable sanctions list or scope;

 

15. The borrower violates other provisions on the rights and obligations of the parties in this contract.

 

In case of any event of default specified in the preceding paragraph, the lender shall have the right to take the following actions regarding the specific circumstances:

 

1. Require the borrower and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend, cancel or terminate the credit line to the borrower in whole or in part;

 

3. Suspend or terminate in whole or in part the acceptance of the borrower’s withdrawal and other business applications; Suspend or cancel all or part of the loans that have not been granted and the trade financing that have not been handled;

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable between the borrower and the lender due immediately;

 

5. Terminate or rescind this contract and other contracts between the borrower and the lender in whole or in part;

 

6. Require the borrower to compensate the losses caused to the lender due to its breach of contract, including but not limited to the litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of the creditor’s rights;

 

7. Deduct the money balance of the account opened by the borrower with the lender and other institutions of Bank of China Limited to pay off all or part of the borrower’s debts to the lender. The undue amount in the account shall become due at the time. If the account currency is different from the lender’s business valuation currency, it shall be converted at the foreign exchange rate at the time of the deduction;

 

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that the lender considers necessary and possible.

 

Article 14 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 15 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 16 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the People’s Republic of China.

 

After this contract comes into effect, all disputes arising from the establishment and performance of this contract can be settled by both parties through negotiation. If the negotiation fails, either party may adopt the 2nd way as follows:

 

1. The case shall be submitted to the Arbitration Commission for arbitration at //// (place of arbitration) according to the commission’s regulations at the time when the case is submitted.

 

2. Bring a lawsuit to the People’s Court of the place where the lender or any other institution of Bank of China Limited exercise its rights and obligations.

 

3. Bring a lawsuit to the People’s Court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other terms of the contract, the other terms shall continue to be performed.

 

Article 17 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

1. Application Form for Withdrawals.

 

2. Notification Letter of Loan Annualized Interest Rate (Format)

 

  

Article 18 Other Agreements

 

1. Without the written consent of the lender, the borrower shall not transfer any rights or obligations in this contract to a third party.

 

2. The borrower is going to agree if the lender has to entrust other institutions of Bank of China Limited to perform the rights and obligations in this contract due to business needs, or to transfer the loan business in this contract to other institutions of Bank of China Limited to undertake and manage. Other institutions of Bank of China Limited authorized by the lender, or other institutions of Bank of China Limited undertaking the loan business in this contract, shall have the right to exercise all the rights in this contract, and have the right to file a lawsuit in the name of such institution, submit to an arbitration institution for adjudication or apply for enforcement according to this contract.

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first instance, second instance, retrial, and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance.

 

In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court, or refusal of the designated recipient to sign after the delivery address is changed, etc., the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The transactions arising from this contract are based on each party’s own interests independently. According to law, the fairness of the transaction shall not be affected by any of the lender’s related parties or persons by taking advantage of the relationship.

 

6. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

7. The lender shall have the right to provide the information related to this contract and the borrower to the credit reference system of the People’s Bank of China and other credit information databases established according to law for inquiry and use by institutions or individuals with appropriate qualifications. The lender also has the right to inquire the relevant information of the borrower through the credit information system of the People’s Bank of China and other legally established credit information databases for the purpose of signing and performing this contract.

 

8. In case of legal holidays, the withdrawal date and repayment date shall be postponed to the first working day after the holidays.

 

 

9. If the lender fails to perform the agreement due to changes in laws and regulations, the lender has the right to terminate or change the performance of this agreement. If the agreement is terminated or changed due to such reasons, the lender shall be exempted from liability.

 

10. The borrower may consult and complain about this contract and its business and fees through the contact phone number of the lender listed in this contract.

 

Article 19 Delivery terms

 

1.1 Any notice, letter, data message, etc. sent by either party to the other party under this agreement shall be sent in writing to the delivery address specified below.

 

If one party changes the delivery address information/electronic delivery information, it shall promptly notify the other party in writing within 3 days after the change. Delivery before the other party actually receives the change notice shall still be valid, and electronic delivery shall have the same legal effect as other delivery methods.

 

The guarantor confirms that the delivery address is as follows:

 

Address: No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Postal Code: 350011,

Contact Person: Liu Yongxu, Contact Number: 0591-83628181.

 

Guarantor (☐ Agreed) þ Disagree) The electronic delivery method is as follows:

Mobile SMS: / Fax: / Instant messaging account (WeChat): / Email: / .

 

The creditor confirms that the delivery address is as follows:

 

Address: No. 3 Changle Middle Road, Wangzhuang Street, Jin’an District, Fuzhou City (east side of former Jiaotang Road), Fusheng Qianlong International Annex Building, Floor 1, 03 Central Commercial Center, Postal Code: 350000, Contact Person: Li Yang, Contact Number: 0591-83163665.

 

Creditor (☐ agree) þ Disagree) The electronic delivery method is as follows:

 

Mobile SMS: / Fax: / Instant messaging account (WeChat): / Email: / .

 

1.2 The delivery address agreed in Article 19, Article 1.1 refers to the address for the delivery of legal documents by the people’s court/arbitration institution during work contacts, legal documents, and dispute resolution between both parties. All parties confirm that the above-mentioned delivery address and delivery method are applicable to all stages of litigation/arbitration, including but not limited to first instance, second instance, retrial, special procedures, and execution procedures.

 

The people’s court/arbitration institution shall deliver legal documents in accordance with one or more of the delivery methods provided by the parties mentioned above, and the delivery time shall be based on the earliest of the aforementioned delivery methods.

 

The parties to the agreement guarantee that the delivery address/electronic delivery information provided is accurate and valid. If the provided address/electronic delivery information

 

Inaccurate delivery information or failure to promptly inform the changed address/electronic delivery information, resulting in legal documents being unable to be delivered or delayed

 

Delivery shall bear the legal consequences that may arise.

 

The people’s court/arbitration institution shall deliver the goods according to the delivery address/electronic delivery information provided by the parties mentioned above. If the address/electronic delivery information provided by the parties is inaccurate or the changed delivery address/electronic delivery information is not notified in a timely manner

 

 

If a legal document is not actually received by the recipient and is directly served, the date on which the civil litigation document is left at that address shall be deemed as the date of service

 

On the day of; If the document is delivered by mail, the date of return shall be the date of delivery; Electronic delivery refers to the delivery when the delivery information reaches the specific system of the recipient.

 

1.3 The delivery terms of the contract are independent clauses and are not affected by the validity of the entire contract or other terms.

 

Article 20 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

This contract is made in triplicate, with each party holding one copy and having the same legal effect.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

March 21, 2023

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature: Zhang Changkai

March 21, 2023

 

Attachment Borrowing Rate Notification Letter

Number:/

 

To: / (Borrower)

 

1. Our bank has signed a “Working Capital Loan Contract” with your company numbered / , Under the aforementioned contract, our bank, as the lender, provides an annualized interest rate of _/ for the loan provided to your company. The annualized interest rate ( ☐ simple interest/ ☐compound interest combination (choose one)) includes:

 

(1) The loan interest calculated based on the loan interest rate stipulated in Article 4 (1) of the heaforementioned contract,

 

2. This notification letter, as an attachment to the aforementioned contract, constitutes an integral part of it and has the same legal effect as the aforementioned contract. Any matters not stipulated shall be governed by the provisions of the aforementioned contract.

 

Lender:

 

Authorized signatory:

 

Year/Month/Day

 

15

 

Exhibit 10.18

 

Working Capital Loan Contract

No: fj1122022110

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

This contract is signed by both of the borrower and the lender through equal consultation serves as a single agreement under the Credit Line Agreement (No.fj1122021141) and the Supplementary Agreement (No. fi1122022096) signed between Shengfeng Logistics Group Co., Ltd and Bank of China Limited Fuzhou Jin’an Sub-branch.

 

Article 1 Loan Amount

 

Currency: RMB;

Amount: ￥13,000,000.00.

 

Article 2 Loan Term

 

The term of the loan is 12 months from the date when the money is actually withdrawn; If it is drawn by installments, then life of the loan is 12 months from the first actual drawing date.

 

The borrower should make the withdrawal in strict accordance with the agreed time. If the actual withdrawal date is later than the agreed date, the borrower should still make the repayment on the agreed date in this contract.

 

Article 3 Purpose of loan

 

Purpose of this loan is to pay for combined transport fee.

 

Without the written consent of the lender, the borrower shall not change the purpose of the loan, including but not limited to that the borrower shall not use the loan for fixed assets, equity or other investment, and shall not use it for any fields and purposes prohibited by laws, regulations, regulatory regulations, or the state from producing or operating, nor shall it be used for lending or purchasing other financial products for arbitrage, nor shall it be used for illegally adding implicit local government debts, nor for other purposes prohibited from using bank loans for investment.

 

 

Article 4 Loan Interest Rate and its Calculation

 

The lender shall specify the annualized interest rate of the loan under this contract to the borrower through the attachment “Notification Letter of Loan Annualized Interest Rate”. If the annualized interest rate of the loan under this contract is only calculated based on the loan interest rate specified in paragraph 1 of this article, the aforementioned “Notification Letter of Loan Annualized Interest Rate” shall not apply.

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

(2) Floating rate, with the actual drawing date (or the first actual drawing date in case of separate drawings) as the starting date. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

 

For each withdrawal:

 

Floating rate of RMB loans

 

A. The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date plus 30 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day plus 30 basis points, and will start to serve as the interest rate of the new floating cycle.

 

2. Interest Calculation

 

(1) For item 1 (1) of this article, fixed interest rate, item 1 (2), RMB loan floating interest rate, and foreign currency loan floating interest rate, item A, C:

 

The interest shall be calculated from the actual drawing date, concerning the actual amount withdrawn and the number of days the money is used.

 

The calculation formula is as below:

 

Interest = principal × actual days × daily interest rate.

 

Daily Interest Rate = annual interest rate / 360.

 

3. Interest Settlement

 

The borrower in this contract shall settle the interest in way (1):

 

(1) The interest is settled quarterly. The 20th day of the last month of each quarter is the interest settlement day, and the 21st day is the interest payment day.

 

(2) The interest is settled by month. The 20th day of each month is the interest settlement day, and the 21st day is the interest payment day.

 

The borrower should pay off all the interest on the last repayment day regardless of whether that day is an interest payment day.

 

4. Penalty Interest

 

(1) If the loan is overdue or not used for the purpose specified in the contract, from the date of overdue or misappropriation, the penalty interest shall be calculated and collected according to the penalty interest rate specified in this paragraph for the overdue or misappropriated part until the principal and interest are paid off.

 

For overdue and misappropriated loans, the penalty interest shall be calculated and charged at higher penalty interest rate.

 

 

(2) For the interest and penalty interest that cannot be paid on time by the borrower, compound interest shall be calculated and collected by the interest settlement method described in paragraph 3 of this article.

 

(3) Penalty interest rate

 

RMB loan penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loan

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 30% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 50% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

5. Other

 

(1) The “loan interest rate” and “penalty interest rate” under this contract are both tax inclusive interest rates, meaning that the interest charged by the lender to the borrower already includes value-added tax payable in accordance with national laws and regulations.

 

(2) If there is a significant change in the pricing basis of the floating interest rate under this contract, it shall be handled in accordance with the then effective market rules. If the lender requests the borrower to sign a supplementary contract on relevant matters at that time, the borrower shall cooperate.

 

(3) The term “pricing benchmark” in this article has the same meaning as the term “benchmark interest rate”.

 

(4) Under this contract, “TIBOR” refers to the TIBOR published and managed by the Japan Bankers Association (or successor manager) as the manager, and “EURIBOR” refers to the EURIBOR published and managed by the European Monetary Market Research Institute (or successor manager) as the manager, “Overnight SOFR” refers to the overnight SOFR published and managed by the Federal Reserve Bank of New York (or successor manager) as the manager “Overnight SONIA” refers to the overnight SONIA published and managed by the Bank of England (or successor manager) as the manager, and “Overnight TONA” refers to the overnight TONA published and managed by the Bank of Japan (or successor manager) as the manager, Overnight ESTR “refers to an overnight ESTR published and managed by the European Central Bank (or successor manager) as the manager, while” overnight SARON “refers to an overnight SARON published and managed by the Swiss Stock Exchange (or successor manager) as the manager.

 

 

Article 5 Conditions for Withdrawing

 

The borrower’s withdrawal shall meet the following conditions:

 

1. This contract and its attachments have come into force;

 

2. The borrower has provided guarantee as required by the lender, and the guarantee contract has become effective through completed legal approval, registration and filing procedures;

 

3. The borrower has reserved its documents, seals, personnel list and signature samples necessary for the signing and performance of the contract to the lender, and has completed all relevant documents;

 

4. The borrower has opened the account required for the contract as required by the lender;

 

5. The borrower has submitted written application and relevant loan purpose documents to the lender 3 working days before the withdrawal;

 

6. Other conditions of withdrawal as stipulated by law and agreed by both parties.

 

If the conditions above are not met, the lender has the right to refuse the borrower’s application for the withdrawal.

 

Article 6 Time and Method of Withdrawal

 

1. The borrower shall withdrawal the money in way (2) :

 

(1) Make an one-time withdrawal on mm / dd / yyyy.

 

(2) Withdraw within 10 working days from March 16, 2022.

 

(3) Make separate withdrawals as follows:

 

Time of withdrawal	Amount of withdrawal
/ / /	/ / /

 

2. The lender has the right to refuse the withdrawal application if the money is not withdrawn in time by the borrower.

 

3. Loan Commitment Services

 

The lender shall provide commitment services to the borrower during the commitment service period (from the effective date of this loan contract to the withdrawal date specified in this contract) that the borrower can withdraw but has not withdrawn the loan (hereinafter referred to as “unused loan”). By mutual agreement between the borrower and the lender The agreement is as follows:

 

The lender, based on the principle of “reduction of fees and benefits”, waives the commitment fee for the aforementioned promised services, and the assessed exemption amount is RMB 500.

 

Article 7 Payment of Loan

 

1. The Loan Issuing Account

 

The borrower shall open the following loan account with the lender through which the loan issuance and payment shall be handled.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account Number: 4273675009

 

2. Payment Method

 

(1) The payment method of loan funds shall be implemented in accordance with laws and regulations, regulatory provisions and with the contract. The payment method with a single withdrawal shall be confirmed in the withdrawal application. If the lender considers that the payment method selected in the withdrawal application does not meet the requirements, the lender has the right to change the payment method or stop the issuance and payment of the loan funds.

 

 

(2) Entrusted Payments. According to CBRC’s and the lender’s internal management regulations, the payment of the loan funds meeting one of the following conditions shall be made by the lender through an entrusted payment method:

 

A. A new credit business relationship is established between the lender and the borrower, and the credit rating of the borrower fails to meet the internal requirements of the lender;

 

B. When a single amount of withdrawal exceeds 10 million yuan (exclusive). Foreign currency shall be converted at the exchange rate on the actual withdrawing day);

 

C. Other circumstances stipulated by the lender or agreed with the borrower.

 

(3) Independent Payments. After the lender has released the loan funds to the borrower’s account, the borrower shall make independent payment to the its counter parties for the purpose agreed in the contract. All payments of the loan funds shall be independent except for the situations in which entrusted payment method should be adopted as stipulated in the preceding paragraph.

 

(4) Change of Payment Method. For independent payments, if the conditions of borrower’s external payment or credit rating changes after the withdrawal application is submitted, the payment method of the loan fund shall be changed if the payment meets the conditions specified in Item (2) of paragraph 2 in this article. The borrower is required to provide the lender with a written application for any changes in the payment method, to submit a new withdrawal application with relevant documents.

 

3. Specific Requirements for Entrusted Payment of the Loan Funds

 

(1) Payment Entrustment. The borrower shall clearly specify the payment entrustment in the withdrawal application, that is, to authorize and entrust the lender to directly pay the loan funds to the borrower’s designated counterpart after transferring the loan funds into the borrower’s account. The borrower shall also provide the name of the recipient, the counter party’s account, payment amount and other necessary payment information.

 

(2) Providing Transaction Information. The borrower shall provide the lender with the information of its loan account and the counter party’s account together with supporting materials proving that the withdrawal is in line with the purpose agreed in the loan contract. The borrower shall guarantee that all information provided to the lender is true, complete and valid. If the entrusted payment obligations of the lender are not completed in time due to the untrue, inaccurate or incomplete transaction information provided by the borrower, the lender shall not bear any responsibility, and the repayment obligations of the borrower under this contract shall not be affected.

 

(3) The Performance of the Lender’s Entrusted Payment Obligation

 

A. After the borrower provides the payment entrustment and other relevant information, the lender will pay the loan funds to the borrower’s counter party through the borrower’s account with the borrower’s approval.

 

B. If the lender finds that the relevant transaction materials provided by the borrower do not conform to the contract or have other defects, it has the right to require the borrower to supplement, replace, explain or to re-submit relevant materials. Before the borrower completely submits the materials required by the lender, the lender has the right to refuse the release and payment of the funds.

 

C. In case of a refund from the counter party’s bank, which causes the lender’s failure to make the payment in time, the lender shall not bear any responsibilities, and the repayment obligations of the borrower under this contract shall not be affected. The borrower hereby authorizes the lender to freeze the amount refunded by the the counter party’s bank. In this case, the borrower shall re-submit relevant transaction materials to the lender.

 

 

(4) The borrower shall not avoid the entrusted payment by breaking the whole payment into parts.

 

4. After the loan fund is released, the borrower shall timely provide the lender with the loan fund use records and other information including but not limited to payment vouchers, etc.

 

5. In case of any of the following circumstances, the lender shall have the right to re-determine the conditions for loan issuance and payment or to stop the issuance and payment of loan funds:

 

(1) The borrower violates the contract and avoids the entrusted payment of the lender by breaking the whole payment into parts;

 

(2) The borrower’s credit status declines or the profitability of its main business is not strong;

 

(3) There is abnormal use of the loan funds;

 

(4) The borrower fails to provide the loan fund use records and information in a timely manner as required by the lender;

 

(5) The borrower uses the loan fund in any way that violates the agreement reached in this article.

 

Article 8 Repayment

 

1. The account below is designated as the repayment account. The borrower shall timely provide information about the fund activities in this account to the lender. The lender has the right to require the borrower to explain the inflow or outflow of large or abnormal funds in this account and supervise the account.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account No.: 4273675009

 

2. Unless otherwise agreed by both parties, the borrower shall repay the loan in this contract with repayment plan (1):

 

(1) Pay off all loans in this contract on the expiration date of the loan term.

 

(2) Repay the loan according to the following schedule:

 

Time of Repayment	Repayment Amount
///	///
///	///

 

(3) Other plans of repayment.

 

The borrower shall submit a written application to the lender 3 banking days before the maturity of the corresponding loan. The change of repayment plan shall be confirmed by both parties in writing.

 

3. Unless otherwise agreed by both parties, if the borrower defaults on the principal and interest of the loan at the same time, the lender has the right to decide the order of repayment of the principal and interest; In the case of repayment by installment, if there are multiple due loans or overdue loans under this contract, the lender has the right to determine the order of a certain repayment; If there are more than on loan contracts due, the lender has the right to determine the order of the contract to be performed with the borrower’s each repayment.

 

4. Unless otherwise agreed by both parties, the borrower may prepay the loan, but shall notify the lender in writing 15 banking days in advance. The amount of prepayment is first used to repay the last due loan.

 

For loans that apply a single compound interest combination for interest calculation, if prepayment or partial prepayment is involved, the interest corresponding to the prepayment principal should be settled in one lump sum.

 

 

5. The borrower shall make the repayment in way (1) as below.

 

(1) The borrower shall deposit sufficient funds in the repayment account below no later than 3 banking days before the maturity of each principal and interest, and the lender has the right to withdraw the money from this account on the maturity date.

 

Repayment Account: Shengfeng Logistics Group Co., Ltd.

 

Account number: 4273675009.

 

(2) Other repayment methods agreed by both parties.

 

Article 9 Guarantee

 

1. The guarantee method of the liabilities in the contract is as follows:

 

This contract belongs to the main contract under the Maximum Guarantee Contract (No. fj1122021143 signed by the guarantor Liu Yongxu and the lender. Liu yongxu is going to provide the maximum guarantee.

 

This contract belongs to the main contract under the Maximum Mortgage Contract (No. fj1122021142) signed by the mortgagor Suzhou Shengfeng Logistics Co., Ltd. and the lender. Suzhou Shengfeng Logistics Co., Ltd. is going to provide the maximum guarantee.

 

2. If the borrower or the guarantor has an event that the lender considers may affect its performance ability, the guarantee contract becomes invalid, cancelled or terminated, the financial situation of the borrower or the guarantor deteriorates, the borrower or the guarantor is involved in major litigation or arbitration cases, the guarantor defaults under the guarantee contract or other contracts with the lender, or the collateral is devalued, damaged, lost or sealed up, resulting in the weakening or loss of the guaranteed value, the lender has the right to require the borrower to provide new guarantee, replace the guarantor, etc. as the borrower’s obligation.

 

Article 10 Invoice Issuance

 

1. The borrower can apply to the lender for issuing a value-added tax invoice (þ value-added tax special invoice/ ☒ value-added tax ordinary invoice) after the lender confirms receipt of the payment. The lender can issue value-added tax to the borrower after receiving the application for issuing a value-added tax invoice from the borrower invoice.

 

2. The borrower can apply for the issuance of value-added tax invoices at the corresponding business processing agency or other institutions designated by the lender.

 

3. The borrower needs to confirm that the payer of the payment, the signatory of the contract, and the purchaser listed in the value-added tax invoice are the same taxpayer. If there is inconsistency, resulting in the borrower being unable to book or deduct input tax in accordance with the law, the relevant losses shall be borne by the borrower undertake.

 

4. If the borrower loses the invoice after obtaining it, the lender does not need to issue a supplementary value-added tax invoice to the borrower.

 

5. If the lender provides a discount to the borrower through negotiation, the amount of the value-added tax invoice issued shall be based on the discounted price.

 

6. If the lender provides free services to the borrower, the lender will not provide value-added tax invoices.

 

7. The lender shall issue a value-added tax invoice to the borrower, and the borrower shall promptly verify the invoice information. If the invoice information is incorrect,the borrower shall promptly apply to the lender for reissuing the value-added tax invoice.

 

 

Article 11 Declaration and Commitment

 

1. The borrower hereby declares that:

 

(1) The borrower is registered and exists legally, and has full capacity and civil rights to conduct the signing and performing of this contract;

 

(2) The signing and performance of this contract is based on the true intention of the borrower. The borrower has obtained legal and effective authorization, and will not violate any agreement, contract or other legal documents binding on the borrower; The borrower has obtained or will obtain all relevant approval, permission, records and registration required for signing and performing this contract;

 

(3) All documents, financial statements, vouchers and other information provided by the borrower to the lender for this contract are true, complete, accurate and effective;

 

(4) The transaction background provided by the borrower is true and legal, and no money laundering or other illegal activities is involved,and not violating the sanctions regulations applicable to the United Nations, China, and other countries;

 

(5) The borrower does not conceal from the lender any event that may affect the financial status and performance ability of the borrower and the guarantor;

 

(6) The borrower and the loan projects meet the national environmental protection standards, and there is no risk of energy over-consumption or pollution identified by the national departments;

 

(7) The purpose of the loan and the source of repayment are true and legal;

 

(8) Other matters declared by the borrower.

 

2. The borrower promises:

 

(1) To provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to the lender on a regular or timely basis; The borrower shall remain to meet the following financial index requirements: A.its asset-liability ratio of the latest single borrower and group consolidated financial statements does not exceed 65%, the current ratio is no less than 1; B.The loan financing balance of the borrower flow does not exceed 400 million yuan and does not exceed 25% of the group’s consolidated annual income;

 

(2) If the borrower has entered into or will enter into a counter guarantee agreement or similar agreement with the guarantor as this contract, the agreement will not damage any rights of the lender;

 

(3) To accept the credit inspection and supervision of the lender with assistance and cooperation; If the borrower adopts the independent payment method, it shall regularly summarize and report to the lender; The summary report shall be a monthly report;

 

(4) In case of merger, division, capital reduction, equity transfer, foreign investment, substantial increase in debt financing, transfer of major assets and creditor’s rights and other matters that may adversely affect the borrower’s solvency, the borrower shall obtain the written consent of the lender in advance;

 

In case of the following circumstances, the borrower shall timely notify the lender:

 

A. There are changes in the borrower or guarantor’s articles of association, business scope, registered capital and legal representative;

 

B. There are any forms of joint venture, cooperation, contracted operation, restructuring, IPO plans and other changes in the operation mode;

 

C. The borrower or the guarantor is involved in major litigation or arbitration cases, property or collateral is sealed up, detained or supervised, or new security is set on collateral;

 

 

D. The borrower is to close down, dissolve, liquidate, have its business license revoked, or apply for bankruptcy, etc;

 

E. Shareholders, directors and current senior managers are suspected of major cases or economic disputes;

 

F. The borrower violates other contracts;

 

G. Business difficulties and deterioration of financial situation occur;

 

(5) The repayment order of the borrower’s debt to the lender is prior to that of the borrower’s shareholders, and is no less than that of other creditors;

 

(6) Before the repayment of the loan principal, interests and related expenses in this contract is completed, the borrower shall not distribute any dividend or bonus to its shareholders in any form;

 

(7) The borrower shall not dispose of its own assets in a way that reduces its solvency. The borrower promises that the total amount of external guarantee shall not be more than twice of its own net assets, and that the total amount of external guarantee and the amount of single guarantee shall not exceed the limit specified in its articles of association;

 

(8) The borrower shall not transfer the loan fund to the account with the same account name or to the account of the related parties except for the purpose specified in this contract or with the consent of the lender.

 

To conduct transfers as mentioned in item (8) above, the borrower must provide the lender with sufficient supporting materials;

 

(9) The loan conditions such as the loan interest rate, guarantee, and repayment order stated in this contract shall not be lower than those given by the borrower to any other financial institution now or in the future;

 

(10) The lender has the right to call in the loan in advance based on the borrower’s fund repayment status;

 

(11) The borrower shall provide its environmental and social risk report to the lender. The borrower undertakes to strengthen the management of environmental and social risks with the lender’s supervision. The borrower’s breach of the agreements described above is deemed as an event of default, and the lender may take remedies for breach of contract;

 

(12) Cooperate with the lender in conducting due diligence work, provide and update information on the institution and its beneficial owners, and provide background information related to the transaction;

 

(13) The loan guarantee method under this contract is for Suzhou Shengfeng Logistics Co., Ltd. to provide the second phase logistics park property land mortgage (certificate number: Su (2017) Suzhou Real Estate No. 7001992), and Liu Yongxu (excluding spouse) shall provide joint liability guarantee;

 

(14) Other items promised by the borrower.

 

Article 12 Disclosure of Related Party Transactions

 

Both parties agree that the following clause 1 shall apply:

 

1. The borrower is not a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

2. The borrower is a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers. The borrower shall timely report to the lender about its related party transactions of more than 10% of its net assets, including the related party relationship, transaction items and nature, transaction amount, and pricing policy (including transactions with no amount or with only symbolic amount).

 

 

If any one of the following circumstances, the lender has the right to unilaterally decide to stop offering the unused loan and call in part or all of the loan principal and interest in advance: the borrower takes advantage of false contract with related parties to obtain bank funds or credit; The borrower is involved in cases of major merger, acquisition and reorganization where the lender thinks that it may affect the security of the loan; and other circumstances specified in Article 18 of the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

Article 13 Breach of Contract

 

Any of the following events shall constitute or be deemed as an event of default:

 

1. The borrower fails to perform its obligations of payment and settlement as agreed in this contract;

 

2. The borrower fails to use the loan funds in the way or for the purpose agreed in this contract，or fails to use the obtained funds for the purposes specified in this contract;or the borrower uses the loan funds for refinancing or purchasing other financial products for arbitrage; Or the borrower illegally adds implicit local government debts;

 

3. The statement made by the borrower in this contract is untrue or violates its commitment in this contract;

 

4. In case of any circumstance specified in Article 11.2.(4) where the lender thinks that it may affect the financial status and performance ability of the borrower or the guarantor, and the borrower fails to provide new guarantee or replace the guarantor;

 

5. The credit status of the borrower declines, the profitability, solvency, operating capacity, cash flow and other financial indicators of the borrower deteriorate, or the borrower’s financial indicators break through the constraints as stipulated in this contract;

 

6. The borrower breaches any other contract with the lender or other institutions of Bank of China Limited; Any event of breaches of credit business contract happen between the borrower and other financial institutions;

 

7. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with the lender or other institutions of Bank of China Limited;

 

8. Termination of business, dissolution, cancellation or bankruptcy happens to the borrower;

 

9. The borrower is involved in or may be involved in major economic disputes, litigation, arbitration, its assets are sealed up, distrained or enforced, it is being investigated or punished by national legal department;

 

10. The borrower’s major investors and key management personnel change abnormally, or become missing, subject to judicial investigation or restriction of personal freedom;

 

11. The lender finds that there are circumstances that may affect the financial status and performance ability of the borrower or the guarantor at the annual review;

 

12. There is a large amount of abnormal capital inflow and outflow in the designated repayment account, and the borrower can not provide supporting materials approved by the lender;

 

13. The construction of energy-saving projects is seriously lagged, the energy-saving technology and equipment have serious defects, stopped or reduced production of the main facilities or equipment results in the actual energy saving significantly lower than the forecast thereafter the energy-saving income can not return to the designated account in time, the borrower participates in private high interest loans, the borrower offers other external guarantee or borrow new debts without the consent of the lender, and the borrower’s key financial indicators are seriously deteriorated;

 

 

14. The borrower refuses to cooperate with the lender in conducting due diligence, and the borrower or its trading counterparty is suspected of money laundering, terrorist financing, nuclear weapons proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the borrower or guarantor is included in the United Nations, China, and other applicable sanctions list or scope;

 

15. The borrower violates other provisions on the rights and obligations of the parties in this contract.

 

In case of any event of default specified in the preceding paragraph, the lender shall have the right to take the following actions regarding the specific circumstances:

 

1. Require the borrower and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend, cancel or terminate the credit line to the borrower in whole or in part;

 

3. Suspend or terminate in whole or in part the acceptance of the borrower’s withdrawal and other business applications; Suspend or cancel all or part of the loans that have not been granted and the trade financing that have not been handled;

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable between the borrower and the lender due immediately;

 

5. Terminate or rescind this contract and other contracts between the borrower and the lender in whole or in part;

 

6. Require the borrower to compensate the losses caused to the lender due to its breach of contract, including but not limited to the litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of the creditor’s rights;

 

7. Deduct the money balance of the account opened by the borrower with the lender and other institutions of Bank of China Limited to pay off all or part of the borrower’s debts to the lender. The undue amount in the account shall become due at the time. If the account currency is different from the lender’s business valuation currency, it shall be converted at the foreign exchange rate at the time of the deduction;

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that the lender considers necessary and possible.

 

Article 14 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

 

Article 15 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 16 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the People’s Republic of China.

 

After this contract comes into effect, all disputes arising from the establishment and performance of this contract can be settled by both parties through negotiation. If the negotiation fails, either party may adopt the 2nd way as follows:

 

1. Submit an application to the following departments for arbitration:

 

☐ China International Economic and Trade Arbitration Commission

 

☐ Beijing Arbitration Commission (Beijing International Arbitration Center)

 

☐ Other arbitration commissions

 

The arbitration shall be conducted in accordance with the arbitration rules in force at the time of applying for arbitration. Final result of the arbitration shall be binding on all parties.

