☐
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of Each Class
|
|
Trading
Symbol(s)
|
|
Name of Each Exchange
On Which Registered
|
American depositary shares, each representing one Class Z ordinary share
|
|
BILI
|
|
Nasdaq Global Select Market
|
Class Z ordinary shares, par value US$0.0001 per share*
|
|
|
Nasdaq Global Select Market
|
*
|
Not for trading, but only in connection with the listing on the Nasdaq Global Select Market of American depositary shares.
|
Large accelerated filer ☒
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|
Accelerated filer ☐
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|
Non-accelerated filer ☐
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|
Emerging growth company ☐
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†
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The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
|
U.S. GAAP ☒
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|
International Financial Reporting Standards as issued
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Other ☐
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||
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by the International Accounting Standards Board ☐
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1
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3
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4
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4
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4
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4
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55
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||
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91
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91
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||
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|
116
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||
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125
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127
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||
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|
128
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129
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139
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139
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141
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|||
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141
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|
141
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||
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|
142
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|
143
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|
143
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143
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143
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144
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144
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144
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144
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144
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144
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144
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144
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||
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|
147
|
|
• |
“ADRs” are to the American depositary receipts that evidence our ADSs;
|
• |
“ADSs” are to our American depositary shares, each of which represents one Class Z ordinary share;
|
• |
“average monthly interactions” for a period is calculated by dividing the total number of interactions based on our interactions features such as bullet chats, commentaries, following, favorites, sharing, bilibili moment posts and like, among other things, during the specified period by the number of months in such period;
|
• |
“average monthly revenue per paying user” for a period is calculated by dividing the sum of revenues from mobile games and VAS during the specified period by the total number of monthly paying users during such period;
|
• |
“average monthly revenue per MAU” for a period is calculated dividing the sum of revenues during the specified period by the total number of MAU during that period then further by the number of months in the specified period;
|
• |
“average daily time spent per active user on our mobile apps” for a period is calculated by dividing the total time spent on our mobile apps during the specified period (excluding time spent on Bilibili operating games, Bilibili Comic and Maoer) by the average number of active users per day during such period, further divided by the number of days during the specified period;
|
• |
“Bilibili,” “we,” “us,” “our company” and “our” are to Bilibili Inc., its subsidiaries and its consolidated affiliated entities;
|
• |
“bullet chat” or “bullet chatting” are to a commenting function that enables content viewers to send comments that fly across the screen like bullets, which we refer to as bullet chats herein. Bullet chats are context-based and can be viewed by the audiences who watch the same content, and therefore can intrigue interactive commenting among content viewers. Only official member can send bullet chats on our platform;
|
• |
“China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;
|
• |
“Class Y ordinary shares” are to our Class Y ordinary shares, par value US$0.0001 per share;
|
• |
“Class Z ordinary shares” are to our Class Z ordinary shares, par value US$0.0001 per share;
|
• |
“Generation Z+” or “Gen Z+” are to, for the purposes of this annual report only, the demographic cohort of individuals in China born from 1985 to 2009;
|
• |
“monthly active users” or “MAU” are to the sum of our mobile apps MAU and PC MAU after eliminating duplicates so that each active registered user that logged on both our Bilibili mobile app and our Bilibili PC website would only be counted towards mobile apps MAU and not PC MAU during a given month. We calculate mobile apps MAU based on the number of mobile devices (including smart TV and other smart devices) that launched our mobile apps during a given month. Starting from the first quarter of 2019, we count mobile MAU of Bilibili Comic, a mobile app offering anime and comic content, and Maoer, an audio platform offering audio drama, towards our MAU. We calculate PC MAU by dividing the total number of IP addresses used by users to visit our PC website during a given month by an estimate of the average number of IP addresses used by each user. “Average MAU” for a period is calculated by dividing the sum of MAU during the specified period by the number of months in such period;
|
• |
“official members” are to users who pass our multiple-choice membership exam consisting of 100 questions, after which additional interactive and community features, such as bullet chatting and commenting, will become available to them;
|
• |
“our platform” are to “Bilibili” mobile apps, PC websites, Smart TV, Bilibili Comic, Maoer and a variety of related features, functionalities, tools and services that we provide to users and content creators;
|
• |
“occupationally generated videos” or “OGV” are to Bilibili-produced or jointly produced content and licensed content procured from third-party production companies;
|
• |
“paying users” on our platform are to users who make payments for various products and services on our platform, including purchases in mobile games offered on our platform and payments for VAS (excluding purchases on our
e-commerce
platform). A user who makes payments across different products and services offered on our platform using the same registered account is counted as one paying user and we add the number of paying users of Maoer towards our total paying users without eliminating duplicates. “Average monthly paying user” for a period is calculated by dividing the sum of monthly paying users during the specified period by the number of months in such period;
|
• |
“professional user generated videos” or “PUGV” are to videos generated by users that exhibits creativity as well as a certain level of professional production and editing capabilities;
|
• |
“retention rate”, as applied to any cohort of users who visit our platform in a given period, are to the percentage of these users who make at least one repeat visit after a certain duration; the “12th-month retention rate” for any cohort of users in a given month is the retention rate in the twelfth month after the applicable month;
|
• |
“premium members” are to members who have subscribed to our premium membership, which allow these members to enjoy exclusive or advance access to our premium content. We calculate premium members based on the number of members whose premium package is still valid by the last day of a given month;
|
• |
“RMB” and “Renminbi” are to the legal currency of China;
|
• |
“shares” or “ordinary shares” are to our Class Y and Class Z ordinary shares, par value US$0.0001 per share;
|
• |
“US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States;
|
• |
“VAS” are to value-added services, including premium membership, live broadcasting, Bilibili Comic, Maoer and other value-added services;
|
• |
“video-based content” are to, for the purposes of this annual report only, video content on video-centric platforms and
non-video-centric
platforms as well as mobile games.
Non-video-centric
platforms include social media, instant messaging,
e-commerce,
browser, and other kind of platforms;
|
• |
“videolization” are to the trend of video integrating into the scenarios of everyday life and;
|
• |
“young generations” are to, for the purposes of this annual report only, people aged 35 or below.
|
• |
our goals and strategies;
|
• |
our future business development, financial conditions and results of operations;
|
• |
the expected growth of the online entertainment and mobile games industries in China;
|
• |
our expectations regarding demand for and market acceptance of our products and services;
|
• |
our expectations regarding our relationships with users, content providers, game developers and publishers, advertisers and other partners;
|
• |
competition in our industry;
|
• |
relevant government policies and regulations relating to our industry;
|
• |
the outcome of any current and future litigation or legal or administrative proceedings; and
|
• |
other factors described under “Item 3. Key Information—D. Risk Factors.”
|
A.
|
Selected Financial Data
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands, except for share and per share data)
|
||||||||||||||||||||||||
Selected Consolidated Statements of Operations and Comprehensive Loss Data:
|
||||||||||||||||||||||||
Net revenues
|
523,310 | 2,468,449 | 4,128,931 | 6,777,922 | 11,998,976 | 1,838,924 | ||||||||||||||||||
Cost of revenues
(1)
|
(772,812 | ) | (1,919,241 | ) | (3,273,493 | ) | (5,587,673 | ) | (9,158,800 | ) | (1,403,648 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gross (loss)/profit
|
|
(249,502
|
)
|
|
549,208
|
|
|
855,438
|
|
|
1,190,249
|
|
|
2,840,176
|
|
|
435,276
|
|
||||||
Operating expenses:
|
||||||||||||||||||||||||
Sales and marketing expenses (1)
|
(102,659 | ) | (232,489 | ) | (585,758 | ) | (1,198,516 | ) | (3,492,091 | ) | (535,186 | ) | ||||||||||||
General and administrative expenses (1)
|
(451,334 | ) | (260,898 | ) | (461,165 | ) | (592,497 | ) | (976,082 | ) | (149,592 | ) | ||||||||||||
Research and development expenses (1)
|
(91,222 | ) | (280,093 | ) | (537,488 | ) | (894,411 | ) | (1,512,966 | ) | (231,872 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses
|
(645,215 | ) | (773,480 | ) | (1,584,411 | ) | (2,685,424 | ) | (5,981,139 | ) | (916,650 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations
|
|
(894,717
|
)
|
|
(224,272
|
)
|
|
(728,973
|
)
|
|
(1,495,175
|
)
|
|
(3,140,963
|
)
|
|
(481,374
|
)
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands, except for share and per share data)
|
||||||||||||||||||||||||
Other income:
|
||||||||||||||||||||||||
Investment income, net
(including impairments)
|
9,795 | 22,957 | 96,440 | 96,610 | 28,203 | 4,322 | ||||||||||||||||||
Interest income
|
1,502 | 1,483 | 68,706 | 162,782 | 83,301 | 12,766 | ||||||||||||||||||
Interest expense
|
— | — | — | (46,543 | ) | (108,547 | ) | (16,636 | ) | |||||||||||||||
Exchange (losses)/gains
|
(21,267 | ) | 6,445 | (1,661 | ) | (11,789 | ) | 41,717 | 6,393 | |||||||||||||||
Others, net
|
(3,668 | ) | 18,518 | 26,455 | 26,412 | 95,641 | 14,660 | |||||||||||||||||
Loss before tax
|
|
(908,355
|
)
|
|
(174,869
|
)
|
|
(539,033
|
)
|
|
(1,267,703
|
)
|
|
(3,000,648
|
)
|
|
(459,869
|
)
|
||||||
Income tax
|
(3,141 | ) | (8,881 | ) | (25,988 | ) | (35,867 | ) | (53,369 | ) | (8,180 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss
|
|
(911,496
|
)
|
|
(183,750
|
)
|
|
(565,021
|
)
|
|
(1,303,570
|
)
|
|
(3,054,017
|
)
|
|
(468,049
|
)
|
||||||
Accretion to redeemable noncontrolling interests
|
— | — | — | — | (4,292 | ) | (658 | ) | ||||||||||||||||
Accretion to
Pre-IPO
Preferred Shares redemption value
|
(161,933 | ) | (258,554 | ) | (64,605 | ) | — | — | — | |||||||||||||||
Deemed dividend in connection with repurchase of
Pre-IPO
Preferred Shares
|
(113,151 | ) | (129,244 | ) | — | — | — | — | ||||||||||||||||
Net loss attributable to noncontrolling interests
|
1,430 | — | 13,301 | 14,597 | 46,605 | 7,143 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss attributable to the Bilibili Inc.’s shareholders
|
|
(1,185,150
|
)
|
|
(571,548
|
)
|
|
(616,325
|
)
|
|
(1,288,973
|
)
|
|
(3,011,704
|
)
|
|
(461,564
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss
|
|
(911,496
|
)
|
|
(183,750
|
)
|
|
(565,021
|
)
|
|
(1,303,570
|
)
|
|
(3,054,017
|
)
|
|
(468,049
|
)
|
||||||
Other comprehensive income/(loss)
|
||||||||||||||||||||||||
Foreign currency translation adjustments
|
58,048 | (75,695 | ) | 296,030 | 140,152 | (325,100 | ) | (49,823 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total other comprehensive income/(loss)
|
|
58,048
|
|
|
(75,695
|
)
|
|
296,030
|
|
|
140,152
|
|
|
(325,100
|
)
|
|
(49,823
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive loss
|
|
(853,448
|
)
|
|
(259,445
|
)
|
|
(268,991
|
)
|
|
(1,163,418
|
)
|
|
(3,379,117
|
)
|
|
(517,872
|
)
|
||||||
Accretion to redeemable noncontrolling interests
|
— | — | — | — | (4,292 | ) | (658 | ) | ||||||||||||||||
Accretion to Pre-IPO Preferred Shares redemption value
|
(161,933 | ) | (258,554 | ) | (64,605 | ) | — | — | — | |||||||||||||||
Deemed dividend in connection with repurchase of
Pre-IPO
Preferred Shares
|
(113,151 | ) | (129,244 | ) | — | — | — | — | ||||||||||||||||
Net loss attributable to noncontrolling interests
|
1,430 | — | 13,301 | 14,597 | 46,605 | 7,143 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive loss attributable to the Bilibili Inc.’s shareholders
|
|
(1,127,102
|
)
|
|
(647,243
|
)
|
|
(320,295
|
)
|
|
(1,148,821
|
)
|
|
(3,336,804
|
)
|
|
(511,387
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss per share, basic
|
(20.42 | ) | (8.17 | ) | (2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||||||
Net loss per share, diluted
|
(20.42 | ) | (8.17 | ) | (2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||||||
Net loss per ADS, basic
|
— | — | (2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||||||||
Net loss per ADS, diluted
|
— | — | (2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||||||||
Weighted average number of ordinary shares, basic
|
58,038,570 | 69,938,570 | 233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||||||||
Weighted average number of ordinary shares, diluted
|
58,038,570 | 69,938,570 | 233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||||||||
Weighted average number of ADS, basic
|
— | — | 233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||||||||
Weighted average number of ADS, diluted
|
— | — | 233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 |
(1) |
Share-based compensation expenses were allocated as follows:
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Cost of revenues
|
3,775 | 7,936 | 28,173 | 23,281 | 37,087 | 5,684 | ||||||||||||||||||
Sales and marketing expenses
|
3,029 | 3,423 | 11,499 | 14,269 | 40,808 | 6,254 | ||||||||||||||||||
General and administrative expenses
|
353,806 | 56,746 | 102,544 | 68,497 | 181,753 | 27,855 | ||||||||||||||||||
Research and development expenses
|
4,878 | 11,849 | 38,977 | 66,503 | 126,250 | 19,349 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
|
|
365,488
|
|
|
79,954
|
|
|
181,193
|
|
|
172,550
|
|
|
385,898
|
|
|
59,142
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
||||||||||||||||||||||||
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Selected Consolidated Balance Sheet Data:
|
||||||||||||||||||||||||
Current assets:
|
||||||||||||||||||||||||
Cash and cash equivalents
|
387,198 | 762,882 | 3,540,031 | 4,962,660 | 4,678,109 | 716,952 | ||||||||||||||||||
Time deposits
|
— | 1,960 | 749,385 | 1,844,558 | 4,720,089 | 723,385 | ||||||||||||||||||
Accounts receivable, net
|
110,666 | 392,942 | 324,392 | 744,845 | 1,053,641 | 161,478 | ||||||||||||||||||
Prepayments and other current assets
|
185,378 | 477,265 | 990,851 | 1,315,901 | 1,765,787 | 270,619 | ||||||||||||||||||
Short-term investments
|
712,564 | 488,391 | 945,338 | 1,260,810 | 3,357,189 | 514,511 | ||||||||||||||||||
Non-current
assets:
|
||||||||||||||||||||||||
Intangible assets, net
|
282,472 | 426,292 | 1,419,435 | 1,657,333 | 2,356,959 | 361,220 | ||||||||||||||||||
Goodwill
|
50,967 | 50,967 | 941,488 | 1,012,026 | 1,295,786 | 198,588 | ||||||||||||||||||
Long-term investments, net
|
377,031 | 635,952 | 979,987 | 1,251,129 | 2,232,938 | 342,213 | ||||||||||||||||||
Total assets
|
2,166,710 | 3,473,525 | 10,490,036 | 15,516,567 | 23,865,608 | 3,657,566 | ||||||||||||||||||
Total current liabilities
|
628,100 | 1,397,994 | 3,298,834 | 4,272,597 | 7,391,548 | 1,132,805 | ||||||||||||||||||
Long-term debt
|
— | — | — | 3,414,628 | 8,340,922 | 1,278,302 | ||||||||||||||||||
Total liabilities
|
|
628,100
|
|
|
1,397,994
|
|
|
3,298,834
|
|
|
7,880,107
|
|
|
16,083,404
|
|
|
2,464,891
|
|
||||||
Net current assets
|
772,706 | 755,106 | 3,251,163 | 6,051,467 | 8,347,999 | 1,279,386 | ||||||||||||||||||
Net assets
|
1,538,610 | 2,075,531 | 7,191,202 | 7,636,460 | 7,782,204 | 1,192,675 | ||||||||||||||||||
Total mezzanine equity
|
2,861,613 | 4,015,043 | — | — | — | — | ||||||||||||||||||
Noncontrolling interests
|
357 | — | 240,406 | 583,976 | 182,004 | 27,893 | ||||||||||||||||||
Total shareholders’ (deficit)/equity
|
(1,323,003 | ) | (1,939,512 | ) | 7,191,202 | 7,636,460 | 7,782,204 | 1,192,675 | ||||||||||||||||
Total liabilities and shareholders’ equity
|
|
2,166,710
|
|
|
3,473,525
|
|
|
10,490,036
|
|
|
15,516,567
|
|
|
23,865,608
|
|
|
3,657,566
|
|
As of December 31,
|
||||||||||||||||||||||||
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Selected Consolidated Statements of Cash Flow Data:
|
||||||||||||||||||||||||
Net cash (used in)/provided by operating activities
|
(198,967 | ) | 464,550 | 737,286 | 194,551 | 753,103 | 115,418 | |||||||||||||||||
Net cash used in investing activities
|
(1,187,300 | ) | (716,254 | ) | (3,196,394 | ) | (3,958,277 | ) | (8,906,821 | ) | (1,365,029 | ) | ||||||||||||
Net cash provided by financing activities
|
1,024,087 | 675,533 | 4,974,810 | 5,078,842 | 8,335,419 | 1,277,458 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies
|
49,606 | (48,145 | ) | 261,447 | 107,513 | (466,252 | ) | (71,456 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net (decrease)/ increase in cash and cash equivalents
|
(312,574 | ) | 375,684 | 2,777,149 | 1,422,629 | (284,551 | ) | (43,609 | ) | |||||||||||||||
Cash and cash equivalents at beginning of the year
|
699,772 | 387,198 | 762,882 | 3,540,031 | 4,962,660 | 760,561 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at end of the year
|
387,198 | 762,882 | 3,540,031 | 4,962,660 | 4,678,109 | 716,952 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
B.
|
Capitalization and Indebtedness
|
C.
|
Reasons for the Offer and Use of Proceeds
|
D.
|
Risk Factors
|
• |
We operate in a fast-evolving industry. We cannot guarantee that we will successfully implement our commercialization strategies or develop new ones, or generate sustainable revenues and profit.
|
• |
We have incurred significant losses and we may continue to experience losses in the future.
|
• |
If we fail to anticipate user preferences and provide products and services to attract and retain users, or if we fail to keep up with rapid changes in technologies and their impact on user behavior, we may not be able to attract sufficient user traffic to remain competitive, and our business and prospects may be materially and adversely affected.
|
• |
Our business depends on our ability to provide users with interesting and useful content, which in turn depends on the content contributed by the content creators on our platform.
|
• |
Increases in the costs of content on our platform may have an adverse effect on our business, financial condition and results of operations;
|
• |
Our auditor is not inspected by the PCAOB and, as such, you are deprived of the benefits of such inspection. In addition, various legislative and regulatory developments related to U.S.-listed China-based companies due to lack of PCAOB inspection and other developments may have a material adverse impact on our listing and trading in the U.S. and the trading prices of our ADSs.
|
• |
If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC regulations on foreign investment in internet and other related businesses, or if these regulations or their interpretation change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
|
• |
We rely on contractual arrangements with our VIEs and their shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership.
|
• |
We may lose the ability to use and enjoy assets held by our VIEs and their subsidiaries that are important to our business if our VIEs and their subsidiaries declare bankruptcy or become subject to a dissolution or liquidation proceeding.
|
• |
Contractual arrangements we have entered into with our VIEs may be subject to scrutiny by the PRC tax authorities. A finding that we owe additional taxes could negatively affect our financial condition and the value of your investment.
|
• |
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.
|
• |
We face uncertainties with respect to the interpretation and implementation of the Anti-Monopoly Guidelines for the Internet Platform Economy Sector.
|
• |
Regulation and censorship of information disseminated over the mobile and internet in China may adversely affect our business and subject us to liability for content posted on our platform.
|
• |
Adverse changes in economic and political policies of the PRC government could have a material and adverse effect on overall economic growth in China, which could materially and adversely affect our business.
|
• |
The trading price of our listed securities has been and is likely to continue to be volatile, regardless of our operating performance, which could result in substantial losses to our investors.
