Item 1.01
Entry into a Material Definitive Agreement
On July 31, 2019, Chain Cloud Mall Network
and Technology (Tianjin) Co., Ltd., (“CCM Tianjin”), a wholly owned subsidiary of Future FinTech Group Inc. (the “Company”),
Chain Cloud Mall E-commerce (Tianjin) Co., Ltd., a limited liability company incorporated under the laws of the China (the “E-commerce
Tianjin”), and Mr. Zeyao Xue and Mr. Kai Xu, citizens of China and shareholders of E-commerce Tianjin, entered into the following
agreements, or collectively, the “Variable Interest Entity Agreements” or “VIE Agreements,” pursuant to
which CCM Tianjin has contractual rights to control and operate the business of E-commerce Tianjin (the “VIE”).
Pursuant to Chinese law and regulations, a
foreign owned enterprise cannot apply for and hold a license for operation of certain e-commerce businesses, the category of business
which the Company plans to expand in China. CCM Tianjin is an indirectly wholly foreign owned enterprise of the Company. In order
to comply with Chinese law and regulations, CCM Tianjin agreed to provide E-commerce Tianjin an Exclusive Operation and Use Rights
Authorization to operate and use the Chain Cloud Mall System owned by CCM Tianjin.
E-commerce Tianjin was incorporated by Mr.
Zeyao Xue and Mr. Kai Xu solely for the purpose of holding the operation license of the Chain Cloud Mall System. Mr. Zeyao Xue
is a major shareholder of the Company and the son of Mr. Yongke Xue, our Chairman and Chief Executive Officer. Mr. Kai Xu is the
Chief Operating Officer of the Company.
The VIE Agreements are as follows:
1) Exclusive Technology Consulting and Service
Agreement by and between CCM Tianjin and E-commerce Tianjin. Pursuant to the Exclusive Technology Consulting and Service Agreement,
CCM Tianjin agreed to act as the exclusive consultant of E-commerce Tianjin and provide technology consulting and services to E-commerce
Tianjin. In exchange, E-commerce Tianjin agreed to pay CCM Tianjin a technology consulting and service fee, the amount of which
is to be equivalent to the amount of net profit before tax of E-commerce Tianjin, payable on a quarterly basis after making up
losses of previous years (if necessary) and deducting necessary costs, expenses and taxes related to the business operations of
E-commerce Tianjin. Without the prior written consent of CCM Tianjin, E-commerce Tianjin may not accept the same or similar technology
consulting and services provided by any third party during the term of the agreement. All the benefits and interests generated
from the agreement, including but not limited to intellectual property rights, know-how and trade secrets, will be CCM Tianjin’s
sole and exclusive property. This agreement has a term of 10 years and may be extended unilaterally by CCM Tianjin with CCM Tianjin's
written confirmation prior to the expiration date. E-commerce Tianjin cannot terminate the agreement early unless CCM Tianjin commits
fraud, gross negligence or illegal acts, or becomes bankrupt or winds up.
2) Exclusive Purchase Option Agreement by and
among CCM Tianjin, E-commerce Tianjin, Mr. Zeyao Xue and Mr. Kai Xu. Pursuant to the Exclusive Purchase Option Agreement, Mr. Zeyao
Xue and Mr. Kai Xu granted to CCM Tianjin and any party designated by CCM Tianjin the exclusive right to purchase, at any time
during the term of this agreement, all or part of the equity interests in E-commerce Tianjin, or the “Equity Interests,”
at a purchase price equal to the registered capital paid by Mr. Zeyao Xue and Mr. Kai Xu for the Equity Interests, or, in the event
that applicable law requires an appraisal of the Equity Interests, the lowest price permitted under applicable law. Pursuant to
powers of attorney executed by Mr. Zeyao Xue and Mr. Kai Xu, they irrevocably authorized any person appointed by CCM Tianjin to
exercise all shareholder rights, including but not limited to voting on their behalf on all matters requiring approval of E-commerce
Tianjin’s shareholder, disposing of all or part of the shareholder's equity interest in E-commerce Tianjin, and electing,
appointing or removing directors and executive officers. The person designated by CCM Tianjin is entitled to dispose of dividends
and profits on the equity interest without reliance on any oral or written instructions of Mr. Zeyao Xue and Mr. Kai Xu. The powers
of attorney will remain in force for so long as Mr. Zeyao Xue and Mr. Kai Xu remain the shareholders of E-commerce Tianjin. Mr.
Zeyao Xue and Mr. Kai Xu have waived all the rights which have been authorized to CCM Tianjin’s designated person under the
powers of attorney.
3) Equity Pledge Agreements by and among CCM
Tianjin, E-commerce Tianjin, Mr. Zeyao Xue and Mr. Kai Xu. Pursuant to the Equity Pledge Agreements, Mr. Zeyao Xue and Mr. Kai
Xu pledged all of the Equity Interests to CCM Tianjin to secure the full and complete performance of the obligations and liabilities
on the part of E-commerce Tianjin and them under this and the above contractual arrangements. If E-commerce Tianjin, Mr. Zeyao
Xue, or Mr. Kai Xu breaches their contractual obligations under these agreements, then CCM Tianjin, as pledgee, will have the right
to dispose of the pledged equity interests. Mr. Zeyao Xue and Mr. Kai Xu agree that, during the term of the Equity Pledge Agreements,
they will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests, and they
also agree that CCM Tianjin’s rights relating to the equity pledge should not be interfered with or impaired by the legal
actions of the shareholders of E-commerce Tianjin, their successors or designees. During the term of the equity pledge, CCM Tianjin
has the right to receive all of the dividends and profits distributed on the pledged equity. The Equity Pledge Agreements will
terminate on the second anniversary of the date when E-commerce Tianjin, Mr. Zeyao Xue and Mr. Kai Xu have completed all their
obligations under the contractual agreements described above.
As a result of the above contractual arrangements,
CCM Tianjin has substantial control over E-commerce Tianjin’s daily operations and financial affairs, election of its senior
executives and all matters requiring shareholder approval. Furthermore, as the primary beneficiary of E-commerce Tianjin, the Company,
via CCM Tianjin, is entitled to consolidate the financial results of E-commerce Tianjin in its own consolidated financial statements.
The Exclusive Operation
and Use Rights Authorization Letter, the Exclusive Technology Consulting and Service Agreement, the Exclusive Purchase Option Agreement,
the Equity Pledge Agreements and Powers of Attorney are filed as Exhibit 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 to this Current
Report on Form 8-K. The foregoing summary of the terms of the VIE Agreements is subject to, and qualified in its
entirety by, the Exclusive Technology Consulting and Service Agreement, the Exclusive Purchase Option Agreement, and the Equity
Pledge Agreements, which are incorporated herein by reference.