 

2. Litigation.

 

þ Bring a lawsuit to the People’s Court of the place where Party B or other institutions of Bank of China limited exercise their rights and obligations.

 

☐ Bring a lawsuit to the International Commercial Court of the Supreme People’s Court (for international commercial disputes with an amount of more than 300 million yuan).

 

☐ Bring a law suit to the people’s court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other provisions of this Agreement and the single agreement, the other provisions shall continue to be performed.

 

Article 17 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

1. Attachment: Application Form for Withdrawals.

 

2. Notification Letter of Loan Annualized Interest Rate (Format)

 

Article 18 Other Agreements

 

1. Without the written consent of the lender, the borrower shall not transfer any rights or obligations in this contract to a third party.

 

2. The borrower is going to agree if the lender has to entrust other institutions of Bank of China Limited to perform the rights and obligations in this contract due to business needs, or to transfer the loan business in this contract to other institutions of Bank of China Limited to undertake and manage. Other institutions of Bank of China Limited authorized by the lender, or other institutions of Bank of China Limited undertaking the loan business in this contract, shall have the right to exercise all the rights in this contract, and have the right to file a lawsuit in the name of such institution, submit to an arbitration institution for adjudication or apply for enforcement according to this contract.

 

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first instance, second instance, retrial, and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance.In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court, or refusal of the designated recipient to sign after the delivery address is changed, etc., the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The transactions arising from this contract are based on each party’s own interests independently. According to law, the fairness of the transaction shall not be affected by any of the lender’s related parties or persons by taking advantage of the relationship.

 

6. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

7. The lender shall have the right to provide the information related to this contract and the borrower to the credit reference system of the People’s Bank of China and other credit information databases established according to law for inquiry and use by institutions or individuals with appropriate qualifications. The lender also has the right to inquire the relevant information of the borrower through the credit information system of the People’s Bank of China and other legally established credit information databases for the purpose of signing and performing this contract.

 

8. In case of legal holidays, the withdrawal date and repayment date shall be postponed to the first working day after the holidays.

 

9. If the lender fails to perform the agreement due to changes in laws and regulations, the lender has the right to terminate or change the performance of this agreement. If the agreement is terminated or changed due to such reasons, the lender shall be exempted from liability.

 

10. The borrower may consult and complain about this contract and its business and fees through the contact phone number of the lender listed in this contract.

 

 

Article 19 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

This contract is made in duplicate with the same legal effect, one for each party.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

March 16, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

March 16, 2022

 

 

14

Exhibit 10.19

 

Working Capital Loan Contract

 

(Applicable to newly signed domestic RMB interest rates other than USD/GBP/EUR/JPY/CHF foreign currency interest rates、USD/GBP/EUR/JPY/CHF new benchmark rate borrowing)

 

No: fj1122022160

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

This contract is signed by both of the borrower and the lender through equal consultation serves as a single agreement under the Credit Line Agreement (No.fj1122021141) and the Supplementary Agreement (No. fi1122022096) signed between Shengfeng Logistics Group Co., Ltd and Bank of China Limited Fuzhou Jin’an Sub-branch.

 

Article 1 Loan Amount

 

Currency: RMB;

Amount: ￥17,000,000.00.

 

Article 2 Loan Term

 

The term of the loan is 12 months from the date when the money is actually withdrawn; If it is drawn by installments, then life of the loan is 12 months from the first actual drawing date.

 

The borrower should make the withdrawal in strict accordance with the agreed time. If the actual withdrawal date is later than the agreed date, the borrower should still make the repayment on the agreed date in this contract.

 

Article 3 Purpose of loan

 

Purpose of this loan is to pay for combined transport fee.

 

Without the written consent of the lender, the borrower shall not change the purpose of the loan, including but not limited to that the borrower shall not use the loan for fixed assets, equity or other investment, and shall not use it for any fields and purposes prohibited by laws, regulations, regulatory regulations, or the state from producing or operating, nor shall it be used for lending or purchasing other financial products for arbitrage, nor shall it be used for illegally adding implicit local government debts, nor for other purposes prohibited from using bank loans for investment.

 

 

Article 4 Loan Interest Rate and its Calculation

 

The lender shall specify the annualized interest rate of the loan under this contract to the borrower through the attachment “Notification Letter of Loan Annualized Interest Rate”. If the annualized interest rate of the loan under this contract is only calculated based on the loan interest rate specified in paragraph 1 of this article, the aforementioned “Notification Letter of Loan Annualized Interest Rate” shall not apply.

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

(2) Floating rate, with the actual drawing date (or the first actual drawing date in case of separate drawings) as the starting date. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

For each withdrawal:

 

Floating rate of RMB loans

 

A. The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date plus 30 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day plus 30 basis points, and will start to serve as the interest rate of the new floating cycle.

 

2. Interest Calculation

 

(1) For item 1 (1) of this article, fixed interest rate, item 1 (2), RMB loan floating interest rate, and foreign currency loan floating interest rate, item A, C:

 

The interest shall be calculated from the actual drawing date, concerning the actual amount withdrawn and the number of days the money is used.

 

The calculation formula is as below:

 

Interest = principal × actual days × daily interest rate.

 

Daily Interest Rate = annual interest rate / 360.

 

3. Interest Settlement

 

The borrower in this contract shall settle the interest in way (1):

 

(1) The interest is settled quarterly. The 20th day of the last month of each quarter is the interest settlement day, and the 21st day is the interest payment day.

 

(2) The interest is settled by month. The 20th day of each month is the interest settlement day, and the 21st day is the interest payment day.

 

The borrower should pay off all the interest on the last repayment day regardless of whether that day is an interest payment day.

 

 

4. Penalty Interest

 

(1) If the loan is overdue or not used for the purpose specified in the contract, from the date of overdue or misappropriation, the penalty interest shall be calculated and collected according to the penalty interest rate specified in this paragraph for the overdue or misappropriated part until the principal and interest are paid off.

 

For overdue and misappropriated loans, the penalty interest shall be calculated and charged at higher penalty interest rate.

 

(2) For the interest and penalty interest that cannot be paid on time by the borrower, compound interest shall be calculated and collected by the interest settlement method described in paragraph 3 of this article.

 

(3) Penalty interest rate

 

RMB loan penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loan

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 100% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

5. Other

 

(1) The “loan interest rate” and “penalty interest rate” under this contract are both tax inclusive interest rates, meaning that the interest charged by the lender to the borrower already includes value-added tax payable in accordance with national laws and regulations.

 

(2) If there is a significant change in the pricing basis of the floating interest rate under this contract, it shall be handled in accordance with the then effective market rules. If the lender requests the borrower to sign a supplementary contract on relevant matters at that time, the borrower shall cooperate.

 

(3) The term “pricing benchmark” in this article has the same meaning as the term “benchmark interest rate”.

 

(4) Under this contract, “TIBOR” refers to the TIBOR published and managed by the Japan Bankers Association (or successor manager) as the manager, and “EURIBOR” refers to the EURIBOR published and managed by the European Monetary Market Research Institute (or successor manager) as the manager, “Overnight SOFR” refers to the overnight SOFR published and managed by the Federal Reserve Bank of New York (or successor manager) as the manager “Overnight SONIA” refers to the overnight SONIA published and managed by the Bank of England (or successor manager) as the manager, and “Overnight TONA” refers to the overnight TONA published and managed by the Bank of Japan (or successor manager) as the manager, Overnight ESTR “refers to an overnight ESTR published and managed by the European Central Bank (or successor manager) as the manager, while” overnight SARON “refers to an overnight SARON published and managed by the Swiss Stock Exchange (or successor manager) as the manager.

 

Article 5 Conditions for Withdrawing

 

The borrower’s withdrawal shall meet the following conditions:

 

1. This contract and its attachments have come into force;

 

2. The borrower has provided guarantee as required by the lender, and the guarantee contract has become effective through completed legal approval, registration and filing procedures;

 

 

3. The borrower has reserved its documents, seals, personnel list and signature samples necessary for the signing and performance of the contract to the lender, and has completed all relevant documents;

 

4. The borrower has opened the account required for the contract as required by the lender;

 

5. The borrower has submitted written application and relevant loan purpose documents to the lender 3 working days before the withdrawal;

 

6. Other conditions of withdrawal as stipulated by law and agreed by both parties.

 

If the conditions above are not met, the lender has the right to refuse the borrower’s application for the withdrawal.

 

Article 6 Time and Method of Withdrawal

 

1. The borrower shall withdrawal the money in way (2) :

 

(1) Make an one-time withdrawal on mm / dd / yyyy.

 

(2) Withdraw within 10 working days from May 20, 2022.

 

(3) Make separate withdrawals as follows:

 

Time of withdrawal	Amount of withdrawal
/ / /	/ / /

 

2. The lender has the right to refuse the withdrawal application if the money is not withdrawn in time by the borrower.

 

3. Loan Commitment Services

 

The lender shall provide commitment services to the borrower during the commitment service period (from the effective date of this loan contract to the withdrawal date specified in this contract) that the borrower can withdraw but has not withdrawn the loan (hereinafter referred to as “unused loan”). By mutual agreement between the borrower and the lender The agreement is as follows:

 

The lender, based on the principle of “reduction of fees and benefits”, waives the commitment fee for the aforementioned promised services, and the assessed exemption amount is RMB 1,700.

 

Article 7 Payment of Loan

 

1. The Loan Issuing Account

 

The borrower shall open the following loan account with the lender through which the loan issuance and payment shall be handled.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account Number: 4273675009

 

2. Payment Method

 

(1) The payment method of loan funds shall be implemented in accordance with laws and regulations, regulatory provisions and with the contract. The payment method with a single withdrawal shall be confirmed in the withdrawal application. If the lender considers that the payment method selected in the withdrawal application does not meet the requirements, the lender has the right to change the payment method or stop the issuance and payment of the loan funds.

 

 

(2) Entrusted Payments. According to CBRC’s and the lender’s internal management regulations, the payment of the loan funds meeting one of the following conditions shall be made by the lender through an entrusted payment method:

 

A. A new credit business relationship is established between the lender and the borrower, and the credit rating of the borrower fails to meet the internal requirements of the lender;

 

B. When a single amount of withdrawal exceeds 10 million yuan (exclusive). Foreign currency shall be converted at the exchange rate on the actual withdrawing day);

 

C. Other circumstances stipulated by the lender or agreed with the borrower.

 

(3) Independent Payments. After the lender has released the loan funds to the borrower’s account, the borrower shall make independent payment to the its counter parties for the purpose agreed in the contract. All payments of the loan funds shall be independent except for the situations in which entrusted payment method should be adopted as stipulated in the preceding paragraph..

 

(4) Change of Payment Method. For independent payments, if the conditions of borrower’s external payment or credit rating changes after the withdrawal application is submitted, the payment method of the loan fund shall be changed if the payment meets the conditions specified in Item (2) of paragraph 2 in this article. The borrower is required to provide the lender with a written application for any changes in the payment method, to submit a new withdrawal application with relevant documents.

 

3. Specific Requirements for Entrusted Payment of the Loan Funds

 

(1) Payment Entrustment. The borrower shall clearly specify the payment entrustment in the withdrawal application, that is, to authorize and entrust the lender to directly pay the loan funds to the borrower’s designated counterpart after transferring the loan funds into the borrower’s account. The borrower shall also provide the name of the recipient, the counter party’s account, payment amount and other necessary payment information.

 

(2) Providing Transaction Information. The borrower shall provide the lender with the information of its loan account and the counter party’s account together with supporting materials proving that the withdrawal is in line with the purpose agreed in the loan contract. The borrower shall guarantee that all information provided to the lender is true, complete and valid. If the entrusted payment obligations of the lender are not completed in time due to the untrue, inaccurate or incomplete transaction information provided by the borrower, the lender shall not bear any responsibility, and the repayment obligations of the borrower under this contract shall not be affected.

 

(3) The Performance of the Lender’s Entrusted Payment Obligation

 

A. After the borrower provides the payment entrustment and other relevant information, the lender will pay the loan funds to the borrower’s counter party through the borrower’s account with the borrower’s approval.

 

B. If the lender finds that the relevant transaction materials provided by the borrower do not conform to the contract or have other defects, it has the right to require the borrower to supplement, replace, explain or to re-submit relevant materials. Before the borrower completely submits the materials required by the lender, the lender has the right to refuse the release and payment of the funds.

 

C. In case of a refund from the counter party’s bank, which causes the lender’s failure to make the payment in time, the lender shall not bear any responsibilities, and the repayment obligations of the borrower under this contract shall not be affected. The borrower hereby authorizes the lender to freeze the amount refunded by the the counter party’s bank. In this case, the borrower shall re-submit relevant transaction materials to the lender.

 

(4) The borrower shall not avoid the entrusted payment by breaking the whole payment into parts.

 

4. After the loan fund is released, the borrower shall timely provide the lender with the loan fund use records and other information including but not limited to payment vouchers, etc.

 

5. In case of any of the following circumstances, the lender shall have the right to re-determine the conditions for loan issuance and payment or to stop the issuance and payment of loan funds:

 

(1) The borrower violates the contract and avoids the entrusted payment of the lender by breaking the whole payment into parts;

 

(2) The borrower’s credit status declines or the profitability of its main business is not strong;

 

(3) There is abnormal use of the loan funds;

 

(4) The borrower fails to provide the loan fund use records and information in a timely manner as required by the lender;

 

(5) The borrower uses the loan fund in any way that violates the agreement reached in this article.

 

 

Article 8 Repayment

 

1. The account below is designated as the repayment account. The borrower shall timely provide information about the fund activities in this account to the lender. The lender has the right to require the borrower to explain the inflow or outflow of large or abnormal funds in this account and supervise the account.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account No.: 4273675009

 

2. Unless otherwise agreed by both parties, the borrower shall repay the loan in this contract with repayment plan (1):

 

(1) Pay off all loans in this contract on the expiration date of the loan term.

 

(2) Repay the loan according to the following schedule:

 

Time of Repayment	Repayment Amount
///	///
///	///

 

(3) Other plans of repayment.

 

The borrower shall submit a written application to the lender 3 banking days before the maturity of the corresponding loan.

 

The change of repayment plan shall be confirmed by both parties in writing.

 

3. Unless otherwise agreed by both parties, if the borrower defaults on the principal and interest of the loan at the same time, the lender has the right to decide the order of repayment of the principal and interest; In the case of repayment by installment, if there are multiple due loans or overdue loans under this contract, the lender has the right to determine the order of a certain repayment; If there are more than on loan contracts due, the lender has the right to determine the order of the contract to be performed with the borrower’s each repayment.

 

4. Unless otherwise agreed by both parties, the borrower may prepay the loan, but shall notify the lender in writing 15 banking days in advance. The amount of prepayment is first used to repay the last due loan.

 

For loans that apply a single compound interest combination for interest calculation, if prepayment or partial prepayment is involved, the interest corresponding to the prepayment principal should be settled in one lump sum.

 

5. The borrower shall make the repayment in way (1) as below.

 

(1) The borrower shall deposit sufficient funds in the repayment account below no later than 3 banking days before the maturity of each principal and interest, and the lender has the right to withdraw the money from this account on the maturity date.

 

Repayment Account: Shengfeng Logistics Group Co., Ltd.

 

Account number: 4273675009.

 

(2) Other repayment methods agreed by both parties.

 

 

Article 9 Guarantee

 

1. The guarantee method of the liabilities in the contract is as follows:

 

This contract belongs to the main contract under the Maximum Guarantee Contract (No. fj1122021143 signed by the guarantor Liu Yongxu and the lender. Liu yongxu is going to provide the maximum guarantee.

 

This contract belongs to the main contract under the Maximum Mortgage Contract (No. fj1122021142) signed by the mortgagor Suzhou Shengfeng Logistics Co., Ltd. and the lender. Suzhou Shengfeng Logistics Co., Ltd. is going to provide the maximum guarantee.

 

2. If the borrower or the guarantor has an event that the lender considers may affect its performance ability, the guarantee contract becomes invalid, cancelled or terminated, the financial situation of the borrower or the guarantor deteriorates, the borrower or the guarantor is involved in major litigation or arbitration cases, the guarantor defaults under the guarantee contract or other contracts with the lender, or the collateral is devalued, damaged, lost or sealed up, resulting in the weakening or loss of the guaranteed value, the lender has the right to require the borrower to provide new guarantee, replace the guarantor, etc. as the borrower’s obligation.

 

Article 10 Invoice Issuance

 

1. The borrower can apply to the lender for issuing a value-added tax invoice (þvalue-added tax special invoice/☒ value-added tax ordinary invoice) after the lender confirms receipt of the payment. The lender can issue value-added tax to the borrower after receiving the application for issuing a value-added tax invoice from the borrower invoice.

 

2. The borrower can apply for the issuance of value-added tax invoices at the corresponding business processing agency or other institutions designated by the lender.

 

3. The borrower needs to confirm that the payer of the payment, the signatory of the contract, and the purchaser listed in the value-added tax invoice are the same taxpayer. If there is inconsistency, resulting in the borrower being unable to book or deduct input tax in accordance with the law, the relevant losses shall be borne by the borrower undertake.

 

4. If the borrower loses the invoice after obtaining it, the lender does not need to issue a supplementary value-added tax invoice to the borrower.

 

5. If the lender provides a discount to the borrower through negotiation, the amount of the value-added tax invoice issued shall be based on the discounted price.

 

6. If the lender provides free services to the borrower, the lender will not provide value-added tax invoices.

 

7. The lender shall issue a value-added tax invoice to the borrower, and the borrower shall promptly verify the invoice information. If the invoice information is incorrect,the borrower shall promptly apply to the lender for reissuing the value-added tax invoice.

 

 

Article 11 Declaration and Commitment

 

1. The borrower hereby declares that:

 

(1) The borrower is registered and exists legally, and has full capacity and civil rights to conduct the signing and performing of this contract;

 

(2) The signing and performance of this contract is based on the true intention of the borrower. The borrower has obtained legal and effective authorization, and will not violate any agreement, contract or other legal documents binding on the borrower; The borrower has obtained or will obtain all relevant approval, permission, records and registration required for signing and performing this contract;

 

(3) All documents, financial statements, vouchers and other information provided by the borrower to the lender for this contract are true, complete, accurate and effective;

 

(4) The transaction background provided by the borrower is true and legal, and no money laundering or other illegal activities is involved,and not violating the sanctions regulations applicable to the United Nations, China, and other countries;

 

(5) The borrower does not conceal from the lender any event that may affect the financial status and performance ability of the borrower and the guarantor;

 

(6) The borrower and the loan projects meet the national environmental protection standards, and there is no risk of energy over-consumption or pollution identified by the national departments;

 

(7) The purpose of the loan and the source of repayment are true and legal;

 

(8) Other matters declared by the borrower.

 

2. The borrower promises:

 

(1) To provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to the lender on a regular or timely basis; The borrower shall remain to meet the following financial index requirements: A.its asset-liability ratio of the latest single borrower and group consolidated financial statements does not exceed 65%, the current ratio is no less than 1; B.The loan financing balance of the borrower flow does not exceed 400 million yuan and does not exceed 25% of the group’s consolidated annual income;

 

(2) If the borrower has entered into or will enter into a counter guarantee agreement or similar agreement with the guarantor as this contract, the agreement will not damage any rights of the lender;

 

(3) To accept the credit inspection and supervision of the lender with assistance and cooperation; If the borrower adopts the independent payment method, it shall regularly summarize and report to the lender; The summary report shall be a monthly report;

 

(4) In case of merger, division, capital reduction, equity transfer, foreign investment, substantial increase in debt financing, transfer of major assets and creditor’s rights and other matters that may adversely affect the borrower’s solvency, the borrower shall obtain the written consent of the lender in advance;

 

In case of the following circumstances, the borrower shall timely notify the lender:

 

A. There are changes in the borrower or guarantor’s articles of association, business scope, registered capital and legal representative;

 

B. There are any forms of joint venture, cooperation, contracted operation, restructuring, IPO plans and other changes in the operation mode;

 

 

C. The borrower or the guarantor is involved in major litigation or arbitration cases, property or collateral is sealed up, detained or supervised, or new security is set on collateral;

 

D. The borrower is to close down, dissolve, liquidate, have its business license revoked, or apply for bankruptcy, etc;

 

E. Shareholders, directors and current senior managers are suspected of major cases or economic disputes;

 

F. The borrower violates other contracts;

 

G. Business difficulties and deterioration of financial situation occur;

 

(5) The repayment order of the borrower’s debt to the lender is prior to that of the borrower’s shareholders, and is no less than that of other creditors;

 

(6) Before the repayment of the loan principal, interests and related expenses in this contract is completed, the borrower shall not distribute any dividend or bonus to its shareholders in any form;

 

(7) The borrower shall not dispose of its own assets in a way that reduces its solvency. The borrower promises that the total amount of external guarantee shall not be more than twice of its own net assets, and that the total amount of external guarantee and the amount of single guarantee shall not exceed the limit specified in its articles of association;

 

(8) The borrower shall not transfer the loan fund to the account with the same account name or to the account of the related parties except for the purpose specified in this contract or with the consent of the lender.

 

To conduct transfers as mentioned in item (8) above, the borrower must provide the lender with sufficient supporting materials;

 

(9) The loan conditions such as the loan interest rate, guarantee, and repayment order stated in this contract shall not be lower than those given by the borrower to any other financial institution now or in the future;

 

(10) The lender has the right to call in the loan in advance based on the borrower’s fund repayment status;

 

(11) The borrower shall provide its environmental and social risk report to the lender. The borrower undertakes to strengthen the management of environmental and social risks with the lender’s supervision. The borrower’s breach of the agreements described above is deemed as an event of default, and the lender may take remedies for breach of contract;

 

(12) Cooperate with the lender in conducting due diligence work, provide and update information on the institution and its beneficial owners, and provide background information related to the transaction;

 

(13) Other items promised by the borrower.

 

Article 12 Disclosure of Related Party Transactions

 

Both parties agree that the following clause 1 shall apply:

 

1. The borrower is not a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

2. The borrower is a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers. The borrower shall timely report to the lender about its related party transactions of more than 10% of its net assets, including the related party relationship, transaction items and nature, transaction amount, and pricing policy (including transactions with no amount or with only symbolic amount).

 

If any one of the following circumstances, the lender has the right to unilaterally decide to stop offering the unused loan and call in part or all of the loan principal and interest in advance: the borrower takes advantage of false contract with related parties to obtain bank funds or credit; The borrower is involved in cases of major merger, acquisition and reorganization where the lender thinks that it may affect the security of the loan; and other circumstances specified in Article 18 of the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

 

Article 13 Breach of Contract

 

Any of the following events shall constitute or be deemed as an event of default:

 

1. The borrower fails to perform its obligations of payment and settlement as agreed in this contract;

 

2. The borrower fails to use the loan funds in the way or for the purpose agreed in this contract，or fails to use the obtained funds for the purposes specified in this contract;or the borrower uses the loan funds for refinancing or purchasing other financial products for arbitrage; Or the borrower illegally adds implicit local government debts;

 

3. The statement made by the borrower in this contract is untrue or violates its commitment in this contract;

 

4. In case of any circumstance specified in Article 11.2.(4) where the lender thinks that it may affect the financial status and performance ability of the borrower or the guarantor, and the borrower fails to provide new guarantee or replace the guarantor;

 

5. The credit status of the borrower declines, the profitability, solvency, operating capacity, cash flow and other financial indicators of the borrower deteriorate, or the borrower’s financial indicators break through the constraints as stipulated in this contract;

 

6. The borrower breaches any other contract with the lender or other institutions of Bank of China Limited; Any event of breaches of credit business contract happen between the borrower and other financial institutions;

 

7. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with the lender or other institutions of Bank of China Limited;

 

8. Termination of business, dissolution, cancellation or bankruptcy happens to the borrower;

 

9. The borrower is involved in or may be involved in major economic disputes, litigation, arbitration, its assets are sealed up, distrained or enforced, it is being investigated or punished by national legal department;

 

10. The borrower’s major investors and key management personnel change abnormally, or become missing, subject to judicial investigation or restriction of personal freedom;

 

11. The lender finds that there are circumstances that may affect the financial status and performance ability of the borrower or the guarantor at the annual review;

 

12. There is a large amount of abnormal capital inflow and outflow in the designated repayment account, and the borrower can not provide supporting materials approved by the lender;

 

13. The construction of energy-saving projects is seriously lagged, the energy-saving technology and equipment have serious defects, stopped or reduced production of the main facilities or equipment results in the actual energy saving significantly lower than the forecast thereafter the energy-saving income can not return to the designated account in time, the borrower participates in private high interest loans, the borrower offers other external guarantee or borrow new debts without the consent of the lender, and the borrower’s key financial indicators are seriously deteriorated;

 

14. The borrower refuses to cooperate with the lender in conducting due diligence, and the borrower or its trading counterparty is suspected of money laundering, terrorist financing, nuclear weapons proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the borrower or guarantor is included in the United Nations, China, and other applicable sanctions list or scope;

 

15. The borrower violates other provisions on the rights and obligations of the parties in this contract.

 

 

In case of any event of default specified in the preceding paragraph, the lender shall have the right to take the following actions regarding the specific circumstances:

 

1. Require the borrower and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend, cancel or terminate the credit line to the borrower in whole or in part;

 

3. Suspend or terminate in whole or in part the acceptance of the borrower’s withdrawal and other business applications; Suspend or cancel all or part of the loans that have not been granted and the trade financing that have not been handled;

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable between the borrower and the lender due immediately;

 

5. Terminate or rescind this contract and other contracts between the borrower and the lender in whole or in part;

 

6. Require the borrower to compensate the losses caused to the lender due to its breach of contract, including but not limited to the litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of the creditor’s rights;

 

7. Deduct the money balance of the account opened by the borrower with the lender and other institutions of Bank of China Limited to pay off all or part of the borrower’s debts to the lender. The undue amount in the account shall become due at the time. If the account currency is different from the lender’s business valuation currency, it shall be converted at the foreign exchange rate at the time of the deduction;

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that the lender considers necessary and possible.

 

Article 14 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 15 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

 

Article 16 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the People’s Republic of China.

 

After this contract comes into effect, all disputes arising from the establishment and performance of this contract can be settled by both parties through negotiation. If the negotiation fails, either party may adopt the 2nd way as follows:

 

1. Submit an application to the following departments for arbitration:

 

☐ China International Economic and Trade Arbitration Commission

 

☐ Beijing Arbitration Commission (Beijing International Arbitration Center)

 

☐ Other arbitration commissions

 

The arbitration shall be conducted in accordance with the arbitration rules in force at the time of applying for arbitration. Final result of the arbitration shall be binding on all parties.

 

2. Litigation.

 

☐ Bring a lawsuit to the People’s Court of the place where Party B or other institutions of Bank of China limited exercise their rights and obligations.

 

☐ Bring a lawsuit to the International Commercial Court of the Supreme People’s Court (for international commercial disputes with an amount of more than 300 million yuan).

 

þ Bring a law suit to the people’s court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other provisions of this Agreement and the single agreement, the other provisions shall continue to be performed.

 

Article 17 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

1. Attachment: Application Form for Withdrawals.

 

2. Notification Letter of Loan Annualized Interest Rate (Format)

 

Article 18 Other Agreements

 

1. Without the written consent of the lender, the borrower shall not transfer any rights or obligations in this contract to a third party.

 

2. The borrower is going to agree if the lender has to entrust other institutions of Bank of China Limited to perform the rights and obligations in this contract due to business needs, or to transfer the loan business in this contract to other institutions of Bank of China Limited to undertake and manage. Other institutions of Bank of China Limited authorized by the lender, or other institutions of Bank of China Limited undertaking the loan business in this contract, shall have the right to exercise all the rights in this contract, and have the right to file a lawsuit in the name of such institution, submit to an arbitration institution for adjudication or apply for enforcement according to this contract.

 

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first instance, second instance, retrial, and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance.In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court, or refusal of the designated recipient to sign after the delivery address is changed, etc., the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The transactions arising from this contract are based on each party’s own interests independently. According to law, the fairness of the transaction shall not be affected by any of the lender’s related parties or persons by taking advantage of the relationship.

 

6. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

7. The lender shall have the right to provide the information related to this contract and the borrower to the credit reference system of the People’s Bank of China and other credit information databases established according to law for inquiry and use by institutions or individuals with appropriate qualifications. The lender also has the right to inquire the relevant information of the borrower through the credit information system of the People’s Bank of China and other legally established credit information databases for the purpose of signing and performing this contract.

 

8. In case of legal holidays, the withdrawal date and repayment date shall be postponed to the first working day after the holidays.

 

9. If the lender fails to perform the agreement due to changes in laws and regulations, the lender has the right to terminate or change the performance of this agreement. If the agreement is terminated or changed due to such reasons, the lender shall be exempted from liability.

 

10. The borrower may consult and complain about this contract and its business and fees through the contact phone number of the lender listed in this contract.

 

Article 19 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

 

This contract is made in duplicate with the same legal effect, one for each party.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

May 18, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

May 18, 2022

 

 

14

Exhibit 10.20

 

Maximum Mortgage Contract

No.: fj1122021142

 

Mortgagor: Suzhou Shengfeng Logistics Co., Ltd

Unified Social Credit Code: 91320507769866735B

Legal Representative / Person in Charge: Kang Zhenghao

Address: 55 Huaxing Road, Xingeng village, Wangting Town, Xiangcheng District, Suzhou City

Zip Code: 201500

Financial Institution and Account Number: China Minsheng Bank Co., Ltd. Suzhou Xiangcheng Branch 631058638

Tel: 0512-66707352                      Fax: 0512-66703297

 

Mortgagee: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge: Lin Jie

Address: Fusheng Qianlong international annex building 1F-03, No.3 middle Changle Road, Wangzhuang Street, Jin’an District, Fuzhou City

Zip Code: 350011

Tel: 0591-83163662                      Fax: 0591-83163662

 

In order to guarantee the performance of the liabilities under the main contract mentioned in Article 1 of this contract, the mortgagor voluntarily mortgages the right of legal property disposal to the mortgagee as listed in the attached “list of mortgaged property”. Both parties enter into this contract through equal consultation. Unless otherwise agreed in this contract, the interpretation of words in this contract shall be determined according to the main contract.

 

Article 1 Main Contract

 

The main contract is:

 

The Credit Line Agreement (No.fj1122021141) signed between the creditor and the debtor Shengfeng Logistics Group Co., Ltd. and the single agreements that have been and will be signed according to the credit line agreement, as well as its amendments or supplements.

 

Article 2 Principal Creditor’s Rights and the Period of Occurrence

 

Unless otherwise determined or agreed in accordance with the law, the creditor’s rights actually occur under the main contract within the following periods, as well as the creditor’s rights already occurred between the debtor and the creditor before the contract takes effect, constitute the main creditor’s rights of the contract:

 

From the effective date of the credit line agreement mentioned in Article 1 of this contract to the expiration date of the service life of the credit line specified in the agreement and its amendments or supplements.

 

 

Article 3 Maximum Amount of Secured Claims

 

1. The maximum creditor’s rights guaranteed by this contract is:

 

Currency: RMB.

Amount: ￥80,000,000.00.

 

2. On the expiration date defined in Article 2 of this contract, the interest (including legal interest, agreed interest, compound interest and penalty interest), liquidated damages, damages, expenses for realizing the creditor’s right (including but not limited to litigation expenses, lawyer’s fees, notarization fees, etc.) incurred on the principal of the principal creditor’s right shall be calculated. The specific amount of the secured claim is determined when it is paid off.