|
• |
We may need additional capital, and the sale of additional Class Z ordinary shares and/or ADSs or other equity securities could result in additional dilution to our shareholders, and the incurrence of additional indebtedness could increase our debt obligations.
|
• |
Conversion of our convertible senior notes may dilute the ownership interest of the existing shareholders, including holders who had previously converted their notes.
|
• |
Provisions of our convertible senior notes could discourage an acquisition of us by a third-party.
|
• |
Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class Z ordinary shares and ADSs may view as beneficial.
|
• |
the popularity, usefulness, ease of use, performance and reliability of our platform, products and services compared to those of our competitors;
|
• |
the amount, quality and timeliness of content on our platform, especially the amount and quality of the PUGV generated by our content creators;
|
• |
the environment and culture of our user communities;
|
• |
our ability, and the ability of our competitors, to develop new products and services and enhancements to existing products and services to keep up with user preferences and demands;
|
• |
the inventory size, quality and size of player base of the games we operate;
|
• |
our ability to establish and maintain relationships with content providers and partners;
|
• |
our ability to commercialize our services;
|
• |
changes mandated by legislation, regulations or government policies, some of which may have a disproportionate effect on us;
|
• |
acquisitions or consolidation within our industry, which may result in more formidable competitors; and
|
• |
our reputation and brand strength relative to our competitors.
|
• |
the integration of new operations and the retention of customers and personnel;
|
• |
significant volatility in our operating profit (loss) due to changes in the fair value of our contingent purchase consideration payable;
|
• |
unforeseen or hidden liabilities, including those associated with different business practices;
|
• |
the diversion of management’s attention and resources from our existing business and technology by acquisition, transition and integration activities;
|
• |
failure to achieve synergies with our existing business and generate revenues as anticipated;
|
• |
failure of the newly acquired businesses, technologies, services and products to perform as anticipated;
|
• |
inability to generate sufficient revenues to offset additional costs and expenses;
|
• |
breach or termination of key agreements by the counterparties;
|
• |
the costs of acquisitions;
|
• |
international operations conducted by some of our subsidiaries;
|
• |
any different interpretations on contingent purchase consideration; or
|
• |
the potential loss of, or harm to, relationships with both our employees and customers resulting from our integration of new businesses.
|
• |
our financial condition, results of operations and cash flows;
|
• |
general market conditions for financing activities by internet companies; and
|
• |
economic, political and other conditions in the PRC and elsewhere.
|
• |
revoking the business licenses and/or operating licenses of such entities;
|
• |
imposing fines on us;
|
• |
confiscating any of our income that they deem to be obtained through illegal operations;
|
• |
discontinuing or placing restrictions or onerous conditions on our operations;
|
• |
placing restrictions on our right to collect revenues;
|
• |
shutting down our servers or blocking our app/websites;
|
• |
requiring us to restructure the operations in such a way as to compel us to establish a new enterprise,
re-apply
for the necessary licenses or relocate our businesses, staff and assets;
|
• |
imposing additional conditions or requirements with which we may not be able to comply; or
|
• |
taking other regulatory or enforcement actions against us that could be harmful to our business.
|
• |
variations in our revenues, earnings, cash flow and data related to our user base or user engagement;
|
• |
announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
|
• |
announcements of new product and service offerings, solutions and expansions by us or our competitors;
|
• |
changes in financial estimates by securities analysts;
|
• |
detrimental adverse publicity about us, our products and services or our industry;
|
• |
additions or departures of key personnel;
|
• |
releases at any time, in some cases without notice, of
lock-up
or other transfer restrictions on our outstanding ordinary shares, ADSs or other equity related securities;
|
• |
sales of additional ADSs or other equity-related securities in the public markets, or issuance of ADSs upon conversion of convertible senior notes issued by us, or the perception of these events; and
|
• |
actual or potential litigation or regulatory investigations.
|
• |
the rules under the Exchange Act requiring the filing of quarterly reports on Form
10-Q;
|
• |
or current reports on Form
8-K
with the SEC;
|
• |
the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
|
• |
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 nonpublic information under Regulation FD.
|
A.
|
History and Development of the Company
|
B.
|
Business Overview
|
Name
|
Initial Launch Date
|
Region
|
Genre
|
|||
Fate/Grand Order |
September 2016
|
China |
ACG-related game
|
|||
Azur Lane |
May 2017
|
China |
ACG-related game
|
|||
Princess Connect! Re: Dive | April 2020 | China |
ACG-related game
|
C.
|
Organizational Structure
|
(1) |
Mr. Rui Chen holds 100% equity interests in Shanghai Kuanyu. He is also the chairman of our board of directors and our chief executive officer.
|
(2) |
Shanghai Kuanyu has 4 subsidiaries.
|
(3) |
Mr. Rui Chen, Mr. Yi Xu and Ms. Ni Li hold 52.3%, 44.3%, and 3.4% equity interests in Hode Information Technology, respectively, as of the date of this annual report. Mr. Chen is our controlling shareholder, the chairman of our board of directors and our chief executive officer. Mr. Xu is our founder, director and president. Ms. Li is the vice chairwoman of our board of directors and chief operating officer.
|
(4) |
Hode Information Technology has 34 subsidiaries.
|
• |
research and development on relevant technologies required for Shanghai Kuanyu’s business;
|
• |
technical application and implementation in relation to Shanghai Kuanyu’s business operations;
|
• |
technical services including advertising design solutions, software design, page production, and management consulting advice in relation to Shanghai Kuanyu’s advertising business operations;
|
• |
daily maintenance, monitoring, debugging and troubleshooting of computer network equipment;
|
• |
consultancy services for the procurement of relevant equipment and software and hardware systems required by Shanghai Kuanyu to carry out its network operations;
|
• |
providing appropriate training and technical support and assistance to Shanghai Kuanyu’s employees;
|
• |
giving advice and solutions to technical questions raised by Shanghai Kuanyu; and
|
• |
other relevant services requested by Shanghai Kuanyu from time to time to the extent permitted under PRC laws and regulations.
|
1. |
the sale, transfer, mortgage or otherwise dispose of any assets (except for those of value less than RMB 1 million in the ordinary course of business of the consolidated affiliated entities), business, management right or beneficial interest of income or create any security interest on any assets, including but not limited to any mortgage, pledge, share options or other guarantee arrangements;
|
2. |
the provision of any guarantee or any fees to third parties or the occurrence of any indebtedness (except for those reasonable costs incurred in the ordinary course of business);
|
3. |
the entering into of any material contracts (except for those where contract amount is less than RMB1 million and those which are entered into within the ordinary course of business of the consolidated affiliated entities between Shanghai Kuanyu and Hode Shanghai and its related parties);
|
4. |
any merger, acquisition, restructuring or liquidation; and
|
5. |
cause any conflict of interest between Shanghai Kuanyu and Hode Shanghai as well as its shareholders.
|
1. |
Shanghai Kuanyu shall not in any manner supplement, change or alter its constitutional documents or increase or decrease its registered capital or change the structure of its registered capital in other manner;
|
2. |
Shanghai Kuanyu shall prudently and effectively operate its business and transactions in accordance with the good financial and business standards;
|
3. |
Shanghai Kuanyu shall not sell, transfer, mortgage or otherwise dispose of any assets, business, legal or beneficial interest of its income or allow any guarantee or security to be created on its assets except for those of value less than RMB 1 million required for normal business operations;
|
4. |
Shanghai Kuanyu shall not incur, inherit, guarantee or allow any indebtedness other than those having been disclosed to and consented by Hode Shanghai in writing or those made during the ordinary course of its business;
|
5. |
Shanghai Kuanyu shall not enter into any material contracts with an amount more than RMB1 million without Hode Shanghai’s prior written consent, except the contracts executed in the ordinary course of business or contracts entered between Shanghai Kuanyu and our Company (or any of our subsidiaries);
|
6. |
Shanghai Kuanyu shall operate its business in order to maintain its asset value or not allow any acts or omission which adversely affects its business or assets value;
|
7. |
Shanghai Kuanyu shall immediately inform Hode Shanghai if its assets or business involved in any disputes, litigations, arbitrations or administrative proceedings;
|
8. |
Shanghai Kuanyu shall not distribute any dividend to its shareholder without Hode Shanghai’s written consent. To the extent permitted under the relevant PRC laws and regulations, Mr. Rui Chen shall inform and transfer all distributable receivable by him to Hode Shanghai as soon as possible after receiving such interests;
|
9. |
Shanghai Kuanyu and its affiliates shall provide its operation and financial information to Hode Shanghai or its designated person upon Hode Shanghai’s request;
|
10. |
Shanghai Kuanyu shall not separate, or merge, or enter into joint operation agreements with other entities, or acquire or be acquired by other entities, or invest in any entities without Hode Shanghai’s written consent;
|
11. |
Shanghai Kuanyu shall sign all necessary and appropriate documents, take all necessary and proper acts, bring up all necessary and proper requests, or raise necessary and proper defenses against claims to maintain Shanghai Kuanyu and its affiliates’ ownership for all the assets;
|
12. |
if Mr. Rui Chen or Shanghai Kuanyu fails to perform the tax obligations under applicable laws and results in obstacles for Hode Shanghai to exercise its exclusive option right, Shanghai Kuanyu or Mr. Rui Chen shall pay the taxes or pay the same amount to Hode Shanghai so Hode Shanghai may pay the taxes instead; and
|
13. |
Shanghai Kuanyu shall take all necessary and proper acts to ensure that all government permits, licenses, authorizations, and approvals required by Shanghai Kuanyu and its affiliates to conduct their businesses are valid and make all necessary changes as required by the relevant PRC laws and regulations.
|
D.
|
Property, Plant and Equipment
|
A.
|
Operating Results
|
For the Three Months Ended
|
||||||||||||||||||||||||||||||||
March 31,
2019 |
June 30,
2019 |
September 30,
2019 |
December 31,
2019 |
March 31,
2020 |
June 30,
2020
|
September 30,
2020 |
December 31,
2020 |
|||||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||||||||||
Average MAU
(1)
|
101.3 | 110.4 | 127.9 | 130.3 | 172.4 | 171.6 | 197.2 | 202.0 |
(1) |
Our MAU include mobile apps MAU and PC MAU after eliminating duplicates.
|
For the Three Months Ended
|
||||||||||||||||||||||||||||||||
March 31,
2019
|
June 30,
2019
|
September 30,
2019
|
December 31,
2019
|
March 31,
2020
|
June 30,
2020
|
September 30,
2020
|
December 31,
2020
|
|||||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||||||||||
Average MAU
|
101.3 | 110.4 | 127.9 | 130.3 | 172.4 | 171.6 | 197.2 | 202.0 | ||||||||||||||||||||||||
Average monthly paying users
|
5.7 | 6.3 | 7.9 | 8.8 | 13.4 | 12.9 | 15.0 | 17.9 | ||||||||||||||||||||||||
(In RMB)
|
||||||||||||||||||||||||||||||||
Average monthly revenue per paying user
|
67.6 | 66.4 | 58.1 | 54.5 | 48.3 | 53.8 | 50.1 | 44.2 |
For the Year Ended December 31,
|
||||||||||||||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||
Net revenues:
|
||||||||||||||||||||||||||||
Mobile games
|
2,936,331 | 71.1 | % | 3,597,809 | 53.1 | % | 4,803,382 | 736,151 | 40.0 | % | ||||||||||||||||||
Value-added services
|
585,643 | 14.2 | % | 1,641,043 | 24.2 | % | 3,845,663 | 589,374 | 32.0 | % | ||||||||||||||||||
Advertising
|
463,490 | 11.2 | % | 817,016 | 12.1 | % | 1,842,772 | 282,417 | 15.4 | % | ||||||||||||||||||
E-commerce
and others
|
143,467 | 3.5 | % | 722,054 | 10.6 | % | 1,507,159 | 230,982 | 12.6 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total net revenues
|
|
4,128,931
|
|
|
100.0
|
%
|
|
6,777,922
|
|
|
100.0
|
%
|
|
11,998,976
|
|
|
1,838,924
|
|
|
100.0
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||||||
Revenue-sharing costs
|
1,630,881 | 49.8 | % | 2,494,416 | 44.6 | % | 4,366,490 | 669,194 | 47.7 | % | ||||||||||||||||||
Content costs
|
543,009 | 16.6 | % | 1,001,600 | 17.9 | % | 1,875,546 | 287,440 | 20.5 | % | ||||||||||||||||||
Server and bandwidth costs
|
618,737 | 18.9 | % | 919,753 | 16.5 | % | 1,141,257 | 174,905 | 12.5 | % | ||||||||||||||||||
E-commerce
and others
|
480,866 | 14.7 | % | 1,171,904 | 21.0 | % | 1,775,507 | 272,109 | 19.3 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total cost of revenues
|
|
3,273,493
|
|
|
100
|
%
|
|
5,587,673
|
|
|
100
|
%
|
|
9,158,800
|
|
|
1,403,648
|
|
|
100
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||
Sales and marketing expenses
|
585,758 | 37.0 | % | 1,198,516 | 44.6 | % | 3,492,091 | 535,186 | 58.4 | % | ||||||||||||||||||
General and administrative expenses
|
461,165 | 29.1 | % | 592,497 | 22.1 | % | 976,082 | 149,592 | 16.3 | % | ||||||||||||||||||
Research and development expenses
|
537,488 | 33.9 | % | 894,411 | 33.3 | % | 1,512,966 | 231,872 | 25.3 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
|
1,584,411
|
|
|
100
|
%
|
|
2,685,424
|
|
|
100
|
%
|
|
5,981,139
|
|
|
916,650
|
|
|
100
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||
Sales and marketing expenses:
|
||||||||||||||||||||||||||||
Marketing and promotional expenses
|
436,487 | 74.5 | % | 934,701 | 78.0 | % | 3,005,965 | 460,684 | 86.1 | % | ||||||||||||||||||
Staff costs
|
131,183 | 22.4 | % | 204,770 | 17.1 | % | 400,910 | 61,442 | 11.5 | % | ||||||||||||||||||
Others
|
18,088 | 3.1 | % | 59,045 | 4.9 | % | 85,216 | 13,060 | 2.4 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total sales and marketing expenses
|
|
585,758
|
|
|
100.0
|
%
|
|
1,198,516
|
|
|
100.0
|
%
|
|
3,492,091
|
|
|
535,186
|
|
|
100
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||
Net revenues
|
4,128,931 | 100.0 | % | 6,777,922 | 100.0 | % | 11,998,976 | 1,838,924 | 100.0 | % | ||||||||||||||||||
Cost of revenues
(1)
|
(3,273,493 | ) | (79.3 | )% | (5,587,673 | ) | (82.4 | )% | (9,158,800 | ) | (1,403,648 | ) | (76.3 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gross profit
|
|
855,438
|
|
|
20.7
|
%
|
|
1,190,249
|
|
|
17.6
|
%
|
|
2,840,176
|
|
|
435,276
|
|
|
23.7
|
%
|
|||||||
Operating expenses:
|
||||||||||||||||||||||||||||
Sales and marketing expenses
(1)
|
(585,758 | ) | (14.2 | )% | (1,198,516 | ) | (17.7 | )% | (3,492,091 | ) | (535,186 | ) | (29.1 | )% | ||||||||||||||
General and administrative expenses
(1)
|
(461,165 | ) | (11.2 | )% | (592,497 | ) | (8.7 | )% | (976,082 | ) | (149,592 | ) | (8.1 | )% | ||||||||||||||
Research and development expenses
(1)
|
(537,488 | ) | (13.0 | )% | (894,411 | ) | (13.2 | )% | (1,512,966 | ) | (231,872 | ) | (12.6 | )% | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
|
(1,584,411
|
)
|
|
(38.4
|
)%
|
|
(2,685,424
|
)
|
|
(39.6
|
)%
|
|
(5,981,139
|
)
|
|
(916,650
|
)
|
|
(49.8
|
)%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loss from operations
|
|
(728,973
|
)
|
|
(17.7
|
)%
|
|
(1,495,175
|
)
|
|
(22.0
|
)%
|
|
(3,140,963
|
)
|
|
(481,374
|
)
|
|
(26.1
|
)%
|
|||||||
Other income/(expenses):
|
||||||||||||||||||||||||||||
Investment income, net (including impairments)
|
96,440 | 2.3 | % | 96,610 | 1.4 | % | 28,203 | 4,322 | 0.2 | % | ||||||||||||||||||
Interest income
|
68,706 | 1.7 | % | 162,782 | 2.4 | % | 83,301 | 12,766 | 0.7 | % | ||||||||||||||||||
Interest expense
|
— | — | (46,543 | ) | (0.7 | )% | (108,547 | ) | (16,636 | ) | (0.9 | %) | ||||||||||||||||
Exchange (losses)/gains
|
(1,661 | ) | 0.0 | % | (11,789 | ) | (0.2 | )% | 41,717 | 6,393 | 0.3 | % | ||||||||||||||||
Others, net
|
26,455 | 0.6 | % | 26,412 | 0.4 | % | 95,641 | 14,660 | 0.8 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loss before tax
|
|
(539,033
|
)
|
|
(13.1
|
)%
|
|
(1,267,703
|
)
|
|
(18.7
|
)%
|
|
(3,000,648
|
)
|
|
(459,869
|
)
|
|
(25.0
|
%)
|
|||||||
Income tax
|
(25,988 | ) | (0.6 | )% | (35,867 | ) | (0.5 | )% | (53,369 | ) | (8,180 | ) | (0.4 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
|
(565,021
|
)
|
|
(13.7
|
)%
|
|
(1,303,570
|
)
|
|
(19.2
|
)%
|
|
(3,054,017
|
)
|
|
(468,049
|
)
|
|
(25.4
|
%)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Share-based compensation expenses were allocated as follows:
|
For the Year Ended December 31,
|
||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of revenues
|
28,173 | 23,281 | 37,087 | 5,684 | ||||||||||||
Sales and marketing expenses
|
11,499 | 14,269 | 40,808 | 6,254 | ||||||||||||
General and administrative expenses
|
102,544 | 68,497 | 181,753 | 27,855 | ||||||||||||
Research and development expenses
|
38,977 | 66,503 | 126,250 | 19,349 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
|
181,193
|
|
|
172,550
|
|
|
385,898
|
|
|
59,142
|
|
||||
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
(in millions, except as otherwise indicated)
|
||||||||||||
Average MAU
|
87.0 | 117.5 | 185.8 | |||||||||
Average monthly paying user
|
3.4 | 7.2 | 14.8 | |||||||||
Paying ratio % (Average monthly paying user / MAU)
|
3.9 | % | 6.1 | % | 8.0 | % | ||||||
Average monthly paying user for mobile games
|
0.9 | 1.2 | 1.8 | |||||||||
Average monthly paying user for VAS
(1)
|
2.5 | 6.0 | 13.0 | |||||||||
Daily time spending per active user (minutes)
|
over 75 minutes | over 80 minutes | over 80 minutes |
(1) |
Average monthly paying user for VAS excludes the duplicative average monthly paying user for mobile games.
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Average monthly revenue per MAU
(1)
|
4.0 | 4.8 | 5.4 | |||||||||
Average monthly revenue per paying user
(2)
|
87.6 | 60.7 | 48.7 | |||||||||
Average monthly revenue per paying user for mobile games
|
284.5 | 254.6 | 223.6 | |||||||||
Average monthly revenue per paying user for VAS
|
19.6 | 22.7 | 24.6 |
(1) |
Numerator is the total net revenues.
|
(2) |
Numerator includes only revenues from mobile games and VAS.
|
• |
Exclusively distributed mobile games
|
• |
Jointly operated mobile game distribution services
|
• |
Sales incentives to customers
|
As of December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
(in thousands)
|
||||||||||||
Financial products
|
858,021 | 1,070,113 | 2,866,643 | |||||||||
Investments in publicly traded companies
|
— | 80,918 | 434,609 | |||||||||
Money market funds
|
87,317 | 109,779 | 55,937 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
945,338
|
|
|
1,260,810
|
|
|
3,357,189
|
|
|||
|
|
|
|
|
|
As of December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
(in thousands)
|
||||||||||||
Equity investments accounted for using the measurement alternative
|
793,149 | 666,025 | 1,791,393 | |||||||||
Equity investments accounted for using the equity method
|
— | 279,854 | 188,199 | |||||||||
Investments accounted for at fair value
|
186,838 | 305,250 | 253,346 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
979,987
|
|
|
1,251,129
|
|
|
2,232,938
|
|
|||
|
|
|
|
|
|
• |
Equity investments accounted for using the measurement alternative
|
• |
Equity investments accounted for using the equity method
|
• |
Investments accounted for at fair value
|
B.
|
Liquidity and Capital Resources
|
For the Year Ended December 31,
|
||||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Selected Consolidated Cash Flows Data:
|
||||||||||||||||
Net cash provided by operating activities
|
737,286 | 194,551 | 753,103 | 115,418 | ||||||||||||
Net cash used in investing activities
|
(3,196,394 | ) | (3,958,277 | ) | (8,906,821 | ) | (1,365,029 | ) | ||||||||
Net cash provided by financing activities
|
4,974,810 | 5,078,842 | 8,335,419 | 1,277,458 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies
|
261,447 | 107,513 | (466,252 | ) | (71,456 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in cash and cash equivalents
|
2,777,149 | 1,422,629 | (284,551 | ) | (43,609 | ) | ||||||||||
Cash and cash equivalents at beginning of the year
|
762,882 | 3,540,031 | 4,962,660 | 760,561 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents at end of the year
|
3,540,031 | 4,962,660 | 4,678,109 | 716,952 | ||||||||||||
|
|
|
|
|
|
|
|
C.
|
Research and Development, Patents and Licenses, Etc.
|
D.
|
Trend Information
|
E.
|
Off-balance
Sheet Arrangements
|
F.
|
Tabular Disclosure of Contractual Obligations
|
Payment due by December 31,
|
||||||||||||||||||||||||
Total
|
2021
|
2022
|
2023
|
2024
|
After
|
|||||||||||||||||||
(in RMB thousands)
|
||||||||||||||||||||||||
Operating lease commitments
(1)
|
496,433 | 156,869 | 171,923 | 106,253 | 43,575 | 17,813 | ||||||||||||||||||
Long-term debt obligations
(2)
|
9,151,355 | 110,108 | 110,108 | 110,108 | 110,108 | 8,710,923 | ||||||||||||||||||
Purchase obligation
(3)
|
622,500 | 377,500 | 200,000 | 45,000 | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
|
10,270,288 | 644,477 | 482,031 | 261,361 | 153,683 | 8,728,736 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Operating lease commitments consist of the commitments under the lease agreements for our office premises.
|
(2) |
Long-term debt obligations consist of the principal amount and cash interests in connection with the 2026 Notes and 2027 Notes.
|
(3) |
Purchase obligation consists of the commitment under the contract signed in September 2020 to purchase the three-year license for live broadcasting the League of Legends World Championship in China starting from 2020 at an aggregate purchase price of RMB800 million (US$122.6 million). The unpaid purchase price was RMB622.5 million (US$95.4 million) as of December 31, 2020.
|
G.
|
Safe Harbor
|
ITEM
|
6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
A.
|
Directors and Senior Management
|
Directors and Executive Officers
|
Age
|
Position/Title
|
||
Rui Chen | 43 | Chairman of the Board of Directors and Chief Executive Officer | ||
Yi Xu | 31 | Founder, Director and President | ||
Ni Li | 35 | Vice Chairwoman of the Board of Directors and Chief Operating Officer | ||
JP Gan | 49 | Independent Director | ||
Eric He | 60 | Independent Director | ||
Feng Li | 47 | Independent Director | ||
Guoqi Ding | 51 | Independent Director | ||
Xin Fan | 41 | Chief Financial Officer |
B.
|
Compensation
|
* |
Less than 1% of our total outstanding shares.
|
C.
|
Board Practices
|
• |
appointing the independent auditors and
pre-approving
all auditing and
non-auditing
services permitted to be performed by the independent auditors;
|
• |
reviewing with the independent auditors any audit problems or difficulties and management’s response;
|
• |
discussing the annual audited financial statements with management and the independent auditors;
|
• |
reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;
|
• |
reviewing and approving all proposed related party transactions;
|
• |
meeting separately and periodically with management and the independent auditors; and
|
• |
monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
|
• |
reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;
|
• |
reviewing and recommending to the board for determination with respect to the compensation of our
non-employee
directors;
|
• |
reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and
|
• |
selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
|
• |
selecting and recommending to the board nominees for election by the shareholders or appointment by the board;
|
• |
reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;
|
• |
making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and
|
• |
advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
|
• |
convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;
|
• |
declaring dividends and distributions;
|
• |
appointing officers and determining the term of office of the officers;
|
• |
exercising the borrowing powers of our company and mortgaging the property of our company; and
|
• |
approving the transfer of shares in our company, including the registration of such shares in our share register.
|
D.
|
Employees
|
As of December 31, 2020
|
||||
Function:
|
||||
Platform operations
|
641 | |||
Products and technology
|
3,898 | |||
Content operations
|
1,186 | |||
Content audit
|
2,413 | |||
Management, sales, finance and administration
|
508 | |||
|
|
|||
Total | 8,646 | |||
|
|
E.
|
Share Ownership
|
• |
each of our directors and executive officers; and
|
• |
each person known to us to own beneficially more than 5% of our ordinary shares.
|
Ordinary Shares Beneficially Owned
|
||||||||||||||||||||
Class Y
Ordinary
Shares
|
Class Z
Ordinary
Shares
|
Total Ordinary
Shares
|
% of Beneficial
Ownership
|
% of Aggregate
Voting Power†
|
||||||||||||||||
Directors and Executive Officers**:
|
||||||||||||||||||||
Rui Chen
(1)
|
49,299,006 | 629,745 | 49,928,751 | 14.2 | % | 44.6 | % | |||||||||||||
Yi Xu
(2)
|
27,216,108 | 1,096,100 | 28,312,208 | 8.0 | % | 24.7 | % | |||||||||||||
Ni Li
(3)
|
7,200,000 | 908,300 | 8,108,300 | 2.3 | % | 6.6 | % | |||||||||||||
JP Gan
(4)
|
— | * | * | * | * | |||||||||||||||
Eric He
(5)
|
— | * | * | * | * | |||||||||||||||
Feng Li
(6)
|
— | — | — | — | — | |||||||||||||||
Guoqi Ding
(7)
|
— | — | — | — | — | |||||||||||||||
Xin Fan
|
— | * | * | * | * | |||||||||||||||
All Directors and Executive Officers as a Group
|
83,715,114 | 3,601,345 | 87,316,459 | 24.8 | % | 76.0 | % | |||||||||||||
Principal Shareholders:
|
||||||||||||||||||||
Entities affiliated with Rui Chen
(8)
|
49,299,006 | 629,745 | 49,928,751 | 14.2 | % | 44.6 | % | |||||||||||||
Tencent entities
(9)
|
— | 43,749,518 | 43,749,518 | 12.4 | % | 4.0 | % | |||||||||||||
Entity affiliated with Yi Xu
(10)
|
27,216,108 | 1,051,100 | 28,267,208 | 8.0 | % | 24.7 | % | |||||||||||||
Taobao China Holding Limited
(11)
|
— | 23,645,657 | 23,645,657 | 6.7 | % | 2.1 | % |
† |
For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class Y and Class Z ordinary shares as a single class. Each holder of Class Z ordinary shares is entitled to one vote per share and each holder of our Class Y ordinary shares is entitled to ten votes per share on all matters submitted to them for a vote. Our Class Y ordinary shares and Class Z ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class Y ordinary shares are convertible at any time by the holder thereof into Class Z ordinary shares on a
one-for-one
|
* |
Less than 1% of our total outstanding shares.
|
** |
Except as otherwise indicated below, the business address of our directors and executive officers is c/o Shanghai Hode Information Technology Co., Ltd., Building 3, Guozheng Center, No. 485 Zhengli Road, Yangpu District, Shanghai, People’s Republic of China.
|
(1) |
Represents (i) 49,299,006 Class Y ordinary shares and 495,800 Class Z ordinary shares directly held by Vanship Limited, a business company limited by shares incorporated in British Virgin Islands, and (ii) 133,945 Class Z ordinary shares directly held by Windforce Limited, a business company limited by shares incorporated in British Virgin Islands. Vanship Limited is controlled by The Le Petit Prince Trust, a trust established under the laws of Cayman Islands and managed by TMF (Cayman) Ltd. as the trustee. Mr. Chen is the settlor of The Le Petit Prince Trust, and Mr. Chen and his family members are the trust’s beneficiaries. Under the terms of this trust, Mr. Chen has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to, the shares held by Vanship Limited in our company, and, except for Mr. Chen, the other beneficiaries of the trust have no voting rights attached to such shares. There are certain limited circumstances in which the trustee would not be required to comply with such a direction (for example, where a direction may make the trustee subject to criminal sanction or civil liability or where a direction involves a transaction which might have an adverse impact on the reputation of the trustee). The above position would also not apply if Mr. Chen is incapacitated, has released his authority or nominated another person to have such authority in his place. Windforce Limited is controlled by Mr. Chen.
|
(2) |
Represents (i) 27,216,108 Class Y ordinary shares, 151,100 Class Z ordinary shares and 900,000 Class Z ordinary shares in the form of ADSs directly held by Kami Sama Limited, a business company limited by shares incorporated in British Virgin Islands, and (ii) 45,000 Class Z ordinary shares in the form of ADSs held by Mr. Xu. Kami Sama Limited is controlled by The Homur Trust, a trust established under the laws of Cayman Islands and managed by TMF (Cayman) Ltd. as the trustee. Mr. Yi Xu is the settlor of The Homur Trust, and Mr. Xu and his family members are the trust’s beneficiaries. Under the terms of this trust, Mr. Xu has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to, the shares held by Kami Sama Limited in our company, and, except for Mr. Xu, the other beneficiaries of the trust have no voting rights attached to such shares. There are certain limited circumstances in which the trustee would not be required to comply with such a direction (for example, where a direction may make the trustee subject to criminal sanction or civil liability or where a direction involves a transaction which might have an adverse impact on the reputation of the trustee). The above position would also not apply if Mr. Xu is incapacitated, has released his authority or nominated another person to have such authority in his place.
|
(3) |
Represents 7,200,000 Class Y ordinary shares and 908,300 Class Z ordinary shares directly held by Saber Lily Limited, a business company limited by shares incorporated in British Virgin Islands. Saber Lily Limited is controlled by The Fortuna Trust, a trust established under the laws of Cayman Islands and managed by TMF (Cayman) Ltd. as the trustee. Ms. Li is the settlor of The Fortuna Trust, and Ms. Li and her family members are the trust’s beneficiaries. Under the terms of this trust, Ms. Li has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to, the shares held by Saber Lily Limited in our company, and, except for Ms. Li, the other beneficiaries of the trust have no voting rights attached to such shares. There are certain limited circumstances in which the trustee would not be required to comply with such a direction (for example, where a direction may make the trustee subject to criminal sanction or civil liability or where a direction involves a transaction which might have an adverse impact on the reputation of the trustee). The above position would also not apply if Ms. Li is incapacitated, has released her authority or nominated another person to have such authority in her place.
|
(4) |
The business address of Mr. JP Gan is Suite 909, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.
|
(5) |
The business address of Mr. Eric He is
2F-1,
No. 495, Guangfu S. Road, Xinyi District, Taipei City 110007, Taiwan.
|
(6) |
The business address of Mr. Feng Li is Room 701, Tower 1, Liangmaqiao Diplomatic Office Building, No 19 Dongfangdong Road, Chaoyang District, Beijing, People’s Republic of China.
|
(7) |
The business address of Mr. Guoqi Ding is 1500 Changyi Road, Building 1, Room 902, Pudong New Area, Shanghai, People’s Republic of China.
|
(8) |
Represents (i) 49,299,006 Class Y ordinary shares and 495,800 Class Z ordinary shares directly held by Vanship Limited, a business company limited by shares incorporated in British Virgin Islands, and (ii) 133,945 Class Z ordinary shares directly held by Windforce Limited, a business company limited by shares incorporated in British Virgin Islands. Vanship Limited is controlled by The Le Petit Prince Trust, a trust established under the laws of Cayman Islands and managed by TMF (Cayman) Ltd. as the trustee. Mr. Chen is the settlor of The Le Petit Prince Trust, and Mr. Chen and his family members are the trust’s beneficiaries. Under the terms of this trust, Mr. Chen has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to, the shares held by Vanship Limited in our company, and, except for Mr. Chen, the other beneficiaries of the trust have no voting rights attached to such shares. There are certain limited circumstances in which the trustee would not be required to comply with such a direction (for example, where a direction may make the trustee subject to criminal sanction or civil liability or where a direction involves a transaction which might have an adverse impact on the reputation of the trustee). The above position would also not apply if Mr. Chen is incapacitated, has released his authority or nominated another person to have such authority in his place. Windforce Limited is controlled by Mr. Chen.
|
(9) |
Represents (i) 10,954,357 Class Z ordinary shares directly held by OPH B Limited, a company limited by shares incorporated in British Virgin Islands, and (ii) 32,795,161 Class Z ordinary shares directly held by Tencent Mobility Limited, a limited company incorporated in Hong Kong, based on the Schedule 13G/A filed on February 10, 2020. OPH B Limited and Tencent Mobility Limited are investing entities ultimately controlled by Tencent Holdings Limited, and are collectively referred to as Tencent entities. The registered address of OPH B Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The registered address of Tencent Mobility Limited is 27/F, Three Pacific Place, No.1 Queen’s Road East, Wanchai, Hong Kong.
|
(10) |
Represents 27,216,108 Class Y ordinary shares, 151,100 Class Z ordinary shares and 900,000 Class Z ordinary shares in the form of ADSs directly held by Kami Sama Limited, a business company limited by shares incorporated in British Virgin Islands. The registered address of Kami Sama Limited is Start Chambers, Wickham’s Cay II., P.O. Box 2221, Road Town, Tortola, British Virgin Islands.
|
(11) |
Represents 13,645,657 Class Z ordinary shares and 10,000,000 Class Z ordinary shares in the form of ADSs directly held by Taobao China Holding Limited, a business company limited by shares incorporated in Hong Kong, based on the Schedule 13G filed on February 14, 2019. Taobao China Holding Limited is a wholly-owned subsidiary of Taobao Holding Limited, a business company limited by shares incorporated in Cayman Islands, which is a wholly-owned subsidiary of Alibaba Group Holding Limited, a business company limited by shares incorporated in Cayman Islands. The principal business address of Alibaba Group Holding Limited, Taobao Holding Limited and Taobao China Holding Limited is c/o Alibaba Group Services Limited, 26/F Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.
|
A.
|
Major Shareholders
|
B.
|
Related Party Transactions
|
C.
|
Interests of Experts and Counsel
|
A.
|
Consolidated Statements and Other Financial Information
|
B.
|
Significant Changes
|
A.
|
Offering and Listing Details
|
B.
|
Plan of Distribution
|
C.
|
Markets
|
D.
|
Selling Shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the Issue
|
A.
|
Share Capital
|
B.
|
Memorandum and Articles of Association
|
• |
the instrument of transfer is lodged with us, accompanied by the certificate for the 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;
|
• |
the instrument of transfer is in respect of only one class of ordinary shares;
|
• |
the instrument of transfer is properly stamped, if required;
|
• |
in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and
|
• |
a fee of such maximum sum as the Nasdaq Stock Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.
|
• |
the designation of the series;
|
• |
the number of shares of the series;
|
• |
the dividend rights, dividend rates, conversion rights, voting rights; and
|
• |
the rights and terms of redemption and liquidation preferences.
|
• |
authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders; and
|
• |
limit the ability of shareholders to requisition and convene general meetings of shareholders.
|
• |
does not have to file an annual return of its shareholders with the Registrar of Companies;
|
• |
is not required to open its register of members for inspection;
|
• |
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 an exempted limited duration company; and
|
• |
may register as a segregated portfolio company.
|
C.
|
Material Contracts
|
D.
|
Exchange Controls
|
E.
|
Taxation
|
• |
that no law which is hereafter enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to our company or its operations; and
|
• |
in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable:
|
• |
on or in respect of the shares, debentures or other obligations of our company; or
|
• |
by way of the withholding, in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Act (as amended).
|
• |
the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;
|
• |
the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a
“pre-PFIC
year”), will be taxable as ordinary income;
|
• |
the amount allocated to each prior taxable year, other than a
pre-PFIC
year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and
|
• |
the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a
pre-PFIC
year.
|
F.
|
Dividends and Paying Agents
|
G.
|
Statement by Experts
|
H.
|
Documents on Display
|
I.
|
Subsidiary Information
|
A.
|
Debt Securities
|
B.
|
Warrants and Rights
|
C.
|
Other Securities
|
D.
|
American Depositary Shares
|
Service
|
Fees
|
|
To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) | Up to US$0.05 per ADS issued | |
Cancellation of ADSs, including the case of termination of the deposit agreement | Up to US$0.05 per ADS cancelled | |
Distribution of cash dividends | Up to US$0.05 per ADS held | |
Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements | Up to US$0.05 per ADS held | |
Distribution of ADSs pursuant to exercise of rights | Up to US$0.05 per ADS held | |
Distribution of securities other than ADSs or rights to purchase additional ADSs | Up to US$0.05 per ADS held | |
Depositary services | Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
• |
Fees for the transfer and registration of Class Z ordinary shares charged by the registrar and transfer agent for the Class Z ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of Class Z ordinary shares).
|
• |
Expenses incurred for converting foreign currency into U.S. dollars.
|
• |
Expenses for cable, telex and fax transmissions and for delivery of securities.
|
• |
Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when Class Z ordinary shares are deposited or withdrawn from deposit).
|
• |
Fees and expenses incurred in connection with the delivery or servicing of Class Z ordinary shares on deposit.
|
• |
Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to Class Z ordinary shares, deposited securities, ADSs and ADRs.
|
• |
Any applicable fees and penalties thereon.