 

The sum of the amount of creditor’s rights determined according to the above two terms is the maximum amount of creditor’s rights guaranteed by this contract.

 

Article 4 Collateral

 

See the “list of collateral” in the appendix for the relevant information of collateral.

 

During the period of the mortgage, if the mortgaged property is damaged, lost or expropriated, the mortgagee may have the priority to be compensated for the obtained insurance and compensation money. This money may also be drawn if the performance period of the secured creditor’s right has not expired.

 

If the mortgaged property is a house, the mortgagor shall timely inform the mortgagee upon knowing the information that the house is to be demolished. During the mortgage period, if the mortgaged house is demolished and the compensation form of property right exchange is adopted for the demolished house, the mortgagor shall negotiate with the debtor and the mortgagee to pay off the main liabilities, or reset the mortgage after the property right exchange and sign a new agreement according to the mortgagee’s requirements. After the demolishing of the original mortgaged real estate and before the new mortgage registration is handled, the mortgagor should provide a guarantee to the mortgagee by the guarantor; If the house to be demolished is compensated in the form of compensation money, the mortgagee has the right to receive the compensation in priority, or require the mortgagor to continue using the demolition compensation as security property by opening a special deposit account or a deposit receipt, and signing the corresponding agreement.

 

Article 5 mortgage Registration

 

If mortgage registration is required according to law, the two parties shall go through the procedures with the registration department within 10 days after signing this contract.

 

In case of any changes in the registered items of mortgage, the two parties shall register the change within 3 days from the change date.

 

The mortgage registration fee shall be borne by the mortgagee.

 

Article 6 Possession and Keep of the Mortgaged Property

 

The mortgaged property under this contract shall be possessed and kept by the mortgagor, but all certificates of the property shall be kept by the mortgagee. The mortgagor agrees to accept and effectively cooperate with the mortgagee’s inspection of the property at any time.

 

The mortgagor shall properly keep and maintain the mortgaged property and take effective measures to ensure the safety and integrity of the property; If the mortgaged property needs to be repaired, the mortgagor shall do so in time and bear the corresponding expenses.

 

Without the written consent of the mortgagee, the mortgagor shall not transfer, gift, re mortgage, pledge, trust, lease, lend, contribute in kind, transform, rebuild, establish residential rights, or dispose of the mortgaged property in whole or in part in any other way; With the written consent of the mortgagee, the proceeds from the disposal of the collateral shall be deposited into the mortgagee’s designated account, and the mortgagee has the right to choose the following methods for processing; (1) Require early repayment of debts; (2) Convert the price into a security deposit pledge; (3) Require the mortgagor to provide new guarantees; If the mortgagor transfers the mortgaged property without the written consent of the mortgagee, resulting in a value significantly lower than the market reasonable value, the mortgagor shall be liable within its fault.

 

 

Article 7 Determination and reduction of collateral value

 

The value of the collateral can be determined through consultation between the mortgagee and the mortgagor. If a third-party evaluation company is entrusted to evaluate the value of the collateral, the borrower is a small and micro enterprise, and the mortgagee serves as the principal and bears the evaluation fee; The borrower is a non small and micro enterprise, and the debtor serves as the principal and bears the evaluation fee.

 

The value of the collateral determined through negotiation or the value conclusion of the evaluation company’s evaluation report reviewed by the mortgagee shall be recorded in the corresponding column of the “Collateral List” in this contract.

 

If the mortgagor’s conducts activities that is going to reduce the value of the mortgaged property before the main creditor’s right of this contract is fully paid off, the mortgagee has the right stop the mortgagor’s such behavior. If the value of the mortgaged property decreases, the mortgagee has the right to require the mortgagor to restore the value of the property or to provide other guarantees equivalent to the reduced value. If the mortgagor neither restores the value of the property nor provides a guarantee, the mortgagee has the right to require the debtor to pay off the liability in advance. If the debtor fails to pay off, the mortgagee has the right to exercise the mortgage.

 

If the mortgaged property is lost or its value is reduced due to natural disasters, accidents, torts and other reasons, the mortgagor shall immediately take measures to prevent further expansion of the loss and immediately notify the mortgagee in writing.

 

Article 8 Fructus

 

If the debtor fails to pay off the due liabilities or under other circumstances the mortgage right is seized by the People’s Court according to law, the mortgagee has the right to collect the natural or legal fructus of the mortgaged property from the date of seizure, unless the mortgagee fails to notify the obligator who shall pay off the legal fruits.

 

The fructus mentioned in the preceding paragraph shall first be used to cover the expenses for collecting the fructus.

 

Article 9 Insurance of Mortgaged Property (one of the following items shall be selected: 1. applicable; 2. not applicable)

 

The mortgagor shall purchase insurance from an insurance company determined through consultation with the mortgagee in accordance with the insurance type, insurance period, and insurance amount determined by both parties. If the assessed value of the collateral is not less than the corresponding amount of the principal debt guaranteed by this contract, the insurance shall be purchased at a rate not less than the corresponding amount of the principal debt guaranteed by this contract. If the assessed value of the collateral is less than the corresponding amount of the principal debt guaranteed by this contract, the insurance shall be purchased at the assessed value of the collateral. The content of the insurance policy shall meet the requirements of the mortgagee and shall not be accompanied by restrictive conditions that are detrimental to the rights and interests of the mortgagee. The insurance premium shall be borne by the mortgagee and 100% by the mortgagor. If the borrower is a small or micro enterprise, the insurance premium shall be borne by the mortgagee.

 

Before the main creditor’s rights of this contract are fully paid off, the mortgagor shall not interrupt, terminate, modify or change the insurance policy for any reason, and shall take all reasonable and necessary measures to ensure that the insurance agreed in this article remains valid. If the mortgagor fails to insure or violates the agreement mentioned above, the mortgagee has the right to decide to continue to insure the mortgaged property. The insurance costs shall be borne by the mortgagor, with 100% borne by the mortgagor. Any losses caused to the mortgagee due to the mortgagor’s failure to bear the corresponding insurance costs as agreed shall be recorded in the debt balance. If the borrower is a small or micro enterprise, the insurance premium shall be borne by the mortgagee.

 

Within 3 days after the signing of this contract, the mortgagor shall provide the mortgagee with the original insurance document of the mortgaged property to transfer the claim right of insurance benefits to the mortgagee. Before the main claims of this contract are fully paid off, the original insurance document shall be kept by the mortgagee.

 

 

Article 10 Guarantee Liabilities

 

If the debtor fails to make payment to the mortgagee on any normal repayment date or prepayment date under the main contract, the mortgagee has the right to exercise the mortgage in accordance with the law and the contract, and has the priority in compensation for the mortgaged property within the maximum amount specified in Article 3 of the contract.

 

The normal repayment date referred to in the preceding paragraph is the principal repayment date, interest payment date or the date when the debtor shall pay any money to the mortgagee according to the contract. The prepayment date mentioned in the preceding paragraph refers to the date proposed by the debtor with the consent of the mortgagee, and the date when the mortgagee requests the debtor to recover the principal and interest of the creditor’s right and / or any other money in advance according to the contract.

 

Article 11 Types and Period of Exercising the Mortgage Right

 

After the occurrence of the guarantee liability, the mortgagee has the right to exercise all or part of the mortgage that has reached the liquidation period according to law.

 

The mortgagee should exercise the right within the limitation of action; If the creditor’s right is paid off by installments, the mortgagee shall exercise the mortgage right before the reach of the last term’s limitation period of action.

 

Article 12 Realization of the Mortgage

 

After the occurrence of the guarantee liability, the mortgagee has the right to negotiate with the mortgagor to convert the mortgaged property into repayment of the principle creditor’s right through auction or sale. If the negotiation fails, the mortgagee has the right to request the People’s Court for an auction or sale of the mortgaged property according to law.

 

The proceeds from the disposal of the mortgaged property should be used to pay for the disposal expenses in priority and then to pay off the principal creditor’s right.

 

If the principle liability is guaranteed by other things besides this contract, it will not affect any right of the mortgagee under this contract. The mortgagee has the right to determine the exercise order of each guarantee right. The mortgagor shall undertake the guarantee liability in accordance with this contract, and there shall be no other defenses regarding other guarantee and the exercise order.

 

Article 13 Relationship Between this Contract and the Main Contract

 

If the main contract includes the credit line agreement / general agreement on credit business, written consent of the mortgagor is required to extend the credit line service term / business cooperation term. Without the mortgagor’s consent or refusal, the mortgagor shall only use the collateral under this contract to guarantee the principal creditor’s rights occurring during the service life of the original credit line / business cooperation period within the maximum amount of the secured creditor’s rights specified in Article 3 of this contract.

 

For changes of other contents or matters in the credit line agreement / general agreement on credit business, the single agreements, and single main contract, it is not necessary to obtain the consent of the mortgagor. The mortgagor still undertakes the guarantee responsibility for the changed main contract with the mortgaged property within the maximum amount of secured creditor’s rights specified in Article 3 of this contract.

 

The maximum amount of secured creditor’s rights specified in Article 3 of this contract may be changed in writing with the agreement of the mortgagor and the mortgagee.

 

If the mortgaged property under this contract has other mortgagees, the changes above shall not have adverse effects on them without their written approval.

 

 

Article 14 Declaration and Commitment

 

The mortgagor hereby declares that:

 

1. The mortgagor is legally registered, exists, and has the full capacity of civil rights required for signing and performing this contract and the legal ownership or disposal right of the mortgaged property;

 

2. The mortgagor guarantees that there are no other co-owners of the mortgaged property, or that although there are co-owners, the mortgagor has obtained the written approval of all co-owners. The mortgagor undertakes to deliver the written approval to the mortgagee before signing this contract;

 

3. The mortgagor fully understands the contents of the main contract. The signing and performance of this contract is based on the mortgagor’s true intention, and the mortgagor has obtained legal and effective authorization.

 

If the mortgagor is a third party and is a company, the guarantee provided by the mortgagor has been approved by the board of directors or through the shareholders’ meeting, and does not exceed the specified limit stipulated by the company.

 

Signing and performing this contract will not violate any contract, agreement or other legal documents binding on the mortgagor. The mortgagor has obtained or will obtain all relevant approval, permission, filing and registration required for this mortgage;

 

4. All documents and materials provided by the mortgagor to the mortgagee are accurate, true, complete and effective;

 

5. The mortgagor has not concealed any existing security interests of the mortgaged property from the mortgagee as of the date of signing this contract;

 

6. If a new security interest is set for the mortgaged property, the mortgaged property is closed down, or the mortgagor is involved in a major lawsuit or arbitration case, the mortgagor should notify the mortgagee in time;

 

7. If the mortgaged property is a project under construction, the mortgagor promises that there is no priority right of a third party in the mortgaged property; If there is a third party’s right of priority, the mortgagor promises to request the third party to issue a written statement of abandoning the right of priority and then hand it over to the mortgagee.

 

8.If the collateral is a house, before the signing of this contract, unless the mortgagor has disclosed to the mortgagee, the mortgagor promises that there is no residential right of a third party on the collateral; During the mortgage period, without the written consent of the mortgagee, no part or all of the mortgaged property shall be granted residency rights.

 

9.If the collateral is movable property, the mortgagor promises that there are no outstanding payments or financing payments for the purchase of the collateral that have not been notified to the mortgagee, and there is no established security interest with the collateral as the main debt.

 

Article 15 Contracting Fault

 

After the signing of this contract, if the mortgagor refuses to handle or delays the mortgage registration, or due to other reasons of the mortgagor, this contract cannot come into effect and the mortgage cannot be effectively issued, it will lead to the fault of contracting. If the mortgagee suffers losses for this reason, the mortgagor shall be liable for the compensation.

 

 

Article 16 Breach of the Contract

 

Any of the following circumstances shall constitute or be deemed as the mortgagor’s breach of the contract:

 

1. The mortgagor, in violation of this contract, transfers, rents, lends, transforms, rebuilds or disposes of the mortgaged property in whole or in part in any other way without authorization;

 

2. The mortgagor failed to handle mortgage registration in a timely manner as agreed in this contract.

 

3. The mortgagor prevents the mortgagee from disposing of the mortgaged property in accordance with the law and / or the relevant provisions of this contract in any way;

 

4. When the value of the mortgaged property decreases as described in Article 7 in this contract, the mortgagor refuses to restore the value as required and does not provide additional guarantee;

 

5. The statement made by the mortgagor in this contract is not true or violates the commitment made in this contract;

 

6. The mortgagor violates other provisions on the rights and obligations of the parties in this contract;

 

7. Termination, dissolution, revocation or bankruptcy occurs to the mortgagor’s company;

 

8. The mortgagor breaches the contract with the mortgagee or other institutions of Bank of China Limited.

 

In the event of breach of contract as mentioned in the preceding paragraph, the mortgagee has the right to take the following measures respectively or at the same time regarding the specific circumstances:

 

1. Require the mortgagor to correct the breach of contract within a time limit;

 

2. Reduce, suspend or terminate the whole or part of the credit line to the mortgagor;

 

3. Partially or fully suspend or terminate business applications from the mortgagor with other contracts; All or part of the loans and trade financing that have not yet been granted or handled shall be suspended or terminated;

 

4. Declare all or part of the mortgagor’s principal and interest of the loan / trade financing funds and other outstanding accounts payable to be immediately due;

 

5. Terminate or rescind this and other contracts between the mortgagor and the mortgagee;

 

6. Require the mortgagor to compensate for the loss caused by the breach of contract;

 

7. Exercise the mortgage;

 

8. Other measures deemed necessary by the mortgagee.

 

 

Article 17 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 18 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 19 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the people’s Republic of China.

 

All disputes arising from the performance of this contract can be settled by both parties through negotiation. If the negotiation fails, both parties agree to adopt the same dispute settlement method as agreed in the main contract.

 

During the dispute settlement period, if the dispute does not affect the performance of other terms of the contract, the other terms shall continue to be performed.

 

Article 20 Appendix

 

The following attachments and other attachments confirmed by both parties constitute an integral part of this contract and have the same legal effect as this contract.

 

1. List of Collateral.

 

Article 21 Other Agreements

 

1. The guarantor shall not transfer any rights and obligations under this contract to a third party without the creditor’s written consent.

 

2. If the creditor has to entrust other institutions of Bank of China Limited to perform the rights and obligations under this contract due to business needs, the guarantor shall recognize it. Other institutions of Bank of China Limited authorized by the creditor have the right to exercise all rights under this contract, and have the right to bring a lawsuit to the court or submit to the arbitration institution for adjudication on the disputes under this contract.

 

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first and second instance retrial and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance. In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill its obligation of knowing in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the recipient designated by the court of refusal to sign for delivery after the delivery address is changed, or other reasons, the date of return of the document shall be deemed as the date of delivery, and the date on which the recipient records the situation on the delivery receipt shall be deemed as the date of delivery.

 

5. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

6.The mortgagor may consult and complain about this contract and its business and fees through the contact phone number of the mortgagee listed in this contract.

 

Article 22 Effectiveness of Contract and Issue of the Mortgage

 

This contract shall come into force from the date when signed by the legal representatives, responsible persons or authorized signers of both parties with official seals. However, if mortgage registration is required according to law, the contract shall come into force from the date when the registration procedures are completed.

 

The mortgage is issued when the contract comes into effect.

 

This contract is made in quadruplicate with the same legal effect, one for each party and the debtors.

 

Mortgagor: Suzhou Shengfeng Logistics Co., Ltd.

Authorized Signature: Kang Zhenghao

 

July 5, 2021

 

Mortgagee: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized Signature: Zhang Changkai

 

July 5, 2021

 

 

Appendix

 

List of Collateral

 

No. fj1122021142-1

 

Collateral Name

Amount

Evaluated Value

Ownership (certificate no.)

Location

Registration Authority

Real estate and land use right of No.50 Taiyang Road, Wangting Town, Xiangcheng District, Suzhou

Building Area:   37767.66㎡;   Land Area:   26400.00㎡.

￥110016300

Su (2017) Suzhou real estate No. 7001992

No.50 Taiyang Road, Wangting Town, Xiangcheng District

Xiangcheng sub center of Suzhou real estate registration center

 

 

9

Exhibit 10.21

 

Maximum guarantee contract

(for natural person guarantor)

No.: fj1122023039

 

Guarantor: Liu Yongxu

Certificate No.: 350122197101084553

Certificate Type: ID card

Address: Sunshine city 3-3-2802, 33 Degui Road, Gulou District, Fuzhou City, Fujian Province

Zip Code: 350001

Tel: 0591-83628181

Fax: 0591-83628181

 

Creditor: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge: Chen Kai

Address: Fusheng Qianlong international annex building 1F-03, No.3 middle Changle Road, Wangzhuang Street, Jin’an District, Fuzhou City

Zip Code: 350011

Tel: 0591-83163662

Fax: 0591-83163662

 

In order to guarantee the performance of the debts under the main contract mentioned in Article 1 of this contract, the guarantor is willing to provide guarantee to the creditor. This contract is signed by both parties through equal consultation. Unless otherwise agreed in this contract, the interpretation of words in this contract shall be determined according to the main contract.

 

Article 1 Main Contract

 

The main contract is:

 

The credit line agreement (No. fj1122023039) signed between the creditor and the debtor Shengfeng Logistics Group Co., Ltd. and the single agreements that have been and will be signed according to the credit line agreement, as well as its amendments or supplements.

 

Article 2 Principal Creditor’s Rights and the Period of Occurrence

 

Unless otherwise determined or agreed in accordance with the law, the creditor’s rights actually occur under the main contract within the following periods, as well as the creditor’s rights already occurred between the debtor and the creditor before the contract takes effect, constitute the main creditor’s rights of the contract:

 

From the effective date of the credit line agreement mentioned in Article 1 of this contract to the expiration date of the service life of the credit line specified in the agreement and its amendments or supplements.

 

 

Article 3 Maximum Amount of Secured Claims

 

1. The maximum principal balance of the creditor’s rights guaranteed by this contract is:

 

Currency: RMB.

 

Amount: ￥80,000,000.00.

 

2. On the expiration date defined in Article 2 of this contract, the interest (including legal interest, agreed interest, compound interest and penalty interest), liquidated damages, damages, expenses for realizing the creditor’s right (including but not limited to litigation expenses, lawyer’s fees, notarization fees, etc.) incurred on the principal of the principal creditor’s right shall be calculated. The specific amount of the secured claim is determined when it is paid off.

 

The sum of the amount of creditor’s rights determined according to the above two terms is the maximum amount of creditor’s rights guaranteed by this contract.

 

Article 4 Guarantee Types

 

The guarantee type of this contract is Item 1 as follows:

 

1. Joint liability guarantee.

 

2. General guarantee.

 

Article 5 The Occurrence of Guarantee Liability

 

If the debtor fails to pay off the debts to the creditor on any normal repayment date or prepayment date under the main contract, the creditor has the right to require the guarantor to bear the guarantee liability.

 

The normal repayment date mentioned in the preceding paragraph refers to the principal repayment date, interest payment date or the date when the debtor shall pay any money to the creditor according to the contract. The prepayment date mentioned in the preceding paragraph refers to the prepayment date proposed by the debtor with the consent of the creditor and the date when the creditor requests the debtor to recover the principal and interest of the creditor’s right and / or any other money in advance in accordance with the contract.

 

If the principal debt is guaranteed by other things besides this contract, it will not affect any right of the creditor and the exercise under this contract. The creditor has the right to determine the order of exercise of each guarantee right. The guarantor shall undertake the guarantee liability according to this contract, and shall not defend the creditor by the existence of other guarantees and the order of exercise.

 

Article 6 Guarantee Period

 

The guarantee period under this contract shall be three years from the date of expiration of the main creditor’s right period specified in Article 2 of this contract.

 

During the guarantee period, the creditor has the right to require the guarantor to undertake the guaranteed liability for all or part of the principal creditor’s rights, in forms of multiple or single claims.

 

Article 7 Limitation of Action of the Guaranteed Liability

 

If the principal creditor’s right is not paid off, in the case of joint and several liability guarantee, if the creditor requires the guarantor to undertake the guaranteed liability before the expiration of the guarantee period specified in Article 6 of this contract, the guaranteed liability shall be calculated and the limitation of action shall be applied from the date when the creditor requires the guarantor to undertake the guarantee liability.

 

In the case of general guarantee, if the creditor brings a lawsuit or applies for arbitration against the debtor before the expiration of the guarantee period specified in Article 6 of this contract, the guaranteed liability shall be counted and the limitation of action shall apply from the effective date of the judgment or arbitration award.

 

 

Article 8 Relationship Between this Contract and the Main Contract

 

If the main contract includes the Credit Line Agreement / General Agreement on Credit Business, written consent of the guarantor is required to extend the credit line term / business cooperation term. Without the guarantor’s consent or refusal, the guarantor shall only undertake the guaranteed liability for the principal creditor’s rights that occur during the service life of the original credit line / business cooperation period within the maximum amount of the guaranteed creditor’s rights specified in Article 3 of this contract, and the guarantee period shall still be the original period.

 

For the change of other contents or matters in the credit line agreement / general agreement on credit business, the single agreements, and the single main contract, it is not necessary to obtain the consent of the guarantor. The guarantor shall still bear the guarantee responsibility for the changed main contract within the maximum amount of guaranteed creditor’s rights specified in Article 3 of this contract.

 

After the creditor and the guarantor reach an agreement through consultation, they may change the maximum amount of the secured creditor’s right stipulated in Article 3 of this contract in writing.

 

Article 9 Declaration and Commitment

 

The guarantor represents and undertakes as follows:

 

1. The guarantor has the capacity of civil rights required to sign and perform the contract; The guarantor has the financial ability to perform the guarantee responsibilities under the contract;

 

2. The guarantor fully understands the contents of the main contract, and the signing and performance of this contract is based on the guarantor’s true intention;

 

3. The execution and performance of this contract will not violate any contract, agreement or other legal document binding on the guarantor;

 

4. All documents and information provided by the guarantor to the creditor are accurate, true, complete and effective;

 

5. The guarantor accepts the supervision and inspection of its financial condition by the creditor, and is willing to provide assistance and cooperation;

 

6. The guarantor has not concealed any major liabilities from the creditor that have been undertaken as of the date of signing the contract;

 

7. If any circumstance may affect the guarantor’s financial condition and performance capability, including but not limited to property reduction, transfer, gift, debt bearing, major disease, etc., or involving in major litigation or arbitration cases, the guarantor shall notify the creditor in time.

 

8. The guarantor promises that the source of funds is legal, and the transaction does not violate the United Nations, China, and other applicable sanctions regulations. The guarantor shall cooperate with the creditor in conducting due diligence work, providing and updating customer information and transaction background information.

 

 

Article 10 Authorization of Personal Credit Information

 

Guarantor authorization: in case of the following circumstances related to the guarantor, the creditor may request the guarantor’s personal credit report through the basic personal credit information database of the people’s Bank of China.

 

1. To review the personal credit application of the guarantor;

 

2. To examine and verify the guarantor’s application for personal guarantee;

 

3. To conduct post-loan management of personal credit or personal guarantee under the name of guarantor;

 

4. To inquire about the credit status of the guarantor as the legal person or as an investor;

 

At the same time, the creditor is authorized to submit the guarantor’s personal credit information to the basic personal credit information database of the people’s Bank of China.

 

Article 11 Breach of Contract

 

Any of the following circumstances shall constitute or be deemed as the guarantor’s breach of this contract:

 

1. Failure to perform the guarantee responsibility in time as agreed in this contract;

 

2. The statement made in this contract is not true or violates the commitments made in this contract;

 

3. The events mentioned in article 9.7 of the contract seriously affect the financial status and performance ability of the guarantor;

 

4. Violation of other provisions on the rights and obligations of the parties in this contract;

 

5. The guarantor breaches the contract with the creditor or other institutions of Bank of China Limited.

 

6. The guarantor refuses to cooperate with the creditor in conducting due diligence, and the guarantor or its transaction/counterparty is suspected of money laundering, terrorist financing, nuclear weapon proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the guarantor is included in the United Nations, China, and other applicable sanctions list or scope.

 

In the event of the guarantor breaching the contract as mentioned in the preceding paragraph, the creditor has the right to take the following measures respectively or at the same time according to the specific circumstances:

 

1. Require the guarantor to correct his or her breach of the contract within a time limit;

 

2. Reduce, suspend or terminate the credit line to the guarantor in whole or in part;

 

3. Suspend or terminate the business application of the guarantor for other contracts and loans and trade financing that have not yet been granted or handled in whole or in part;

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable of the guarantor under other contracts due immediately;

 

5. Terminate or rescind this contract or other contracts between the guarantor and the creditor in whole or in part;

 

6. Ask the guarantor to compensate the creditor for the loss caused by the breach of contract;

 

7. Deduct the money balance from the account opened by the guarantor to pay off all or part of the debts to the creditor. The unexpired amount in the account shall be regarded as early maturity. If the account currency is different from the creditor’s business valuation currency, it shall be converted according to the foreign exchange rate applicable to the creditor at the time of deduction;

 

8. Other measures regarded necessary by the creditor.

 

 

Article 12 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 13 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 14 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the people’s Republic of China.

 

All disputes arising from the performance of this contract can be settled by both parties through negotiation. If the negotiation fails, both parties agree to adopt the same dispute settlement method as agreed in the main contract.

 

During the dispute settlement period, if the dispute does not affect the performance of other terms of the contract, the other terms shall continue to be performed.

 

Article 15 Appendix

 

The following attachments and other attachments confirmed by both parties constitute an integral part of this contract and have the same legal effect as this contract.

 

1. Consent letter (if any).

 

 

Article 16 Other Agreements

 

1. The guarantor shall not transfer any rights and obligations under this contract to a third party without the creditor’s written consent.

 

2. If the creditor has to entrust other institutions of Bank of China Limited to perform the rights and obligations under this contract due to business needs, the guarantor shall recognize it. Other institutions of Bank of China Limited authorized by the creditor have the right to exercise all rights under this contract, and have the right to bring a lawsuit to the court or submit to the arbitration institution for adjudication on the disputes under this contract.

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first instance, second instance, retrial, and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance. In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court, or refusal of the designated recipient to sign after the delivery address is changed, etc., the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

6. The guarantor may consult and complain about this contract and its business and fees through the contact phone number of the creditors listed in this contract.

 

Article 17 Delivery terms

 

1.1 Any notice, letter, data message, etc. sent by either party to the other party under this agreement shall be sent in writing to the delivery address specified below.

 

If one party changes the delivery address information/electronic delivery information, it shall promptly notify the other party in writing within 3 days after the change. Delivery before the other party actually receives the change notice shall still be valid, and electronic delivery shall have the same legal effect as other delivery methods.

 

The guarantor confirms that the delivery address is as follows:

 

Address: No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Postal Code: 350011, Contact Person: Liu Yongxu, Contact Number: 0591-83628181.

 

 

Guarantor (□ Agreed) ☑ Disagree) The electronic delivery method is as follows:

 

Mobile SMS: / Fax: / Instant messaging account (WeChat): / Email: / .

 

The creditor confirms that the delivery address is as follows:

 

Address: No. 3 Changle Middle Road, Wangzhuang Street, Jin’an District, Fuzhou City (east side of former Jiaotang Road), Fusheng Qianlong International Annex Building, Floor 1, 03 Central Commercial Center, Postal Code: 350000, Contact Person: Li Yang, Contact Number: 0591-83163665.

 

Creditor (☐ agree) ☑ Disagree) The electronic delivery method is as follows:

 

Mobile SMS: / Fax: / Instant messaging account (WeChat): / Email: / .

 

1.2 The delivery address agreed in Article 17, Article 1.1 refers to the address for the delivery of legal documents by the people’s court/arbitration institution during work contacts, legal documents, and dispute resolution between both parties. All parties confirm that the above-mentioned delivery address and delivery method are applicable to all stages of litigation/arbitration, including but not limited to first instance, second instance, retrial, special procedures, and execution procedures.

 

The people’s court/arbitration institution shall deliver legal documents in accordance with one or more of the delivery methods provided by the parties mentioned above, and the delivery time shall be based on the earliest of the aforementioned delivery methods.

 

The parties to the agreement guarantee that the delivery address/electronic delivery information provided is accurate and valid. If the provided address/electronic delivery information

 

Inaccurate delivery information or failure to promptly inform the changed address/electronic delivery information, resulting in legal documents being unable to be delivered or delayed

 

Delivery shall bear the legal consequences that may arise.

 

The people’s court/arbitration institution shall deliver the goods according to the delivery address/electronic delivery information provided by the parties mentioned above. If the address/electronic delivery information provided by the parties is inaccurate or the changed delivery address/electronic delivery information is not notified in a timely manner

 

If a legal document is not actually received by the recipient and is directly served, the date on which the civil litigation document is left at that address shall be deemed as the date of service

 

On the day of; If the document is delivered by mail, the date of return shall be the date of delivery; Electronic delivery refers to the delivery when the delivery information reaches the specific system of the recipient.

 

1.3 The delivery terms of the contract are independent clauses and are not affected by the validity of the entire contract or other terms.

 

Article 18 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed by the guarantor and the creditor and is stamped with the official seal.

 

This contract is made in triplicate, one for each party and one for the debtor. All three have the same legal effect.

 

Guarantor: Liu Yongxu

March 15, 2023

 

Creditor: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized Signature: Zhang Changkai

March 15, 2023 

 

 

7

 

Exhibit 10.22

 

Credit Line Agreement

No.fj1122023039

 

Party A: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal Representative / Person in Charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181

Fax: 0591-83628181

 

Party B: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge: Chen Kai

Address: Fusheng Qianlong international annex building, 1F No.3, Middle Changle Road, Wangzhuang Street, Jin’an District, Fuzhou City

Zip Code: 350000

Tel: 0591-83163662

Fax: 0591-83163662

 

To develop a friendly and mutually beneficial cooperative relationship, this Agreement is signed by Party A and Party B through equal and genuine consultation.

 

Article 1 Business Scope

 

According to this Agreement, Party B shall provide credit lines to Party A. Complying with other relevant single agreements, Party A may apply to Party B for circulation, adjustment or one-time use for short-term loans, overdraft of corporate account, bank acceptance, trade financing, letter of guarantee, capital business and other credit business (collectively referred to as “single credit business”).

 

The trade financing business mentioned in this Agreement includes the opening of domestic and international letter of guarantee, import documentary, delivery guarantee, packaged loans, outward documentary, outward bill discount, buyer’s documentary of domestic letter of credit, seller’s documentary of domestic letter of credit, negotiation of domestic letter of credit and other international and domestic trade financing business.

 

The guarantee business mentioned in this agreement includes various international and domestic guarantee businesses such as issuing guarantee and standby letter of credit.

 

Article 2 Type and Amount of Credit Lines

 

Party B agrees to provide Party A with the following credit line:

Currency: RMB.

Amount: ￥80,000,000.00.

This loan is a short term working capital loan of ￥80,000,000.00.

 

Article 3 Application of the Credit Line

 

1. Within the service life of the credit line agreed in this Agreement, Party A may use the corresponding credit line in the following way (1) within the limit of each single credit business agreed in this Agreement:

 

(1) Recycling. The specific type is: short-term working capital loans.

 

(2) One time use. The specific types of quotas are: ///.

 

 

If Party A needs to adjust the credit line agreed in Article 2, Party A shall submit an application to Party B in writing, and Party B shall decide whether to adjust with specific adjustment method, and notify Party A in writing.