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
(RMB in thousands)
|
||||||||||||
Audit fees
(1)
|
7,450 | 9,128 | 9,128 | |||||||||
Audit-related fees
(2)
|
— | 3,650 | 1,500 | |||||||||
Tax fees
(3)
|
1,090 | 1,050 | 385 | |||||||||
Other fees
(4)
|
180 | 150 | 150 |
(1) |
“Audit fees” means the aggregate fees incurred for each of the fiscal years listed for professional services rendered by our principal auditors for the audit or review of our annual financial statements or quarterly financial information and review of documents filed with the SEC. In 2018, the audit refers to financial statement audit and assurance services rendered in connection with our IPO in 2018. In 2019 and 2020, the audit refers to financial statement audit and audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
|
(2) |
“Audit-related fees” means the aggregate fees incurred for the issuance of comfort letters in connection with the offering of the 2026 Notes and concurrent offering of additional ADSs in April 2019, and permissible services to review and comment on the design of internal control over financial reporting rendered by our principal auditors in 2019. In 2020, the audit-related fees refer to the aggregate fees incurred for the issuance of comfort letters in connection with the offering of the 2027 Notes in May 2020.
|
(3) |
“Tax fees” means the aggregate fees incurred in each of the fiscal years listed for the professional tax services rendered by our principal auditors.
|
(4) |
“Other fees” means the aggregate fees incurred in each of the fiscal years listed for services rendered by our principal auditors other than services reported under “Audit fees,” “Audit-related fees” and “Tax fees.”
|
* |
Filed with this Annual Report on Form
20-F.
|
** |
Furnished with this Annual Report on Form
20-F.
|
Bilibili Inc. | ||
By: |
/s/ Rui Chen
|
|
Name: | Rui Chen | |
Title: |
Chairman of the Board of Directors and
Chief Executive Officer
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020
|
December 31,
2020
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
Note 2(e)
|
||||||||||||||||
Assets
|
||||||||||||||||
Current assets:
|
||||||||||||||||
Cash and cash equivalents
|
3,540,031 | 4,962,660 | 4,678,109 | 716,952 | ||||||||||||
Time deposits
|
749,385 | 1,844,558 | 4,720,089 | 723,385 | ||||||||||||
Accounts receivable, net
|
324,392 | 744,845 | 1,053,641 | 161,478 | ||||||||||||
Amount due from related parties
|
— | 195,290 | 164,732 | 25,246 | ||||||||||||
Prepayments and other current assets
|
990,851 | 1,315,901 | 1,765,787 | 270,619 | ||||||||||||
Short-term
investments
|
945,338 | 1,260,810 | 3,357,189 | 514,511 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current assets
|
|
6,549,997
|
|
|
10,324,064
|
|
|
15,739,547
|
|
|
2,412,191
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Non-current
assets:
|
||||||||||||||||
Property and equipment, net
|
394,898 | 516,087 | 761,941 | 116,773 | ||||||||||||
Production cost, net
|
204,231 | 443,533 | 667,876 | 102,356 | ||||||||||||
Intangible assets, net
|
1,419,435 | 1,657,333 | 2,356,959 | 361,220 | ||||||||||||
Deferred tax assets
|
— | 10,479 | 20,918 | 3,206 | ||||||||||||
Goodwill
|
941,488 | 1,012,026 | 1,295,786 | 198,588 | ||||||||||||
Long-term
investments, net
|
979,987 | 1,251,129 | 2,232,938 | 342,213 | ||||||||||||
Other long-term assets
|
— | 301,916 | 789,643 | 121,019 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-current
assets
|
|
3,940,039
|
|
|
5,192,503
|
|
|
8,126,061
|
|
|
1,245,375
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Total assets
|
|
10,490,036
|
|
|
15,516,567
|
|
|
23,865,608
|
|
|
3,657,566
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities
|
||||||||||||||||
Current liabilities:
|
||||||||||||||||
Accounts payable
|
1,307,598 | 1,904,042 | 3,074,298 | 471,157 | ||||||||||||
Salary and welfare payable
|
246,815 | 355,936 | 734,376 | 112,548 | ||||||||||||
Taxes payable
|
38,505 | 67,856 | 127,192 | 19,493 | ||||||||||||
Short-term loans
|
— | — | 100,000 | 15,326 | ||||||||||||
Deferred revenue
|
985,143 | 1,369,000 | 2,118,006 | 324,599 | ||||||||||||
Accrued liabilities and other payables
|
670,442 | 575,763 | 1,237,676 | 189,682 | ||||||||||||
Amount due to related parties
|
50,331 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total current liabilities
|
|
3,298,834
|
|
|
4,272,597
|
|
|
7,391,548
|
|
|
1,132,805
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Non-current
liabilities:
|
||||||||||||||||
Long-term debt
|
— | 3,414,628 | 8,340,922 | 1,278,302 | ||||||||||||
Other long-term liabilities
|
— | 192,882 | 350,934 | 53,784 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-current
liabilities
|
—
|
3,607,510 | 8,691,856 |
|
1,332,086 |
|
||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities
|
|
3,298,834
|
|
|
7,880,107
|
|
|
16,083,404
|
|
|
2,464,891
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Commitments and contingencies
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020
|
December 31,
2020
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
Note 2(e)
|
||||||||||||||||
Shareholders’ equity
|
||||||||||||||||
Ordinary shares:
|
||||||||||||||||
Class Y Ordinary Shares (US$0.0001 par value; 100,000,000 shares authorized, 85,364,814 shares issued and outstanding, as of December 31, 2018 and 2019; US$0.0001 par value; 100,000,000 shares authorized, 83,715,114 shares issued and outstanding as of December 31, 2020)
|
53 | 53 | 52 | 8 | ||||||||||||
Class Z Ordinary Shares (US$0.0001 par value; 9,800,000,000 shares authorized, 229,056,421 shares issued and 226,323,075 shares outstanding as of December 31, 2018; 9,800,000,000 shares authorized, 247,230,234 shares issued, 242,751,341 shares outstanding as of December 31, 2019; 9,800,000,000 shares authorized, 271,507,165 shares issued, 268,204,838 shares outstanding as of December 31, 2020)
|
144 | 155 | 172 | 26 | ||||||||||||
Additional
paid-in
capital
|
9,459,546 | 10,718,190 | 14,616,302 | 2,240,046 | ||||||||||||
Statutory reserves
|
7,666 | 13,463 | 17,884 | 2,741 | ||||||||||||
Accumulated other comprehensive income
|
326,077 | 466,229 | 141,129 | 21,629 | ||||||||||||
Accumulated deficit
|
(2,842,690 | ) | (4,145,606 | ) | (7,175,339 | ) | (1,099,668 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Bilibili Inc.’s shareholders’ equity
|
6,950,796 | 7,052,484 | 7,600,200 | 1,164,782 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Noncontrolling interests
|
240,406 | 583,976 | 182,004 | 27,893 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total shareholders’ equity
|
|
7,191,202
|
|
|
7,636,460
|
|
|
7,782,204
|
|
|
1,192,675
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities and shareholders’ equity
|
|
10,490,036
|
|
|
15,516,567
|
|
|
23,865,608
|
|
|
3,657,566
|
|
||||
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||
2018
|
2019
|
2020
|
2020
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
Note 2(e)
|
|||||||||||||
Net revenues
|
|
4,128,931
|
|
|
6,777,922
|
|
|
11,998,976
|
|
|
1,838,924
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Cost of revenues
|
(3,273,493 | ) | (5,587,673 | ) | (9,158,800 | ) | (1,403,648 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
|
855,438
|
|
|
1,190,249
|
|
|
2,840,176
|
|
|
435,276
|
|
||||
Operating expenses:
|
||||||||||||||||
Sales and marketing expenses
|
(585,758 | ) | (1,198,516 | ) | (3,492,091 | ) | (535,186 | ) | ||||||||
General and administrative expenses
|
(461,165 | ) | (592,497 | ) | (976,082 | ) | (149,592 | ) | ||||||||
Research and development expenses
|
(537,488 | ) | (894,411 | ) | (1,512,966 | ) | (231,872 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
(1,584,411 | ) | (2,685,424 | ) | (5,981,139 | ) | (916,650 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations
|
|
(728,973
|
)
|
|
(1,495,175
|
)
|
|
(3,140,963
|
)
|
|
(481,374
|
)
|
||||
Other income:
|
||||||||||||||||
Investment income, net (including impairments)
|
96,440 | 96,610 | 28,203 | 4,322 | ||||||||||||
Interest income
|
68,706 | 162,782 | 83,301 | 12,766 | ||||||||||||
Interest expense
|
— | (46,543 | ) | (108,547 | ) | (16,636 | ) | |||||||||
Exchange (losses)/gains
|
(1,661 | ) | (11,789 | ) | 41,717 | 6,393 | ||||||||||
Others, net
|
26,455 | 26,412 | 95,641 | 14,660 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income, net
|
189,940 | 227,472 | 140,315 | 21,505 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before tax
|
|
(539,033
|
)
|
|
(1,267,703
|
)
|
|
(3,000,648
|
)
|
|
(459,869
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Income tax
|
(25,988 | ) | (35,867 | ) | (53,369 | ) | (8,180 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss
|
|
(565,021
|
)
|
|
(1,303,570
|
)
|
|
(3,054,017
|
)
|
|
(468,049
|
)
|
||||
Accretion to redeemable noncontrolling interests
|
— | — | (4,292 | ) | (658 | ) | ||||||||||
Accretion to
Pre-IPO
Preferred Shares redemption value
|
(64,605 | ) | — | — | — | |||||||||||
Net loss attributable to noncontrolling interests
|
13,301 | 14,597 | 46,605 | 7,143 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss attributable to the Bilibili Inc.’s shareholders
|
|
(616,325
|
)
|
|
(1,288,973
|
)
|
|
(3,011,704
|
)
|
|
(461,564
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Net loss
|
|
(565,021
|
)
|
|
(1,303,570
|
)
|
|
(3,054,017
|
)
|
|
(468,049
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income/(loss):
Foreign currency translation adjustments
|
296,030 | 140,152 | (325,100 | ) | (49,823 | ) | ||||||||||
Total other comprehensive income/(loss)
|
|
296,030
|
|
|
140,152
|
|
|
(325,100
|
)
|
|
(49,823
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive loss
|
|
(268,991
|
)
|
|
(1,163,418
|
)
|
|
(3,379,117
|
)
|
|
(517,872
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Accretion to redeemable noncontrolling interests
|
— | — | (4,292 | ) | (658 | ) | ||||||||||
Accretion to
Pre-IPO
Preferred Shares redemption value
|
(64,605 | ) | — | — | — | |||||||||||
Net loss attributable to noncontrolling interests
|
13,301 | 14,597 | 46,605 | 7,143 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive loss attributable to the Bilibili Inc.’s shareholders
|
|
(320,295
|
)
|
|
(1,148,821
|
)
|
|
(3,336,804
|
)
|
|
(511,387
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Net loss per share, basic
|
(2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||
Net loss per share, diluted
|
(2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||
Net loss per ADS, basic
|
(2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||
Net loss per ADS, diluted
|
(2.64 | ) | (3.99 | ) | (8.71 | ) | (1.33 | ) | ||||||||
Weighted average number of ordinary shares, basic
|
233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||
Weighted average number of ordinary shares, diluted
|
233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||
Weighted average number of ADS, basic
|
233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||
Weighted average number of ADS, diluted
|
233,047,703 | 323,161,680 | 345,816,023 | 345,816,023 | ||||||||||||
Share-based compensation expenses included in
Cost of revenues
|
28,173 | 23,281 | 37,087 | 5,684 | ||||||||||||
Sales and marketing expenses
|
11,499 | 14,269 | 40,808 | 6,254 | ||||||||||||
General and administrative expenses
|
102,544 | 68,497 | 181,753 | 27,855 | ||||||||||||
Research and development expenses
|
38,977 | 66,503 | 126,250 | 19,349 |
Ordinary shares
|
Other permanent equities
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y Ordinary
Shares |
Class Z Ordinary
Shares |
Pre-IPO
Class A
Ordinary Shares
|
Pre-IPO
Class B
Ordinary Shares
|
Pre-IPO
Class C
Ordinary Shares
|
Pre-IPO
Class D
Ordinary Shares
|
Additional
paid-in
capital |
Statutory
reserves |
Accumulated
other comprehensive income |
Accumulated
deficit |
Noncontrolling
interests |
Total
shareholders’ (deficit)/equity |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,336,926
|
|
|
45
|
|
|
13,600,000
|
|
|
16,356
|
|
|
8,500,000
|
|
|
16,944
|
|
|
2,132,353
|
|
|
6,911
|
|
|
208,884
|
|
|
4,075
|
|
|
30,047
|
|
|
(2,222,774
|
)
|
|
—
|
|
|
(1,939,512
|
)
|
||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (551,720 | ) | (13,301 | ) | (565,021 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based
compensation
|
— | — | — | — | — | — | — | — | — | — | — | — | 178,343 | — | — | — | 2,850 | 181,193 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share issuance upon initial public offering and
follow-on
offering, net of issuance costs of US$6,333
|
— | — | 67,063,451 | 43 | — | — | — | — | — | — | — | — | 4,952,563 | — | — | — | — | 4,952,606 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redesignation of
Pre-IPO
Ordinary Shares into Class Y and Class Z Ordinary Shares upon initial public offering
|
84,260,279 | 52 | 9,309,000 | 6 | (69,336,926 | ) | (45 | ) | (13,600,000 | ) | (16,356 | ) | (8,500,000 | ) | (16,944 | ) | (2,132,353 | ) | (6,911 | ) | 40,198 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Redesignation of
Pre-IPO
Preferred Shares into Class Y and Class Z Ordinary Shares upon initial public offering
|
1,104,535 | 1 | 141,808,970 | 89 | — | — | — | — | — | — | — | — | 4,079,558 | — | — | — | — | 4,079,648 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-IPO
Preferred Shares redemption value accretion
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (64,605 | ) | — | (64,605 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital injection in subsidiaries by noncontrolling interests
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 22,198 | 22,198 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions of subsidiaries
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 228,659 | 228,659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share issuance from exercise of share options
|
— | — | 8,141,654 | 6 | — | — | — | — | — | — | — | — | — | — | — | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Appropriation to statutory reserves
|
— | — | — | — | — | — | — | — | — | — | — | — | — | 3,591 | — | (3,591 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | 296,030 | — | — | 296,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018
|
|
85,364,814
|
|
|
53
|
|
|
226,323,075
|
|
|
144
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,459,546
|
|
|
7,666
|
|
|
326,077
|
|
|
(2,842,690
|
)
|
|
240,406
|
|
|
7,191,202
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
||||||||||||||||||||||||||||||||||||||||
Class Y Ordinary
Shares |
Class Z Ordinary
Shares |
Additional
paid-in
capital |
Statutory
reserves |
Accumulated other
comprehensive income |
Accumulated
deficit |
Noncontrolling
interests |
Total
shareholders’ equity |
|||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
|||||||||||||||||||||||||||||||||
Balance at December 31, 2018
|
|
85,364,814
|
|
|
53
|
|
|
226,323,075
|
|
|
144
|
|
|
9,459,546
|
|
|
7,666
|
|
|
326,077
|
|
|
(2,842,690
|
)
|
|
240,406
|
|
|
7,191,202
|
|
||||||||||
Net loss
|
— | — | — | — | — | — | — | (1,288,973 | ) | (14,597 | ) | (1,303,570 | ) | |||||||||||||||||||||||||||
Share-based
compensation
|
— | — | — | — | 172,550 | — | — | — | — | 172,550 | ||||||||||||||||||||||||||||||
Issuance of ordinary shares, net of issuance costs of US$9,376
|
— | — | 14,173,813 | 10 | 1,647,701 | — | — | — | — | 1,647,711 | ||||||||||||||||||||||||||||||
Acquisition of a subsidiary
|
— | — | — | — | — | — | — | — | 30,000 | 30,000 | ||||||||||||||||||||||||||||||
Consolidation of an entity under common control (Note 24)
|
— | — | — | — | (488,463 | ) | — | — | (8,146 | ) | 426,448 | (70,161 | ) | |||||||||||||||||||||||||||
Purchase of noncontrolling interests
|
— | — | — | — | (73,144 | ) | — | — | — | (102,480 | ) | (175,624 | ) | |||||||||||||||||||||||||||
Share issuance from exercise of share options
|
— | — | 2,254,453 | 1 | — | — | — | — | — | 1 | ||||||||||||||||||||||||||||||
Deconsolidation of a subsidiary
|
— | — | — | — | — | — | — | — | 4,199 | 4,199 | ||||||||||||||||||||||||||||||
Appropriation to statutory reserves
|
— | — | — | — | — | 5,797 | — | (5,797 | ) | — | — | |||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
— | — | — | — | — | — | 140,152 | — | — | 140,152 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at December 31, 2019
|
|
85,364,814
|
|
|
53
|
|
|
242,751,341
|
|
|
155
|
|
|
10,718,190
|
|
|
13,463
|
|
|
466,229
|
|
|
(4,145,606
|
)
|
|
583,976
|
|
|
7,636,460
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
||||||||||||||||||||||||||||||||||||||||
Class Y Ordinary
Shares |
Class Z Ordinary
Shares |
Additional
paid-in
capital |
Statutory
reserves |
Accumulated other
comprehensive income |
Accumulated
deficit |
Noncontrolling
interests |
Total
shareholders’ equity |
|||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
|||||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
|
85,364,814
|
|
|
53
|
|
|
242,751,341
|
|
|
155
|
|
|
10,718,190
|
|
|
13,463
|
|
|
466,229
|
|
|
(4,145,606
|
)
|
|
583,976
|
|
|
7,636,460
|
|
||||||||||
Net loss
|
— | — | — | — | — | — | — | (3,007,412 | ) | (46,605 | ) | (3,054,017 | ) | |||||||||||||||||||||||||||
Impact of adoption of credit loss guidance
|
— | — | — | — | — | — | — | (17,900 | ) | — | (17,900 | ) | ||||||||||||||||||||||||||||
Share-based compensation
|
— | — | — | — | 385,898 | — | — | — | — | 385,898 | ||||||||||||||||||||||||||||||
Share issuance from exercise of share options
|
— | — | 4,491,566 | 3 | — | — | — | — | — | 3 | ||||||||||||||||||||||||||||||
Issuance ordinary shares related to long-term investment
|
— | — | — | — | 277,467 | — | — | — | — | 277,467 | ||||||||||||||||||||||||||||||
Issuance of ordinary shares, net of issuance costs of US$563
|
— | — | 17,310,696 | 12 | 2,817,446 | — | — | — | — | 2,817,458 | ||||||||||||||||||||||||||||||
Shares redesignation
|
(1,649,700 | ) | (1 | ) | 1,649,700 | 1 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Accretion to redeemable noncontrolling interests
|
— | — | — | — | (4,292 | ) | — | — | — | (1,672 | ) | (5,964 | ) | |||||||||||||||||||||||||||
Capital injection in subsidiaries by noncontrolling interests
|
— | — | — | — | — | — | — | — | 21,463 | 21,463 | ||||||||||||||||||||||||||||||
Acquisition of subsidiaries
|
— | — | 270,435 | * | 120,865 | — | — | — | 41,627 | 162,492 | ||||||||||||||||||||||||||||||
Purchase of noncontrolling interests
|
— | — | 1,731,100 | 1 | 300,728 | — | — | — | (416,785 | ) | (116,056 | ) | ||||||||||||||||||||||||||||
Appropriation to statutory reserves
|
— | — | — | — | — | 4,421 | — | (4,421 | ) | — | — | |||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
— | — | — | — | — | — | (325,100 | ) | — | — | (325,100 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at December 31, 2020
|
|
83,715,114
|
|
|
52
|
|
|
268,204,838
|
|
|
172
|
|
|
14,616,302
|
|
|
17,884
|
|
|
141,129
|
|
|
(7,175,339
|
)
|
|
182,004
|
|
|
7,782,204
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Less than 1.
|
For the Year Ended December 31,
|
||||||||||||||||
2018
|
2019
|
2020
|
2020
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
Note 2(e)
|
|||||||||||||
Cash flows from operating activities:
|
||||||||||||||||
Net loss
|
(565,021 | ) | (1,303,570 | ) | (3,054,017 | ) | (468,049 | ) | ||||||||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||||||||||
Depreciation of property and equipment
|
99,714 | 191,784 | 326,512 | 50,040 | ||||||||||||
Amortization of intangible assets
|
542,731 | 905,613 | 1,395,129 | 213,813 | ||||||||||||
Amortization of
right-of-use
|
— | 70,712 | 96,235 | 14,749 | ||||||||||||
Amortization of debt issuance costs
|
— | 9,117 | 19,291 | 2,956 | ||||||||||||
Share-based
compensation expenses
|
181,193 | 172,550 | 385,898 | 59,142 | ||||||||||||
Allowance for doubtful accounts
|
10,904 | 9,396 | 99,165 | 15,198 | ||||||||||||
Inventory provision
|
— | 5,987 | 6,218 | 953 | ||||||||||||
Deferred income taxes
|
— | (10,479 | ) | (13,466 | ) | (2,064 | ) | |||||||||
Unrealized exchange
losses /(gains)
|
497 | 2,636 | (3,018 | ) | (463 | ) | ||||||||||
Unrealized fair value changes of
short-term
investments
|
(1,799 | ) | 17,939 | (39,470 | ) | (6,049 | ) | |||||||||
Fair value changes of long-term investments
|
2,072 | 18,444 | (11,171 | ) | (1,712 | ) | ||||||||||
Gain on disposal of long-term investments and subsidiaries
|
— | (148,776 | ) | — | — | |||||||||||
Loss from equity method investments
|
— | 24,173 | 50,531 | 7,744 | ||||||||||||
Revaluation of previously held equity interests
|
(144,434 | ) | — | — | — | |||||||||||
Impairments of long-term investments
|
46,375 | 5,900 | 8,000 | 1,226 | ||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable
|
65,612 | (398,968 | ) | (417,237 | ) | (63,944 | ) | |||||||||
Amount due from related parties
|
35,118 | 7,382 | 17,015 | 2,608 | ||||||||||||
Prepayments and other assets
|
(540,647 | ) | (508,515 | ) | (610,592 | ) | (93,577 | ) | ||||||||
Other long-term assets
|
— | (360,497 | ) | (245,224 | ) | (37,582 | ) | |||||||||
Accounts payable
|
345,917 | 586,864 | 816,103 | 125,073 | ||||||||||||
Salary and welfare payable
|
95,452 | 101,788 | 374,442 | 57,386 | ||||||||||||
Taxes payable
|
13,708 | 23,114 | 54,381 | 8,334 | ||||||||||||
Amount due to related parties
|
44,607 | (50,331 | ) | — | — | |||||||||||
Deferred revenue
|
398,623 | 353,997 | 734,786 | 112,611 | ||||||||||||
Accrued liabilities and other payables
|
106,664 | 277,875 | 651,651 | 99,869 | ||||||||||||
Other long-term liabilities
|
— | 190,416 | 111,941 | 17,156 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by operating activities
|
|
737,286
|
|
|
194,551
|
|
|
753,103
|
|
|
115,418
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Cash flows from investing activities:
|
||||||||||||||||
Purchase of property and equipment
|
(293,566 | ) | (296,044 | ) | (602,122 | ) | (92,279 | ) | ||||||||
Purchase of intangible assets
|
(1,040,125 | ) | (1,268,830 | ) | (1,636,877 | ) | (250,862 | ) | ||||||||
Purchase of
short-term
investments
|
(6,666,731 | ) | (9,973,879 | ) | (26,731,176 | ) | (4,096,732 | ) | ||||||||
Maturities of
short-term
investments
|
6,252,151 | 9,993,525 | 24,921,538 | 3,819,393 | ||||||||||||
Cash consideration paid for purchase of subsidiaries, net of cash acquired
|
(135,822 | ) | (719,909 | ) | (498,854 | ) | (76,453 | ) | ||||||||
Cash paid for
long-term
investments including loans
|
(565,137 | ) | (1,226,794 | ) | (1,261,161 | ) | (193,281 | ) | ||||||||
Repayment of loans from investees
|
— | 11,000 | 3,500 | 536 | ||||||||||||
Cash received from disposal of long-term investments
|
1,250 | 566,554 | 135,254 | 20,729 | ||||||||||||
Impact to cash resulting from deconsolidation of a subsidiary
|
— | (959 | ) | — | — | |||||||||||
Placements of time deposits
|
(750,473 | ) | (4,920,099 | ) | (10,907,296 | ) | (1,671,616 | ) | ||||||||
Maturities of time deposits
|
2,059 | 3,877,158 | 7,670,373 | 1,175,536 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash used in investing activities
|
|
(3,196,394
|
)
|
|
(3,958,277
|
)
|
|
(8,906,821
|
)
|
|
(1,365,029
|
)
|
||||
|
|
|
|
|
|
|
|
|||||||||
Cash flows from financing activities:
|
||||||||||||||||
Proceeds of short-term loans
|
— | 141,857 | 200,000 | 30,651 | ||||||||||||
Repayment of
short-term
loans
|
— | (100,000 | ) | (100,000 | ) | (15,326 | ) | |||||||||
P
urchase of noncontrolling interests
|
— | (121,325 | ) | (280,271 | ) | (42,952 | ) | |||||||||
Capital injections from noncontrolling interests
|
22,198 | 154,492 | 103,450 | 15,854 | ||||||||||||
Proceeds from exercise of employees’ share options
|
6 | 1 | 3 | * | ||||||||||||
Proceeds from issuance of ordinary shares, net of issuance costs of US$6,333, US$9,376 and US$563, respectively
|
4,952,606 | 1,647,711 | 2,817,458 | 431,794 | ||||||||||||
Proceeds from issuance of convertible senior notes, net of issuance costs of US$11,805 and US$13,857, respectively
|
— | 3,356,106 | 5,594,779 | 857,437 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by financing activities
|
|
4,974,810
|
|
|
5,078,842
|
|
|
8,335,419
|
|
|
1,277,458
|
|
||||
|
|
|
|
|
|
|
|
|||||||||
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies
|
261,447 | 107,513 | (466,252 | ) | (71,456 | ) | ||||||||||
Net increase/(decrease) in cash and cash equivalents
|
2,777,149 | 1,422,629 | (284,551 | ) | (43,609 | ) | ||||||||||
Cash and cash equivalents at beginning of the year
|
762,882 | 3,540,031 | 4,962,660 | 760,561 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents at end of the year
|
3,540,031 | 4,962,660 | 4,678,109 | 716,952 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Supplemental disclosures of cash flows information:
|
||||||||||||||||
Cash paid for income taxes, net of tax refund
|
15,765 | 33,734 | 54,022 | 8,279 | ||||||||||||
Cash paid for interest expense
|
— | 26,203 | 86,167 | 13,206 | ||||||||||||
Supplemental schedule of
non-cash
investing and financing activities:
|
Accretion to
Pre-IPO
Preferred Shares redemption value
|
64,605 | — | — | — | ||||||||||||
Accretion to redeemable noncontrolling interests
|
— | — | 5,964 | 914 | ||||||||||||
Fixed assets purchases financed by accounts payable
|
40,277 | 55,759 | 25,797 | 3,954 | ||||||||||||
Acquisitions and investments financed by accrued liabilities and other payables
|
502,279 | 79,059 | 125,363 | 19,213 | ||||||||||||
Intangible assets purchases financed by accounts payable
|
415,780 | 365,187 | 746,404 | 114,391 | ||||||||||||
Issuance of ordinary shares in the business combination, purchase of noncontrolling interests and investment addition
|
— | — | 889,957 | 136,392 |
1.
|
Operations and Reorganization
|
Major Subsidiaries
|
Place and Year of
Incorporation
|
Percentage of Direct or
Indirect
Economic Ownership
|
Principal Activities
|
|||
Bilibili HK Limited
|
Hong Kong Y2014 | 100 | Investment holding | |||
Hode HK Limited
|
Hong Kong Y2014 | 100 | Investment holding | |||
Bilibili Co., Ltd.
|
Japan Y2014 | 100 | Business development | |||
Hode Shanghai Limited (“Hode Shanghai”)
|
PRC Y2014 | 100 | Technology development | |||
Shanghai Bilibili Technology Co., Ltd.
|
PRC Y2016 | 100 | Technology development |
Major VIEs and VIEs’ subsidiaries
|
Place and
Year of
Incorporation
Acquisition
|
Percentage of
Direct or Indirect
Economic
Ownership
|
Principal Activities
|
|||
Shanghai Hode Information Technology Co., Ltd. (“Hode Information Technology”)
|
PRC Y2013 | 100 | Mobile game operation | |||
Shanghai Kuanyu Digital Technology Co., Ltd. (“Shanghai Kuanyu”)
|
PRC Y2014 | 100 | Video distribution and game distribution | |||
Sharejoy Network Technology Co., Ltd. (“Sharejoy Network”)
|
PRC Y2014 | 100 | Game distribution | |||
Shanghai Hehehe Culture Communication Co., Ltd. (“Shanghai Hehehe”)
|
PRC Y2014 | 100 | Comics distribution | |||
Shanghai Anime Tamashi Cultural Media Co., Ltd. (“Shanghai Anime Tamashi”)
|
PRC Y2015 | 100 |
E-commerce
|
• |
Reorganization
|
1.
|
Operations and Reorganization (Continued)
|
• |
Initial public offering (“IPO”) and
follow-on
offerings
|
1.
|
Operations and Reorganization (Continued)
|
1.
|
Operations and Reorganization (Continued)
|
1.
|
Operations and Reorganization (Continued)
|
1.
|
Operations and Reorganization (Continued)
|
• |
revoke the Group’s business and/or operating licenses;
|
• |
impose fines on the Group;
|
• |
confiscate any of the Group’s income that they deem to be obtained through illegal operations;
|
• |
discontinue or place restrictions or onerous conditions on the Group’s operations
|
• |
restrict the Group’s right to collect revenues;
|
• |
shut down the Group’s servers or block the Group’s app/websites;
|
• |
require the Group to restructure the operations,
re-apply
for the necessary licenses or relocate the Group’s businesses, staff and assets;
|
• |
impose additional conditions or requirements with which the Group may not be able to comply; or
|
• |
take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business.
|
1.
|
Operations and Reorganization (Continued)
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
||||||||||
RMB in thousands
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
152,295 | 201,310 | 349,190 | |||||||||
Time deposits
|
10,265 | 7,674 | 22,161 | |||||||||
Accounts receivable, net
|
130,823 | 223,438 | 343,099 | |||||||||
Amount due from the Company and its subsidiaries
|
165,559 | 127,944 | 173,596 | |||||||||
Amount
due from related parties
|
— | 170,535 | 59,117 | |||||||||
Prepayments and other current assets
|
841,018 | 999,780 | 1,383,648 | |||||||||
Short-term
investments
|
252,943 | 672,787 | 1,175,309 | |||||||||
Non-current
assets:
|
||||||||||||
Long-term
investments, net
|
843,149 | 794,549 | 1,223,943 | |||||||||
Other
non-current
assets
|
943,373 | 1,483,983 | 2,183,411 | |||||||||
|
|
|
|
|
|
|||||||
Total assets
|
|
3,339,425
|
|
|
4,682,000
|
|
|
6,913,474
|
|
|||
|
|
|
|
|
|
|||||||
Current liabilities:
|
||||||||||||
Accounts payable
|
1,078,070 | 1,454,924 | 2,332,372 | |||||||||
Salary and welfare payable
|
94,699 | 128,343 | 288,686 | |||||||||
Taxes payable
|
27,152 | 33,611 | 106,492 | |||||||||
Short-term loans
|
— | — | 100,000 | |||||||||
Deferred revenue
|
937,086 | 1,234,508 | 1,769,992 | |||||||||
Amount due to the Company and its subsidiaries
|
1,594,527 | 2,650,499 | 3,752,973 | |||||||||
Accrued liabilities and other payables
|
318,568 | 222,078 | 449,370 | |||||||||
Amount due to related parties
|
23,054 | — | — | |||||||||
Non-current
liabilities:
|
||||||||||||
Other long-term liabilities
|
— | 23,108 | 19,640 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities
|
|
4,073,156
|
|
|
5,747,071
|
|
|
8,819,525
|
|
|||
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Net revenues:
|
||||||||||||
Revenue from third parties
|
3,691,219 | 6,056,332 | 9,651,207 | |||||||||
Revenue from the Company and its subsidiaries
|
443,405 | 531,830 | 667,765 | |||||||||
|
|
|
|
|
|
|||||||
Net revenues
|
|
4,134,624
|
|
|
6,588,162
|
|
|
10,318,972
|
|
|||
|
|
|
|
|
|
|||||||
Net loss
|
(587,932 | ) | (448,114 | ) | (853,970 | ) |
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Net cash provided by operating activities
|
636,972 | 271,299 | 1,476,494 | |||||||||
Net cash used in investing activities
|
(674,483 | ) | (1,518,931 | ) | (2,421,163 | ) | ||||||
Net cash provided by financing activities
|
130,592 | 1,300,740 | 1,090,287 |
1.
|
Operations and Reorganization (Continued)
|
2.
|
Significant Accounting Policies
|
a)
|
Basis of presentation
|
b)
|
Principles of consolidation
|
2.
|
Significant Accounting Policies (Continued)
|
c)
|
Use of estimates
|
d)
|
Functional currency and foreign currency translation
|
e)
|
Convenience Translation
|
2.
|
Significant Accounting Policies (Continued)
|
f)
|
Fair value measurements
|
a. |
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
b. |
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
c. |
Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
|
2.
|
Significant Accounting Policies (Continued)
|
g)
|
Cash and cash equivalents and time deposits
|
h)
|
Receivables, net
|
2.
|
Significant Accounting Policies (Continued)
|
h)
|
Receivables, net (Continued)
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Beginning balance prior to ASC 326
|
— | — | 17,696 | |||||||||
Impact of adoption to ASC 326
|
— | — | 17,900 | |||||||||
Beginning balance
|
4,516 | 14,420 | 35,596 | |||||||||
|
|
|
|
|
|
|||||||
Provisions
|
10,904 | 9,396 | 99,165 | |||||||||
Write-offs
|
(1,000 | ) | (6,120 | ) | (13,758 | ) | ||||||
Ending balance
|
|
14,420
|
|
|
17,696
|
|
|
121,003
|
|
|||
|
|
|
|
|
|
i)
|
Inventories, net
|
j)
|
Property and equipment, net
|
2.
|
Significant Accounting Policies (Continued)
|
k)
|
Intangible assets, net
|
Licensed copyrights of content
|
|
shorter of the licensed period or projected useful life of the content, mainly vary from 1 to 8 years
|
License rights of mobile games
|
|
shorter of the licensed period or projected useful life of mobile games, mainly vary from 1 to 3 years
|
Intellectual property and others
|
|
1
-
10 years, based on the underlying intangible assets expected to contribute to the future cash flows
|
l)
|
Goodwill
|
2.
|
Significant Accounting Policies (Continued)
|
m)
|
Impairment of long-lived assets other than goodwill
|
n)
|
Research and development expenses
|
o)
|
Sales and marketing expenses
|
p)
|
General and administrative expenses
|
2.
|
Significant Accounting Policies (Continued)
|
q)
|
Leases
|
2.
|
Significant Accounting Policies (Continued)
|
q)
|
Leases (Continued)
|
December 31, 2020
|
||||
RMB in thousands
|
||||
2021
|
156,869 | |||
2022
|
171,923 | |||
2023
|
106,253 | |||
2024
|
43,575 | |||
2025 and thereafter
|
17,813 | |||
|
|
|||
Total future lease payments
|
496,433 | |||
Impact of discounting remaining lease payments
|
(42,642 | ) | ||
|
|
|||
Total lease liabilities
|
453,791 | |||
|
|
For the Year Ended December 31,
|
||||||||
2019
|
2020
|
|||||||
RMB in thousands
|
||||||||
Cash payments for operating leases
|
67,535 | 107,772 | ||||||
Right-of-use
|
96,692 | 260,867 | ||||||
|
|
|
|
2.
|
Significant Accounting Policies (Continued)
|
q)
|
Leases (Continued)
|
Operating Leases*
|
||||
RMB in thousands
|
||||
2019
|
65,400 | |||
2020
|
72,230 | |||
2021
|
73,054 | |||
2022
|
69,681 | |||
Beyond 2022
|
19,544 |
* |
Amounts are based on ASC 840,
Leases
, Leases
|
r)
|
Share-based compensation
|
2.
|
Significant Accounting Policies (Continued)
|
s)
|
Employee benefits
|
t)
|
Investments
|
2.
|
Significant Accounting Policies (Continued)
|
t)
|
Investments (Continued)
|
2.
|
Significant Accounting Policies (Continued)
|
u)
|
Taxation
|
v)
|
Revenue recognition
|
2.
|
Significant Accounting Policies (Continued)
|
v)
|
Revenue recognition (continued)
|
2.
|
Significant Accounting Policies (Continued)
|
v)
|
Revenue recognition (continued)
|
2.
|
Significant Accounting Policies (Continued)
|
v)
|
Revenue recognition (continued)
|
2.
|
Significant Accounting Policies (Continued)
|
v)
|
Revenue recognition (continued)
|
2.
|
Significant Accounting Policies (Continued)
|
v)
|
Revenue recognition (continued)
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Mobile games
|
2,936,331 | 3,597,809 | 4,803,382 | |||||||||
Value-added services (formerly known as Live broadcasting and VAS)
|
585,643 | 1,641,043 | 3,845,663 | |||||||||
Advertising
|
463,490 | 817,016 | 1,842,772 | |||||||||
E-commerce and others
|
143,467 | 722,054 | 1,507,159 | |||||||||
|
|
|
|
|
|
|||||||
Total net revenues
|
|
4,128,931
|
|
|
6,777,922
|
|
|
11,998,976
|
|
|||
|
|
|
|
|
|
3.
|
Significant Accounting Policies (Continued)
|
w)
|
Cost of revenues
|
x)
|
Related parties
|
2.
|
Significant Accounting Policies (Continued)
|
y)
|
Net loss per share
|
z)
|
Statutory reserves
|
For the Year Ended
December 31, |
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Appropriations to general reserve funds and statutory surplus funds
|
3,591 | 5,797 | 4,421 |
2.
|
Significant Accounting Policies (Continued)
|
aa)
|
Noncontrolling interests
|
bb)
|
Comprehensive loss
|
cc)
|
Segment reporting
|
dd)
|
Business combinations
|
2.
|
Significant Accounting Policies (Continued)
|
dd)
|
Business combinations (Continued)
|
ee)
|
Recently issued accounting pronouncements
|
3.
|
Concentrations and Risks
|
a)
|
Telecommunications service provider
|
For the Year Ended
December 31, |
||||||||||||
2018
|
2019
|
2020
|
||||||||||
Total number of telecommunications service providers
|
88 | 107 | 116 | |||||||||
Number of service providers providing 10% or more of the Group’s servers and bandwidth expenditure
|
3 | 2 | 3 | |||||||||
Total percentage of the Group’s servers and bandwidth expenditure provided by 10% or greater service providers
|
48 | % | 45 | % | 55 | % |
b)
|
Foreign currency exchange rate risk
|
c)
|
Credit risk
|
RMB in thousands
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
|||||||||
Distribution channel A
|
63,762 | 118,860 | 146,907 |
3.
|
Concentrations and Risks (Continued)
|
d)
|
Major customers and supplying channels
|
e)
|
Mobile games
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
Mobile game 1
|
53 | % | 31 | % | 11 | % |
4.
|
Prepayments and Other Current Assets
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
||||||||||
RMB in thousands
|
||||||||||||
Prepayments for revenue sharing cost*
|
462,883 | 542,971 | 782,518 | |||||||||
Prepayments for content cost
|
130,619 | 226,500 | 195,175 | |||||||||
Prepayments for sales tax
|
80,487 | 157,244 | 202,025 | |||||||||
Interest income receivable
|
26,812 | 93,688 | 6,396 | |||||||||
Inventories, net
|
55,032 | 69,914 | 160,006 | |||||||||
Loans to investees or ongoing investments
|
84,075 | 64,463 | 187,672 | |||||||||
Prepayments of marketing and other operational expenses
|
33,198 | 53,246 | 64,068 | |||||||||
Prepayments /receivables relating to jointly invested content
|
44,951 | 43,838 | 28,664 | |||||||||
Deposits
|
20,447 | 26,301 | 51,661 | |||||||||
Prepayments to inventory suppliers
|
12,901 | 9,058 | 19,970 | |||||||||
Others
|
39,446 | 28,678 | 67,632 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
990,851
|
|
|
1,315,901
|
|
|
1,765,787
|
|
|||
|
|
|
|
|
|
* |
App stores retain commissions on each purchase made by the users through the App stores. The Group is also obligated to pay ongoing licensing fees in form of royalties to the third-party game developers. Licensing fees consist of fees that the Group pays to content owners for the use of licensed content, including trademarks and copyrights, in the development of games. Licensing fees are either paid in advance and recorded on the balance sheets as prepayments or accrued as incurred and subsequently paid. Additionally, the Group defers the revenue from licensed mobile games over the estimated average playing period of paying players given that there is an implied obligation to provide
on-going
services to
end-users.