 

2. Credit obtained by Party A from Party B before the effective date of this Agreement in previously valid or similar credit line and single agreements will be deemed as using the credit in this Agreement.

 

Article 4 Situations of Credit Line Use

 

There are three situations of credit line use as stipulated in Article 2 of this Agreement:

 

1. Non Usage: for business under the single agreements, if Party A can provide sufficient margin or guarantee of pledged cash equivalent (including but not limited to Treasury bonds and certificates of deposit), or if the credit risk of the business is completely transferred to the financial institutions recognized by Party B (including but not limited to Party A providing the bank acceptance bill pledge from financial institutions recognized by Party B), then the credit line is not considered to be used.

 

2. Partial Usage: for the part which Party A can provide with sufficient margin or guarantee of pledged cash equivalent (including but not limited to Treasury bonds and certificates of deposit), or if the credit risk of the business is completely transferred to the financial institutions recognized by Party B (including but not limited to Party A providing the bank acceptance bill pledge from financial institutions recognized by Party B), the credit line is not considered to be used; The part not covered by the margin or cash equivalent pledge guarantee and the part of which the business credit risk is not transferred to the financial institutions recognized by Party B, are considered as using the credit line amount.

 

3. Full Usage: business other than those specified in Items 1 and 2 above shall be considered using the credit line according to Article 2 in this Agreement.

 

All single agreements mentioned above shall each constitute an integral part of this Agreement unless otherwise agreed in the single agreements.

 

The situations of credit line use also applies to Article 3 (2) in this Agreement.

 

Article 5 Agreements to be Signed for Single Credit Business

 

If Party A applies to Party B for other single credit business under this Agreement, Party A shall submit an application form and/or sign the corresponding contract or agreement with Party B (collectively referred to as the single agreements).

 

Article 6 Term of Use of the Credit Line

 

The term of use of the credit line specified in Article 2 in this Agreement shall be from the effective date of this Agreement to 01/09/2023.

 

At the expiration of the credit line, Party B can continue to provide Party A with a new credit line by both parties signing a supplementary agreement in writing to specify the new credit line and its term of use. The supplementary agreement constitutes an integral part of this Agreement, and the provisions of this Agreement shall apply to the matters not agreed in the supplementary agreement. The supplementary agreement has the same legal effect as this Agreement.

 

The expiration of the credit line does not affect the legal effect of this Agreement and does not lead to the termination of this agreement. All signed single business agreements under this Agreement between Party A and Party B shall continue to be valid and all rights and obligations shall be fulfilled.

 

 

Article 7 Preconditions for Single Credit Business

 

To apply for other single credit business, Party A must:

 

1. Reserve relevant company documents, bills, seals, relevant personnel list and signature samples for signing this and the single agreements, and fill in corresponding vouchers;

 

2. Have accounts necessary for single credit business opened;

 

3. Have guarantee needed in this Agreement and the single agreements effectively set;

 

4. Meet other preconditions as agreed in the single agreements;

 

5. Meet other conditions as required by Party B.

 

Article 8 Guarantee

 

For liabilities of Party A to Party B occurring in this Agreement and the single agreements, both parties agree with the following guarantee types:

 

☐ Maximum Guarantee:

 

Liu Yongxu shall provide the maximum amount guarantee and sign the corresponding contract, No. fj1122023040, which constitutes the main guarantee contract.

 

☐ Maximum Mortgage:

 

Suzhou Shengfeng Logistics Co., Ltd. shall provide the maximum amount of mortgage and sign the corresponding contract, No. fj1122023041, which constitutes the main guarantee contract.

 

If Party A or the guarantor has an event that Party B thinks that an event happened to Party A or the guarantor may affect its performance capability, the guarantee contract becomes invalid, canceled or terminated, the financial situation of Party A or the guarantor deteriorates, Party A or the guarantor is involved in a major lawsuit or arbitration case, the guarantor breaches the guarantee contract or other contracts with Party B, or the collateral is devalued, damaged or lost, Party B has the right to request Party A to provide a new guarantee, as well as the right to replace the guarantor, etc.

 

Article 9 Declaration and Commitment

 

Party A declares as follows:

 

1. Party A exists and is legally registered. Party A has full capacity and civil rights to conduct the signing and performing of this Agreement;

 

2. The signing and performance of this Agreement and single agreements is based on the true intention of Party A. Party A will not violate any agreement, contract or other legal documents with its obligations in. Party A has obtained or will obtain all relevant approvals, licenses, records or registration required for signing and performing this Agreement;

 

3. All documents, financial statements, vouchers and other information provided by Party A to Party B for this Agreement and the single agreements are true, complete, accurate and valid;

 

4. The transaction background provided by Party A in the application is true and legal, and no money laundering or other illegal activities are involved;

 

 

5. Party A has not concealed any events that may affect the financial status and performance ability of Party A and the guarantor from Party B.

 

6. The purpose of the loan and the source of repayment are true and legal.

 

Party A promises as follows:

 

1. Party A is going to provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to Party B on a regular basis or timely as required by Party B;

 

2. Party A will accept and cooperate with Party B’s inspection and supervision on the use of the credit line, and on Party A’s related production, operation and financial activities;

 

3. If Party A and the guarantor of this Agreement sign a counter guarantee contract or a similar contract, the contract will not damage any rights of Party B in this Agreement;

 

4. In case of any circumstances that may affect the financial status and performance ability of Party A or the guarantor, including but not limited to any form of separation, merger, joint venture, joint venture with foreign investors, cooperation, contracted operation, reorganization, restructuring, planned listing and other changes in business methods, reduction of registered capital, transfer of major assets or equity, and assumption of major liabilities, setting up new guarantee on the collateral, sealing up, dissolution, cancellation, application for bankruptcy, or involving in major litigation or arbitration cases, Party A shall inform Party B in time;

 

5. The funds obtained under this Agreement and the single agreements will not be used for refinancing or purchases of other financial products for arbitrage,used for illegally adding implicit local government debts.

 

6. Party A will cooperate with Party B to carry out due diligence, provide and update the information of customers and their beneficiaries, and provide background information about the transaction.

 

7. Party A shall provide its environmental and social risk report to Party B. Party A declares and guarantees to strengthen the environmental and social risk management, and undertakes to accept the supervision of Party B. Party A’s violation of the above agreement shall constitute or be deemed as an event of default under this agreement, and Party B may take remedy measures for breach of contract in accordance with this agreement.

 

8. If Party A has plans to increase external financing, provide external guarantee (including guarantee, mortgage, etc.), or carry out shareholders’ dividends and repay shareholders’ loans, party A must inform Party B in advance and obtain Party B’s consent, otherwise Party B has the right to request to recover the loan in advance.

 

9. The credit guarantee method and mortgage rate provided by Party A to Party B are not inferior to those provided by Party A to other financial institutions.

 

10. The purpose of the credit is limited to Party A’s daily payment of fuel fee, road and bridge fee, combined transportation fee, vehicle maintenance fee, etc. If it is used to pay for combined transportation fee to Party A’s subsidiaries, the following requirements shall be implemented:

 

(1) The amount of loans used under related party transactions shall not exceed 40 million yuan, and the cumulative payment amount within the past 12 months shall not exceed 70% of the corresponding subsidiary’s annual income.

 

(2) When drawing the loan, Party A shall provide Party B with the combined transport contract signed with the subsidiary, the VAT invoice, and relevant supporting materials for the purpose of external payment of the subsidiary;

 

 

(3) When Party A’s subsidiary receives the loan funds within one week, it shall use the funds on the purpose that was notified to Party B in advance. The purpose is limited to daily operation, payment of fuel, road and bridge fees, combined transport fees, vehicle maintenance fees, etc. Party A shall provide Party B with payment vouchers in a timely manner after payment;

 

(4) Within 2 months after the loan is granted, Party A shall provide Party B with the invoice related to the use of the subsidiary’s funds as evidence;

 

If the aforementioned requirements are not met, Party B has the right to withdraw the credit in advance and adjust the credit strategy according to the situation.

 

11. The first party controls the total credit balance of the second party’s exposure within the scope of the collateral value;

 

12. Party A promises that the settlement amount with Party B (direct or indirect) matches the credit line amount, and the credit balance does not exceed 70% of the debit amount in the previous quarter. In principle, the assessment of settlement is based on the group standard. The funds shall be used for Party A’s daily operation, repayment of financing, etc. Party A shall declare to Party B for the purpose when making external payments.

 

13. Party A agrees with the financial constraints as follows: (1) the current ratio of Party A and its group in the latest financial statement shall not be less than 0.85,and the asset liability ratio shall not exceed 65%; (2) the balance of Party A’s financing exposure shall not exceed 400 million yuan and shall not exceed 25% of the annual income of its group’s consolidated financial statement. If any of the above conditions are not met, Party B has the right to reduce the credit balance to less than 50 million yuan, and consider further measures as needed.

 

14. For matters not mentioned in this Agreement and the single agreements, Party A agrees to handle them in accordance with relevant regulations and business practices of Party B.

 

Article 10 Disclosure of Related Parties and Related Transactions within Party A’s Group

 

Term 1 below is agreed by both parties:

 

1. Party A is not a group customer determined by Party B according to the guidelines on risk management of group customer credit business of commercial banks (hereinafter referred to as the guidelines).

 

2. Party A belongs to the group customer determined by Party B according to the guidelines. Party A shall, in accordance with Article 17 of the guidelines, timely report to Party B about its related party transactions with more than 10% of the net assets, including the related party relationship, transaction items and trading nature, transaction amount or corresponding proportion, and pricing policy (including transactions with no amount or only symbolic amount).

 

 

Article 11 The Breach of Contract

 

Any of the following shall constitute or be deemed as an event of default of Party A under this Agreement and the single agreements:

 

1. Party A fails to perform the payment and discharge obligations to Party B according to this Agreement and the single agreements;

 

2. Party A fails to use the funds obtained for the agreed purpose in accordance with this Agreement and the single agreement,or Party A illegally adds implicit local government debtss;

 

3. The statements made by Party A in this agreement or single agreements are untrue or violate its commitment in this agreement or single agreements;

 

4. In case of any circumstance specified in Item 4 of paragraph 2 of Article 9 of this agreement, if Party B thinks that it may affect the financial status and performance capability of Party A, or the guarantor, but Party A fails to provide new guarantee or replace the guarantor;

 

5. Party A’s termination of business, or dissolution, cancellation and bankruptcy;

 

6. The first party refuses to cooperate with the second party in conducting due diligence, and the first party or its transaction/counterparty is suspected of money laundering, terrorist financing, nuclear weapon proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the first party or guarantor is included in the United Nations, China, and other applicable sanctions list or scope;

 

7. Party A violates other provisions on the rights and obligations of the parties in this Agreement and single agreement;

 

8. Party A breaches any other contract with Party B or other institutions of Bank of China Limited;

 

9. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with Party B or other institutions of Bank of China Limited.

 

In the event of breach of contract as mentioned in the preceding paragraph, Party B has the right to take the following measures respectively or simultaneously according to the specific circumstances:

 

1. Require Party A and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend or terminate the credit line to Party A in whole or in part;

 

3. Suspend or terminate business applications from Party A in whole or in part under this Agreement with the single agreements and other agreements between Party A and Party B; For the loans that have not yet been issued, the trade financing and guarantee business that have not yet been handled, all or part of them shall be suspended or terminated;

 

4. Declare that all or part of the outstanding loans, trade financing funds, principal and interest of advance payment of letter of guarantee and other payable funds under this agreement, single agreement or other agreements between Party A and Party B shall become due immediately;

 

5. Terminate or rescind this agreement, and the single agreement and other agreements between Party A and Party B in whole or in part;

 

6. Ask Party A to compensate Party B for the loss caused by its breach of contract, Including but not limited to the loss of litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of creditor’s rights;

 

7. Deduct the balance from the account opened by Party A in Party B to pay off all or part of Party A’s debt to Party B. The unexpired amount in the account shall be regarded as early maturity. If the account currency is different from Party B’s business valuation currency, it shall be converted according to the exchange rate applicable to Party B at the time of deduction;

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that Party B considers necessary.

 

 

Article 12 Rights Reserved

 

If one party fails to exercise part or all of its rights under this Agreement and the single agreements, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay by one party to the other party in exercising its rights under this Agreement and the single agreements shall not affect any rights it has under this Agreement and the single agreements, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 13 Change, Modification, Termination and Partial Invalidity

 

This agreement can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this agreement.

 

Unless otherwise stipulated by laws and other regulations or agreed by both parties, this Agreement shall not be terminated until all rights and obligations have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this Agreement shall not affect the legal effect of other provisions.

 

Article 14 Applications of Law and Settlement of Disputes

 

Unless otherwise agreed by both parties, this Agreement and the agreements shall be governed by the laws of the people’s Republic of China.

 

When this Agreement and the single agreements take effect, unless otherwise agreed by both parties, all disputes arising from the conclusion and performance of this Agreement and the single agreements may be settled by both parties through negotiation. If the negotiation fails, either party may adopt the way 2 as follows:

 

1. Submit an application to the following departments for arbitration:

 

☐

China International Economic and Trade Arbitration Commission

 

☐

Beijing Arbitration Commission (Beijing International Arbitration Center)

 

☐

Other arbitration commissions

 

The arbitration shall be conducted in accordance with the arbitration rules in force at the time of applying for arbitration. Final result of the arbitration shall be binding on all parties.

 

2. Litigation.

 

☐

Bring a lawsuit to the People’s Court of the place where Party B or other institutions of Bank of China limited exercise their rights and obligations.

 

☐

Bring a lawsuit to the International Commercial Court of the Supreme People’s Court (for international commercial disputes with an amount of more than 300 million yuan).

 

☐

Bring a law suit to the people’s court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other provisions of this Agreement and the single agreement, the other provisions shall continue to be performed.

 

Article 15 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

Attachment: /

 

 

Article 16 Other Agreements

 

1. Without the written consent of Party B, Party A shall not transfer any rights and obligations under this Agreement and single agreements to a third party.

 

2. If Party B has to entrust other institutions of Bank of China Limited to perform the rights and obligations under this Agreement and the single agreements due to business needs, Party A shall recognize it; Other institutions of Bank of China Limited authorized by Party B have the right to exercise all the rights under this Agreement and the single agreements, and have the right to bring a lawsuit to the court or submit to the arbitration organization for adjudication on the disputes under this Agreement and the single agreements.

 

3. Without affecting other provisions of this Agreement and the single agreements, this Agreement shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall recognize the place of residence specified in this Agreement as the effective contact address. The address will serve for all kinds of notices, agreements and other documents when both parties perform the contract, relevant documents and legal documents in case of dispute over this agreement, as well as the first instance, second instance, retrial and execution procedures after the dispute enters into arbitration and civil proceedings.

 

In case of any changes in the address, the changing party shall inform the other party of the changed address in writing 5 working days in advance. During arbitration or civil procedures, when any party changes its address, the changing party shall timely inform the arbitration institution and the Court. If a party fails to perform the obligation of notice in the above manner, its address confirmed in this Agreement shall still be regarded as the effective address.

 

If the legal document is not received by one party due to the inaccuracy of the service address, the failure to inform the other party and the Court in time after the change of the service address, or the refusal of the receiver’s signature, the date of return of the document shall be regarded as the date of reception; if documents are sent directly in person, the date on which the receiver signs on the receipt is considered the date of reception.

 

5. The title and business name in this Agreement are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

6. If Party B is unable to perform the agreement due to changes in laws, regulations and regulatory provisions or other requirements of regulatory authorities, Party B has the right to terminate or change the performance of this Agreement and the single agreements. In case of termination or change of the agreement due to such reasons, Party B shall be exempted from liabilities.

 

7. Party A has the right to make consultants or complaints about the content and the business under this Agreement to Party B by the tel numbers listed in this Agreement.

 

Article 17 Delivery terms

 

1.1 Any notice, letter, data message, etc. sent by either party to the other party under this agreement shall be sent in writing to the delivery address specified below.

 

If one party changes the delivery address information/electronic delivery information, it shall promptly notify the other party in writing within 3 days after the change. Delivery before the other party actually receives the change notice shall still be valid, and electronic delivery shall have the same legal effect as other delivery methods.

 

 

The guarantor confirms that the delivery address is as follows:

 

Address: No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Postal Code: 350011, Contact Person: Liu Yongxu, Contact Number: 0591-83628181.

 

Guarantor (☐ Agreed) ☑ Disagree) The electronic delivery method is as follows:

Mobile SMS:   /   Fax:    /   Instant messaging account (WeChat):    /   Email:   /   .

The creditor confirms that the delivery address is as follows:

Address: No. 3 Changle Middle Road, Wangzhuang Street, Jin’an District, Fuzhou City (east side of former Jiaotang Road), Fusheng Qianlong International Annex Building, Floor 1, 03 Central Commercial Center, Postal Code: 350000, Contact Person: Li Yang, Contact Number: 0591-83163665.

Creditor (☐ agree) ☑ Disagree) The electronic delivery method is as follows:

Mobile SMS:   /   Fax:   /   Instant messaging account (WeChat):   /   Email:   /   .

 

1.2 The delivery address agreed in Article 17, Article 1.1 refers to the address for the delivery of legal documents by the people’s court/arbitration institution during work contacts, legal documents, and dispute resolution between both parties. All parties confirm that the above-mentioned delivery address and delivery method are applicable to all stages of litigation/arbitration, including but not limited to first instance, second instance, retrial, special procedures, and execution procedures.

 

The people’s court/arbitration institution shall deliver legal documents in accordance with one or more of the delivery methods provided by the parties mentioned above, and the delivery time shall be based on the earliest of the aforementioned delivery methods.

 

The parties to the agreement guarantee that the delivery address/electronic delivery information provided is accurate and valid. If the provided address/electronic delivery information

 

Inaccurate delivery information or failure to promptly inform the changed address/electronic delivery information, resulting in legal documents being unable to be delivered or delayed

 

Delivery shall bear the legal consequences that may arise.

 

The people’s court/arbitration institution shall deliver the goods according to the delivery address/electronic delivery information provided by the parties mentioned above. If the address/electronic delivery information provided by the parties is inaccurate or the changed delivery address/electronic delivery information is not notified in a timely manner

 

If a legal document is not actually received by the recipient and is directly served, the date on which the civil litigation document is left at that address shall be deemed as the date of service

 

On the day of; If the document is delivered by mail, the date of return shall be the date of delivery; Electronic delivery refers to the delivery when the delivery information reaches the specific system of the recipient.

 

1.3 The delivery terms of the contract are independent clauses and are not affected by the validity of the entire contract or other terms.

 

 

Article 18 Effectiveness of the Agreement

 

This Agreement shall come into force on the date when it is signed and sealed by the legal representatives, responsible persons or authorized signers of both parties.

 

This agreement is made in quintuplicate, one for each party and the guarantors. All of the five copies have the same legal effect.

 

Party A: Shengfeng Logistics Group Co., Ltd.

Authorized signature:___________________

MM/DD/YYYY

 

Party B: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature: _____________

MM/DD/YYYY

 

 

10

Exhibit 10.23

 

Working Capital Loan Contract

 

(Applicable to newly signed domestic RMB interest rates other than USD/GBP/EUR/JPY/CHF foreign currency interest rates、USD/GBP/EUR/JPY/CHF new benchmark rate borrowing)

 

No: fj1122022208

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

This contract is signed by both of the borrower and the lender through equal consultation serves as a single agreement under the Credit Line Agreement (No.fj1122021141) and the Supplementary Agreement (No. fi1122022096) signed between Shengfeng Logistics Group Co., Ltd and Bank of China Limited Fuzhou Jin’an Sub-branch.

 

Article 1 Loan Amount

 

Currency: RMB;

 

Amount: ￥30,000,000.00.

 

Article 2 Loan Term

 

The term of the loan is 12 months from the date when the money is actually withdrawn; If it is drawn by installments, then life of the loan is 12 months from the first actual drawing date.

 

The borrower should make the withdrawal in strict accordance with the agreed time. If the actual withdrawal date is later than the agreed date, the borrower should still make the repayment on the agreed date in this contract.

 

Article 3 Purpose of loan

 

Purpose of this loan is to pay for combined transport fee.

 

Without the written consent of the lender, the borrower shall not change the purpose of the loan, including but not limited to that the borrower shall not use the loan for fixed assets, equity or other investment, and shall not use it for any fields and purposes prohibited by laws, regulations, regulatory regulations, or the state from producing or operating, nor shall it be used for lending or purchasing other financial products for arbitrage, nor shall it be used for illegally adding implicit local government debts, nor for other purposes prohibited from using bank loans for investment.

 

 

Article 4 Loan Interest Rate and its Calculation

 

The lender shall specify the annualized interest rate of the loan under this contract to the borrower through the attachment “Notification Letter of Loan Annualized Interest Rate”. If the annualized interest rate of the loan under this contract is only calculated based on the loan interest rate specified in paragraph 1 of this article, the aforementioned “Notification Letter of Loan Annualized Interest Rate” shall not apply.

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

(2) Floating rate, with the actual drawing date (or the first actual drawing date in case of separate drawings) as the starting date. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

 

For each withdrawal:

 

Floating rate of RMB loans

 

A. The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date plus 30 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day plus 30 basis points, and will start to serve as the interest rate of the new floating cycle.

 

2. Interest Calculation

 

(1) For item 1 (1) of this article, fixed interest rate, item 1 (2), RMB loan floating interest rate, and foreign currency loan floating interest rate, item A, C:

 

The interest shall be calculated from the actual drawing date, concerning the actual amount withdrawn and the number of days the money is used.

 

The calculation formula is as below:

 

Interest = principal × actual days × daily interest rate.

 

Daily Interest Rate = annual interest rate / 360.

 

3. Interest Settlement

 

The borrower in this contract shall settle the interest in way (1):

 

(1) The interest is settled quarterly. The 20th day of the last month of each quarter is the interest settlement day, and the 21st day is the interest payment day.

 

(2) The interest is settled by month. The 20th day of each month is the interest settlement day, and the 21st day is the interest payment day.

 

The borrower should pay off all the interest on the last repayment day regardless of whether that day is an interest payment day.

 

4. Penalty Interest

 

(1) If the loan is overdue or not used for the purpose specified in the contract, from the date of overdue or misappropriation, the penalty interest shall be calculated and collected according to the penalty interest rate specified in this paragraph for the overdue or misappropriated part until the principal and interest are paid off.

 

 

For overdue and misappropriated loans, the penalty interest shall be calculated and charged at higher penalty interest rate.

 

(2) For the interest and penalty interest that cannot be paid on time by the borrower, compound interest shall be calculated and collected by the interest settlement method described in paragraph 3 of this article.

 

(3) Penalty interest rate

 

RMB loan penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loan

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 100% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

5. Other

 

(1) The “loan interest rate” and “penalty interest rate” under this contract are both tax inclusive interest rates, meaning that the interest charged by the lender to the borrower already includes value-added tax payable in accordance with national laws and regulations.

 

(2) If there is a significant change in the pricing basis of the floating interest rate under this contract, it shall be handled in accordance with the then effective market rules. If the lender requests the borrower to sign a supplementary contract on relevant matters at that time, the borrower shall cooperate.

 

(3) The term “pricing benchmark” in this article has the same meaning as the term “benchmark interest rate”.

 

(4) Under this contract, “TIBOR” refers to the TIBOR published and managed by the Japan Bankers Association (or successor manager) as the manager, and “EURIBOR” refers to the EURIBOR published and managed by the European Monetary Market Research Institute (or successor manager) as the manager, “Overnight SOFR” refers to the overnight SOFR published and managed by the Federal Reserve Bank of New York (or successor manager) as the manager “Overnight SONIA” refers to the overnight SONIA published and managed by the Bank of England (or successor manager) as the manager, and “Overnight TONA” refers to the overnight TONA published and managed by the Bank of Japan (or successor manager) as the manager, Overnight ESTR “refers to an overnight ESTR published and managed by the European Central Bank (or successor manager) as the manager, while” overnight SARON “refers to an overnight SARON published and managed by the Swiss Stock Exchange (or successor manager) as the manager.

 

Article 5 Conditions for Withdrawing

 

The borrower’s withdrawal shall meet the following conditions:

 

1. This contract and its attachments have come into force;

 

 

2. The borrower has provided guarantee as required by the lender, and the guarantee contract has become effective through completed legal approval, registration and filing procedures;

 

3. The borrower has reserved its documents, seals, personnel list and signature samples necessary for the signing and performance of the contract to the lender, and has completed all relevant documents;

 

4. The borrower has opened the account required for the contract as required by the lender;

 

5. The borrower has submitted written application and relevant loan purpose documents to the lender 3 working days before the withdrawal;

 

6. Other conditions of withdrawal as stipulated by law and agreed by both parties.

If the conditions above are not met, the lender has the right to refuse the borrower’s application for the withdrawal.

 

Article 6 Time and Method of Withdrawal

 

1. The borrower shall withdrawal the money in way (2) :

 

(1) Make an one-time withdrawal on mm / dd / yyyy.

 

(2) Withdraw within 10 working days from June 8, 2022.

 

(3) Make separate withdrawals as follows:

 

Time of withdrawal	Amount of withdrawal
/ / /	/ / /

 

2. The lender has the right to refuse the withdrawal application if the money is not withdrawn in time by the borrower.

 

3. Loan Commitment Services

 

The lender shall provide commitment services to the borrower during the commitment service period (from the effective date of this loan contract to the withdrawal date specified in this contract) that the borrower can withdraw but has not withdrawn the loan (hereinafter referred to as “unused loan”). By mutual agreement between the borrower and the lender The agreement is as follows:

 

The lender, based on the principle of “reduction of fees and benefits”, waives the commitment fee for the aforementioned promised services, and the assessed exemption amount is RMB 3,000.

 

Article 7 Payment of Loan

 

1. The Loan Issuing Account

 

The borrower shall open the following loan account with the lender through which the loan issuance and payment shall be handled.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account Number: 4273675009

 

2. Payment Method

 

(1) The payment method of loan funds shall be implemented in accordance with laws and regulations, regulatory provisions and with the contract. The payment method with a single withdrawal shall be confirmed in the withdrawal application. If the lender considers that the payment method selected in the withdrawal application does not meet the requirements, the lender has the right to change the payment method or stop the issuance and payment of the loan funds.

 

 

(2) Entrusted Payments. According to CBRC’s and the lender’s internal management regulations, the payment of the loan funds meeting one of the following conditions shall be made by the lender through an entrusted payment method:

 

A. A new credit business relationship is established between the lender and the borrower, and the credit rating of the borrower fails to meet the internal requirements of the lender;

 

B. When a single amount of withdrawal exceeds 10 million yuan (exclusive). Foreign currency shall be converted at the exchange rate on the actual withdrawing day);

 

C. Other circumstances stipulated by the lender or agreed with the borrower.

 

(3) Independent Payments. After the lender has released the loan funds to the borrower’s account, the borrower shall make independent payment to the its counter parties for the purpose agreed in the contract. All payments of the loan funds shall be independent except for the situations in which entrusted payment method should be adopted as stipulated in the preceding paragraph..

 

(4) Change of Payment Method. For independent payments, if the conditions of borrower’s external payment or credit rating changes after the withdrawal application is submitted, the payment method of the loan fund shall be changed if the payment meets the conditions specified in Item (2) of paragraph 2 in this article. The borrower is required to provide the lender with a written application for any changes in the payment method, to submit a new withdrawal application with relevant documents.

 

3. Specific Requirements for Entrusted Payment of the Loan Funds

 

(1) Payment Entrustment. The borrower shall clearly specify the payment entrustment in the withdrawal application, that is, to authorize and entrust the lender to directly pay the loan funds to the borrower’s designated counterpart after transferring the loan funds into the borrower’s account. The borrower shall also provide the name of the recipient, the counter party’s account, payment amount and other necessary payment information.

 

(2) Providing Transaction Information. The borrower shall provide the lender with the information of its loan account and the counter party’s account together with supporting materials proving that the withdrawal is in line with the purpose agreed in the loan contract. The borrower shall guarantee that all information provided to the lender is true, complete and valid. If the entrusted payment obligations of the lender are not completed in time due to the untrue, inaccurate or incomplete transaction information provided by the borrower, the lender shall not bear any responsibility, and the repayment obligations of the borrower under this contract shall not be affected.

 

(3) The Performance of the Lender’s Entrusted Payment Obligation

 

A. After the borrower provides the payment entrustment and other relevant information, the lender will pay the loan funds to the borrower’s counter party through the borrower’s account with the borrower’s approval.

 

B. If the lender finds that the relevant transaction materials provided by the borrower do not conform to the contract or have other defects, it has the right to require the borrower to supplement, replace, explain or to re-submit relevant materials. Before the borrower completely submits the materials required by the lender, the lender has the right to refuse the release and payment of the funds.

 

C. In case of a refund from the counter party’s bank, which causes the lender’s failure to make the payment in time, the lender shall not bear any responsibilities, and the repayment obligations of the borrower under this contract shall not be affected. The borrower hereby authorizes the lender to freeze the amount refunded by the the counter party’s bank. In this case, the borrower shall re-submit relevant transaction materials to the lender.

 

 

(4) The borrower shall not avoid the entrusted payment by breaking the whole payment into parts.

 

4. After the loan fund is released, the borrower shall timely provide the lender with the loan fund use records and other information including but not limited to payment vouchers, etc.

 

5. In case of any of the following circumstances, the lender shall have the right to re-determine the conditions for loan issuance and payment or to stop the issuance and payment of loan funds:

 

(1) The borrower violates the contract and avoids the entrusted payment of the lender by breaking the whole payment into parts;

 

(2) The borrower’s credit status declines or the profitability of its main business is not strong;

 

(3) There is abnormal use of the loan funds;

 

(4) The borrower fails to provide the loan fund use records and information in a timely manner as required by the lender;

 

(5) The borrower uses the loan fund in any way that violates the agreement reached in this article.

 

Article 8 Repayment

 

1. The account below is designated as the repayment account. The borrower shall timely provide information about the fund activities in this account to the lender. The lender has the right to require the borrower to explain the inflow or outflow of large or abnormal funds in this account and supervise the account.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account No.: 4273675009

 

2. Unless otherwise agreed by both parties, the borrower shall repay the loan in this contract with repayment plan (1):

 

(1) Pay off all loans in this contract on the expiration date of the loan term.

 

(2) Repay the loan according to the following schedule:

 

Time of Repayment	Repayment Amount
///	///
///	///

 

(3) Other plans of repayment.

 

The borrower shall submit a written application to the lender 3 banking days before the maturity of the corresponding loan. The change of repayment plan shall be confirmed by both parties in writing.

 

3. Unless otherwise agreed by both parties, if the borrower defaults on the principal and interest of the loan at the same time, the lender has the right to decide the order of repayment of the principal and interest; In the case of repayment by installment, if there are multiple due loans or overdue loans under this contract, the lender has the right to determine the order of a certain repayment; If there are more than on loan contracts due, the lender has the right to determine the order of the contract to be performed with the borrower’s each repayment.

 

4. Unless otherwise agreed by both parties, the borrower may prepay the loan, but shall notify the lender in writing 15 banking days in advance. The amount of prepayment is first used to repay the last due loan.

 

 

For loans that apply a single compound interest combination for interest calculation, if prepayment or partial prepayment is involved, the interest corresponding to the prepayment principal should be settled in one lump sum.

 

5. The borrower shall make the repayment in way (1) as below.

 

(1) The borrower shall deposit sufficient funds in the repayment account below no later than 3 banking days before the maturity of each principal and interest, and the lender has the right to withdraw the money from this account on the maturity date.