The related direct and incremental platform commissions as well as game developers’ licensing fees are deferred and reported in “Prepayments and Other Current Assets” on the consolidated balance sheets.
|
5.
|
Short-term Investments
|
December 31,
2018
|
December 31,
2019
|
December 31,
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Financial products
|
858,021 | 1,070,113 | 2,866,643 | |||||||||
Investments in publicly traded companies
|
— | 80,918 | 434,609 | |||||||||
Money market funds
|
87,317 | 109,779 | 55,937 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
945,338
|
|
|
1,260,810
|
|
|
3,357,189
|
|
|||
|
|
|
|
|
|
6.
|
Property and Equipment, Net
|
December 31,
2018
|
December 31,
2019
|
December 31,
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Leasehold improvements
|
51,186 | 76,772 | 118,581 | |||||||||
Servers and computers
|
481,695 | 765,110 | 1,286,310 | |||||||||
Others
|
19,127 | 23,211 | 30,750 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
552,008
|
|
|
865,093
|
|
|
1,435,641
|
|
|||
Less: accumulated depreciation
|
(157,110 | ) | (349,006 | ) | (673,700 | ) | ||||||
|
|
|
|
|
|
|||||||
Net book value
|
|
394,898
|
|
|
516,087
|
|
|
761,941
|
|
|||
|
|
|
|
|
|
7.
|
Intangible Assets, Net
|
As of December 31, 2018
|
||||||||||||
Gross
carrying value |
Accumulated
amortization |
Net
carrying value |
||||||||||
RMB in thousands
|
||||||||||||
Licensed copyrights of content
|
1,997,175 | (921,565 | ) | 1,075,610 | ||||||||
License rights of mobile games
|
18,098 | (15,163 | ) | 2,935 | ||||||||
Intellectual property and others
|
412,202 | (71,312 | ) | 340,890 | ||||||||
|
|
|
|
|
|
|||||||
Total
|
|
2,427,475
|
|
|
(1,008,040
|
)
|
|
1,419,435
|
|
|||
|
|
|
|
|
|
As of December 31, 2019
|
||||||||||||
Gross
carrying value |
Accumulated
amortization |
Net
carrying value |
||||||||||
RMB in thousands
|
||||||||||||
Licensed copyrights of content
|
3,072,959 | (1,736,608 | ) | 1,336,351 | ||||||||
License rights of mobile games
|
71,703 | (35,863 | ) | 35,840 | ||||||||
Intellectual property and others
|
434,089 | (148,947 | ) | 285,142 | ||||||||
|
|
|
|
|
|
|||||||
Total
|
|
3,578,751
|
|
|
(1,921,418
|
)
|
|
1,657,333
|
|
|||
|
|
|
|
|
|
As of December 31, 2020
|
||||||||||||
Gross
carrying value |
Accumulated
amortization |
Net
carrying value |
||||||||||
RMB in thousands
|
||||||||||||
Licensed copyrights of content
|
4,556,683 | (2,891,742 | ) | 1,664,941 | ||||||||
License rights of mobile games
|
299,786 | (119,493 | ) | 180,293 | ||||||||
Intellectual property and others
|
753,282 | (241,557 | ) | 511,725 | ||||||||
|
|
|
|
|
|
|||||||
Total
|
|
5,609,751
|
|
|
(3,252,792
|
)
|
|
2,356,959
|
|
|||
|
|
|
|
|
|
Intangible assets amortization expense
|
||||
RMB in thousands
|
||||
2021
|
843,542 | |||
2022
|
575,491 | |||
2023
|
340,301 | |||
2024
|
205,238 | |||
2025
|
134,128 | |||
Thereafter
|
258,259 | |||
|
|
|||
Total expected amortization expense
|
|
2,356,959
|
|
|
|
|
8.
|
Goodwill
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
||||||||||
RMB in thousands
|
||||||||||||
Beginning balance
|
50,967 | 941,488 | 1,012,026 | |||||||||
Additions (Note 24)
|
890,521 | 70,538 | 283,760 | |||||||||
|
|
|
|
|
|
|||||||
Ending balance
|
|
941,488
|
|
|
1,012,026
|
|
|
1,295,786
|
|
|||
|
|
|
|
|
|
9.
|
Long-term Investments, Net
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
||||||||||
RMB in thousands
|
||||||||||||
Equity investments accounted for using the measurement alternative
|
793,149 | 666,025 | 1,791,393 | |||||||||
Equity investments accounted for using the equity method
|
— | 279,854 | 188,199 | |||||||||
Investments accounted for at fair value
|
186,838 | 305,250 | 253,346 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
979,987
|
|
|
1,251,129
|
|
|
2,232,938
|
|
|||
|
|
|
|
|
|
10.
|
Taxation
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Current income tax expenses
|
14,909 | 29,452 | 48,081 | |||||||||
Withholding income tax expenses
|
11,079 | 16,894 | 18,754 | |||||||||
Deferred tax benefits
|
— | (10,479 | ) | (13,466 | ) | |||||||
|
|
|
|
|
|
|||||||
Total
|
|
25,988
|
|
|
35,867
|
|
|
53,369
|
|
|||
|
|
|
|
|
|
a)
|
Income taxes
|
10.
|
Taxation (Continued)
|
a)
|
Income taxes (Continued)
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
%
|
%
|
%
|
||||||||||
Statutory income tax rate
|
25.00 | 25.00 | 25.00 | |||||||||
Permanent differences
|
(3.76 | ) | (0.83 | ) | 0.60 | |||||||
Tax rate difference from statutory rate in other jurisdictions*
|
(0.92 | ) | (0.39 | ) | (3.90 | ) | ||||||
Tax effect of preferential tax treatments
|
(3.15 | ) | (8.48 | ) | (8.29 | ) | ||||||
Withholding tax
|
(2.05 | ) | (1.33 | ) | (0.63 | ) | ||||||
Change in valuation allowance
|
(19.94 | ) | (16.80 | ) | (14.56 | ) | ||||||
|
|
|
|
|
|
|||||||
Effective income tax rate
|
|
(4.82
|
)
|
|
(2.83
|
)
|
|
(1.78
|
)
|
|||
|
|
|
|
|
|
* |
It is primarily due to the tax effect of the Company as a
tax-exempt
entity incorporated in the Cayman Islands.
|
RMB in
thousands |
||||
Loss expiring in 2021
|
43,751 | |||
Loss expiring in 2022
|
44,711 | |||
Loss expiring in 2023
|
83,876 | |||
Loss expiring in 2024
|
208,366 | |||
Loss expiring in 2025 and thereafter
|
3,201,799 | |||
|
|
|||
Total
|
|
3,582,503
|
|
|
|
|
10.
|
Taxation (Continued)
|
b)
|
Sales tax
|
c)
|
Deferred tax assets and liabilities
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
||||||||||
RMB in thousands
|
||||||||||||
Deferred tax assets:
|
||||||||||||
Deferred revenue
|
90,311 | 95,806 | 163,620 | |||||||||
Accrued expenses and other payables
|
25,984 | 82,351 | 128,886 | |||||||||
Advertising expenses in excess of deduction limit
|
312 | 7,507 | 65,674 | |||||||||
Net operating tax loss carry forwards
|
176,439 | 360,975 | 621,035 | |||||||||
Others
|
909 | 1,199 | 19,036 | |||||||||
|
|
|
|
|
|
|||||||
Total deferred tax assets
|
|
293,955
|
|
|
547,838
|
|
|
998,251
|
|
|||
|
|
|
|
|
|
|||||||
Less: valuation allowance
|
(293,955 | ) | (537,359 | ) | (977,333 | ) | ||||||
|
|
|
|
|
|
|||||||
Net deferred tax assets
|
|
—
|
|
|
10,479
|
|
|
20,918
|
|
|||
|
|
|
|
|
|
|||||||
Deferred tax liabilities
|
||||||||||||
Acquired intangible assets (Note 24)
|
|
—
|
|
|
—
|
|
(46,112 | ) | ||||
|
|
|
|
|
|
|||||||
Total deferred tax liabilities
|
|
—
|
|
|
—
|
|
|
(46,112
|
)
|
|||
|
|
|
|
|
|
Balance at
January 1 |
Re-measurement due to
applicable preferential tax rate |
Addition
|
Expiration of loss carry
forward and impact of disposal of subsidiaries |
Balance at
December 31 |
||||||||||||||||
RMB in thousands
|
||||||||||||||||||||
2018 | (157,264 | ) | 22,502 | (159,690 | ) | 497 | (293,955 | ) | ||||||||||||
2019 | (293,955 | ) | — | (248,896 | ) | 5,492 | (537,359 | ) | ||||||||||||
2020 | (537,359 | ) | 105 | (484,445 | ) | 44,366 | (977,333 | ) |
10.
|
Taxation (Continued)
|
d)
|
Withholding income tax on dividends
|
11.
|
Taxes Payable
|
December 31,
2018 |
December 31,
2019
|
December 31,
2020
|
||||||||||
RMB in thousands
|
||||||||||||
VAT payable
|
13,920 | 16,519 | 50,881 | |||||||||
EIT payable
|
6,913 | 20,599 | 31,181 | |||||||||
Withholding individual income taxes for employees
|
7,844 | 12,941 | 20,465 | |||||||||
Withholding income tax payable
|
5,510 | 12,302 | 18,300 | |||||||||
Others
|
4,318 | 5,495 | 6,365 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
38,505
|
|
|
67,856
|
|
|
127,192
|
|
|||
|
|
|
|
|
|
12.
|
Accrued Liabilities and Other Payable
s
|
December 31,
2018 |
December 31,
2019 |
December 31,
2020 |
||||||||||
RMB in thousands
|
||||||||||||
Accrued marketing expenses
|
71,217 | 229,457 | 783,455 | |||||||||
Leasing liabilities - current portion
|
— | 95,901 | 150,402 | |||||||||
Consideration payable for acquisitions and investments
|
502,279 | 79,059 | 125,363 | |||||||||
Payables to producers and licensors
|
9,357 | 25,898 | 63,307 | |||||||||
Professional fees
|
13,492 | 22,562 | 38,573 | |||||||||
Other staff related cost
|
18,685 | 13,791 | 13,872 | |||||||||
Interest payable
|
— | 11,990 | 14,041 | |||||||||
Advances from/payables to third parties
|
21,966 | 76,893 | 5,869 | |||||||||
Others
|
33,446 | 20,212 | 42,794 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
670,442
|
|
|
575,763
|
|
|
1,237,676
|
|
|||
|
|
|
|
|
|
13.
|
Long-term Debt
|
13.
|
Long-term Debt (Continued)
|
December 31,
2019
|
December 31,
2020
|
Effective interest rate
|
||||||||||
Amounts
|
Amounts
|
|||||||||||
RMB in thousands
|
||||||||||||
US$500,000 1.375% notes due 2026
|
3,414,628 | 3,204,309 | 1.74 | % | ||||||||
US$800,000 1.25% notes due 2027
|
— | 5,136,613 | 1.52 | % | ||||||||
|
|
|
|
|||||||||
Carrying value
|
|
3,414,628
|
|
|
8,340,922
|
|
||||||
Unamortized discount and debt issuance costs
|
73,472 | 141,448 | ||||||||||
|
|
|
|
|||||||||
Total principal amounts of unsecured senior notes
|
|
3,488,100
|
|
|
8,482,370
|
|
||||||
|
|
|
|
14.
|
Ordinary Shares
|
15.
|
Pre-IPO
Preferred Shares
|
15.
|
Pre-IPO
Preferred Shares (Continued)
|
Pre-IPO
Series A
Preferred Shares |
Pre-IPO
Series A+
Preferred Shares |
Pre-IPO
Series B
Preferred Shares |
Pre-IPO
Series C
Preferred Shares |
Pre-IPO
Series C1
Preferred Shares |
Pre-IPO Series C2
Preferred Shares |
Pre-IPO
Series D1
Preferred Shares
|
Pre-IPO
Series D2
Preferred Shares
|
Total Mezzanine
Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number
of shares |
Amount
|
Number
of shares |
Amount
|
Number
of shares |
Amount
|
Number
of shares |
Amount
|
Number
of shares |
Amount
|
Number
of shares |
Amount
|
Number
of shares
|
Amount
|
Number
of shares
|
Amount
|
Number
of shares |
Amount
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
RMB in thousands, except for share data
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2017
|
|
7,078,502
|
|
|
16,625
|
|
|
14,643,281
|
|
|
85,681
|
|
|
22,794,876
|
|
|
325,559
|
|
|
27,996,184
|
|
|
797,355
|
|
|
42,585,304
|
|
|
1,442,351
|
|
|
954,605
|
|
|
36,763
|
|
|
13,101,189
|
|
|
586,385
|
|
|
13,759,564
|
|
|
724,324
|
|
|
142,913,505
|
|
|
4,015,043
|
|
||||||||||||||||||
Accretion to
Pre-IPO
Preferred Shares redemption value
|
— | 242 | — | 1,448 | — | 5,328 | — | 13,633 | — | 23,024 | — | 578 | — | 9,124 | — | 11,228 | — | 64,605 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redesignation of
Pre-IPO
Preferred Shares into Class Y Ordinary Shares
|
— | — | — | — | — | — | — | — | (1,104,535 | ) | (38,007 | ) | — | — | — | — | — | — | (1,104,535 | ) | (38,007 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Redesignation of
Pre-IPO
Preferred Shares into Class Z Ordinary Shares
|
(7,078,502 | ) | (16,867 | ) | (14,643,281 | ) | (87,129 | ) | (22,794,876 | ) | (330,887 | ) | (27,996,184 | ) | (810,988 | ) | (41,480,769 | ) | (1,427,368 | ) | (954,605 | ) | (37,341 | ) | (13,101,189 | ) | (595,509 | ) | (13,759,564 | ) | (735,552 | ) | (141,808,970 | ) | (4,041,641 | ) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
Employee Benefits
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Contributions to medical and pension schemes
|
158,113 | 215,553 | 195,655 | |||||||||
Other employee benefits
|
23,958 | 24,180 | 40,216 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
|
182,071
|
|
|
239,733
|
|
|
235,871
|
|
|||
|
|
|
|
|
|
17.
|
Share-based Compensation
|
a)
|
Description of share option plans
|
b)
|
Valuation assumptions
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
Expected volatility
|
47.8%-48.4%
|
49.6%-52.1%
|
50.1%-55.0%
|
|||||||||
Weighted average volatility
|
48.3% | 50.8% | 51.9% | |||||||||
Expected dividends
|
— | — | — | |||||||||
Risk-free rate
|
2.6%-2.8%
|
1.4%-2.4%
|
0.4%-0.7%
|
|||||||||
Contractual term (in years)
|
6 | 6 |
6-7
|
17.
|
Share-based Compensation (Continued)
|
(b)
|
Valuation assumptions (continued)
|
(c)
|
Share options activities
|
Employees
|
Senior
Management |
Consultants
|
Total
|
Weighted
Average Exercise Price |
Weighted
Average Remaining Contractual Life |
Aggregate
Intrinsic Value |
||||||||||||||||||||||
(In thousands)
|
(In thousands)
|
(In thousands)
|
(In thousands)
|
US$
|
(In years)
|
(RMB in
thousands) |
||||||||||||||||||||||
Outstanding at January 1, 2018
|
8,124 | 10,595 | 700 | 19,419 | 0.0001 | 4.80 | 880,197 | |||||||||||||||||||||
Granted
|
2,587 | 620 | — | 3,207 | 0.0001 | |||||||||||||||||||||||
Exercised
|
(2,387 | ) | (5,543 | ) | (212 | ) | (8,142 | ) | 0.0001 | |||||||||||||||||||
Forfeited
|
(683 | ) | (1,437 | ) | (50 | ) | (2,170 | ) | 0.0001 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Outstanding at December 31,
2018 |
7,641 | 4,235 | 438 | 12,314 | 0.0001 | 4.46 | 1,233,028 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Outstanding at January 1, 2019
|
7,641 | 4,235 | 438 | 12,314 | 0.0001 | 4.46 | 1,233,028 | |||||||||||||||||||||
Granted
|
2,464 | 730 | — | 3,194 | 0.0001 | |||||||||||||||||||||||
Exercised
|
(1,352 | ) | (710 | ) | (193 | ) | (2,255 | ) | 0.0001 | |||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Forfeited
|
(479 | ) | (600 | ) | — | (1,079 | ) | 0.0001 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Outstanding at December 31,
2019 |
8,274 | 3,655 | 245 | 12,174 | 0.0001 | 4.13 | 1,581,408 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Outstanding at January 1, 2020
|
8,274 | 3,655 | 245 | 12,174 | 0.0001 | 4.13 | 1,581,408 | |||||||||||||||||||||
Granted
|
6,966 | 8,700 | 50 | 15,716 | 2.9007 | |||||||||||||||||||||||
Exercised
|
(2,784 | ) | (1,643 | ) | (65 | ) | (4,492 | ) | 0.0001 | |||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Forfeited
|
(1,101 | ) | — | — | (1,101 | ) | 0.4234 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Outstanding at December 31,
2020 |
11,355 | 10,712 | 230 | 22,297 | 2.0236 | 5.41 | 12,177,047 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercisable at December 31,
2020 |
830 | 130 | 155 | 1,115 | 0.0001 | 2.97 | 623,376 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.
|
Net Loss per Share
|
18.
|
Net Loss per Share (Continued)
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands, except for share and per share data
|
||||||||||||
Numerator:
|
||||||||||||
Net loss
|
(565,021 | ) | (1,303,570 | ) | (3,054,017 | ) | ||||||
Accretion to redeemable noncontrolling interests
|
— | — | (4,292 | ) | ||||||||
Accretion to
Pre-IPO
Preferred Shares redemption value
|
(64,605 | ) | — | — | ||||||||
Net loss attributable to noncontrolling interests
|
13,301 | 14,597 | 46,605 | |||||||||
|
|
|
|
|
|
|||||||
Net loss attributable to Bilibili Inc.’s shareholders for basic/dilutive net loss per share calculation
|
(616,325 | ) | (1,288,973 | ) | (3,011,704 | ) | ||||||
|
|
|
|
|
|
|||||||
Denominator:
|
||||||||||||
Weighted average number of ordinary shares outstanding, basic
|
233,047,703 | 323,161,680 | 345,816,023 | |||||||||
Weighted average number of ordinary shares outstanding, diluted
|
233,047,703 | 323,161,680 | 345,816,023 | |||||||||
Net loss per share, basic
|
(2.64 | ) | (3.99 | ) | (8.71 | ) | ||||||
Net loss per share, diluted
|
(2.64 | ) | (3.99 | ) | (8.71 | ) |
19.
|
Commitments and Contingencies
|
(a)
|
Commitments
|
(b)
|
Litigation
|
20.
|
Related Party Transactions and Balances
|
For the Year Ended December 31,
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
RMB in thousands
|
||||||||||||
Purchases of goods and services
|
162,992 | 87,597 | 35,131 | |||||||||
Transfer of/
|
3,250 | 539,646 | (110,039 | ) | ||||||||
Purchase of noncontrolling interests of Chaodian Inc. (“Chaodian”) (See note 24)
|
— | — | 257,288 | |||||||||
Investment income*
|
— | 73,884 | — |
December 31, 2018
|
December 31, 2019
|
December 31, 2020
|
||||||||||
RMB in thousands
|
||||||||||||
Amount due from related parties
|
||||||||||||
Due from an investment fund*
|
— | 170,535 | 74,235 | |||||||||
Due from an equity investee**
|
— | 24,755 | 90,497 | |||||||||
|
|
|
|
|
|
|||||||
Total
|
— | 195,290 | 164,732 | |||||||||
|
|
|
|
|
|
|||||||
Amount due to related parties
|
50,331 | — | — | |||||||||
|
|
|
|
|
|
* |
The transactions in 2018 referred to the investments transferred to an entity controlled by the Group’s major shareholders. In June 2019, to focus the Company’s efforts and resources on its core businesses, the Company transferred several equity investments of the Group to an investment fund. The Group contributed a total of RMB220.0 million cash into this fund as a limited partner, which is accounted for as an equity method investment. The cost of the equity investments transferred was RMB465.8 million. The consideration was RMB539.6 million, which was based on the estimated fair value of the investments. The difference between the consideration and cost of the investments was recognized as investment income. In July 2020, the Company acquired certain equity interests of two investments from the investment fund. The consideration was RMB110.0 million. The balances due from an investment fund as of December 31, 2019 and December 31, 2020 were consideration receivables related to the equity investments transferred in 2019 and dividend receivables
,
which is non-trade in nature.
|
** |
The balances as of December 31, 2020 mainly represent interest-bearing loans and interest expenses of RMB105.6 million related to an equity investee
,
which is non-trade in nature
The annual interest rates of the loans were 2.8% and all the loans were within one year.
and partially offset by the trade payables to the equity investee.
|
|
|
|
Amount due to related parties as of December 31, 2018 was trade in nature. |
21.
|
Segment Information
|
22.
|
Fair Value Measurement
|
23.
|
Restricted Net Assets
|
24.
|
Acquisitions
|
Amount
|
Amortization
Period |
|||||||
RMB in thousands
|
||||||||
Net assets acquired
|
30,252 | |||||||
Intangible assets
|
||||||||
—Tradename
|
54,974 | 8 years | ||||||
—Non-compete
clause
|
2,230 | 3 years | ||||||
Noncontrolling interests
|
(121,154 | ) | ||||||
Goodwill
|
360,039 | |||||||
|
|
|||||||
Total
|
|
326,341
|
|
|||||
|
|
|
|
Amount
|
|
|
|
|
RMB in thousands
|
|
|
Cash consideration
|
|
|
296,796
|
|
Fair value of previously held equity interests
|
|
|
29,545
|
|
|
|
|
|
|
Total
|
|
|
326,341
|
|
|
|
|
|
24.