 

Repayment Account: Shengfeng Logistics Group Co., Ltd.

 

Account number: 4273675009.

 

(2) Other repayment methods agreed by both parties.

 

Article 9 Guarantee

 

1. The guarantee method of the liabilities in the contract is as follows:

 

This contract belongs to the main contract under the Maximum Guarantee Contract (No. fj1122021143 signed by the guarantor Liu Yongxu and the lender. Liu yongxu is going to provide the maximum guarantee.

 

This contract belongs to the main contract under the Maximum Mortgage Contract (No. fj1122021142) signed by the mortgagor Suzhou Shengfeng Logistics Co., Ltd. and the lender. Suzhou Shengfeng Logistics Co., Ltd. is going to provide the maximum guarantee.

 

2. If the borrower or the guarantor has an event that the lender considers may affect its performance ability, the guarantee contract becomes invalid, cancelled or terminated, the financial situation of the borrower or the guarantor deteriorates, the borrower or the guarantor is involved in major litigation or arbitration cases, the guarantor defaults under the guarantee contract or other contracts with the lender, or the collateral is devalued, damaged, lost or sealed up, resulting in the weakening or loss of the guaranteed value, the lender has the right to require the borrower to provide new guarantee, replace the guarantor, etc. as the borrower’s obligation.

 

Article 10 Invoice Issuance

 

1. The borrower can apply to the lender for issuing a value-added tax invoice (þ value-added tax special invoice/ ☒ value-added tax ordinary invoice) after the lender confirms receipt of the payment. The lender can issue value-added tax to the borrower after receiving the application for issuing a value-added tax invoice from the borrower invoice.

 

2. The borrower can apply for the issuance of value-added tax invoices at the corresponding business processing agency or other institutions designated by the lender.

 

3. The borrower needs to confirm that the payer of the payment, the signatory of the contract, and the purchaser listed in the value-added tax invoice are the same taxpayer. If there is inconsistency, resulting in the borrower being unable to book or deduct input tax in accordance with the law, the relevant losses shall be borne by the borrower undertake.

 

4. If the borrower loses the invoice after obtaining it, the lender does not need to issue a supplementary value-added tax invoice to the borrower.

 

5. If the lender provides a discount to the borrower through negotiation, the amount of the value-added tax invoice issued shall be based on the discounted price.

 

6. If the lender provides free services to the borrower, the lender will not provide value-added tax invoices.

 

7. The lender shall issue a value-added tax invoice to the borrower, and the borrower shall promptly verify the invoice information. If the invoice information is incorrect,the borrower shall promptly apply to the lender for reissuing the value-added tax invoice.

 

 

Article 11 Declaration and Commitment

 

1. The borrower hereby declares that:

 

(1) The borrower is registered and exists legally, and has full capacity and civil rights to conduct the signing and performing of this contract;

 

(2) The signing and performance of this contract is based on the true intention of the borrower. The borrower has obtained legal and effective authorization, and will not violate any agreement, contract or other legal documents binding on the borrower; The borrower has obtained or will obtain all relevant approval, permission, records and registration required for signing and performing this contract;

 

(3) All documents, financial statements, vouchers and other information provided by the borrower to the lender for this contract are true, complete, accurate and effective;

 

(4) The transaction background provided by the borrower is true and legal, and no money laundering or other illegal activities is involved,and not violating the sanctions regulations applicable to the United Nations, China, and other countries;

 

(5) The borrower does not conceal from the lender any event that may affect the financial status and performance ability of the borrower and the guarantor;

 

(6) The borrower and the loan projects meet the national environmental protection standards, and there is no risk of energy over-consumption or pollution identified by the national departments;

 

(7) The purpose of the loan and the source of repayment are true and legal;

 

(8) Other matters declared by the borrower.

 

2. The borrower promises:

 

(1) To provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to the lender on a regular or timely basis; The borrower shall remain to meet the following financial index requirements: A.its asset-liability ratio of the latest single borrower and group consolidated financial statements does not exceed 65%, the current ratio is no less than 1; B.The loan financing balance of the borrower flow does not exceed 400 million yuan and does not exceed 25% of the group’s consolidated annual income;

 

(2) If the borrower has entered into or will enter into a counter guarantee agreement or similar agreement with the guarantor as this contract, the agreement will not damage any rights of the lender;

 

(3) To accept the credit inspection and supervision of the lender with assistance and cooperation; If the borrower adopts the independent payment method, it shall regularly summarize and report to the lender; The summary report shall be a monthly report;

 

(4) In case of merger, division, capital reduction, equity transfer, foreign investment, substantial increase in debt financing, transfer of major assets and creditor’s rights and other matters that may adversely affect the borrower’s solvency, the borrower shall obtain the written consent of the lender in advance;

 

In case of the following circumstances, the borrower shall timely notify the lender:

 

A. There are changes in the borrower or guarantor’s articles of association, business scope, registered capital and legal representative;

 

B. There are any forms of joint venture, cooperation, contracted operation, restructuring, IPO plans and other changes in the operation mode;

 

 

C. The borrower or the guarantor is involved in major litigation or arbitration cases, property or collateral is sealed up, detained or supervised, or new security is set on collateral;

 

D. The borrower is to close down, dissolve, liquidate, have its business license revoked, or apply for bankruptcy, etc;

 

E. Shareholders, directors and current senior managers are suspected of major cases or economic disputes;

 

F. The borrower violates other contracts;

 

G. Business difficulties and deterioration of financial situation occur;

 

(5) The repayment order of the borrower’s debt to the lender is prior to that of the borrower’s shareholders, and is no less than that of other creditors;

 

(6) Before the repayment of the loan principal, interests and related expenses in this contract is completed, the borrower shall not distribute any dividend or bonus to its shareholders in any form;

 

(7) The borrower shall not dispose of its own assets in a way that reduces its solvency. The borrower promises that the total amount of external guarantee shall not be more than twice of its own net assets, and that the total amount of external guarantee and the amount of single guarantee shall not exceed the limit specified in its articles of association;

 

(8) The borrower shall not transfer the loan fund to the account with the same account name or to the account of the related parties except for the purpose specified in this contract or with the consent of the lender.

 

To conduct transfers as mentioned in item (8) above, the borrower must provide the lender with sufficient supporting materials;

 

(9) The loan conditions such as the loan interest rate, guarantee, and repayment order stated in this contract shall not be lower than those given by the borrower to any other financial institution now or in the future;

 

(10) The lender has the right to call in the loan in advance based on the borrower’s fund repayment status;

 

(11) The borrower shall provide its environmental and social risk report to the lender. The borrower undertakes to strengthen the management of environmental and social risks with the lender’s supervision. The borrower’s breach of the agreements described above is deemed as an event of default, and the lender may take remedies for breach of contract;

 

(12) Cooperate with the lender in conducting due diligence work, provide and update information on the institution and its beneficial owners, and provide background information related to the transaction;

 

(13) Other items promised by the borrower.

 

Article 12 Disclosure of Related Party Transactions

 

Both parties agree that the following clause 1 shall apply:

 

1. The borrower is not a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

2. The borrower is a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers. The borrower shall timely report to the lender about its related party transactions of more than 10% of its net assets, including the related party relationship, transaction items and nature, transaction amount, and pricing policy (including transactions with no amount or with only symbolic amount).

 

 

If any one of the following circumstances, the lender has the right to unilaterally decide to stop offering the unused loan and call in part or all of the loan principal and interest in advance: the borrower takes advantage of false contract with related parties to obtain bank funds or credit; The borrower is involved in cases of major merger, acquisition and reorganization where the lender thinks that it may affect the security of the loan; and other circumstances specified in Article 18 of the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

Article 13 Breach of Contract

 

Any of the following events shall constitute or be deemed as an event of default:

 

1. The borrower fails to perform its obligations of payment and settlement as agreed in this contract;

 

2. The borrower fails to use the loan funds in the way or for the purpose agreed in this contract，or fails to use the obtained funds for the purposes specified in this contract;or the borrower uses the loan funds for refinancing or purchasing other financial products for arbitrage; Or the borrower illegally adds implicit local government debts;

 

3. The statement made by the borrower in this contract is untrue or violates its commitment in this contract;

 

4. In case of any circumstance specified in Article 11.2.(4) where the lender thinks that it may affect the financial status and performance ability of the borrower or the guarantor, and the borrower fails to provide new guarantee or replace the guarantor;

 

5. The credit status of the borrower declines, the profitability, solvency, operating capacity, cash flow and other financial indicators of the borrower deteriorate, or the borrower’s financial indicators break through the constraints as stipulated in this contract;

 

6. The borrower breaches any other contract with the lender or other institutions of Bank of China Limited; Any event of breaches of credit business contract happen between the borrower and other financial institutions;

 

7. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with the lender or other institutions of Bank of China Limited;

 

8. Termination of business, dissolution, cancellation or bankruptcy happens to the borrower;

 

9. The borrower is involved in or may be involved in major economic disputes, litigation, arbitration, its assets are sealed up, distrained or enforced, it is being investigated or punished by national legal department;

 

10. The borrower’s major investors and key management personnel change abnormally, or become missing, subject to judicial investigation or restriction of personal freedom;

 

11. The lender finds that there are circumstances that may affect the financial status and performance ability of the borrower or the guarantor at the annual review;

 

12. There is a large amount of abnormal capital inflow and outflow in the designated repayment account, and the borrower can not provide supporting materials approved by the lender;

 

13. The construction of energy-saving projects is seriously lagged, the energy-saving technology and equipment have serious defects, stopped or reduced production of the main facilities or equipment results in the actual energy saving significantly lower than the forecast thereafter the energy-saving income can not return to the designated account in time, the borrower participates in private high interest loans, the borrower offers other external guarantee or borrow new debts without the consent of the lender, and the borrower’s key financial indicators are seriously deteriorated;

 

 

14. The borrower refuses to cooperate with the lender in conducting due diligence, and the borrower or its trading counterparty is suspected of money laundering, terrorist financing, nuclear weapons proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the borrower or guarantor is included in the United Nations, China, and other applicable sanctions list or scope;

 

15. The borrower violates other provisions on the rights and obligations of the parties in this contract.

 

In case of any event of default specified in the preceding paragraph, the lender shall have the right to take the following actions regarding the specific circumstances:

 

1. Require the borrower and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend, cancel or terminate the credit line to the borrower in whole or in part;

 

3. Suspend or terminate in whole or in part the acceptance of the borrower’s withdrawal and other business applications; Suspend or cancel all or part of the loans that have not been granted and the trade financing that have not been handled;

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable between the borrower and the lender due immediately;

 

5. Terminate or rescind this contract and other contracts between the borrower and the lender in whole or in part;

 

6. Require the borrower to compensate the losses caused to the lender due to its breach of contract, including but not limited to the litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of the creditor’s rights;

 

7. Deduct the money balance of the account opened by the borrower with the lender and other institutions of Bank of China Limited to pay off all or part of the borrower’s debts to the lender. The undue amount in the account shall become due at the time. If the account currency is different from the lender’s business valuation currency, it shall be converted at the foreign exchange rate at the time of the deduction;

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that the lender considers necessary and possible.

 

Article 14 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 15 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 16 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the People’s Republic of China.

 

After this contract comes into effect, all disputes arising from the establishment and performance of this contract can be settled by both parties through negotiation. If the negotiation fails, either party may adopt the 2nd way as follows:

 

1. Submit an application to the following departments for arbitration:

 

☐ China International Economic and Trade Arbitration Commission

 

☐ Beijing Arbitration Commission (Beijing International Arbitration Center)

 

☐ Other arbitration commissions

 

The arbitration shall be conducted in accordance with the arbitration rules in force at the time of applying for arbitration. Final result of the arbitration shall be binding on all parties.

 

2. Litigation.

 

☐ Bring a lawsuit to the People’s Court of the place where Party B or other institutions of Bank of China limited exercise their rights and obligations.

 

☐ Bring a lawsuit to the International Commercial Court of the Supreme People’s Court (for international commercial disputes with an amount of more than 300 million yuan).

 

þ Bring a law suit to the people’s court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other provisions of this Agreement and the single agreement, the other provisions shall continue to be performed.

 

Article 17 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

1. Attachment: Application Form for Withdrawals.

 

2. Notification Letter of Loan Annualized Interest Rate (Format)

 

Article 18 Other Agreements

 

1. Without the written consent of the lender, the borrower shall not transfer any rights or obligations in this contract to a third party.

 

2. The borrower is going to agree if the lender has to entrust other institutions of Bank of China Limited to perform the rights and obligations in this contract due to business needs, or to transfer the loan business in this contract to other institutions of Bank of China Limited to undertake and manage. Other institutions of Bank of China Limited authorized by the lender, or other institutions of Bank of China Limited undertaking the loan business in this contract, shall have the right to exercise all the rights in this contract, and have the right to file a lawsuit in the name of such institution, submit to an arbitration institution for adjudication or apply for enforcement according to this contract.

 

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first instance, second instance, retrial, and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance.In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court, or refusal of the designated recipient to sign after the delivery address is changed, etc., the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The transactions arising from this contract are based on each party’s own interests independently. According to law, the fairness of the transaction shall not be affected by any of the lender’s related parties or persons by taking advantage of the relationship.

 

6. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

7. The lender shall have the right to provide the information related to this contract and the borrower to the credit reference system of the People’s Bank of China and other credit information databases established according to law for inquiry and use by institutions or individuals with appropriate qualifications. The lender also has the right to inquire the relevant information of the borrower through the credit information system of the People’s Bank of China and other legally established credit information databases for the purpose of signing and performing this contract.

 

8. In case of legal holidays, the withdrawal date and repayment date shall be postponed to the first working day after the holidays.

 

9. If the lender fails to perform the agreement due to changes in laws and regulations, the lender has the right to terminate or change the performance of this agreement. If the agreement is terminated or changed due to such reasons, the lender shall be exempted from liability.

 

10. The borrower may consult and complain about this contract and its business and fees through the contact phone number of the lender listed in this contract.

 

Article 19 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

This contract is made in triplicate with the same legal effect, one for each party.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

June 7, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

June 7, 2022

 

 

13

Exhibit 10.24

 

Working Capital Loan Contract

 

(Applicable to newly signed domestic RMB interest rates other than USD/GBP/EUR/JPY/CHF foreign currency interest rates, USD/GBP/EUR/JPY/CHF new benchmark rate borrowing)

 

No: fj1122022214

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

This contract is signed by both of the borrower and the lender through equal consultation serves as a single agreement under the Credit Line Agreement (No.fj1122021141) and the Supplementary Agreement (No. fi1122022096) signed between Shengfeng Logistics Group Co., Ltd and Bank of China Limited Fuzhou Jin’an Sub-branch.

 

Article 1 Loan Amount

 

Currency: RMB;

Amount: ￥20,000,000.00.

 

Article 2 Loan Term

 

The term of the loan is 12 months from the date when the money is actually withdrawn; If it is drawn by installments, then life of the loan is 12 months from the first actual drawing date.

 

The borrower should make the withdrawal in strict accordance with the agreed time. If the actual withdrawal date is later than the agreed date, the borrower should still make the repayment on the agreed date in this contract.

 

Article 3 Purpose of loan

 

Purpose of this loan is to pay for combined transport fee.

 

Without the written consent of the lender, the borrower shall not change the purpose of the loan, including but not limited to that the borrower shall not use the loan for fixed assets, equity or other investment, and shall not use it for any fields and purposes prohibited by laws, regulations, regulatory regulations, or the state from producing or operating, nor shall it be used for lending or purchasing other financial products for arbitrage, nor shall it be used for illegally adding implicit local government debts, nor for other purposes prohibited from using bank loans for investment.

 

 

Article 4 Loan Interest Rate and its Calculation

 

The lender shall specify the annualized interest rate of the loan under this contract to the borrower through the attachment “Notification Letter of Loan Annualized Interest Rate”. If the annualized interest rate of the loan under this contract is only calculated based on the loan interest rate specified in paragraph 1 of this article, the aforementioned “Notification Letter of Loan Annualized Interest Rate” shall not apply.

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

(2) Floating rate, with the actual drawing date (or the first actual drawing date in case of separate drawings) as the starting date. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

 

For each withdrawal:

 

Floating rate of RMB loans

 

A. The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date plus 30 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day plus 30 basis points, and will start to serve as the interest rate of the new floating cycle.

 

2. Interest Calculation

 

(1) For item 1 (1) of this article, fixed interest rate, item 1 (2), RMB loan floating interest rate, and foreign currency loan floating interest rate, item A, C:

 

The interest shall be calculated from the actual drawing date, concerning the actual amount withdrawn and the number of days the money is used.

 

The calculation formula is as below:

 

Interest = principal × actual days × daily interest rate.

 

Daily Interest Rate = annual interest rate / 360.

 

3. Interest Settlement

 

The borrower in this contract shall settle the interest in way (1):

 

(1) The interest is settled quarterly. The 20th day of the last month of each quarter is the interest settlement day, and the 21st day is the interest payment day.

 

(2) The interest is settled by month. The 20th day of each month is the interest settlement day, and the 21st day is the interest payment day.

 

The borrower should pay off all the interest on the last repayment day regardless of whether that day is an interest payment day.

 

 

4. Penalty Interest

 

(1) If the loan is overdue or not used for the purpose specified in the contract, from the date of overdue or misappropriation, the penalty interest shall be calculated and collected according to the penalty interest rate specified in this paragraph for the overdue or misappropriated part until the principal and interest are paid off.

 

For overdue and misappropriated loans, the penalty interest shall be calculated and charged at higher penalty interest rate.

 

(2) For the interest and penalty interest that cannot be paid on time by the borrower, compound interest shall be calculated and collected by the interest settlement method described in paragraph 3 of this article.

 

(3) Penalty interest rate

 

RMB loan penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loan

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 100% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

5. Other

 

(1) The “loan interest rate” and “penalty interest rate” under this contract are both tax inclusive interest rates, meaning that the interest charged by the lender to the borrower already includes value-added tax payable in accordance with national laws and regulations.

 

(2) If there is a significant change in the pricing basis of the floating interest rate under this contract, it shall be handled in accordance with the then effective market rules. If the lender requests the borrower to sign a supplementary contract on relevant matters at that time, the borrower shall cooperate.

 

(3) The term “pricing benchmark” in this article has the same meaning as the term “benchmark interest rate”.

 

(4) Under this contract, “TIBOR” refers to the TIBOR published and managed by the Japan Bankers Association (or successor manager) as the manager, and “EURIBOR” refers to the EURIBOR published and managed by the European Monetary Market Research Institute (or successor manager) as the manager, “Overnight SOFR” refers to the overnight SOFR published and managed by the Federal Reserve Bank of New York (or successor manager) as the manager “Overnight SONIA” refers to the overnight SONIA published and managed by the Bank of England (or successor manager) as the manager, and “Overnight TONA” refers to the overnight TONA published and managed by the Bank of Japan (or successor manager) as the manager, Overnight ESTR “refers to an overnight ESTR published and managed by the European Central Bank (or successor manager) as the manager, while” overnight SARON “refers to an overnight SARON published and managed by the Swiss Stock Exchange (or successor manager) as the manager.

 

 

Article 5 Conditions for Withdrawing

 

The borrower’s withdrawal shall meet the following conditions:

 

1. This contract and its attachments have come into force;

 

2. The borrower has provided guarantee as required by the lender, and the guarantee contract has become effective through completed legal approval, registration and filing procedures;

 

3. The borrower has reserved its documents, seals, personnel list and signature samples necessary for the signing and performance of the contract to the lender, and has completed all relevant documents;

 

4. The borrower has opened the account required for the contract as required by the lender;

 

5. The borrower has submitted written application and relevant loan purpose documents to the lender 3 working days before the withdrawal;

 

6. Other conditions of withdrawal as stipulated by law and agreed by both parties.

 

If the conditions above are not met, the lender has the right to refuse the borrower’s application for the withdrawal.

 

Article 6 Time and Method of Withdrawal

 

1. The borrower shall withdrawal the money in way (2) :

 

(1) Make an one-time withdrawal on mm / dd / yyyy.

 

(2) Withdraw within 9 working days from June 15, 2022.

 

(3) Make separate withdrawals as follows:

 

Time of withdrawal	Amount of withdrawal
/ / /	/ / /

 

2. The lender has the right to refuse the withdrawal application if the money is not withdrawn in time by the borrower.

 

3. Loan Commitment Services

 

The lender shall provide commitment services to the borrower during the commitment service period (from the effective date of this loan contract to the withdrawal date specified in this contract) that the borrower can withdraw but has not withdrawn the loan (hereinafter referred to as “unused loan”). By mutual agreement between the borrower and the lender The agreement is as follows:

 

The lender, based on the principle of “reduction of fees and benefits”, waives the commitment fee for the aforementioned promised services, and the assessed exemption amount is RMB 2,000.

 

 

Article 7 Payment of Loan

 

1. The Loan Issuing Account

 

The borrower shall open the following loan account with the lender through which the loan issuance and payment shall be handled.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account Number: 4273675009

 

2. Payment Method

 

(1) The payment method of loan funds shall be implemented in accordance with laws and regulations, regulatory provisions and with the contract. The payment method with a single withdrawal shall be confirmed in the withdrawal application. If the lender considers that the payment method selected in the withdrawal application does not meet the requirements, the lender has the right to change the payment method or stop the issuance and payment of the loan funds.

 

(2) Entrusted Payments. According to CBRC’s and the lender’s internal management regulations, the payment of the loan funds meeting one of the following conditions shall be made by the lender through an entrusted payment method:

 

A. A new credit business relationship is established between the lender and the borrower, and the credit rating of the borrower fails to meet the internal requirements of the lender;

 

B. When a single amount of withdrawal exceeds 10 million yuan (exclusive). Foreign currency shall be converted at the exchange rate on the actual withdrawing day);

 

C. Other circumstances stipulated by the lender or agreed with the borrower.

 

(3) Independent Payments. After the lender has released the loan funds to the borrower’s account, the borrower shall make independent payment to the its counter parties for the purpose agreed in the contract. All payments of the loan funds shall be independent except for the situations in which entrusted payment method should be adopted as stipulated in the preceding paragraph..

 

(4) Change of Payment Method. For independent payments, if the conditions of borrower’s external payment or credit rating changes after the withdrawal application is submitted, the payment method of the loan fund shall be changed if the payment meets the conditions specified in Item (2) of paragraph 2 in this article. The borrower is required to provide the lender with a written application for any changes in the payment method, to submit a new withdrawal application with relevant documents.

 

3. Specific Requirements for Entrusted Payment of the Loan Funds

 

(1) Payment Entrustment. The borrower shall clearly specify the payment entrustment in the withdrawal application, that is, to authorize and entrust the lender to directly pay the loan funds to the borrower’s designated counterpart after transferring the loan funds into the borrower’s account. The borrower shall also provide the name of the recipient, the counter party’s account, payment amount and other necessary payment information.

 

(2) Providing Transaction Information. The borrower shall provide the lender with the information of its loan account and the counter party’s account together with supporting materials proving that the withdrawal is in line with the purpose agreed in the loan contract. The borrower shall guarantee that all information provided to the lender is true, complete and valid. If the entrusted payment obligations of the lender are not completed in time due to the untrue, inaccurate or incomplete transaction information provided by the borrower, the lender shall not bear any responsibility, and the repayment obligations of the borrower under this contract shall not be affected.

 

(3) The Performance of the Lender’s Entrusted Payment Obligation

 

A. After the borrower provides the payment entrustment and other relevant information, the lender will pay the loan funds to the borrower’s counter party through the borrower’s account with the borrower’s approval.

 

B. If the lender finds that the relevant transaction materials provided by the borrower do not conform to the contract or have other defects, it has the right to require the borrower to supplement, replace, explain or to re-submit relevant materials. Before the borrower completely submits the materials required by the lender, the lender has the right to refuse the release and payment of the funds.

 

 

C. In case of a refund from the counter party’s bank, which causes the lender’s failure to make the payment in time, the lender shall not bear any responsibilities, and the repayment obligations of the borrower under this contract shall not be affected. The borrower hereby authorizes the lender to freeze the amount refunded by the the counter party’s bank. In this case, the borrower shall re-submit relevant transaction materials to the lender.

 

(4) The borrower shall not avoid the entrusted payment by breaking the whole payment into parts.

 

4. After the loan fund is released, the borrower shall timely provide the lender with the loan fund use records and other information including but not limited to payment vouchers, etc.

 

5. In case of any of the following circumstances, the lender shall have the right to re-determine the conditions for loan issuance and payment or to stop the issuance and payment of loan funds:

 

(1) The borrower violates the contract and avoids the entrusted payment of the lender by breaking the whole payment into parts;

 

(2) The borrower’s credit status declines or the profitability of its main business is not strong;

 

(3) There is abnormal use of the loan funds;

 

(4) The borrower fails to provide the loan fund use records and information in a timely manner as required by the lender;

 

(5) The borrower uses the loan fund in any way that violates the agreement reached in this article.

 

Article 8 Repayment

 

1. The account below is designated as the repayment account. The borrower shall timely provide information about the fund activities in this account to the lender. The lender has the right to require the borrower to explain the inflow or outflow of large or abnormal funds in this account and supervise the account.

 

Account Name: Shengfeng Logistics Group Co., Ltd

 

Account No.: 4273675009

 

2. Unless otherwise agreed by both parties, the borrower shall repay the loan in this contract with repayment plan (1):

 

(1) Pay off all loans in this contract on the expiration date of the loan term.

 

(2) Repay the loan according to the following schedule:

 

Time of Repayment	Repayment Amount
///	///
///	///

 

(3) Other plans of repayment.

 

The borrower shall submit a written application to the lender 3 banking days before the maturity of the corresponding loan.

 

The change of repayment plan shall be confirmed by both parties in writing.

 

3. Unless otherwise agreed by both parties, if the borrower defaults on the principal and interest of the loan at the same time, the lender has the right to decide the order of repayment of the principal and interest; In the case of repayment by installment, if there are multiple due loans or overdue loans under this contract, the lender has the right to determine the order of a certain repayment; If there are more than on loan contracts due, the lender has the right to determine the order of the contract to be performed with the borrower’s each repayment.

 

 

4. Unless otherwise agreed by both parties, the borrower may prepay the loan, but shall notify the lender in writing 15 banking days in advance. The amount of prepayment is first used to repay the last due loan.

 

For loans that apply a single compound interest combination for interest calculation, if prepayment or partial prepayment is involved, the interest corresponding to the prepayment principal should be settled in one lump sum.

 

5. The borrower shall make the repayment in way (1) as below.

 

(1) The borrower shall deposit sufficient funds in the repayment account below no later than 3 banking days before the maturity of each principal and interest, and the lender has the right to withdraw the money from this account on the maturity date.

 

Repayment Account: Shengfeng Logistics Group Co., Ltd.

 

Account number: 4273675009.

 

(2) Other repayment methods agreed by both parties.

 

Article 9 Guarantee

 

1. The guarantee method of the liabilities in the contract is as follows:

 

This contract belongs to the main contract under the Maximum Guarantee Contract (No. fj1122021143 signed by the guarantor Liu Yongxu and the lender. Liu yongxu is going to provide the maximum guarantee.

 

This contract belongs to the main contract under the Maximum Mortgage Contract (No. fj1122021142) signed by the mortgagor Suzhou Shengfeng Logistics Co., Ltd. and the lender. Suzhou Shengfeng Logistics Co., Ltd. is going to provide the maximum guarantee.

 

2. If the borrower or the guarantor has an event that the lender considers may affect its performance ability, the guarantee contract becomes invalid, cancelled or terminated, the financial situation of the borrower or the guarantor deteriorates, the borrower or the guarantor is involved in major litigation or arbitration cases, the guarantor defaults under the guarantee contract or other contracts with the lender, or the collateral is devalued, damaged, lost or sealed up, resulting in the weakening or loss of the guaranteed value, the lender has the right to require the borrower to provide new guarantee, replace the guarantor, etc. as the borrower’s obligation.

 

Article 10 Invoice Issuance

 

1. The borrower can apply to the lender for issuing a value-added tax invoice (þvalue-added tax special invoice/☒value-added tax ordinary invoice) after the lender confirms receipt of the payment. The lender can issue value-added tax to the borrower after receiving the application for issuing a value-added tax invoice from the borrower invoice.

 

2. The borrower can apply for the issuance of value-added tax invoices at the corresponding business processing agency or other institutions designated by the lender.

 

3. The borrower needs to confirm that the payer of the payment, the signatory of the contract, and the purchaser listed in the value-added tax invoice are the same taxpayer. If there is inconsistency, resulting in the borrower being unable to book or deduct input tax in accordance with the law, the relevant losses shall be borne by the borrower undertake.

 

4. If the borrower loses the invoice after obtaining it, the lender does not need to issue a supplementary value-added tax invoice to the borrower.

 

5. If the lender provides a discount to the borrower through negotiation, the amount of the value-added tax invoice issued shall be based on the discounted price.

 

6. If the lender provides free services to the borrower, the lender will not provide value-added tax invoices.

 

7. The lender shall issue a value-added tax invoice to the borrower, and the borrower shall promptly verify the invoice information. If the invoice information is incorrect,the borrower shall promptly apply to the lender for reissuing the value-added tax invoice.

 

 

Article 11 Declaration and Commitment

 

1. The borrower hereby declares that:

 

(1) The borrower is registered and exists legally, and has full capacity and civil rights to conduct the signing and performing of this contract;

 

(2) The signing and performance of this contract is based on the true intention of the borrower. The borrower has obtained legal and effective authorization, and will not violate any agreement, contract or other legal documents binding on the borrower; The borrower has obtained or will obtain all relevant approval, permission, records and registration required for signing and performing this contract;

 

(3) All documents, financial statements, vouchers and other information provided by the borrower to the lender for this contract are true, complete, accurate and effective;

 

(4) The transaction background provided by the borrower is true and legal, and no money laundering or other illegal activities is involved,and not violating the sanctions regulations applicable to the United Nations, China, and other countries;

 

(5) The borrower does not conceal from the lender any event that may affect the financial status and performance ability of the borrower and the guarantor;

 

(6) The borrower and the loan projects meet the national environmental protection standards, and there is no risk of energy over-consumption or pollution identified by the national departments;

 

(7) The purpose of the loan and the source of repayment are true and legal;

 

(8) Other matters declared by the borrower.

 

2. The borrower promises:

 

(1) To provide its financial statements (including but not limited to annual report, quarterly report and monthly report) and other relevant information to the lender on a regular or timely basis; The borrower shall remain to meet the following financial index requirements: A.its asset-liability ratio of the latest single borrower and group consolidated financial statements does not exceed 65%, the current ratio is no less than 1; B.The loan financing balance of the borrower flow does not exceed 400 million yuan and does not exceed 25% of the group’s consolidated annual income;

 

(2) If the borrower has entered into or will enter into a counter guarantee agreement or similar agreement with the guarantor as this contract, the agreement will not damage any rights of the lender;

 

(3) To accept the credit inspection and supervision of the lender with assistance and cooperation; If the borrower adopts the independent payment method, it shall regularly summarize and report to the lender; The summary report shall be a monthly report;

 

(4) In case of merger, division, capital reduction, equity transfer, foreign investment, substantial increase in debt financing, transfer of major assets and creditor’s rights and other matters that may adversely affect the borrower’s solvency, the borrower shall obtain the written consent of the lender in advance;

 

In case of the following circumstances, the borrower shall timely notify the lender:

 

A. There are changes in the borrower or guarantor’s articles of association, business scope, registered capital and legal representative;

 

B. There are any forms of joint venture, cooperation, contracted operation, restructuring, IPO plans and other changes in the operation mode;

 

C. The borrower or the guarantor is involved in major litigation or arbitration cases, property or collateral is sealed up, detained or supervised, or new security is set on collateral;

 

 

D. The borrower is to close down, dissolve, liquidate, have its business license revoked, or apply for bankruptcy, etc;

 

E. Shareholders, directors and current senior managers are suspected of major cases or economic disputes;

 

F. The borrower violates other contracts;

 

G. Business difficulties and deterioration of financial situation occur;

 

(5) The repayment order of the borrower’s debt to the lender is prior to that of the borrower’s shareholders, and is no less than that of other creditors;

 

(6) Before the repayment of the loan principal, interests and related expenses in this contract is completed, the borrower shall not distribute any dividend or bonus to its shareholders in any form;

 

(7) The borrower shall not dispose of its own assets in a way that reduces its solvency. The borrower promises that the total amount of external guarantee shall not be more than twice of its own net assets, and that the total amount of external guarantee and the amount of single guarantee shall not exceed the limit specified in its articles of association;

 

(8) The borrower shall not transfer the loan fund to the account with the same account name or to the account of the related parties except for the purpose specified in this contract or with the consent of the lender.

 

To conduct transfers as mentioned in item (8) above, the borrower must provide the lender with sufficient supporting materials;

 

(9) The loan conditions such as the loan interest rate, guarantee, and repayment order stated in this contract shall not be lower than those given by the borrower to any other financial institution now or in the future;

 

(10) The lender has the right to call in the loan in advance based on the borrower’s fund repayment status;

 

(11) The borrower shall provide its environmental and social risk report to the lender. The borrower undertakes to strengthen the management of environmental and social risks with the lender’s supervision. The borrower’s breach of the agreements described above is deemed as an event of default, and the lender may take remedies for breach of contract;

 

(12) Cooperate with the lender in conducting due diligence work, provide and update information on the institution and its beneficial owners, and provide background information related to the transaction;

 

(13) Other items promised by the borrower.

 

Article 12 Disclosure of Related Party Transactions

 

Both parties agree that the following clause 1 shall apply:

 

1. The borrower is not a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

2. The borrower is a group customer determined by the lender according to the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers. The borrower shall timely report to the lender about its related party transactions of more than 10% of its net assets, including the related party relationship, transaction items and nature, transaction amount, and pricing policy (including transactions with no amount or with only symbolic amount).

 

If any one of the following circumstances, the lender has the right to unilaterally decide to stop offering the unused loan and call in part or all of the loan principal and interest in advance: the borrower takes advantage of false contract with related parties to obtain bank funds or credit; The borrower is involved in cases of major merger, acquisition and reorganization where the lender thinks that it may affect the security of the loan; and other circumstances specified in Article 18 of the Guidelines for Commercial Banks on Risk Management of Credit Business with Group Customers.

 

 

Article 13 Breach of Contract

 

Any of the following events shall constitute or be deemed as an event of default:

 

1. The borrower fails to perform its obligations of payment and settlement as agreed in this contract;

 

2. The borrower fails to use the loan funds in the way or for the purpose agreed in this contract，or fails to use the obtained funds for the purposes specified in this contract;or the borrower uses the loan funds for refinancing or purchasing other financial products for arbitrage; Or the borrower illegally adds implicit local government debts;

 

3. The statement made by the borrower in this contract is untrue or violates its commitment in this contract;

 

4. In case of any circumstance specified in Article 11.2.(4) where the lender thinks that it may affect the financial status and performance ability of the borrower or the guarantor, and the borrower fails to provide new guarantee or replace the guarantor;

 

5. The credit status of the borrower declines, the profitability, solvency, operating capacity, cash flow and other financial indicators of the borrower deteriorate, or the borrower’s financial indicators break through the constraints as stipulated in this contract;

 

6. The borrower breaches any other contract with the lender or other institutions of Bank of China Limited; Any event of breaches of credit business contract happen between the borrower and other financial institutions;

 

7. The guarantor violates the provisions of the guarantee contract, or defaults under other contracts with the lender or other institutions of Bank of China Limited;

 

8. Termination of business, dissolution, cancellation or bankruptcy happens to the borrower;

 

9. The borrower is involved in or may be involved in major economic disputes, litigation, arbitration, its assets are sealed up, distrained or enforced, it is being investigated or punished by national legal department;

 

10. The borrower’s major investors and key management personnel change abnormally, or become missing, subject to judicial investigation or restriction of personal freedom;

 

11. The lender finds that there are circumstances that may affect the financial status and performance ability of the borrower or the guarantor at the annual review;

 

12. There is a large amount of abnormal capital inflow and outflow in the designated repayment account, and the borrower can not provide supporting materials approved by the lender;

 

13. The construction of energy-saving projects is seriously lagged, the energy-saving technology and equipment have serious defects, stopped or reduced production of the main facilities or equipment results in the actual energy saving significantly lower than the forecast thereafter the energy-saving income can not return to the designated account in time, the borrower participates in private high interest loans, the borrower offers other external guarantee or borrow new debts without the consent of the lender, and the borrower’s key financial indicators are seriously deteriorated;

 

14. The borrower refuses to cooperate with the lender in conducting due diligence, and the borrower or its trading counterparty is suspected of money laundering, terrorist financing, nuclear weapons proliferation, violation of applicable sanctions, or other illegal and irregular activities, or the borrower or guarantor is included in the United Nations, China, and other applicable sanctions list or scope;

 

15. The borrower violates other provisions on the rights and obligations of the parties in this contract.

 

In case of any event of default specified in the preceding paragraph, the lender shall have the right to take the following actions regarding the specific circumstances:

 

1. Require the borrower and the guarantor to correct their breach of contract within a time limit;

 

2. Reduce, suspend, cancel or terminate the credit line to the borrower in whole or in part;

 

3. Suspend or terminate in whole or in part the acceptance of the borrower’s withdrawal and other business applications; Suspend or cancel all or part of the loans that have not been granted and the trade financing that have not been handled;

 

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable between the borrower and the lender due immediately;

 

5. Terminate or rescind this contract and other contracts between the borrower and the lender in whole or in part;

 

6. Require the borrower to compensate the losses caused to the lender due to its breach of contract, including but not limited to the litigation costs, lawyers’ fees, notarization fees, execution fees and other related expenses caused by the realization of the creditor’s rights;

 

7. Deduct the money balance of the account opened by the borrower with the lender and other institutions of Bank of China Limited to pay off all or part of the borrower’s debts to the lender. The undue amount in the account shall become due at the time. If the account currency is different from the lender’s business valuation currency, it shall be converted at the foreign exchange rate at the time of the deduction;

 

8. Exercise the security interest;

 

9. Require the guarantor to undertake the guarantee responsibility;

 

10. Other measures that the lender considers necessary and possible.

 

Article 14 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 15 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 16 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the People’s Republic of China.

 

After this contract comes into effect, all disputes arising from the establishment and performance of this contract can be settled by both parties through negotiation. If the negotiation fails, either party may adopt the 2nd way as follows:

 

1. Submit an application to the following departments for arbitration:

 

☐ China International Economic and Trade Arbitration Commission

 

☐ Beijing Arbitration Commission (Beijing International Arbitration Center)

 

☐ Other arbitration commissions

 

The arbitration shall be conducted in accordance with the arbitration rules in force at the time of applying for arbitration. Final result of the arbitration shall be binding on all parties.

 

 

2. Litigation.

 

☐ Bring a lawsuit to the People’s Court of the place where Party B or other institutions of Bank of China limited exercise their rights and obligations.

 

☐ Bring a lawsuit to the International Commercial Court of the Supreme People’s Court (for international commercial disputes with an amount of more than 300 million yuan).

 

þ Bring a law suit to the people’s court with jurisdiction according to law.

 

During the dispute settlement period, if the dispute does not affect the performance of other provisions of this Agreement and the single agreement, the other provisions shall continue to be performed.

 

Article 17 Appendixes

 

The following attachment and other attachments and individual agreements confirmed by both parties constitute an integral part of this Agreement and have the same legal effect as this Agreement.

 

1. Attachment: Application Form for Withdrawals.

 

2. Notification Letter of Loan Annualized Interest Rate (Format)

 

Article 18 Other Agreements

 

1. Without the written consent of the lender, the borrower shall not transfer any rights or obligations in this contract to a third party.

 

2. The borrower is going to agree if the lender has to entrust other institutions of Bank of China Limited to perform the rights and obligations in this contract due to business needs, or to transfer the loan business in this contract to other institutions of Bank of China Limited to undertake and manage. Other institutions of Bank of China Limited authorized by the lender, or other institutions of Bank of China Limited undertaking the loan business in this contract, shall have the right to exercise all the rights in this contract, and have the right to file a lawsuit in the name of such institution, submit to an arbitration institution for adjudication or apply for enforcement according to this contract.

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first instance, second instance, retrial, and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance.In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court, or refusal of the designated recipient to sign after the delivery address is changed, etc., the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The transactions arising from this contract are based on each party’s own interests independently. According to law, the fairness of the transaction shall not be affected by any of the lender’s related parties or persons by taking advantage of the relationship.

 

6. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

7. The lender shall have the right to provide the information related to this contract and the borrower to the credit reference system of the People’s Bank of China and other credit information databases established according to law for inquiry and use by institutions or individuals with appropriate qualifications. The lender also has the right to inquire the relevant information of the borrower through the credit information system of the People’s Bank of China and other legally established credit information databases for the purpose of signing and performing this contract.

 

8. In case of legal holidays, the withdrawal date and repayment date shall be postponed to the first working day after the holidays.

 

9. If the lender fails to perform the agreement due to changes in laws and regulations, the lender has the right to terminate or change the performance of this agreement. If the agreement is terminated or changed due to such reasons, the lender shall be exempted from liability.

 

10. The borrower may consult and complain about this contract and its business and fees through the contact phone number of the lender listed in this contract.

 

Article 19 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

This contract is made in triplicate with the same legal effect, one for each party.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

June 15, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

June 15, 2022

 

 

13

Exhibit 10.25

 

Supplementary Contract to the Working Capital Loan Contract

No: fj1122022160-1

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

The borrower and lender, through equal consultation, have entered into this supplementary contract for the “Working Capital Loan Contract” (hereinafter referred to as the “Original Contract”) with the number fj1122022214 signed by both parties on May 18, 2022. Both parties unanimously agree to modify the terms of RMB loan interest rate and penalty interest rate stipulated in Article 4 of the original contract as follows:

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

The source of fixed interest rate is:

 

As of the working day before the effective date of this contract, the latest published one-year/loan market quotation interest rate by the National Interbank Funding Center plus/minus basis points.

 

(2) Floating rate, The floating interest rate has been calculated from May 26, 2022. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

 

For each withdrawal（Including loan balance and new withdrawals）,Floating rate of RMB loans:

 

A.The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date minus 120 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day minus 120 basis points, and will start to serve as the interest rate of the new floating cycle.

 

 

2. Penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loa

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 100% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

The loan and penalty interest rate before the effective date shall still be executed according to the original contract agreement. Matters not stipulated in this contract shall still be executed in accordance with the original contract. In case of any inconsistency between the provisions of this contract and the original contract, this contract shall prevail.

 

This contract is made in triplicate, with each party holding one copy and having equal legal effect.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

October 21, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

October 21, 2022

 

 

 

 

Exhibit 10.26

 

Maximum Mortgage Contract

No.: fj1122023041

 

Mortgagor: Suzhou Shengfeng Logistics Co., Ltd

Unified Social Credit Code: 91320507769866735B

Legal Representative / Person in Charge: Kang Zhenghao

Address: 55 Huaxing Road, Xingeng village, Wangting Town, Xiangcheng District, Suzhou City

Zip Code: 201500

Financial Institution and Account Number: China Minsheng Bank Co., Ltd. Suzhou Xiangcheng Branch, 631058638

Tel: 0512-66707352

Fax: 0512-66703297

 

Mortgagee: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge: Chen Kai

Address: Fusheng Qianlong international annex building 1F-03, No.3 middle Changle Road, Wangzhuang Street, Jin’an District, Fuzhou City

Zip Code: 350011

Tel: 0591-83163662

Fax: 0591-83163662

 

In order to guarantee the performance of the liabilities under the main contract mentioned in Article 1 of this contract, the mortgagor voluntarily mortgages the right of legal property disposal to the mortgagee as listed in the attached “list of mortgaged property”. Both parties enter into this contract through equal consultation. Unless otherwise agreed in this contract, the interpretation of words in this contract shall be determined according to the main contract.

 

Article 1 Main Contract

 

The main contract is:

 

The Credit Line Agreement (No.fj1122023039) signed between the creditor and the debtor Shengfeng Logistics Group Co., Ltd. and the single agreements that have been and will be signed according to the credit line agreement, as well as its amendments or supplements.

 

Article 2 Principal Creditor’s Rights and the Period of Occurrence

 

Unless otherwise determined or agreed in accordance with the law, the creditor’s rights actually occur under the main contract within the following periods, as well as the creditor’s rights already occurred between the debtor and the creditor before the contract takes effect, constitute the main creditor’s rights of the contract:

 

From the effective date of the credit line agreement mentioned in Article 1 of this contract to the expiration date of the service life of the credit line specified in the agreement and its amendments or supplements.

 

Article 3 Maximum Amount of Secured Claims

 

1. The maximum creditor’s rights guaranteed by this contract is:

 

Currency: RMB.

 

Amount: ￥80,000,000.00.

 

 

2. On the expiration date defined in Article 2 of this contract, the interest (including legal interest, agreed interest, compound interest and penalty interest), liquidated damages, damages, expenses for realizing the creditor’s right (including but not limited to litigation expenses, lawyer’s fees, notarization fees, etc.) incurred on the principal of the principal creditor’s right shall be calculated. The specific amount of the secured claim is determined when it is paid off.

 

The sum of the amount of creditor’s rights determined according to the above two terms is the maximum amount of creditor’s rights guaranteed by this contract.

 

Article 4 Collateral

 

See the “list of collateral” in the appendix for the relevant information of collateral.

 

During the period of the mortgage, if the mortgaged property is damaged, lost or expropriated, the mortgagee may have the priority to be compensated for the obtained insurance and compensation money. This money may also be drawn if the performance period of the secured creditor’s right has not expired.

 

If the mortgaged property is a house, the mortgagor shall timely inform the mortgagee upon knowing the information that the house is to be demolished. During the mortgage period, if the mortgaged house is demolished and the compensation form of property right exchange is adopted for the demolished house, the mortgagor shall negotiate with the debtor and the mortgagee to pay off the main liabilities, or reset the mortgage after the property right exchange and sign a new agreement according to the mortgagee’s requirements. After the demolishing of the original mortgaged real estate and before the new mortgage registration is handled, the mortgagor should provide a guarantee to the mortgagee by the guarantor; If the house to be demolished is compensated in the form of compensation money, the mortgagee has the right to receive the compensation in priority, or require the mortgagor to continue using the demolition compensation as security property by opening a special deposit account or a deposit receipt, and signing the corresponding agreement.

 

Article 5 mortgage Registration

 

If mortgage registration is required according to law, the two parties shall go through the procedures with the registration department within 30 days after signing this contract.

 

In case of any changes in the registered items of mortgage, the two parties shall register the change within 5 days from the change date.

 

The mortgage registration fee shall be borne by the mortgagor.

 

Article 6 Possession and Keep of the Mortgaged Property

 

The mortgaged property under this contract shall be possessed and kept by the mortgagor, but all certificates of the property shall be kept by the mortgagee. The mortgagor agrees to accept and effectively cooperate with the mortgagee’s inspection of the property at any time.

 

The mortgagor shall properly keep and maintain the mortgaged property and take effective measures to ensure the safety and integrity of the property; If the mortgaged property needs to be repaired, the mortgagor shall do so in time and bear the corresponding expenses.

 

Without the written consent of the mortgagee, the mortgagor shall not transfer, gift, re mortgage, pledge, trust, lease, lend, contribute in kind, transform, rebuild, establish residential rights, or dispose of the mortgaged property in whole or in part in any other way; With the written consent of the mortgagee, the proceeds from the disposal of the mortgaged property shall be deposited into the designated account of the mortgagee. The mortgagee has the right to choose the following methods for processing: (1) demand early repayment of the debt; (2) Convert the price into a security deposit pledge; (3) Require the mortgagor to provide new guarantees; If the mortgagor transfers the mortgaged property without the written consent of the mortgagee, resulting in the transfer price being significantly lower than the market reasonable value, the mortgagor shall be liable within its fault.

 

 

Article 7 Decrease in the Value of the Mortgaged Property

 

The value of the collateral can be determined through consultation between the mortgagee and the mortgagor. If a third-party evaluation company is entrusted to evaluate the value of the collateral, the borrower is a small and micro enterprise, and the mortgagee serves as the principal and bears the evaluation fee; The borrower is a non small and micro enterprise, and the debtor serves as the principal and bears the evaluation fee.

 

The value of the collateral determined through negotiation or the value conclusion of the evaluation report of the evaluation company reviewed by the mortgagee shall be recorded in the corresponding column of the “Collateral List” in this contract.

 

If the mortgagor’s conducts activities that is going to reduce the value of the mortgaged property before the main creditor’s right of this contract is fully paid off, the mortgagee has the right stop the mortgagor’s such behavior. If the value of the mortgaged property decreases, the mortgagee has the right to require the mortgagor to restore the value of the property or to provide other guarantees equivalent to the reduced value. If the mortgagor neither restores the value of the property nor provides a guarantee, the mortgagee has the right to require the debtor to pay off the liability in advance. If the debtor fails to pay off, the mortgagee has the right to exercise the mortgage.

 

If the mortgaged property is lost or its value is reduced due to natural disasters, accidents, torts and other reasons, the mortgagor shall immediately take measures to prevent further expansion of the loss and immediately notify the mortgagee in writing.

 

Article 8 Fructus

 

If the debtor fails to pay off the due liabilities or under other circumstances the mortgage right is seized by the People’s Court according to law, the mortgagee has the right to collect the natural or legal fructus of the mortgaged property from the date of seizure, unless the mortgagee fails to notify the obligator who shall pay off the legal fruits.

 

The fructus mentioned in the preceding paragraph shall first be used to cover the expenses for collecting the fructus.

 

Article 9 Insurance of Mortgaged Property (one of the following items shall be selected: 1. applicable; 2. not applicable)

 

The mortgagor shall purchase insurance from an insurance company determined through consultation with the mortgagee in accordance with the insurance type, insurance period, and insurance amount determined by both parties. If the assessed value of the collateral is not less than the corresponding amount of the principal debt guaranteed by this contract, the insurance shall be purchased at a rate not less than the corresponding amount of the principal debt guaranteed by this contract. If the assessed value of the collateral is less than the corresponding amount of the principal debt guaranteed by this contract, the insurance shall be purchased at the assessed value of the collateral. The content of the insurance policy shall meet the requirements of the mortgagee and shall not be accompanied by restrictive conditions that are detrimental to the rights and interests of the mortgagee. The insurance premium shall be borne by the mortgagee / and 100% by the mortgagor. If the borrower is a small or micro enterprise, the insurance premium shall be borne by the mortgagee.

 

Before the main creditor’s rights of this contract are fully paid off, the mortgagor shall not interrupt, terminate, modify or change the insurance policy for any reason, and shall take all reasonable and necessary measures to ensure that the insurance agreed in this article remains valid.

 

If the mortgagor fails to take out insurance or violates the aforementioned agreement, the mortgagee has the right to decide to take out insurance or continue to take out insurance for the mortgaged property. The insurance premium shall be borne by the mortgagee / , and the mortgagor shall bear 100%. Any losses caused to the mortgagee due to the mortgagor’s failure to bear the corresponding insurance premium as agreed shall be recorded in the debt balance. If the borrower is a small or micro enterprise, the insurance premium shall be borne by the mortgagee.

 

Within 3 days after the signing of this contract, the mortgagor shall provide the mortgagee with the original insurance document of the mortgaged property to transfer the claim right of insurance benefits to the mortgagee. Before the main claims of this contract are fully paid off, the original insurance document shall be kept by the mortgagee.

 

 

Article 10 Guarantee Liabilities

 

If the debtor fails to make payment to the mortgagee on any normal repayment date or prepayment date under the main contract, the mortgagee has the right to exercise the mortgage in accordance with the law and the contract, and has the priority in compensation for the mortgaged property within the maximum amount specified in Article 3 of the contract.

 

The normal repayment date referred to in the preceding paragraph is the principal repayment date, interest payment date or the date when the debtor shall pay any money to the mortgagee according to the contract. The prepayment date mentioned in the preceding paragraph refers to the date proposed by the debtor with the consent of the mortgagee, and the date when the mortgagee requests the debtor to recover the principal and interest of the creditor’s right and / or any other money in advance according to the contract.

 

Article 11 Types and Period of Exercising the Mortgage Right

 

After the occurrence of the guarantee liability, the mortgagee has the right to exercise all or part of the mortgage that has reached the liquidation period according to law.

 

The mortgagee should exercise the right within the limitation of action; If the creditor’s right is paid off by installments, the mortgagee shall exercise the mortgage right before the reach of the last term’s limitation period of action.

 

Article 12 Realization of the Mortgage

 

After the occurrence of the guarantee liability, the mortgagee has the right to negotiate with the mortgagor to convert the mortgaged property into repayment of the principle creditor’s right through auction or sale. If the negotiation fails, the mortgagee has the right to request the People’s Court for an auction or sale of the mortgaged property according to law.

 

The proceeds from the disposal of the mortgaged property should be used to pay for the disposal expenses in priority and then to pay off the principal creditor’s right.

 

If the principle liability is guaranteed by other things besides this contract, it will not affect any right of the mortgagee under this contract. The mortgagee has the right to determine the exercise order of each guarantee right. The mortgagor shall undertake the guarantee liability in accordance with this contract, and there shall be no other defenses regarding other guarantee and the exercise order.

 

Article 13 Relationship Between this Contract and the Main Contract

 

If the main contract includes the credit line agreement / general agreement on credit business, written consent of the mortgagor is required to extend the credit line service term / business cooperation term. Without the mortgagor’s consent or refusal, the mortgagor shall only use the collateral under this contract to guarantee the principal creditor’s rights occurring during the service life of the original credit line / business cooperation period within the maximum amount of the secured creditor’s rights specified in Article 3 of this contract.

 

For changes of other contents or matters in the credit line agreement / general agreement on credit business, the single agreements, and single main contract, it is not necessary to obtain the consent of the mortgagor. The mortgagor still undertakes the guarantee responsibility for the changed main contract with the mortgaged property within the maximum amount of secured creditor’s rights specified in Article 3 of this contract.

 

The maximum amount of secured creditor’s rights specified in Article 3 of this contract may be changed in writing with the agreement of the mortgagor and the mortgagee.

 

If the mortgaged property under this contract has other mortgagees, the changes above shall not have adverse effects on them without their written approval.

 

 

Article 14 Declaration and Commitment

 

The mortgagor hereby declares that:

 

1. The mortgagor is legally registered, exists, and has the full capacity of civil rights required for signing and performing this contract and the legal ownership or disposal right of the mortgaged property;

 

2. The mortgagor guarantees that there are no other co-owners of the mortgaged property, or that although there are co-owners, the mortgagor has obtained the written approval of all co-owners. The mortgagor undertakes to deliver the written approval to the mortgagee before signing this contract;

 

3. The mortgagor fully understands the contents of the main contract. The signing and performance of this contract is based on the mortgagor’s true intention, and the mortgagor has obtained legal and effective authorization.

 

If the mortgagor is a third party and is a company, the guarantee provided by the mortgagor has been approved by the board of directors or through the shareholders’ meeting, and does not exceed the specified limit stipulated by the company.

 

Signing and performing this contract will not violate any contract, agreement or other legal documents binding on the mortgagor. The mortgagor has obtained or will obtain all relevant approval, permission, filing and registration required for this mortgage;

 

4. All documents and materials provided by the mortgagor to the mortgagee are accurate, true, complete and effective;

 

5. The mortgagor has not concealed any existing security interests of the mortgaged property from the mortgagee as of the date of signing this contract;

 

6. If a new security interest is set for the mortgaged property, the mortgaged property is closed down, or the mortgagor is involved in a major lawsuit or arbitration case, the mortgagor should notify the mortgagee in time;

 

7. If the mortgaged property is a project under construction, the mortgagor promises that there is no priority right of a third party in the mortgaged property; If there is a third party’s right of priority, the mortgagor promises to request the third party to issue a written statement of abandoning the right of priority and then hand it over to the mortgagee.

 

8. If the collateral is a house, before the signing of this contract, unless the mortgagor has disclosed to the mortgagee, the mortgagor promises that there is no residential right of a third party on the collateral; During the mortgage period, without the written consent of the mortgagee, no part or all of the mortgaged property shall be granted residency rights.

 

9. If the collateral is movable property, the mortgagor promises that there are no outstanding payments or financing payments for the purchase of the collateral that have not been notified to the mortgagee, and there is no established security interest with the collateral as the main creditor’s right.

 

10. The mortgagor promises that the source of the collateral is legal, and the transaction does not violate the United Nations, China, and other applicable sanctions regulations.

 

The mortgagor shall cooperate with the mortgagee in conducting due diligence work, providing and updating information on the institution and its beneficial owners, and Provide background information about the transaction.

 

Article 15 Contracting Fault

 

After the signing of this contract, if the mortgagor refuses to handle or delays the mortgage registration, or due to other reasons of the mortgagor, this contract cannot come into effect and the mortgage cannot be effectively issued, it will lead to the fault of contracting. If the mortgagee suffers losses for this reason, the mortgagor shall be liable for the compensation.

 

 

Article 16 Breach of the Contract

 

Any of the following circumstances shall constitute or be deemed as the mortgagor’s breach of the contract:

 

1. The mortgagor, in violation of this contract, transfers, rents, lends, transforms, rebuilds or disposes of the mortgaged property in whole or in part in any other way without authorization;

 

2. The mortgagor failed to handle mortgage registration in a timely manner as agreed in this contract；

 

3. The mortgagor prevents the mortgagee from disposing of the mortgaged property in accordance with the law and / or the relevant provisions of this contract in any way;

 

4. When the value of the mortgaged property decreases as described in Article 7 in this contract, the mortgagor refuses to restore the value as required and does not provide additional guarantee;

 

5. The statement made by the mortgagor in this contract is not true or violates the commitment made in this contract;

 

6. The mortgagor violates other provisions on the rights and obligations of the parties in this contract;

 

7. Termination, dissolution, revocation or bankruptcy occurs to the mortgagor’s company;

 

8. The mortgagor breaches the contract with the mortgagee or other institutions of Bank of China Limited；

 

9. The mortgagor refuses to cooperate with the mortgagee in conducting due diligence, and the mortgagor or its transaction/counterparty is suspected of money laundering, terrorist financing, nuclear weapon proliferation, violation of applicable sanctions, or other illegal or irregular activities, or the mortgagor is included in the United Nations, China, and other applicable sanctions list or scope.

 

In the event of breach of contract as mentioned in the preceding paragraph, the mortgagee has the right to take the following measures respectively or at the same time regarding the specific circumstances:

 

1. Require the mortgagor to correct the breach of contract within a time limit;

 

2. Require the mortgagor to use the proceeds from the disposal of the mortgaged property for early repayment of debts or deposit with a third party designated by the mortgagee；

 

3. Reduce, suspend or terminate the whole or part of the credit line to the mortgagor;

 

4. Partially or fully suspend or terminate business applications from the mortgagor with other contracts; All or part of the loans and trade financing that have not yet been granted or handled shall be suspended or terminated;

 

5. Declare all or part of the mortgagor’s principal and interest of the loan / trade financing funds and other outstanding accounts payable to be immediately due;

 

6. Terminate or rescind this and other contracts between the mortgagor and the mortgagee;

 

7. Require the mortgagor to compensate for the loss caused by the breach of contract;

 

8. Exercise the mortgage;

 

9. Other measures deemed necessary by the mortgagee.

 

 

Article 17 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

Article 18 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 19 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the people’s Republic of China.

 

All disputes arising from the performance of this contract can be settled by both parties through negotiation. If the negotiation fails, both parties agree to adopt the same dispute settlement method as agreed in the main contract.

 

During the dispute settlement period, if the dispute does not affect the performance of other terms of the contract, the other terms shall continue to be performed.

 

Article 20 Appendix

 

The following attachments and other attachments confirmed by both parties constitute an integral part of this contract and have the same legal effect as this contract.

 

1. List of Collateral.

 

Article 21 Other Agreements

 

1. The guarantor shall not transfer any rights and obligations under this contract to a third party without the creditor’s written consent.

 

2. If the creditor has to entrust other institutions of Bank of China Limited to perform the rights and obligations under this contract due to business needs, the guarantor shall recognize it. Other institutions of Bank of China Limited authorized by the creditor have the right to exercise all rights under this contract, and have the right to bring a lawsuit to the court or submit to the arbitration institution for adjudication on the disputes under this contract.

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes the delivery of various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first and second instance after the dispute enters arbitration and civil litigation proceedings

 

Review, retrial, and execution procedures.

 

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed location 5 working days in advance

 

Address. In arbitration and civil litigation proceedings, when either party changes their address, they shall fulfill the service address change to the arbitration institution or court

 

Obligation to notify. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be deemed as valid delivery

 

Delivery address.

 

Due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the court in accordance with procedures after the delivery address is changed

 

If the designated recipient refuses to sign for the legal document and other reasons result in it not being actually received by one party, or if it is delivered by mail, the document shall be deemed as

 

The date of return shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

6. The mortgagor may consult and complain about this contract and its business and fees through the contact phone number of the mortgagee listed in this contract.

 

Article 22 Delivery Terms

 

1.1 Any notice, letter, data message, etc. sent by either party to the other party under this agreement shall be sent in writing to the delivery address specified below.

 

If one party changes the delivery address information/electronic delivery information, it shall promptly notify the other party in writing within 3 days after the change. Delivery before the other party actually receives the change notice shall still be valid, and electronic delivery shall have the same legal effect as other delivery methods.

 

The guarantor confirms that the delivery address is as follows:

 

Address: No. 478 Fuxin East Road, Jin’an District, Fuzhou City, Postal Code: 350011, Contact Person: Liu Yongxu, Contact Number: 0591-83628181.

 

Guarantor (☐ Agreed) þ  Disagree) The electronic delivery method is as follows:

 

Mobile SMS:     /     Fax:     /     Instant messaging account (WeChat):     /     Email:      /      .

 

The creditor confirms that the delivery address is as follows:

 

Address: No. 3 Changle Middle Road, Wangzhuang Street, Jin’an District, Fuzhou City (east side of former Jiaotang Road), Fusheng Qianlong International Annex Building, Floor 1, 03 Central Commercial Center, Postal Code: 350000, Contact Person: Li Yang, Contact Number: 0591-83163665.

 

Creditor (☐ agree) þ  Disagree) The electronic delivery method is as follows:

 

Mobile SMS:      /     Fax:     /     Instant messaging account (WeChat):     /     Email:     /     .

 

1.2 The delivery address agreed in Article 22, Article 1.1 refers to the address for the delivery of legal documents by the people’s court/arbitration institution during work contacts, legal documents, and dispute resolution between both parties. All parties confirm that the above-mentioned delivery address and delivery method are applicable to all stages of litigation/arbitration, including but not limited to first instance, second instance, retrial, special procedures, and execution procedures.