|
Acquisitions (Continued)
|
Amount
|
||||
RMB in thousands
|
||||
Consideration
|
|
1,198,198
|
|
|
Cash and cash equivalents
|
1,199,117 | |||
Accounts receivable, net
|
95,147 | |||
Goodwill
|
36,120 | |||
Other asset acquired
|
68,214 | |||
|
|
|||
Total assets acquired
|
|
1,398,598
|
|
|
Accrued liabilities and other payables
|
(323,025 | ) | ||
Other liabilities assumed
|
(89,217 | ) | ||
|
|
|||
Total liability assumed
|
|
(412,242
|
)
|
|
Noncontrolling interests
|
(276,621 | ) | ||
Deemed dividend
|
488,463 | |||
Total
|
|
1,198,198
|
|
|
|
|
24.
|
Acquisitions (Continued)
|
For the Year Ended December 31,
|
Amortization
Period |
|||||||||||||||
2018
|
2019
|
2020
|
||||||||||||||
Amount
|
||||||||||||||||
RMB in thousands
|
||||||||||||||||
Net assets acquired
|
62,800 | 65,582 | 18,495 | |||||||||||||
Intangible assets
|
||||||||||||||||
—Tradename
|
104,000 | — | — | 5 to 10 years | ||||||||||||
—User base
|
21,500 | — | 700 | 3 to 5 years | ||||||||||||
—Copyrights
|
23,500 | — | 49,000 | 9 months to 10 years | ||||||||||||
—Technology
|
9,000 | — | — | 6 to 8 months | ||||||||||||
—Vendor relationship
|
— | — | 86,000 | 10 years | ||||||||||||
—On-going
projects
|
— | — | 69,000 | 4.5 years | ||||||||||||
Noncontrolling interests
|
(107,505 | ) | (30,000 | ) | (44,064 | ) | ||||||||||
Deferred tax liabilities
|
— | — | (49,140 | ) | ||||||||||||
Goodwill
|
530,482 | 34,418 | 283,760 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total
|
|
643,777
|
|
|
70,000
|
|
|
413,751
|
|
|||||||
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|||||||||
|
|
RMB in thousands
|
|
|||||||||||
Cash consideration
|
|
|
391,071
|
|
|
|
70,000
|
|
|
|
295,323
|
|
||
Share consideration
|
|
|
—
|
|
|
|
—
|
|
|
|
118,428
|
|
||
Fair value of previously held equity interests
|
|
|
252,706
|
|
|
|
—
|
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total
|
|
|
643,777
|
|
|
|
70,000
|
|
|
|
413,751
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
25.
|
Subsequent Events
|
TABLE OF CONTENTS
PAGE | ||||||
ARTICLE 1 |
|
|||||
DEFINITIONS |
|
|||||
Section 1.01 |
Definitions |
1 | ||||
Section 1.02 |
References to Interest |
12 | ||||
ARTICLE 2 |
|
|||||
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES |
|
|||||
Section 2.01 |
Designation and Amount |
12 | ||||
Section 2.02 |
Form of Notes |
12 | ||||
Section 2.03 |
Date and Denomination of Notes; Payments of Interest and Defaulted Amounts |
13 | ||||
Section 2.04 |
Execution, Authentication and Delivery of Notes |
14 | ||||
Section 2.05 |
Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary |
16 | ||||
Section 2.06 |
Mutilated, Destroyed, Lost or Stolen Notes |
24 | ||||
Section 2.07 |
Temporary Notes |
24 | ||||
Section 2.08 |
Cancellation of Notes Paid, Converted, Etc. |
25 | ||||
Section 2.09 |
CUSIP Numbers |
25 | ||||
Section 2.10 |
Additional Notes; Repurchases |
25 | ||||
ARTICLE 3 |
|
|||||
SATISFACTION AND DISCHARGE |
|
|||||
Section 3.01 |
Satisfaction and Discharge |
26 | ||||
ARTICLE 4 |
|
|||||
PARTICULAR COVENANTS OF THE COMPANY |
|
|||||
Section 4.01 |
Payment of Principal and Interest |
26 | ||||
Section 4.02 |
Maintenance of Office or Agency |
26 | ||||
Section 4.03 |
Appointments to Fill Vacancies in Trustees Office |
27 | ||||
Section 4.04 |
Provisions as to Paying Agent |
27 | ||||
Section 4.05 |
Existence |
29 | ||||
Section 4.06 |
Rule 144A Information Requirement and Annual Reports |
29 | ||||
Section 4.07 |
Additional Amounts |
31 |
ii
Section 4.08 |
Stay, Extension and Usury Laws |
34 | ||||
Section 4.09 |
Compliance Certificate; Statements as to Defaults |
34 | ||||
Section 4.10 |
Further Instruments and Acts |
34 | ||||
ARTICLE 5 | ||||||
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE |
|
|||||
Section 5.01 |
Lists of Holders |
35 | ||||
Section 5.02 |
Preservation and Disclosure of Lists |
35 | ||||
ARTICLE 6 | ||||||
DEFAULTS AND REMEDIES | ||||||
Section 6.01 |
Events of Default |
35 | ||||
Section 6.02 |
Acceleration; Rescission and Annulment |
36 | ||||
Section 6.03 |
Additional Interest |
37 | ||||
Section 6.04 |
Payments of Notes on Default; Suit Therefor |
38 | ||||
Section 6.05 |
Application of Monies Collected by Trustee |
40 | ||||
Section 6.06 |
Proceedings by Holders |
41 | ||||
Section 6.07 |
Proceedings by Trustee |
41 | ||||
Section 6.08 |
Remedies Cumulative and Continuing |
42 | ||||
Section 6.09 |
Direction of Proceedings and Waiver of Defaults by Majority of Holders |
42 | ||||
Section 6.10 |
Notice of Defaults and Events of Default |
43 | ||||
Section 6.11 |
Undertaking to Pay Costs |
43 | ||||
ARTICLE 7 | ||||||
CONCERNING THE TRUSTEE | ||||||
Section 7.01 |
Duties and Responsibilities of Trustee |
43 | ||||
Section 7.02 |
Reliance on Documents, Opinions, Etc. |
46 | ||||
Section 7.03 |
No Responsibility for Recitals, Etc. |
48 | ||||
Section 7.04 | Trustee, Paying Agents, Conversion Agents or Note Registrar May Own Notes | 48 | ||||
Section 7.05 |
Monies to Be Held in Trust |
48 | ||||
Section 7.06 |
Compensation and Expenses of Trustee |
49 | ||||
Section 7.07 |
Officers Certificate as Evidence |
50 | ||||
Section 7.08 |
Eligibility of Trustee |
50 | ||||
Section 7.09 |
Resignation or Removal of Trustee |
50 |
iii
Section 7.10 |
Acceptance by Successor Trustee |
51 | ||||
Section 7.11 |
Succession by Merger, Etc. |
52 | ||||
Section 7.12 |
Trustees Application for Instructions from the Company |
52 | ||||
ARTICLE 8 | ||||||
CONCERNING THE HOLDERS | ||||||
Section 8.01 |
Action by Holders |
52 | ||||
Section 8.02 |
Proof of Execution by Holders |
53 | ||||
Section 8.03 |
Who Are Deemed Absolute Owners |
53 | ||||
Section 8.04 |
Company-Owned Notes Disregarded |
53 | ||||
Section 8.05 |
Revocation of Consents; Future Holders Bound |
54 | ||||
ARTICLE 9 | ||||||
HOLDERS MEETINGS | ||||||
Section 9.01 |
Purpose of Meetings |
54 | ||||
Section 9.02 |
Call of Meetings by Trustee |
54 | ||||
Section 9.03 |
Call of Meetings by Company or Holders |
55 | ||||
Section 9.04 |
Qualifications for Voting |
55 | ||||
Section 9.05 |
Regulations |
55 | ||||
Section 9.06 |
Voting |
56 | ||||
Section 9.07 |
No Delay of Rights by Meeting |
56 | ||||
ARTICLE 10 SUPPLEMENTAL INDENTURES | ||||||
Section 10.01 |
Supplemental Indentures Without Consent of Holders |
56 | ||||
Section 10.02 |
Supplemental Indentures with Consent of Holders |
57 | ||||
Section 10.03 |
Effect of Supplemental Indentures |
58 | ||||
Section 10.04 |
Notation on Notes |
59 | ||||
Section 10.05 | Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee | 59 | ||||
ARTICLE 11 | ||||||
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE |
|
|||||
Section 11.01 |
Company May Consolidate, Etc. on Certain Terms |
59 | ||||
Section 11.02 |
Successor Corporation to Be Substituted |
60 | ||||
Section 11.03 |
Opinion of Counsel to Be Given to Trustee |
60 |
iv
ARTICLE 12 |
|
|||||
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS |
|
|||||
Section 12.01 |
Indenture and Notes Solely Corporate Obligations |
61 | ||||
ARTICLE 13 |
|
|||||
INTENTIONALLY OMITTED | ||||||
ARTICLE 14 |
|
|||||
CONVERSION OF NOTES | ||||||
Section 14.01 |
Conversion Privilege |
61 | ||||
Section 14.02 |
Conversion Procedure; Settlement Upon Conversion |
61 | ||||
Section 14.03 |
Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes |
64 | ||||
Section 14.04 |
Adjustment of Conversion Rate |
67 | ||||
Section 14.05 |
Adjustments of Prices |
76 | ||||
Section 14.06 |
Ordinary Shares to Be Fully Paid |
76 | ||||
Section 14.07 | Effect of Recapitalizations, Reclassifications and Changes of the Ordinary Shares | 77 | ||||
Section 14.08 |
Certain Covenants |
78 | ||||
Section 14.09 |
Responsibility of Trustee |
79 | ||||
Section 14.10 |
Notice to Holders Prior to Certain Actions |
79 | ||||
Section 14.11 |
Stockholder Rights Plans |
80 | ||||
Section 14.12 |
Termination of Depositary Receipt Program |
80 | ||||
ARTICLE 15 |
|
|||||
REPURCHASE OF NOTES AT OPTION OF HOLDERS | ||||||
Section 15.01 |
Repurchase at Option of Holders |
80 | ||||
Section 15.02 |
Repurchase at Option of Holders Upon a Fundamental Change |
83 | ||||
Section 15.03 | Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice | 85 | ||||
Section 15.04 |
Deposit of Repurchase Price or Fundamental Change Repurchase Price |
86 | ||||
Section 15.05 |
Covenant to Comply with Applicable Laws Upon Repurchase of Notes |
87 | ||||
ARTICLE 16 |
|
|||||
OPTIONAL REDEMPTION | ||||||
Section 16.01 | Optional Redemption for Changes in the Tax Law of the Relevant Jurisdiction | 87 |
v
ARTICLE 17 |
|
|||||
MISCELLANEOUS PROVISIONS |
|
|||||
Section 17.01 |
Provisions Binding on Companys Successors |
89 | ||||
Section 17.02 |
Official Acts by Successor Corporation |
89 | ||||
Section 17.03 |
Addresses for Notices, Etc. |
89 | ||||
Section 17.04 |
Governing Law; Jurisdiction |
90 | ||||
Section 17.05 |
Submission to Jurisdiction; Service of Process |
91 | ||||
Section 17.06 |
Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee |
91 | ||||
Section 17.07 |
Legal Holidays |
92 | ||||
Section 17.08 |
No Security Interest Created |
92 | ||||
Section 17.09 |
Benefits of Indenture |
92 | ||||
Section 17.10 |
Table of Contents, Headings, Etc. |
92 | ||||
Section 17.11 |
Execution in Counterparts |
92 | ||||
Section 17.12 |
Severability |
93 | ||||
Section 17.13 |
Waiver of Jury Trial |
93 | ||||
Section 17.14 |
Force Majeure |
93 | ||||
Section 17.15 |
Calculations |
94 | ||||
Section 17.16 |
U.S.A. Patriot Act |
94 |
EXHIBIT
Exhibit A |
Form of Note |
A-1 | ||||
Exhibit B |
Form of Authorization Certificate |
B-1 |
vi
INDENTURE dated as of June 2, 2020 between BILIBILI INC., a Cayman Islands exempted company, as issuer (the Company, as more fully set forth in Section 1.01) and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as trustee (the Trustee, as more fully set forth in Section 1.01).
W I T N E S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 1.25% Convertible Senior Notes due 2027 (the Notes), initially in an aggregate principal amount not to exceed US$800,000,000, subject to Section 2.10, and in order to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, the Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice, the Form of Repurchase Notice and the Form of Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and
WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee, as in this Indenture provided, the valid, binding and legal obligations of the Company, and this Indenture a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issuance hereunder of the Notes have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes (except as otherwise provided below), as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. The words herein, hereof, hereunder, and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular.
Additional ADSs shall have the meaning specified in Section 14.03(a).
Additional Amounts shall have the meaning specified in Section 4.07(a).
Additional Interest means all amounts, if any, payable pursuant to Section 4.06(d),Section 4.06(e) and Section 6.03, as applicable.
1
ADS means an American Depositary Share, issued pursuant to the Unrestricted Deposit Agreement or Restricted Deposit Agreement, as applicable, representing one Ordinary Share of the Company as of the date of this Indenture, and deposited with the ADS Custodian.
ADS Custodian means Deutsche Bank AG, Hong Kong Branch, with respect to the ADSs delivered pursuant to the Unrestricted Deposit Agreement or the Restricted Deposit Agreement, as applicable, or any successor entity thereto.
ADS Depositary means Deutsche Bank Trust Company Americas, as depositary for the ADSs.
ADS Price shall have the meaning specified in Section 14.03(b).
Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control, when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.
Agents means the Paying Agent, the Transfer Agent, the Note Registrar and the Conversion Agent.
Applicable PRC Rate means (i) in the case of deduction or withholding of Peoples Republic of China income tax, 10%, (ii) in the case of deduction or withholding of, or reduction for, Peoples Republic of China value added tax (including any related local levies), 6.72%, or (iii) in the case of deduction or withholding of, or reduction for, both Peoples Republic of China income tax and Peoples Republic of China value added tax (including any related local levies), 16.72%.
applicable taxes shall have the meaning specified in Section 4.07(a).
Board of Directors means the board of directors of the Company or a committee of such board duly authorized to act for it hereunder.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, and to be in full force and effect on the date of such certification, and delivered to the Trustee.
Business Day means, with respect to any Note, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in the State of New York or the Cayman Islands are authorized or obligated by law or executive order to close.
Capital Stock means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.
2
Change in Tax Law shall have the meaning specified in Section 16.01.
Clause A Distribution shall have the meaning specified in Section 14.04(c).
Clause B Distribution shall have the meaning specified in Section 14.04(c).
Clause C Distribution shall have the meaning specified in Section 14.04(c).
close of business means 5:00 p.m. (New York City time).
Code means the U.S. Internal Revenue Code of 1986, as amended.
Commission means the U.S. Securities and Exchange Commission.
Common Equity of any Person means ordinary share capital or common stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.
Company shall have the meaning specified in the first paragraph of this Indenture, and subject to the provisions of Article 11, shall include its successors and assigns.
Company Notice shall have the meaning specified in Section 15.01(a).
Company Order means a written order of the Company, signed by an Officer of the Company and delivered to the Trustee.
Consolidated Affiliated Entity means, with respect to any Person, any corporation, association or other entity which is or is required to be consolidated with such Person under Accounting Standards Codification subtopic 810-10, Consolidation: Overall (including any changes, amendments or supplements thereto) or, if such person prepares its financial statements in accordance with accounting principles other than the accounting principles generally accepted in the United States of America, the equivalent of Accounting Standards Codification subtopic 810-10, Consolidation: Overall under such accounting principles.
Conversion Agent shall have the meaning specified in Section 4.02.
Conversion Date shall have the meaning specified in Section 14.02(c).
Conversion Obligation shall have the meaning specified in Section 14.01.
Conversion Rate shall have the meaning specified in Section 14.01.
Corporate Trust Office means the corporate trust office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 60 Wall Street, New York, NY 10005, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Company).
3
Default means any event that is, or after notice or passage of time, or both, would be, an Event of Default.
Defaulted Amounts means any amounts on any Note (including, without limitation, the Redemption Price, the Repurchase Price, the Fundamental Change Repurchase Price, principal and interest) that are payable but are not punctually paid or duly provided for.
Depositary means, with respect to each Global Note, the Person specified in Section 2.05(c) and Section 2.05(e) as the Depositary with respect to such Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, Depositary shall mean or include such successor.
Distributed Property shall have the meaning specified in Section 14.04(c).
Effective Date shall have the meaning specified in Section 14.03(c).
Event of Default shall have the meaning specified in Section 6.01.
Ex-Dividend Date means the first date on which the ADSs trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of the ADSs on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Expiring Rights means any rights, options or warrants to purchase Ordinary Shares or ADSs that expire on or prior to the Maturity Date.
FATCA shall have the meaning specified in Section 4.07(a)(i)(D).
Form of Assignment and Transfer shall mean the Form of Assignment and Transfer attached as Attachment 4 to the Form of Note attached hereto as Exhibit A.
Form of Fundamental Change Repurchase Notice shall mean the Form of Fundamental Change Repurchase Notice attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.
Form of Notice of Conversion shall mean the Form of Notice of Conversion attached as Attachment 1 to the Form of Note attached hereto as Exhibit A.
Form of Repurchase Notice shall mean the Form of Repurchase Notice attached as Attachment 3 to the Form of Note attached hereto as Exhibit A.
Fractional ADS shall have the meaning specified in Section 14.02(a).
4
Fundamental Change shall be deemed to have occurred at the time after the Notes are originally issued if any of the following occurs:
(a) (A) A person or group within the meaning of Section 13(d) of the Exchange Act, other than the Company, its Subsidiaries, the employee benefit plans of the Company and its Subsidiaries and the Permitted Holders, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect beneficial owner, as defined in Rule 13d-3 under the Exchange Act, of: (i) the Companys ordinary share capital (including ordinary share capital held in the form of ADSs) representing more than 50% of the voting power of the Companys ordinary share capital, or (ii) Ordinary Shares representing more than 50% of the Ordinary Shares (including Ordinary Shares held in the form of ADSs), or (B) the Permitted Holders (together with any of their respective affiliates that directly or indirectly through one or more intermediaries is controlling, is controlled by, or is under common control with, any or all of the Permitted Holders) have become the direct or indirect beneficial owners, as defined in Rule 13d-3 under the Exchange Act, of Ordinary Shares (including Ordinary Shares held in the form of ADSs) representing, in the aggregate, more than 45% of the Ordinary Shares (including Ordinary Shares held in the form of ADSs), based on any Schedule TO or any schedule, form or report under the Exchange Act disclosing the same filed by any one or more of the Permitted Holders;
(b) the consummation of (A) any recapitalization, reclassification or change of the Ordinary Shares or the ADSs (other than changes resulting from a subdivision or combination) as a result of which the Ordinary Shares or the ADSs would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Company pursuant to which the Ordinary Shares or the ADSs will be converted into cash, securities or other property; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries and Consolidated Affiliated Entities, taken as a whole, to any Person other than one of the Companys wholly-owned Subsidiaries; provided, however, that a transaction described in clause (B) in which the holders of all classes of the Companys ordinary share capital (including ordinary share capital held in the form of ADSs) immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions vis-a-vis each other as such ownership immediately prior to such transaction shall not be a Fundamental Change pursuant to this clause (b);
(c) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;
(d) the ADSs (or other Common Equity or ADSs in respect of Common Equity underlying the Notes) cease to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors); or
5
(e) any change in or amendment to the laws, regulations and rules of the Peoples Republic of China or the official interpretation or official application thereof (a Change in Law) that results in (x) the Company, its Subsidiaries and its Consolidated Affiliated Entities (collectively, the Company Group) (as in existence immediately subsequent to such Change in Law), as a whole, being legally prohibited from operating substantially all of the business operations conducted by the Company Group (as in existence immediately prior to such Change in Law) as of the last date of the period described in the Companys consolidated financial statements for the most recent fiscal quarter and (y) the Companys being unable to continue to derive substantially all of the economic benefits from the business operations conducted by the Company Group (as in existence immediately prior to such Change in Law) in the same manner as reflected in the Companys consolidated financial statements for the most recent fiscal quarter;
provided, however, that a transaction or event described in clause (b) above shall not constitute a Fundamental Change, if at least 90% of the consideration received or to be received by holders of the ADSs, excluding cash payments for Fractional ADSs, in connection with such transaction or event consists of shares of Common Equity or ADSs in respect of Common Equity that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or event that would otherwise constitute a Fundamental Change under clause (b) of the definition thereof and as a result of such transaction or event, the Notes become convertible into such consideration, excluding cash payments for Fractional ADSs.