 

The people’s court/arbitration institution shall deliver legal documents in accordance with one or more of the delivery methods provided by the parties mentioned above, and the delivery time shall be based on the earliest of the aforementioned delivery methods.

 

 

The parties to the agreement guarantee that the delivery address/electronic delivery information provided is accurate and valid. If the provided address/electronic delivery information

 

Inaccurate delivery information or failure to promptly inform the changed address/electronic delivery information, resulting in legal documents being unable to be delivered or delayed

 

Delivery shall bear the legal consequences that may arise.

 

The people’s court/arbitration institution shall deliver the goods according to the delivery address/electronic delivery information provided by the parties mentioned above. If the address/electronic delivery information provided by the parties is inaccurate or the changed delivery address/electronic delivery information is not notified in a timely manner

 

If a legal document is not actually received by the recipient and is directly served, the date on which the civil litigation document is left at that address shall be deemed as the date of service

 

On the day of; If the document is delivered by mail, the date of return shall be the date of delivery; Electronic delivery refers to the delivery when the delivery information reaches the specific system of the recipient.

 

1.3 The delivery terms of the contract are independent clauses and are not affected by the validity of the entire contract or other terms.

 

Article 23 Effectiveness of Contract and Issue of the Mortgage

 

This contract shall come into force from the date when signed by the legal representatives, responsible persons or authorized signers of both parties with official seals. However, if mortgage registration is required according to law, the contract shall come into force from the date when the registration procedures are completed.

 

The mortgage is issued when the contract comes into effect.

 

This contract is made in quadruplicate with the same legal effect, one for each party and the debtors.

 

Mortgagor: Suzhou Shengfeng Logistics Co., Ltd.

Authorized Signature: Kang Zhenghao

March 15, 2023

 

Mortgagee: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized Signature: Zhang Changkai

March 15, 2023

 

 

Appendix

 

List of Collateral

No. fj1122023041-1

 

Collateral Name

Amount

Evaluated Value

Ownership (certificate no.)

Location

Registration Authority

Real estate and land use right of No.50 Taiyang Road, Wangting Town, Xiangcheng District, Suzhou

Building Area: 37767.66㎡; Land Area: 26400.00㎡.

￥110870000

Su (2017) Suzhou real estate No. 7001992

No.50 Taiyang Road, Wangting Town, Xiangcheng District

Suzhou Natural Resources and Planning Bureau

 

 

10 

 

Exhibit 10.27

 

Maximum guarantee contract

(for natural person guarantor)

No.: fj1122021143

 

Guarantor: Liu Yongxu

Certificate No.: 350122197101084553

Certificate Type: ID card

Address: Sunshine city 3-3-2802, 33 Degui Road, Gulou District, Fuzhou City, Fujian Province

Zip Code: 350001

Tel: 0591-83628181

Fax: 0591-83628181

 

Creditor: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge: Lin Jie

Address: Fusheng Qianlong international annex building 1F-03, No.3 middle Changle Road, Wangzhuang Street, Jin’an District, Fuzhou City

Zip Code: 350011

Tel: 0591-83163662

Fax: 0591-83163662

 

In order to guarantee the performance of the debts under the main contract mentioned in Article 1 of this contract, the guarantor is willing to provide guarantee to the creditor. This contract is signed by both parties through equal consultation. Unless otherwise agreed in this contract, the interpretation of words in this contract shall be determined according to the main contract.

 

Article 1 Main Contract

 

The main contract is:

 

The credit line agreement (No. fj1122021141) signed between the creditor and the debtor Shengfeng Logistics Group Co., Ltd. and the single agreements that have been and will be signed according to the credit line agreement, as well as its amendments or supplements.

 

Article 2 Principal Creditor’s Rights and the Period of Occurrence

 

Unless otherwise determined or agreed in accordance with the law, the creditor’s rights actually occur under the main contract within the following periods, as well as the creditor’s rights already occurred between the debtor and the creditor before the contract takes effect, constitute the main creditor’s rights of the contract:

 

From the effective date of the credit line agreement mentioned in Article 1 of this contract to the expiration date of the service life of the credit line specified in the agreement and its amendments or supplements.

 

Article 3 Maximum Amount of Secured Claims

 

1. The maximum principal balance of the creditor’s rights guaranteed by this contract is:

 

Currency: RMB.

Amount: ￥80,000,000.00.

 

 

2. On the expiration date defined in Article 2 of this contract, the interest (including legal interest, agreed interest, compound interest and penalty interest), liquidated damages, damages, expenses for realizing the creditor’s right (including but not limited to litigation expenses, lawyer’s fees, notarization fees, etc.) incurred on the principal of the principal creditor’s right shall be calculated. The specific amount of the secured claim is determined when it is paid off.

 

The sum of the amount of creditor’s rights determined according to the above two terms is the maximum amount of creditor’s rights guaranteed by this contract.

 

Article 4 Guarantee Types

 

The guarantee type of this contract is Item 1 as follows:

 

1. Joint liability guarantee.

 

2. General guarantee.

 

Article 5 The Occurrence of Guarantee Liability

 

If the debtor fails to pay off the debts to the creditor on any normal repayment date or prepayment date under the main contract, the creditor has the right to require the guarantor to bear the guarantee liability.

 

The normal repayment date mentioned in the preceding paragraph refers to the principal repayment date, interest payment date or the date when the debtor shall pay any money to the creditor according to the contract. The prepayment date mentioned in the preceding paragraph refers to the prepayment date proposed by the debtor with the consent of the creditor and the date when the creditor requests the debtor to recover the principal and interest of the creditor’s right and / or any other money in advance in accordance with the contract.

 

If the principal debt is guaranteed by other things besides this contract, it will not affect any right of the creditor and the exercise under this contract. The creditor has the right to determine the order of exercise of each guarantee right. The guarantor shall undertake the guarantee liability according to this contract, and shall not defend the creditor by the existence of other guarantees and the order of exercise.

 

Article 6 Guarantee Period

 

The guarantee period for the debts guaranteed under this contract shall be calculated separately one by one, and the guarantee period for each debt shall be three years from the date of expiration of the debt performance period.

 

During the guarantee period, the creditor has the right to require the guarantor to undertake the guaranteed liability for all or part of the principal creditor’s rights, in forms of multiple or single claims.

 

Article 7 Limitation of Action of the Guaranteed Liability

 

If the principal creditor’s right is not paid off, in the case of joint and several liability guarantee, if the creditor requires the guarantor to undertake the guaranteed liability before the expiration of the guarantee period specified in Article 6 of this contract, the guaranteed liability shall be calculated and the limitation of action shall be applied from the date when the creditor requires the guarantor to undertake the guarantee liability.

 

 

In the case of general guarantee, if the creditor brings a lawsuit or applies for arbitration against the debtor before the expiration of the guarantee period specified in Article 6 of this contract, the guaranteed liability shall be counted and the limitation of action shall apply from the effective date of the judgment or arbitration award.

 

Article 8 Relationship Between this Contract and the Main Contract

 

If the main contract includes the Credit Line Agreement / General Agreement on Credit Business, written consent of the guarantor is required to extend the credit line term / business cooperation term. Without the guarantor’s consent or refusal, the guarantor shall only undertake the guaranteed liability for the principal creditor’s rights that occur during the service life of the original credit line / business cooperation period within the maximum amount of the guaranteed creditor’s rights specified in Article 3 of this contract, and the guarantee period shall still be the original period.

 

For the change of other contents or matters in the credit line agreement / general agreement on credit business, the single agreements, and the single main contract, it is not necessary to obtain the consent of the guarantor. The guarantor shall still bear the guarantee responsibility for the changed main contract within the maximum amount of guaranteed creditor’s rights specified in Article 3 of this contract.

 

After the creditor and the guarantor reach an agreement through consultation, they may change the maximum amount of the secured creditor’s right stipulated in Article 3 of this contract in writing.

 

Article 9 Declaration and Commitment

 

The guarantor represents and undertakes as follows:

 

1. The guarantor has the capacity of civil rights required to sign and perform the contract; The guarantor has the financial ability to perform the guarantee responsibilities under the contract;

 

2. The guarantor fully understands the contents of the main contract, and the signing and performance of this contract is based on the guarantor’s true intention;

 

3. The execution and performance of this contract will not violate any contract, agreement or other legal document binding on the guarantor;

 

4. All documents and information provided by the guarantor to the creditor are accurate, true, complete and effective;

 

5. The guarantor accepts the supervision and inspection of its financial condition by the creditor, and is willing to provide assistance and cooperation;

 

6. The guarantor has not concealed any major liabilities from the creditor that have been undertaken as of the date of signing the contract;

 

7. If any circumstance may affect the guarantor’s financial condition and performance capability, including but not limited to property reduction, transfer, gift, debt bearing, major disease, etc., or involving in major litigation or arbitration cases, the guarantor shall notify the creditor in time.

 

Article 10 Authorization of Personal Credit Information

 

Guarantor authorization: in case of the following circumstances related to the guarantor, the creditor may request the guarantor’s personal credit report through the basic personal credit information database of the people’s Bank of China.

 

1. To review the personal credit application of the guarantor;

 

2. To examine and verify the guarantor’s application for personal guarantee;

 

 

3. To conduct post-loan management of personal credit or personal guarantee under the name of guarantor;

 

4. To inquire about the credit status of the guarantor as the legal person or as an investor;

 

At the same time, the creditor is authorized to submit the guarantor’s personal credit information to the basic personal credit information database of the people’s Bank of China.

 

Article 11 Breach of Contract

 

Any of the following circumstances shall constitute or be deemed as the guarantor’s breach of this contract:

 

1. Failure to perform the guarantee responsibility in time as agreed in this contract;

 

2. The statement made in this contract is not true or violates the commitments made in this contract;

 

3. The events mentioned in article 9.7 of the contract seriously affect the financial status and performance ability of the guarantor;

 

4. Violation of other provisions on the rights and obligations of the parties in this contract;

 

5. The guarantor breaches the contract with the creditor or other institutions of Bank of China Limited.

 

In the event of the guarantor breaching the contract as mentioned in the preceding paragraph, the creditor has the right to take the following measures respectively or at the same time according to the specific circumstances:

 

1. Require the guarantor to correct his or her breach of the contract within a time limit;

 

2. Reduce, suspend or terminate the credit line to the guarantor in whole or in part;

 

3. Suspend or terminate the business application of the guarantor for other contracts and loans and trade financing that have not yet been granted or handled in whole or in part;

 

4. Declare all or part of the principal and interest of the outstanding loan / trade financing funds and other accounts payable of the guarantor under other contracts due immediately;

 

5. Terminate or rescind this contract or other contracts between the guarantor and the creditor in whole or in part;

 

6. Ask the guarantor to compensate the creditor for the loss caused by the breach of contract;

 

7. Deduct the money balance from the account opened by the guarantor to pay off all or part of the debts to the creditor. The unexpired amount in the account shall be regarded as early maturity. If the account currency is different from the creditor’s business valuation currency, it shall be converted according to the foreign exchange rate applicable to the creditor at the time of deduction;

 

8. Other measures regarded necessary by the creditor.

 

Article 12 Rights Reserved

 

If one party fails to exercise part or all of its rights under this contract, or fails to require the other party to perform or assume part or all of its obligations and liabilities, it shall not constitute a waiver of such rights or an exemption from such obligations and liabilities.

 

Any tolerance, extension or delay offered from one party to the other in exercising its rights under this contract shall not affect any rights the first party owns under this contract, laws and regulations, nor shall it be deemed as a waiver of such rights.

 

 

Article 13 Change, Modification and Termination of the Contract

 

This contract can be changed or modified in written form by both parties through negotiation. Any change or modification shall constitute an integral part of this contract.

 

Unless otherwise stipulated by laws and regulations, or agreed by both parties, this contract shall not be terminated until all the rights and obligations under it have been fulfilled.

 

Unless otherwise stipulated by laws and regulations or agreed by both parties, the invalidity of any provision of this contract shall not affect the legal effect of other provisions.

 

Article 14 Application of Law and Dispute Settlement

 

This contract shall be governed by the laws of the people’s Republic of China.

 

All disputes arising from the performance of this contract can be settled by both parties through negotiation. If the negotiation fails, both parties agree to adopt the same dispute settlement method as agreed in the main contract.

 

During the dispute settlement period, if the dispute does not affect the performance of other terms of the contract, the other terms shall continue to be performed.

 

Article 15 Appendix

 

The following attachments and other attachments confirmed by both parties constitute an integral part of this contract and have the same legal effect as this contract.

 

1. Consent letter (if any).

 

Article 16 Other Agreements

 

1. The guarantor shall not transfer any rights and obligations under this contract to a third party without the creditor’s written consent.

 

2. If the creditor has to entrust other institutions of Bank of China Limited to perform the rights and obligations under this contract due to business needs, the guarantor shall recognize it. Other institutions of Bank of China Limited authorized by the creditor have the right to exercise all rights under this contract, and have the right to bring a lawsuit to the court or submit to the arbitration institution for adjudication on the disputes under this contract.

 

3. Without affecting other provisions of this contract, this contract shall be legally binding on both parties and their respective successors and transferees.

 

4. Unless otherwise agreed, both parties shall designate the place of residence specified in this contract as the communication and contact address, and the valid delivery address confirmed by both parties. The applicable scope of delivery address includes various notices, contracts, and other documents during the performance of the contract between both parties, as well as the delivery of relevant documents and legal documents in case of disputes arising from this contract. It also includes the first and second instance retrial and execution procedures after the dispute enters arbitration and civil litigation proceedings.

 

If there is a change in the above address, the changing party will notify the other party in writing of the changed address 5 working days in advance. In arbitration and civil litigation proceedings, either party shall fulfill the obligation to serve notice of address change to the arbitration institution or court when the address is changed. If one party fails to fulfill the notification obligation in the aforementioned manner, the delivery address confirmed in this contract shall still be considered as a valid delivery address.

 

 

If a legal document is not actually received by one party due to inaccurate delivery address provided or confirmed by one party, failure to promptly notify the other party and the recipient designated by the court of refusal to sign after the delivery address is changed, or other reasons, the date of return of the document shall be deemed as the date of delivery; For direct delivery, the date on which the recipient records the situation on the delivery receipt on the spot shall be deemed as the date of delivery.

 

5. The title and business name in this contract are only used for the convenience of reference, and shall not be used for the interpretation of the terms and the rights and obligations of the parties.

 

6. The guarantor may consult and complain about this contract and its business and fees through the contact phone number of the creditors listed in this contract.

 

Article 17 Effectiveness of the Contract

 

This contract shall come into force on the date when it is signed by the guarantor and the creditor and is stamped with the official seal.

 

This contract is made in triplicate, one for each party and one for the debtor. All three have the same legal effect.

 

Guarantor: Liu Yongxu

July 3, 2021

 

Creditor: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized Signature: Zhang Changkai

July 3, 2021

 

6

Exhibit 10.28

 

Shengfeng Building Lease Contract

 

Party A (Lessor): Fuzhou Tianyu Shengfeng Industrial Co., Ltd.

 

Party B (Lessee): Shengfeng Logistics Group Co., Ltd.

 

In accordance with the provisions of the Civil Code and relevant laws and regulations, Party A and Party B, on the basis of equality and voluntariness, enter into this Agreement on the lease of the house by Party A to Party B and the lease of the house by Party B in order to clarify the rights and obligations of both parties.

 

Article 1 The subject matter and its use

 

1. Party A will lease the 2312.96 square meter commercial office building on the 4th and 6th floors of Shengfeng Building, No. 478, Fuxin East Road, Gushan Town, Jin’an District, Fuzhou City to Party B for office use. Without the written consent of Party A, Party B shall not change the use of the house.

 

Article 2 Lease period

 

1. The rental period: from 2022/11/1 (YYYY/MM/DD) to 2024/10/31 (YYYY/MM/DD).

 

2. Lease renewal: Party A will continue to rent under the condition that the purpose of the house remains unchanged, and Party B will have priority of the rents under the same conditions. However, if Party B needs to renew the lease upon the expiration of the lease term, it shall notify Party A in writing two months before the expiration of the lease term, and both parties shall re-sign the lease contract.

 

Article 3 Decoration period

 

Party A agrees to give Party B a / month(s) decoration period. The decoration period starts from / (YYYY/MM/DD) to / (YYYY/MM/DD), and no rent will be charged during the decoration period. However, the water, electricity, property management and other expenses incurred during the rent-free period shall be borne by Party B.

 

 

Article 4 Rent, property management fees, water and electricity fees, performance bond and payment methods.

 

4.1 Rent (tax included): from November 1, 2022 to October 31, 2024, the monthly rent is RMB115,648. Party B shall pay the rent of the current month by transfer before the 10th of each month.

 

4.2 Property management fee: the property management fee shall be paid according to the standard of RMB / square meter / month. The total property management fee is RMB/ month. Party B shall pay the property management fee of the current month by transfer before the 10th day of each month.

 

4.3 Water and electricity fees: Party A shall collect the water and electricity charges from Party B according to the actual usage of Party B according to the collection sheet, and the water and electricity charges of the public part shall be apportioned and calculated according to the rental area (including sharing) of Party B. Party B shall pay the water and electricity charges to Party A by transfer before the 10th day of each month.

 

4.4 Parking fees: if Party B applies for monthly car card, Party A will temporarily charge the parking fee of RMB100 / month / car.

 

4.5 Performance bond: Party B shall pay a one-time deposit of RMB231,296 to Party A on the date of signing this contract as the guarantee for Party B to perform its obligations and responsibilities under this agreement. Upon the expiration of this contract, after both parties have settled their claims and debts, Party A shall return the deposit without interest within 7 working days when Party B has no breach of contract.

 

Article 5 Rights and Obligations of Party A and Party B

 

5.1 Party A’s rights and obligations.

 

5.1.1 The rent and other related fees shall be collected in accordance with the provisions of this contract.

 

5.1.2 Party A is responsible for providing paid water and electricity for the normal use of the leased house.

 

5.1.3To formulate property management regulations, to supervise and inspect Party B’s use of leased houses, to stop Party B’s use of leased houses in breach of contract, and conduct unified management and maintenance of related objects.

 

 

5.1.4 Does not interfere with or obstruct Party B’s legal business activities but has the right to stop Party B’s illegal or inconsistent business activities as stipulated in this contract.

 

5.2 Party B’s rights and obligations

 

5.2.1 Collect rent and other related fees according to the contract.

 

5.2.2 The second party must strictly use the house in accordance with the purpose specified in this contract, and all economic and legal responsibilities arising from the rental of the house by the second party shall be borne by the second party. If Party B rents the house and causes losses to Party A, Party B shall be responsible for compensating.

 

5.2.3 Party B must strictly abide by the property management regulations formulated by Party A or the property management agency entrusted by Party A. Without the written consent of Party A, Party B shall not renovate or modify the structure of the leased property without authorization.

 

5.2.4 Party B’s decoration plan shall be designed in strict accordance with the relevant national regulations and meet the national safety construction standards. If it needs to be approved, Party B shall submit it to the relevant departments for approval, and the expenses shall be borne by Party B. If Party A is needed to provide information, Party A shall provide assistance, and Party B’s decoration construction blueprints shall be submitted to Party A before decoration construction.

 

5.2.5 During the lease period, Party B shall apply for the business license and related licenses by itself in accordance with the regulations. Party A provide necessary assistance and materials, and the expenses shall be borne by Party B.

 

5.2.6 Party B shall be responsible for the proper use and maintenance of the leased property and accessories, and shall promptly eliminate all possible faults and dangers, so as to avoid all possible hidden dangers.

 

5.2.7 In case of any damage of the leased property and its ancillary facilities due to Party B’s fault or negligence such as improper or unreasonable use, Party B shall be liable for compensation or maintenance. If Party B refuses to repair, Party A can repair on behalf of Party B, and the cost shall be borne by Party B.

 

5.2.8 During the lease period, Party B must strictly abide by the relevant provisions of the “Fire Control Regulations of the People’s Republic of China” and the “Safety Production Law of the People’s Republic of China”, timely rectify and eliminate potential safety hazards, and actively cooperate with Party A for fire protection. In the event of a security incident during the lease period, all economic and legal responsibilities shall be borne by Party B and have nothing to do with Party A.

 

 

5.2.9 If Party B no longer uses Party A’s properties, it shall not damage the renovated parts and the structure of the house.

 

5.2.10 When the lease expires or the contract is terminated early, the movable materials added by Party B in the leased property shall be removed by Party B within 15 working days. If the lease is overdue, it shall be deemed to have been given up by Party B and belong to Party A, and Party A shall take back the leased property; All the materials in the leased property other than the movable materials purchased by Party B shall be owned by Party A free of charge, and Party B shall transfer them to Party A in good condition within 15 working days.

 

5.2.11 Party B has the right to independently carry out legitimate business activities in accordance with the provisions of this contract.

 

5.2.12 During the lease term, Party B has no right to sublet part or all of its leased property to a third party.

 

Article 6 Liability for breach of contract

 

6.1 If Party B fails to pay rent, utilities and other expenses in full and on time, for each day overdue, Party B shall pay Party A the penalty of 5‰ of the total amount of overdue.

 

6.2 In case of any of the following circumstances in the process of Party B’s performance of this contract, it is a fundamental breach of contract by Party B. in addition to the losses caused to Party A, Party A shall have the right to terminate this contract (except article 6.2.5), and the performance bond paid by Party B shall be used as liquidated damages to Party A, which shall not be returned. Party A shall recover the lease and recover the arrears:

 

6.2.1 Pay rent, utilities, and other expenses more than 30 days overdue.

 

6.2.2 Conduct business activities illegally in violation of the provisions of this contract.

 

6.2.3 Violation of clause 5.2.3 of this contract to alter the structure of the leased property without authorization or to renovate the leased property without the written consent of Party A.

 

6.2.4 Violation of clause 5.2.4 of this contract, decoration construction drawings in violation of relevant national regulations, decoration without authorization.

 

6.2.5 Cancel this contract in advance without authorization.

 

6.2.6 Party B fails to obtain Party A’s agreement to change the lease use and unauthorized sublease.

 

6.2.7 In the event of force majeure or unforeseeable and objective reasons of both parties, this contract cannot be continued, the contract shall be terminated in advance, and the parties shall settle their claims and debts and shall not bear each other’s liability for breach of contract.

 

 

Article 7 Supplementary Provisions

 

7.1 For matters not covered in this contract, both parties shall negotiate amicably, and a supplementary contract may be concluded.

 

7.2 Parties to fulfill this contract dispute shall be settled through friendly consultations. If the negotiation fails, the dispute shall be submitted to the people’s court where Party B is domiciled for arbitration.

 

7.3 This contract becomes effective after both parties have signed and sealed and Party B has paid the performance bond in full as agreed in this contract.

 

7.4 The annex to this contract has the same legal effect as the contract.

 

7.5 There are two copies of this contract, each of which is held by Party A and Party B, with the same legal effect.

 

Annex:	1.	“Red Line Map of Lease Objects”
	2.	“Safety Responsibility Agreement”

 

Party A: Fuzhou Tianyu Shengfeng Industrial Co., Ltd.		Party B: Shengfeng Logistics Group Co., Ltd.
Representative:		Representative:
Phone:		Phone:
Signing Date:

 

 

- 5 -

Exhibit 10.30

 

Supplementary Contract to the Working Capital Loan Contract

No: fj1122022214-1

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

The borrower and lender, through equal consultation, have entered into this supplementary contract for the “Working Capital Loan Contract” (hereinafter referred to as the “Original Contract”) with the number fj1122022214 signed by both parties on June 15, 2022. Both parties unanimously agree to modify the terms of RMB loan interest rate and penalty interest rate stipulated in Article 4 of the original contract as follows:

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

The source of fixed interest rate is:

 

As of the working day before the effective date of this contract, the latest published one-year/loan market quotation interest rate by the National Interbank Funding Center plus/minus basis points.

 

(2) Floating rate, The floating interest rate has been calculated from June 23, 2022. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

 

For each withdrawal（Including loan balance and new withdrawals), Floating rate of RMB loans:

 

A.The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date minus 120 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day minus 120 basis points, and will start to serve as the interest rate of the new floating cycle.

 

 

2.Penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loa

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 100% higher than the penalty interest base rate.

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

The loan and penalty interest rate before the effective date shall still be executed according to the original contract agreement. Matters not stipulated in this contract shall still be executed in accordance with the original contract. In case of any inconsistency between the provisions of this contract and the original contract, this contract shall prevail.

 

This contract is made in triplicate, with each party holding one copy and having equal legal effect.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

October 21, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

October 21, 2022

 

 

 

 

Exhibit 10.31

 

Supplementary Contract to the Working Capital Loan Contract

No: fj1122022160-1

 

Borrower: Shengfeng Logistics Group Co., Ltd

Unified social credit Code: 9135010073360328XC

Legal representative / person in charge: Liu Yongxu

Address: No.478, Fuxin East Road, Jin’an District, Fuzhou City

Zip Code: 350011

Financial Institution and Account Number: Bank of China Limited Fuzhou Jin’an Sub-branch Business department 4273675009

Tel: 0591-83628181 Fax: 0591-83628181

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Legal Representative / Person in Charge:Lin Jie

Address: Fusheng Qianlong international annex building, 1F No.3, Midlle Changle Road, Wangzhuang street, Jin’an District, Fuzhou City

Zip code: 350011

Tel: 0591-83163662 Fax: 0591-83163662

 

The borrower and lender, through equal consultation, have entered into this supplementary contract for the “Working Capital Loan Contract” (hereinafter referred to as the “Original Contract”) with the number fj1122022160 signed by both parties on May 18, 2022. Both parties unanimously agree to modify the terms of RMB loan interest rate and penalty interest rate stipulated in Article 4 of the original contract as follows:

 

1. Loan Interest Rate:

 

The loan interest rate in this contract is the 2nd of the following:

 

(1) Fixed interest rate with annual interest rate of ///%. The contract interest rate remains unchanged during the whole life of the loan.

 

The source of fixed interest rate is:

 

As of the working day before the effective date of this contract, the latest published one-year/loan market quotation interest rate by the National Interbank Funding Center plus/minus basis points.

 

(2) Floating rate, The floating interest rate has been calculated from May 26, 2022. The rate is adjusted (or repriced) once every 12 months, which is considered a full cycle and the repricing date is the first day of the next floating cycle. If there is no such date in the current month, the starting date shall be the last day of the current month.If the float cycle is daily, the repricing date is the day of the next float cycle.

 

For each withdrawal（Including loan balance and new withdrawals), Floating rate of RMB loans:

 

A.The interest rate of the first period (from the actual withdrawing date to the expiration date of the floating cycle) is the average interest rate of the quoted 1-yearLPR published by NIFC on the working day before the actual withdrawal date minus 120 basis points;

 

B. On the repricing date, the interest rate will be recalculated as the average of the 1-year LPR published by NIFC on the previous working day minus 120 basis points, and will start to serve as the interest rate of the new floating cycle.

 

2. Penalty interest rate

 

Penalty Interest Rate of the Floating Rate Loa

 

A. The interest rate shall float according to the floating period specified in this article from the date of overdue or misappropriation.

 

B. The penalty interest rate of overdue loan is 50% higher than the penalty interest base rate determined in item C of this article, and the penalty interest rate of misappropriated loan is 100% higher than the penalty interest base rate.

 

 

C. In the first floating cycle of the loan, the penalty prime rate is the actual current interest rate in the cycle when overdue or misappropriation occurs. At the end of each cycle, the penalty interest prime rate of the next floating cycle will be adjusted on the repricing date by using the method specified in paragraph 1 of this article.

 

This contract shall come into force on the date when it is signed with official seals by the legal representatives, responsible persons or authorized signers of both parties.

 

The loan and penalty interest rate before the effective date shall still be executed according to the original contract agreement. Matters not stipulated in this contract shall still be executed in accordance with the original contract. In case of any inconsistency between the provisions of this contract and the original contract, this contract shall prevail.

 

This contract is made in triplicate, with each party holding one copy and having equal legal effect.

 

Borrower: Shengfeng Logistics Group Co., Ltd.

Authorized signature: Liu Yongxu

October 21, 2022

 

Lender: Bank of China Limited Fuzhou Jin’an Sub-branch

Authorized signature:

October 21, 2022

 

 

 

Exhibit 10.34

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”), dated as of [●], 2023, is by between Shengfeng Development Limited, a company organized under the laws of the Cayman Islands (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) as to the Units, Shares and the Ordinary Warrants, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE I.
DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed, provided that banks shall not be deemed to be authorized or obligated to be closed due to a “shelter in place,” “non-essential employee” or similar closure of physical branch locations at the direction of any governmental authority if such banks’ electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.

 

“CFTC” means the United States Commodity Futures Trading Commission.

 

“Closing” means the individual and collective reference to the Initial Closing and each subsequent closing on or before the Final Closing Date with one or more Purchasers of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” means the Initial Closing Date and the Final Closing Date.

 

“Commission” means the United States Securities and Exchange Commission.

 

 

“Company Cayman Islands Counsel” means Ogier (Cayman) LLP.

 

“Company PRC Counsel” means AllBright Law Offices.

 

“Company U.S. Counsel” means Hunter Taubman Fischer & Li LLC.

 

“Control” (including the terms “Controlled by” and “under common Control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such person or securities that represent a majority of the outstanding voting securities of such person.

 

“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York City time) on the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent.

 

“DVP” shall have the meaning ascribed to such term in Section 2.1.

 

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(s).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Exempt Issuance” means the issuance of (a) Ordinary Shares or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder pursuant to the Initial Closing or subsequent Closing(s), and/or other securities exercisable or exchangeable for or convertible into Ordinary Shares issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.11(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

  

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

 

“Final Closing Date” shall mean that date which shall be the earlier of (a) completion of the sale of all Securities in the Offering and (b) the expiration of the Offering Period under the Placement Agency Agreement.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

 

“Initial Closing” shall mean the Closing of the sale of Securities on the Initial Closing Date.

 

“Initial Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the second Trading Day following the date of this Agreement.

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).

 

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(n).

 

“Offering” shall mean the offering of the Securities contemplated by this Agreement and the Registration Statement.

 

“Ordinary Share(s)” means the Class A ordinary shares of the Company, par value US$0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Ordinary Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Ordinary Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares.

 

  

“Ordinary Warrants” means, collectively, the Ordinary Share purchase warrants delivered to the Purchasers at each Closing in accordance with Section 2.2(a) hereof, which Ordinary Warrants shall be exercisable immediately and have a term of exercise equal to five (5) years, in the form of Exhibit A attached hereto.

 

“Ordinary Warrant Shares” means the Ordinary Shares issuable upon exercise of the Ordinary Warrants.

 

“Per Unit Purchase Price” equals $[●], subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of Ordinary Shares that occur after the date of this Agreement.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint share company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Placement Agency Agreement” means the Placement Agency Agreement by and between the Company and the Placement Agent dated as of [●], 2023, as it may be amended from time to time.

 

“Placement Agent” means Univest Securities, LLC.

 

“Preliminary Prospectus” means the preliminary prospectus dated [●], 2023, filed with the Commission.

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus” means the final prospectus filed for the Registration Statement.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

 

“Registration Statement” means the effective registration statement on Form F-1 filed with Commission (File No. 333-[●]) which registers the sale of the Units, the Shares, the Ordinary Warrants, and the Ordinary Warrant Shares to the Purchasers, and includes any Rule 462(b) Registration Statement.

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Rule 462(b) Registration Statement” means any registration statement prepared by the Company registering additional Securities, which was filed with the Commission on or prior to the date hereof and became automatically effective pursuant to Rule 462(b) promulgated by the Commission pursuant to the Securities Act.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Units, the Shares, the Ordinary Warrants and the Ordinary Warrant Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Shares” means the Ordinary Shares included in the Units, which are issuable to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include locating and/or borrowing Ordinary Shares).

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Units purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

“Subsidiary” of any person means any corporation, partnership, limited liability company, joint stock company, joint venture or other organization or entity, whether incorporated or unincorporated, which is Controlled by such Person, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date of this Agreement.

 

“Sullivan” means Sullivan & Worcester LLP, with offices located at 1633 Broadway, New York, NY 10019.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Ordinary Shares are listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, or the NYSE American (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Ordinary Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

 

“Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Pl., Woodmere, NY 11598, and any successor transfer agent of the Company.

 

“Units” means the units being offered by the Company pursuant to the Registration Statement, each unit being comprised of one Ordinary Share and one Ordinary Warrant to purchase one Ordinary Share.

 

“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.11(b).

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of an Ordinary Shares for such date (or the nearest preceding date) on the Trading Market on which an Ordinary Shares is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB or OTCQX is not a Trading Market, the volume weighted average price of an Ordinary Shares for such date (or the nearest preceding date) on the OTCQB or OTCQX, (c) if Ordinary Shares s are not then listed or quoted for trading on the OTCQB or OTCQX and if prices for Ordinary Shares s are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of an Ordinary Shares so reported, or (d) in all other cases, the fair market value of an Ordinary Shares as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

ARTICLE II.
PURCHASE AND SALE

 

2.1 Closing. On each Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, an aggregate of [●] Units, each Unit consisting of one Ordinary Share and one Ordinary Warrant, as determined pursuant to Section 2.2(a). Unless otherwise directed by the Placement Agent, each Purchaser shall deliver, via wire transfer, immediately available funds equal to its Subscription Amount pursuant to Section 2.2(b)(ii), and the Company shall deliver to each Purchaser its respective Units consisting of Shares and Ordinary Warrants (as applicable to each Purchaser), as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at each Closing. Each Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser shall be made available for “Delivery Versus Payment” (“DVP”) settlement with the Company or its designee. The Company shall deliver to each Purchaser its respective Shares and Ordinary Warrants as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, each Closing shall occur at the offices of Sullivan or such other location as the parties shall mutually agree. Unless otherwise directed by the Placement Agent, settlement of the Shares shall occur via DVP (i.e., on the Closing Date, the Company shall issue the Shares registered in the Purchasers’ names and addresses and released by the Transfer Agent directly to the account(s) at the Placement Agent identified by each Purchaser; upon receipt of such Shares, the Placement Agent shall promptly electronically deliver such Shares to the applicable Purchaser, and payment therefor shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company). At each Closing, the Company shall deliver Ordinary Warrants registered in the name of each Purchaser to purchase up to an aggregate number of Ordinary Shares equal to 100% of the aggregate number of such Purchaser’s Shares purchased pursuant to the Offering. The Company covenants that, if the Purchaser delivers a Notice of Exercise (as defined in the Ordinary Warrants) no later than 12:00 p.m. (New York City time) on a Closing Date to exercise Ordinary Warrants between the date hereof and such Closing Date, the Company shall deliver Ordinary Warrant Shares to the Purchaser on such Closing Date in connection with such Notice of Exercise; provided that the Purchasers must deliver payment of the Exercise Price (as defined in the Ordinary Warrants) at or prior to such Closing.

 

  

2.2 Deliveries.

 

(a) Subject to Section 5.21 below, as applicable, on or prior to each Closing, the Company shall deliver or cause to be delivered to each of the Purchasers, as directed by the Placement Agent, the following:

 

(i) this Agreement duly executed by the Company;

 

(ii) legal opinions of (1) Company Cayman Islands Counsel, (2) Company PRC Counsel and (3) Company U.S Counsel, each addressed to the Placement Agent and the Purchasers and in form and substance reasonably acceptable to the Placement Agent and Purchasers;

 

(iii) Officer’s Certificate of the Company;

 

(iv) Secretary’s Certificate of the Company;

 

(v) Good Standing Certificate of the Company;

 

(vi) subject to the last sentence of Section 2.1, a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Unit Purchase Price, registered in the name of such Purchaser;

 

(vii) an Ordinary Warrant registered in the name of each Purchaser to purchase up to an aggregate number of Ordinary Shares equal to 100% of the Units sold to such Purchaser, with an exercise price equal to $[●] per Ordinary Share, subject to adjustment therein (such Ordinary Warrant certificate may be delivered within five Trading Days of each Closing Date); and

 

 

(viii) the Prospectus (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(b) On or prior to each Closing, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i) this Agreement duly executed by each Purchaser; and

 

(ii) such Purchaser’s purchase price as set forth on the signature page hereto executed by such Purchaser shall be made available for DVP settlement with the Placement Agent or its designee. 

 

2.3 Closing Conditions.

 

(a) Subject to Section 5.21 below, as applicable, the obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on such Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to such Closing Date shall have been performed; and

 

(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b) Subject to Section 5.21 below, as applicable, the respective obligations of the Purchasers hereunder in connection with each Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on such Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to such Closing Date shall have been performed;

 

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv) there shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement and to such Closing Date; and

 

  

(v) the Shares and Ordinary Warrant Shares shall have been approved for listing on the Trading Market, subject to official notice of issuance, and from the date of this Agreement to such Closing Date, trading in the Ordinary Shares shall not have been suspended by the Commission or any Trading Market, and, at any time prior to such Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Units at such Closing.

 

(vi) no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act.

 

2.4 Additional Units Allocation. The Company hereby acknowledges and agrees that each Purchaser, severally, has the right to elect to purchase up to 100% of the number of Units (the “Additional Units Allocation”) each Purchaser purchased at the Initial Closing on or before 5:00 p.m., Eastern Time, on the Final Closing Date (the “Additional Units Allocation Period”) at the Per Unit Purchase Price by delivery of one or more written notices (each, an “Additional Units Allocation Election Notice”) to the Company during such Additional Units Allocation Period (each, an “Additional Closing”). Each Purchaser hereby acknowledges and agrees that the Company and the Placement Agent have a one-time right to agree in their sole discretion and in writing to extend the Offering Period for an additional thirty (30) calendar days as set forth in the Placement Agency Agreement. Each Additional Closing shall occur on the second (2^nd) Trading Day after such applicable Additional Units Allocation Election Notice and, subject to Section 5.21 below, as applicable, in accordance with Sections 2.2 and 2.3 hereof (with “Additional Closing” replacing “Closing” therein with respect thereto); provided, however that the Final Closing shall occur on or prior to the Final Closing Date.

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser as of the date hereof and on each Closing Date (unless as of a specific date therein, in which case they shall be accurate as of such date):

 

 

(a) Subsidiaries. All of the direct and indirect principal subsidiaries of the Company are set forth in Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and, if applicable under the laws of the jurisdiction in which they are formed, in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company and each of the Subsidiaries has all necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date of this Agreement to conduct its business purpose in all material respects as described in the Registration Statement and SEC Reports and to own or lease its properties. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation or association, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

  

(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation or association, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus, (iii) application(s) to each applicable Trading Market for the listing of the Shares and the Ordinary Warrant Shares for trading thereon in the time and manner required thereby and (iv) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

 

(f) Issuance of the Securities; Registration. The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company. The Ordinary Warrants are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms. The Ordinary Warrant Shares are duly authorized and, when issued in accordance with the terms of the Ordinary Warrants against payment therefor as provided therein, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital the maximum number of Ordinary Shares issuable pursuant to this Agreement and the Ordinary Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which became effective on [●], 2023 (the “Effective Date”), including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Preliminary Prospectus or the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission. The Company, if required by the rules and regulations of the Commission, shall file the Prospectus with the Commission pursuant to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Preliminary Prospectus the Prospectus and any amendments or supplements thereto, at the time the Preliminary Prospectus and the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(g) Capitalization. The equity capitalization of the Company is as set forth on Schedule 3.1(g). The Company has not issued any capital stock since its most recently filed Form 20-F. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Ordinary Shares or Ordinary Share Equivalents or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional Ordinary Shares or Ordinary Share Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue Ordinary Shares or Ordinary Share Equivalents or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any share appreciation rights or “phantom share” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws where applicable, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except for the Required Approvals, no further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

 

  

(h) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof and the registration statement on Form F-1 (File No. 333-[●]), for the one year preceding the date of this Agreement (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company share option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

 

  

(j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, which could result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k) Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, transaction in digital assets or currencies (e.g. bitcoin), product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance in all material respects.

 

(o) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement, except as would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

 

(p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any of the Subsidiaries maintain insurance coverage for senior management or other key personnel. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(q) Transactions With Affiliates and Employees. None of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in each case in excess of $120,000, other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including share option agreements under any share option plan of the Company.

 

(r) Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date of this Agreement and applicable to the Company and the Subsidiaries, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date of this Agreement and as of the Closing Date and applicable to the Company and the Subsidiaries. The Company and the Subsidiaries maintain a system of internal accounting controls to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. There have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

  

(s) Certain Fees. Except as set forth in the Prospectus, no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. Other than for Persons directly engaged by a Purchaser, if any, the Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(t) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Units, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(u) Registration Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(v) Listing and Maintenance Requirements. The Ordinary Shares are registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Ordinary Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the twelve (12) months preceding the date of this Agreement, received notice from any Trading Market on which the Ordinary Shares are or have been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

(w) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its jurisdiction of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

  

(x) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(y) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

 

(z) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Units hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth as of the date of this Agreement all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed that is in excess of $800,000 individually or $1,000,000 in aggregate in the case of any liabilities lower than $1,000 (other than trade accounts payable incurred in the ordinary course of business and amounts due to related parties as disclosed in the Registration Statement), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

(aa) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

(bb) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.

 

(cc) Accountants. The Company’s accounting firm is as set forth in the Prospectus. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2023.

 

(dd) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ee) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.13 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Ordinary Shares, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Ordinary Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing shareholders' equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

(ff) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

 

 

(gg) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(hh) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.

 

(ii) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(jj) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

(kk) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 

(ll) CFTC Regulations To the Company’s knowledge, the operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable CFTC Regulations, including the Commodity Exchange Act, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any Company or Subsidiary to any CFTC Regulation is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date of this Agreement and as of each applicable Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):

 

(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b) Understandings or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date of this Agreement and each Closing date, it is, and on each date on which it exercise any Ordinary Warrants, it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

 

(e) Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and, has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

 

(f) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material pricing terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

  

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1 Ordinary Warrant Shares. If all or any portion of an Ordinary Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Ordinary Warrant Shares or if the Ordinary Warrant is exercised via cashless exercise, the Ordinary Warrant Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale of the Ordinary Warrant Shares) is not effective or is not otherwise available for the sale or resale of the Ordinary Warrant Shares, the Company shall immediately notify the holders of the Ordinary Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale of the Ordinary Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Ordinary Warrant Shares in compliance with applicable federal and state securities laws). The Company shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Ordinary Warrant Shares effective during the term of the Ordinary Warrants.

 

4.2 Furnishing of Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Ordinary Warrants have expired, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

 

4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Report on Form 6-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.6 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission on a Report on Form 6-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

 

4.7 Use of Proceeds. The Company shall use the net proceeds from the sale of the Units hereunder for expanding and increasing the number of its regional sorting centers and for working capital purposes and other general corporate purposes, and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Ordinary Shares or Ordinary Share Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

 

4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

  

4.9 Reservation of Ordinary Shares. As of the date of this Agreement, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of Ordinary Shares for the purpose of enabling the Company to issue the Shares pursuant to this Agreement and Ordinary Warrant Shares pursuant to any exercise of the Ordinary Warrants.

 

4.10 Listing of Shares. The Company hereby agrees to use commercially reasonable best efforts to maintain the listing or quotation of the Shares and Ordinary Warrant Shares on each Trading Market on which any Ordinary Shares are currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Shares and Ordinary Warrant Shares on such Trading Markets and promptly secure the listing of all of the Shares and Ordinary Warrant Shares on such Trading Markets. The Company further agrees, if the Company applies to have the Ordinary Shares traded on any other Trading Market, it will then include in such application all of the Shares and Ordinary Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Ordinary Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its ordinary shares on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.11 Subsequent Equity Sales.

 

(a) From the date hereof until ninety (90) days after the Final Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Ordinary Shares or Ordinary Share Equivalents.

 

(b) From the date hereof until ninety (90) days after the Final Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Ordinary Shares or Ordinary Share Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional Ordinary Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Ordinary Shares at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Ordinary Shares (but not including antidilution protections related to future share issuances) or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. For the avoidance of doubt, following the ninety (90) day anniversary of the Final Closing Date, sales effected under an “at-the-market” facility through the Placement Agent, should one be established, shall not be considered a Variable Rate Transaction. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

 

  

(c) Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

 

4.12 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.13 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4. Each Purchaser, severally and not jointly, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

 

4.14 Exercise Procedures. The form of Notice of Exercise included in the Ordinary Warrants sets forth the totality of the procedures required of the Purchasers in order to exercise the Ordinary Warrants. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Ordinary Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Ordinary Warrants. The Company shall honor exercises of the Ordinary Warrants and shall deliver Ordinary Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.15 [Reserved].

 

ARTICLE V.
MISCELLANEOUS

 

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder, by written notice to the other parties, if the Initial Closing has not been consummated on or before the fifth (5^th) Trading Day following the date hereof; provided, however, that no such termination will affect the right of any party to sue for any breach by any other party (or parties).

 

5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, and the Prospectus, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2^nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report on Form 6-K.

 

  

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Units based on the Subscription Amounts hereunder (or, prior to the Initial Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.

 

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8 No Third-Party Beneficiaries. The Placement Agent shall be a third-party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.

 

 

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding. The Company hereby appoints Cogency Global Inc. as its agent for service of process in New York. The choice of the laws of the State of New York as the governing law of this Agreement is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in the Cayman Islands, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the Cayman Islands. The Company or any of their respective properties, assets or revenues does not have any right of immunity under Cayman Islands or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Cayman Islands and New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Agreement and the other Transaction Documents.

 

5.10 Survival. The representations and warranties contained herein shall survive each Closing and the delivery of the Securities for the applicable statute of limitations.

 

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

 

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of an exercise of an Ordinary Warrant, the applicable Purchaser shall be required to return any Ordinary Shares subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Ordinary Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

  

5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through Sullivan. Sullivan does not represent any of the Purchasers and only represents the Placement Agent. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

 

5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.20 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and Ordinary Shares in any Transaction Document shall be subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of the Ordinary Shares and Ordinary Warrants that occur after the date of this Agreement.

 

 

5.21 Sales During Pre-Settlement Period. Notwithstanding anything herein to the contrary, if at any time on or after the time of execution of this Agreement by the Company and an applicable Purchaser, through, and including the time immediately prior to a Closing (the “Pre-Settlement Period”), such Purchaser sells to any Person all, or any portion, of any Shares to be issued hereunder to such Purchaser at such Closing (collectively, the “Pre-Settlement Shares”), such Purchaser shall, automatically hereunder (without any additional required actions by such Purchaser or the Company), be deemed to be unconditionally bound to purchase, and the Company shall be deemed unconditionally bound to sell, such Pre-Settlement Shares to such Purchaser at such Closing; provided, that the Company shall not be required to deliver any Pre-Settlement Shares to such Purchaser prior to the Company’s receipt of the purchase price of such Pre-Settlement Shares hereunder; and provided further that the Company hereby acknowledges and agrees that the forgoing shall not constitute a representation or covenant by such Purchaser as to whether or not during the Pre-Settlement Period such Purchaser shall sell any Shares to any Person and that any such decision to sell any Shares by such Purchaser shall be made, in the sole discretion of such Purchaser, at the time such Purchaser elects to effect any such sale, if any.

 

5.22 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

SHENGFENG DEVELOPMENT LIMITED			Address for Notice:
By:
Name:	Yongxu Liu		E-Mail:
Title:	Chief Executive Officer		Fax:

 

With a copy to (which shall not constitute notice):

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 [SIGNATURE PAGE TO SECURITIES PURCHASE AGREMENET]

 

 

[PURCHASER SIGNATURE PAGES TO Shengfeng SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: ________________________________________________________

 

Signature of Authorized Signatory of Purchaser: _________________________________

 

Name of Authorized Signatory: _______________________________________________

 

Title of Authorized Signatory: ________________________________________________

 

Email Address of Authorized Signatory: _________________________________________

 

Facsimile Number of Authorized Signatory: __________________________________________

 

Address for Notice to Purchaser (and delivery of Ordinary Warrants):

 

Address for Delivery of Units to Purchaser (if not same as address for notice):

 

Subscription Amount: $_________________

 

Shares: _________________

 

Ordinary Warrants: __________________

 

EIN Number: _______________________

 

[SIGNATURE PAGE TO SECURITIES PURCHASE AGREMENET] 

 

 

Schedule 3.1(a)

 

Subsidiaries

 

(See Attached)

 

 

Schedule 3.1(g)

 

Capitalization

 

(See Attached)

 

 

 

Schedule 3.1(z)

 

Solvency/Indebtedness

 

(See Attached)

  

 

39

 

Exhibit 10.35

 

Form of Lock-Up Agreement

 

_________, 2023

 

Univest Securities, LLC

75 Rockefeller Plaza , Suite 1838

New York, NY, 10019

 

As Placement Agent, pursuant to a Placement Agency Agreement between Univest Securities, LLC and Shengfeng Development Limited, dated July __, 2023

 

Re: Offering and Sale of Securities of Shengfeng Development Limited

 

Ladies and Gentlemen:

 

The undersigned understands that you (the “Placement Agent”) propose to enter into a Placement Agency Agreement (the “Placement Agency Agreement”) providing for the placement by the Placement Agent of Units, each Unit consisting of one Class A ordinary share, par value US$0.0001 per share, (the “Shares”) and one warrant to purchase one Class A ordinary share (the “Warrants”) (the “Offering”), of Shengfeng Development Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), to certain investors (the “Investors”) who execute and enter into a Securities Purchase Agreement with the Company (the “Purchase Agreement”).

 

In consideration of the execution of the Placement Agency Agreement by the Placement Agent and the Purchase Agreement by the Investors, and for other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the prior written consent of the Placement Agent, on behalf of the Investors, the undersigned will not, directly or indirectly, (a) offer for sale, sell, pledge, or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) any Class A ordinary shares (including, without limitation, Class A ordinary shares that may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and Class A ordinary shares that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for Class A ordinary shares; (b) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of Class A ordinary shares, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Class A ordinary shares or other securities, in cash or otherwise; (c) except as provided for below, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any Class A ordinary shares or securities convertible into or exercisable or exchangeable for Class A ordinary shares or any other securities of the Company; or (d) publicly disclose the intention to do any of the foregoing for a period commencing on the date hereof and ending six (6) months after the date of the final closing of the Offering (such 6-month period, the “Lock-Up Period”).

 

 

The foregoing paragraph shall not apply to (a) transactions relating to Class A ordinary shares or other securities acquired in the open market after the date of the final closing of the Offering, provided that no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shall be required or shall be voluntarily made in connection with such transfers; (b) bona fide gifts of shares of any class of the Company’s capital stock or any security convertible into Class A ordinary shares, in each case that are made exclusively between and among the undersigned or members of the undersigned’s family, or affiliates of the undersigned, including its partners (if a partnership) or members (if a limited liability company); (c) any transfer of Class A ordinary shares or any security convertible into Class A ordinary shares by will or intestate succession upon the death of the undersigned; (d) transfer of Class A ordinary shares or any security convertible into Class A ordinary shares to an immediate family member (for purposes of this Lock-Up Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin) or any trust, limited partnership, limited liability company or other entity for the direct or indirect benefit of the undersigned or any immediate family member of the undersigned; provided that, in the case of clauses (b), (c) and (d) above, it shall be a condition to any such transfer that (i) the transferee/donee agrees to be bound by the terms of this Lock-Up Agreement (including, without limitation, the restrictions set forth in the preceding sentence) to the same extent as if the transferee/donee were a party hereto; (ii) each party (donor, donee, transferor or transferee) shall not be required by law (including without limitation the disclosure requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act) to make, and shall agree to not voluntarily make, any filing or public announcement of the transfer or disposition prior to the expiration of the 6-month period referred to above; and (iii) the undersigned notifies the Placement Agent at least two (2) business days prior to the proposed transfer or disposition; (e) the transfer of shares to the Company to satisfy withholding obligations for any equity award granted pursuant to the terms of the Company’s stock option/incentive plans, such as upon exercise, vesting, lapse of substantial risk of forfeiture, or other similar taxable event, in each case on a “cashless” or “net exercise” basis (which, for the avoidance of doubt shall not include “cashless” exercise programs involving a broker or other third party), provided that as a condition of any transfer pursuant to this clause (e), that if the undersigned is required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of Class A ordinary shares or any securities convertible into or exercisable or exchangeable for Class A ordinary shares during the Lock-Up Period, the undersigned shall include a statement in such report, and if applicable an appropriate disposition transaction code, to the effect that such transfer is being made as a share delivery or forfeiture in connection with a net value exercise, or as a forfeiture or sale of shares solely to cover required tax withholding, as the case may be; (f) transfers of Class A ordinary shares or any security convertible into or exercisable or exchangeable for Class A ordinary shares pursuant to a bona fide third party tender offer made to all holders of the Class A ordinary shares, merger, consolidation or other similar transaction involving a change of control (as defined below) of the Company, including voting in favor of any such transaction or taking any other action in connection with such transaction, provided that in the event that such merger, tender offer or other transaction is not completed, the Class A ordinary shares and any security convertible into or exercisable or exchangeable for Class A ordinary shares shall remain subject to the restrictions set forth herein; (g) the exercise of warrants or the exercise of stock options granted pursuant to the Company’s stock option/incentive plans or otherwise outstanding on the date hereof; provided, that the restrictions shall apply to Class A ordinary shares issued upon such exercise or conversion; (h) the establishment of any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1 (a “Rule 10b5-1 Plan”) under the Exchange Act; provided, however, that no sales of Class A ordinary shares or securities convertible into, or exchangeable or exercisable for, Class A ordinary shares, shall be made pursuant to a Rule 10b5-1 Plan prior to the expiration of the Lock-Up Period; provided further, that the Company is not required to report the establishment of such Rule 10b5-1 Plan in any public report or filing with the Commission under the Exchange Act during the lock-up period and does not otherwise voluntarily effect any such public filing or report regarding such Rule 10b5-1 Plan; and (i) any demands or requests for, exercise any right with respect to, or take any action in preparation of, the registration by the Company under the Securities Act of the undersigned’s Class A ordinary shares, provided that no transfer of the undersigned’s Class A ordinary shares registered pursuant to the exercise of any such right and no registration statement shall be filed under the Securities Act with respect to any of the undersigned’s Class A ordinary shares during the Lock-Up Period. For purposes of clause (f) above, “change of control” shall mean the consummation of any bona fide third party tender offer, merger, purchase, consolidation or other similar transaction the result of which is that any “person” (as defined in Section 13(d)(3) of the Exchange Act), or group of persons, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a majority of total voting power of the voting stock of the Company.

 

 

The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s securities subject to this Lock-Up Agreement except in compliance with this Lock-Up Agreement.

 

It is understood that, if the Company notifies the Placement Agent that it does not intend to proceed with the Offering, if the Placement Agency Agreement does not become effective, or if the Placement Agency Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to the initial closing of the Offering, the undersigned will be released from its obligations under this Lock-Up Agreement.

 

The undersigned understands that the Company and the Placement Agent will proceed with the Offering and the Investors will execute and enter into the Securities Purchase Agreement in reliance on this Lock-Up Agreement.

 

Whether or not the Offering actually occurs depends on a number of factors, including market conditions. Any Offering will only be made pursuant to a Placement Agency Agreement, the terms of which are subject to negotiation between the Company and the Placement Agent.

 

This Lock-Up Agreement shall automatically terminate upon the earliest to occur, if any, of (a) the termination of the Placement Agency Agreement before the initial closing of the Offering; and (b) [_], 2023, in the event that the Placement Agency Agreement has not been executed by that date.

 

This Lock-Up Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof. Delivery of a signed copy of this Lock-Up Agreement by e-mail/.pdf transmission shall be effective as the delivery of the original hereof.

 

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement and that, upon request, the undersigned will execute any additional documents necessary in connection with the enforcement hereof. Any obligations of the undersigned shall be binding upon the heirs, personal representative, successors and assigns of the undersigned.

 

	Very truly yours,
	Print Name:
	Address:

 

 

3

 

 

 

 

 

 Exhibit 21.1

 

Subsidiaries of the Registrant

 

Subsidiaries		Place of Incorporation
Shengfeng Holding Limited		Hong Kong
Tianyu Shengfeng Logistics Group Co., Ltd.		PRC
Variable Interest Entity		Place of Incorporation
Shengfeng Logistics Group Co., Ltd.		PRC
Significant Subsidiaries of Tianyu Shengfeng Logistics Group Co., Ltd.		Place of Incorporation
Yichun Shengfeng Logistics Co., Ltd.		PRC
Fujian Shengfeng Smart Technology Co., Ltd.		PRC
Shenzhen Tianyu Shengfeng Supply Chain Management Co., Ltd.		PRC
Significant Subsidiaries of Variable Interest Entity		Place of Incorporation
Fuqing Shengfeng Logistics Co., Ltd.		PRC
Xiamen Shengfeng Logistics Co., Ltd.		PRC
Guangdong Shengfeng Logistics Co., Ltd.		PRC
Hainan Shengfeng Supply Chain Management Co., Ltd.		PRC
Beijing Tianyushengfeng E-commerce Technology Co., Ltd.		PRC
Beijing Shengfeng Supply Chain Management Co., Ltd.		PRC
Shengfeng logistics (Guizhou) Co., Ltd.		PRC
Shengfeng logistics (Tianjin) Co., Ltd.		PRC
Shengfeng logistics (Shandong) Co., Ltd.		PRC
Shengfeng Logistics Hebei Co., Ltd.		PRC
Shengfeng logistics (Henan) Co., Ltd.		PRC
Shengfeng logistics (Liaoning) Co., Ltd.		PRC
Shengfeng logistics (Yunnan) Co., Ltd.		PRC
Shengfeng logistics (Guangxi) Co., Ltd.		PRC
Hubei Shengfeng Logistics Co., Ltd.		PRC
Shengfeng Logistics Group (Shanghai) Supply Chain Management Co., Ltd.		PRC
Shanghai Shengxu Logistics Co., Ltd.		PRC
Hangzhou Shengfeng Logistics Co., Ltd		PRC
Nanjing Shengfeng Logistics Co., Ltd		PRC
Suzhou Shengfeng Logistics Co., Ltd.		PRC
Suzhou Shengfeng Supply Chain Management Co., Ltd.		PRC
Shengfeng Supply Chain Management Co., Ltd.		PRC
Fuzhou Shengfeng Transportation Co., Ltd		PRC
Sichuan Shengfeng Logistics Co., Ltd.		PRC
Fujian Shengfeng Logistics Co., Ltd.		PRC
Fujian Dafengche Information Technology Co. Ltd.		PRC
Ningde Shengfeng Logistics Co. Ltd.		PRC
Shengfeng Logistics (Zhejiang) Co., Ltd.		PRC
Chengdu Shengfeng Supply Chain Management Co., Ltd		PRC
Shengfeng Logistics Group (Ningde) Supply Chain Management Co., Ltd.		PRC

  

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the incorporation by reference in this Registration Statement of Shengfeng Development Limited on Form F-1 of our report dated July 25, 2022, except for Notes 1, 11, 17 and 18 which are dated on September 9, 2022; Notes 5 and 6 which are dated on October 31, 2022, with respect to our audits of the consolidated financial statements of Shengfeng Development Limited for the years ended December 31, 2021 and 2020, appearing in the Annual Report on Form 20-F of Shengfeng Development Limited for the year ended December 31, 2022. We also consent to the reference to our firm under the heading “Experts” in the Prospectus, which is part of this Registration Statement.

 

/s/ Friedman LLP

 

New York, New York

August 4, 2023

 

Exhibit 23.2

 

 

 

Independent Registered Public Accounting Firm’s Consent

 

We consent to the incorporation by reference in this Registration Statement of Shengfeng Development Limited on Form F-1 of our report dated May 1, 2023 with respect to our audit of the consolidated financial statements of Shengfeng Development Limited as of December 31, 2022 and for the year ended December 31, 2022 appearing in the Annual Report on Form 20-F of Shengfeng Development Limited for the year ended December 31, 2022. We also consent to the reference to our firm under the heading “Experts” in the Prospectus, which is part of this Registration Statement.

 

/s/ Marcum Asia CPAs LLP

 

New York, New York

August 4, 2023

 

 

 

NEW YORK OFFICE ● 7 Penn Plaza ● Suite 830 ● New York, New York ● 10001

Phone 646.442.4845 ● Fax 646.349.5200 ● www.marcumasia.com

Exhibit 23.4

 

 

 

CONSENT LETTER

 

Date: August 4, 2023

 

To:

Shengfeng Development Limited

No. 478 Fuxin East Road, Jinan District, Fuzhou,

People’s Republic of China

 

Dear Sir/Madam:

 

We consent to the references to our firm under the mentions of “PRC Counsel” in connection with the Registration Statement of Shengfeng Development Limited (the “Company”) on Form F-1 (the “Registration Statement”), filed by the Company with the Securities and Exchange Commission (the “SEC”) on August 4, 2023 under the U.S. Securities Act of 1933 (as amended). We also consent to the filing with the SEC of this consent letter as an exhibit to the Registration Statement.

 

In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.

 

Sincerely yours,

 

/s/ AllBright Law Offices

AllBright Law Offices

 

Exhibit 107

 

Calculation of Filing Fee Tables

 

           F-1         

(Form Type)

 

Shengfeng Development Limited

(Exact Name of Registrant as Specified in its Charter)

 

Table 1: Newly Registered Securities

 

Fee

Proposed

Proposed

Calculation

Maximum

Maximum

Security

or Carry

Offering

Aggregate

Amount of

Security

Class

Forward

Amount

Price Per

Offering

Registration

Type

Title

Rule

Registered

Unit

Price(1)

Fee Rate

Fee

Equity

Units, each consisting of one Class A Ordinary Share, par value $0.0001 per share, and one Warrant to purchase one Class A Ordinary Share

Rule 457(o)

–

–

$

60,000,000

0.00011020

$

6,612.00

Fees to Be Paid

Equity

Class A Ordinary Shares included as part of the Units

Rule 457(o)

–

–

–

–

–

Equity

Warrants to purchase Class A Ordinary Shares included as part of the Units(2)

Rule 457(g)

–

–

–

–

–

Equity

Class A Ordinary Shares issuable upon exercise of the Warrants

Rule 457(o)

–

–

$

66,000,000

(3)

0.00011020

$

7,273.20

Total Offering Amounts

$

126,000,000

$

13,885.20

Total Fees Previously Paid

$

0

Total Fee Offset

$

0

Net Fee Due

$

13,885.20

 

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).
(2)	In accordance with Rule 457(g) under the Securities Act, because the Registrant’s Class A Ordinary Shares underlying the Warrants are registered hereby, no separate registration fee is required with respect to the Warrants registered hereby.
(3)	The Warrants are exercisable at a per-share exercise price  equal to 110% of the public offering price per Unit in this offering. As estimated solely for the purpose of recalculating the registration fee pursuant to Rule 457(o) under the Securities Act, the proposed maximum aggregate offering price of the Warrants is equal to 110% of US$60,000,000.

 

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