For the purposes of the definition of Fundamental Change, any transaction that would constitute a Fundamental Change pursuant to both clauses (a) and (b) above (prior to giving effect to the proviso to clause (b) and prior to giving effect to the immediately preceding paragraph) shall be deemed (i) not to be a transaction under clause (a) of the definition of Fundamental Change; and (ii) to be a transaction solely under clause (b) of the definition of Fundamental Change (but for the avoidance of doubt, subject to the immediately preceding paragraph to the extent applicable).
Fundamental Change Company Notice shall have the meaning specified in Section 15.02(c).
Fundamental Change Repurchase Date shall have the meaning specified in Section 15.02(a).
Fundamental Change Repurchase Notice shall have the meaning specified in Section 15.02(b)(i).
Fundamental Change Repurchase Price shall have the meaning specified in Section 15.02(a).
Global Note shall have the meaning specified in Section 2.05(b).
6
Holder, as applied to any Note, or other similar terms (but excluding the term beneficial holder), shall mean any Person in whose name at the time a particular Note is registered on the Note Register.
Indenture means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.
Initial Purchasers means Morgan Stanley & Co. LLC, Goldman Sachs (Asia) L.L.C. and BofA Securities, Inc., as representatives of the several Purchasers (as defined in the Purchase Agreement).
Interest Payment Date means each June 15 and December 15 of each year or, if the relevant date is not a Business Day, the immediately following Business Day, beginning on December 15, 2020.
Last Reported Sale Price of the ADSs on any date means the closing sale price per ADS (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the ADSs are traded. If the ADSs are not listed for trading on a U.S. national or regional securities exchange on the relevant date, the Last Reported Sale Price shall be the last quoted bid price for the ADSs in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the ADSs are not so quoted, the Last Reported Sale Price shall be the average of the mid-point of the last bid and ask prices for the ADSs on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.
Make-Whole Fundamental Change means any transaction or event described in clause (a), (b), (d) or (e) of the definition of Fundamental Change (determined after giving effect to any exceptions to or exclusions from such definition, including in the proviso immediately succeeding clause (e) of the definition thereof, but without regard to the proviso in clause (b) of the definition thereof).
Maturity Date means June 15, 2027.
Merger Event shall have the meaning specified in Section 14.07(a).
Note or Notes shall have the meaning specified in the first paragraph of the recitals of this Indenture.
Notes Fungibility Date means the date, if any, following the Resale Restriction Termination Date on which all of the Rule 144A Notes and all of the Regulation S Notes are no longer Restricted Securities, do not bear the restrictive legend required by Section 2.05(c), are fungible for U.S. securities law purposes and are assigned an identical, unrestricted CUSIP number.
Note Register shall have the meaning specified in Section 2.05(a).
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Note Registrar shall have the meaning specified in Section 2.05(a).
Notice of Conversion shall have the meaning specified in Section 14.02(b).
Offering Memorandum means the preliminary offering memorandum dated May 27, 2020, as supplemented by the pricing term sheet dated May 28, 2020, relating to the offering and sale of the Notes.
Officer means, with respect to the Company, the President, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Treasurer.
Officers Certificate, when used with respect to the Company, means a certificate that is delivered to the Trustee and that is signed by (a) two Officers of the Company. Each such certificate shall include the statements provided for in Section 17.06 if and to the extent required by the provisions of such Section. One of the Officers giving an Officers Certificate pursuant to Section 4.09 shall be the principal executive, financial or accounting officer of the Company.
open of business means 9:00 a.m. (New York City time).
Opinion of Counsel means an opinion in writing signed by legal counsel and in a form reasonably acceptable to the Trustee, who may be counsel to the Company, or other counsel acceptable to the Trustee, that is delivered to the Trustee. Each such opinion shall include the statements provided for in Section 17.06 if and to the extent required by the provisions of such Section 17.06.
Ordinary Shares means Class Z ordinary shares of the Company, par value US$0.0001 per share, at the date of this Indenture, subject to Section 14.07.
outstanding, when used with reference to Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Note Registrar or accepted by the Note Registrar for cancellation;
(b) Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent);
(c) Notes that have been paid pursuant to Section 2.06 or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.06 unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;
(d) Notes converted pursuant to Article 14 and required to be cancelled pursuant to Section 2.08;
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(e) Notes redeemed pursuant to Article 16; and
(f) Notes repurchased by the Company pursuant to the third sentence of Section 2.10.
Paying Agent shall have the meaning specified in Section 4.02.
Permitted Holders means each of Mr. Rui Chen and Mr. Yi Xu, together with any other respective person or group subject to aggregation with respect to the Capital Stock of the Company (including Ordinary Shares held in the form of ADSs) with any of the aforementioned persons under Section 13(d) of the Exchange Act.
Person means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.
Physical Notes means permanent certificated Notes in registered form issued in denominations of US$1,000 principal amount and multiples thereof.
Predecessor Note of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.06 in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.
Purchase Agreement means that certain Purchase Agreement, dated as of May 28, 2020, among the Company and the Initial Purchasers.
Record Date means, with respect to any dividend, distribution or other transaction or event in which the holders of ADSs (or other applicable security) have the right to receive any cash, securities or other property or in which ADSs (or other applicable security) are exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the ADSs (or other applicable security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, statute, contract or otherwise).
Redemption Date shall have the meaning specified in Section 16.01(a).
Redemption Reference Date shall have the meaning specified in Section 14.03(g).
Redemption Reference Price shall have the meaning specified in Section 14.03(g).
Redemption Price shall have the meaning specified in Section 16.01(a).
Reference Property shall have the meaning specified in Section 14.07(a).
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Regular Record Date, with respect to any Interest Payment Date, shall mean the June 1 or December 1 (whether or not such day is a Business Day) immediately preceding the applicable June 15 or December 15 Interest Payment Date, respectively.
Regulation S means Regulation S under the Securities Act or any successor to such regulation.
Regulation S Notes means the Notes initially offered and sold outside the United States pursuant to Regulation S.
Relevant Jurisdiction shall have the meaning specified in Section 4.07(a).
Relevant Taxing Jurisdiction shall have the meaning specified in Section 4.07(a).
Repurchase Date shall have the meaning specified in Section 15.01(a).
Repurchase Expiration Time shall have the meaning specified in Section 15.01(a).
Repurchase Notice shall have the meaning specified in Section 15.01(a).
Repurchase Price shall have the meaning specified in Section 15.01(a).
Resale Restriction Termination Date shall have the meaning specified in Section 2.05(c).
Responsible Officer means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Persons knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
Restricted Deposit Agreement means the deposit agreement for restricted securities dated as of April 3, 2019 by and among the Company, the ADS Depositary and the holders and beneficial owners of the restricted ADSs delivered thereunder or, if amended or supplemented as provided therein, as so amended or supplemented.
Restricted Securities shall have the meaning specified in Section 2.05(c).
Rule 144 means Rule 144 as promulgated under the Securities Act.
Rule 144A means Rule 144A as promulgated under the Securities Act.
Rule 144A Notes means the notes initially offered and sold pursuant to Rule 144A.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
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Significant Subsidiary means a Subsidiary of the Company that meets the definition of significant subsidiary in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act. Each of the Companys Consolidated Affiliated Entities will be deemed to be a subsidiary for purposes of the definition of significant subsidiary in Article 1, Rule 1-02 of Regulation S-X.
Spin-Off shall have the meaning specified in Section 14.04(c).
Subsidiary means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
Successor Company shall have the meaning specified in Section 11.01(a).
Trading Day means a day on which (i) trading in the ADSs (or other security for which a closing sale price must be determined) generally occurs on The NASDAQ Global Select Market or, if the ADSs (or such other security) are not then listed on The NASDAQ Global Select Market, on the principal other U.S. national or regional securities exchange on which the ADSs (or such other security) are then listed or, if the ADSs (or such other security) are not then listed on a U.S. national or regional securities exchange, on the principal other market on which the ADSs (or such other security) are then traded and (ii) a Last Reported Sale Price for the ADSs (or closing sale price for such other security) is available on such securities exchange or market; provided that if the ADSs (or such other security) are not so listed or traded, Trading Day means a Business Day.
transfer shall have the meaning specified in Section 2.05(c) and Section 2.05(e), as applicable.
Transfer Agent shall have the meaning specified in Section 4.02.
Trigger Event shall have the meaning specified in Section 14.04(c).
Trust Indenture Act means the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after the date hereof, the term Trust Indenture Act shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended.
Trustee means the Person named as the Trustee in the first paragraph of this Indenture until a successor trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder.
unit of Reference Property shall have the meaning specified in Section 14.07(a).
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Unrestricted Deposit Agreement means the deposit agreement dated as of March 27, 2018, by and among the Company, the ADS Depositary and the holders and beneficial owners of the ADSs delivered thereunder or, if amended or supplemented as provided therein, as so amended or supplemented.
U.S. Person shall have the meaning as such term is defined under Regulation S.
Valuation Period shall have the meaning specified in Section 14.04(c).
Section 1.02 References to Interest. Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in this Indenture shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of Section 4.06(d), Section 4.06(e) and Section 6.03. Unless the context otherwise requires, any express mention of Additional Interest in any provision hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01 Designation and Amount. The Notes shall be designated as the 1.25% Convertible Senior Notes due 2027. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is initially limited to US$800,000,000, subject to Section 2.10 and except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to Section 2.05, Section 2.06, Section 2.07, Section 10.04, Section 14.02 and Section 15.04.
Section 2.02 Form of Notes. The Notes and the Trustees certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of this Indenture. To the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.
Any Global Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Depositary, or as may be required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or designated for issuance or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.
Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as the Officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject.
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Each Global Note shall represent such principal amount of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect redemptions, repurchases, cancellations, conversions, transfers or exchanges permitted hereby. Any endorsement of the Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Registrar in such manner and upon instructions given by the Holder of such Notes in accordance with this Indenture. Payment of principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Global Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.
Section 2.03 Date and Denomination of Notes; Payments of Interest and Defaulted Amounts. (a) The Notes shall be issuable in registered form without coupons in denominations of US$1,000 principal amount and integral multiples thereof. Each Note shall be dated the date of its authentication and shall bear interest from, and including, the date specified on the face of such Note. Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of actual days elapsed over a 30-day month.
(b) The Person in whose name any Note (or its Predecessor Note) is registered on the Note Register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date. Interest shall be payable at the office or agency of the Company maintained by the Company for such purposes in the Borough of Manhattan, The City of New York, which shall initially be the Corporate Trust Office. The Company shall pay or cause the Paying Agent to pay interest (i) on any Physical Notes (A) to Holders holding Physical Notes having an aggregate principal amount of US$5,000,000 or less, by check mailed (at the Companys expense) to the Holders of these Notes at their address as it appears in the Note Register and (B) to Holders holding Physical Notes having an aggregate principal amount of more than US$5,000,000, either by check mailed (at the Companys expense) to such Holders or, upon application by such Holder to the Note Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holders account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Note Registrar to the contrary or (ii) on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee.
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(c) Any Defaulted Amounts shall forthwith cease to be payable to the Holder on the relevant payment date but shall accrue interest per annum at the rate per annum borne by the Notes plus one percent, subject to the enforceability thereof under applicable law, from, and including, such relevant payment date, and such Defaulted Amounts together with such interest thereon shall be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Amounts to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee in its sole discretion shall consent to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Amounts or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Amounts as in this clause provided. Thereupon the Company shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company shall promptly notify the Trustee in writing of such special record date and the Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be mailed, first-class postage prepaid (at the Companys expense), to each Holder at its address as it appears in the Note Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so mailed, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause (ii) of this Section 2.03(c).
(ii) The Company may make payment of any Defaulted Amounts in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
Section 2.04 Execution, Authentication and Delivery of Notes. The Notes shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary or any of its Executive or Senior Vice Presidents. With the delivery of this Indenture, the Company is furnishing, and from time to time thereafter may furnish, a certificate substantially in the form of Exhibit B (an Authorization Certificate) identifying and certifying the incumbency and specimen (and/or facsimile) signatures of its active authorized Officers. Until the Trustee receives a subsequent Authorization Certificate, the Trustee shall be entitled to conclusively rely on the last Authorization Certificate delivered to it for purposes of determining the relevant authorized Officers. Typographical and other minor errors or defects in any signature shall not affect the validity or enforceability of any Note which has been duly authenticated and delivered by the Trustee.
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At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes, without any further action by the Company hereunder.
The Company Order shall specify the amount of Notes to be authenticated (including the initial amount of Rule 144A Notes and the initial amount of Regulation S Notes), the applicable rate at which interest will accrue on such Notes, the date on which the original issuance of such Notes is to be authenticated, the date from which interest will begin to accrue, the date or dates on which interest on such Notes will be payable and the date on which the principal of such Notes will be payable and other terms relating to such Notes. The Trustee shall thereupon authenticate and deliver said Notes to or upon the written order of the Company (as set forth in such Company Order).
The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section (a) unless and until it receives from the Company a Company Order instructing it to so authenticate and deliver such Notes and, if requested by the Trustee, an Officers Certificate and an Opinion of Counsel in accordance with Section 17.06 hereof; (b) if the Trustee determines that such action may not lawfully be taken; or (c) if the Trustee determines that such action would expose the Trustee to personal liability, unless indemnity and/or security and/or pre-funding reasonably satisfactory to the Trustee against such liability is provided to the Trustee and the Note Registrar.
Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on the form of Note attached as Exhibit A hereto, executed manually or electronically by an authorized officer of the Trustee, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.
In case any Officer of the Company who shall have signed any of the Notes shall cease to be such Officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Notes had not ceased to be such Officer of the Company; and any Note may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Note, shall be the Officers of the Company, although at the date of the execution of this Indenture any such Person was not such an Officer.
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Section 2.05 Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary. (a) The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office or in any other office or agency of the Company designated pursuant to Section 4.02, the Note Register) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. Deutsche Bank Trust Company Americas is hereby initially appointed the Note Registrar and Transfer Agent for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more co-Note Registrars in accordance with Section 4.02.
Prior to the Notes Fungibility Date, upon surrender for registration of transfer of any Rule 144A Note or Regulation S Note, as the case may be, to the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Rule 144A Notes or Regulation S Notes, as the case may be, of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture. Following the Notes Fungibility Date, upon surrender for registration of transfer of any Note to the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and not bearing the restrictive legends required by Section 2.05(c).
Prior to the Notes Fungibility Date, Rule 144A Notes and Regulation S Notes, as the case may be, may be exchanged for other Rule 144A Notes or Regulation S Notes, as the case may be, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Rule 144A Notes or Regulation S Notes, as the case may be, to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02. Whenever any Rule 144A Notes or Regulation S Notes, as the case may be, are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Rule 144A Notes or Regulation S Notes, as the case may be, that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding. Following the Notes Fungibility Date, Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount but not bearing the restrictive legend required by Section 2.05(c), upon surrender of the Notes to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of transfer or for exchange, repurchase or conversion shall (if so required by the Company, the Trustee, the Note Registrar or any co-Note Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and duly executed, by the Holder thereof or its attorney-in-fact duly authorized in writing.
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No service charge shall be imposed by the Company, the Transfer Agent, the Note Registrar, any co-Note Registrar or the Paying Agent for any exchange or registration of transfer of Notes, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp, issue, transfer or similar tax required in connection therewith as a result of the name of the Holder of new Notes issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer. The Company shall pay the ADS Depositarys fees for issuance of the ADSs.
None of the Company, the Trustee, the Note Registrar or any co-Note Registrar shall be required to exchange or register a transfer of (i) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion, (ii) any Notes, or a portion of any Note, surrendered for repurchase (and not withdrawn) in accordance with Article 15 or (iii) any Notes selected for redemption in accordance with Article 16.
All Notes issued upon any registration of transfer or exchange of Notes in accordance with this Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.
The Trustee shall have no responsibility or obligation to any direct or indirect participant or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any direct or indirect participant or other Person (other than the Depositary and any other registered Holder of Notes) of any notice (including any notice of redemption pursuant to Article 16) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the customary procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its direct or indirect participants.
The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among direct or indirect participants in any Global Note) other than to require delivery of such certificates as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
(b) So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, subject to the fourth paragraph from the end of Section 2.05(c) all Notes shall be represented by one or more Notes in global form (each, a Global Note) registered in the name of the Depositary or the nominee of the Depositary. The transfer and exchange of beneficial interests in a Global Note that does not involve the issuance of a Physical Note shall be effected through the Depositary in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor. Prior to the Notes Fungibility Date, the Rule 144A Notes shall be represented by one or more Global Notes and the Regulation S Notes shall be represented by one or more separate Global Notes. Following the Notes Fungibility Date, the Rule 144A Notes and the Regulation S Notes may be represented by one or more of the same Global Notes.
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(c) Every Note that bears or is required under this Section 2.05(c) to bear the legend set forth in this Section 2.05(c) (together with any ADSs (including the Ordinary Shares represented thereby) delivered upon conversion of the Notes that are required to bear the legend set forth in Section 2.05(d), collectively, the Restricted Securities) shall be subject to the restrictions on transfer set forth in this Section 2.05(c) (including the legend set forth below), unless such restrictions on transfer shall be eliminated or otherwise waived by written consent of the Company, and the Holder of each such Restricted Security, by such Holders acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this Section 2.05(c) and Section 2.05(d), the term transfer encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security.
Until the date (the Resale Restriction Termination Date) that is the later of (1) the date that is one year after the last date of original issuance of the Notes, or such shorter period of time as permitted by Rule 144 under the Securities Act or any successor provision thereto, and (2) such later date, if any, as may be required by applicable law, any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than ADSs (including the Ordinary Shares represented thereby) issued upon conversion thereof, which shall bear the legend set forth in Section 2.05(d), if applicable) shall bear a legend in substantially the following form (unless such Notes have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 under the Securities Act or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company in writing, with notice thereof to the Trustee):
THIS SECURITY, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION OF THIS SECURITY AND THE ORDINARY SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULES 144 UNDER THE SECURITIES ACT OR CONTRACTUALLY RESTRICTED SECURITIES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND LOCATED OUTSIDE THE UNITED STATES (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT, AND HAS NOT BEEN FOR THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF BILIBILI INC. (THE COMPANY), AND
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(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION OF THIS SECURITY AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY, OR ANY BENEFICIAL INTEREST HEREIN OR THEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) TO A NON-U.S. PERSON LOCATED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY, THE DEPOSITARY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE, OTHERWISE ACQUIRE OR OWN THIS NOTE, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION HEREOF AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY, OR A BENEFICIAL INTEREST HEREIN OR THEREIN.
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No transfer of any Note prior to the Resale Restriction Termination Date will be registered by the Note Registrar unless the applicable box on the Form of Assignment and Transfer has been checked.
Any Note (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms may, upon surrender of such Note for exchange to the Note Registrar in accordance with the provisions of this Section 2.05, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.05(c) and shall not be assigned a restricted CUSIP number. The Company shall be entitled to instruct the Trustee in writing to so surrender any Global Note as to which such restrictions on transfer shall have expired in accordance with their terms for exchange, and, upon such instruction, the Trustee shall so surrender such Global Note for exchange; and any new Global Note so exchanged therefor shall not bear the restrictive legend specified in this Section 2.05(c) and shall not be assigned a restricted CUSIP number. The Company shall promptly notify the Trustee in writing upon the occurrence of the Resale Restriction Termination Date and after a registration statement, if any, with respect to the Notes or the ADSs (including the Ordinary Shares represented thereby) issued upon conversion of the Notes has been declared effective under the Securities Act.
Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this Section 2.05(c)), a Global Note may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for transfers of portions of a Global Note in certificated form made upon request of a member of, or a participant in, the Depositary (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures of the Depositary and in compliance with this Section 2.05(c).
The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to each Global Note. Initially, each Global Note shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with Deutsche Bank Trust Company Americas as custodian for Cede & Co.
If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days or (iii) an Event of Default with respect to the Notes has occurred and is continuing and a beneficial owner of any Note requests that its beneficial interest therein be issued as a Physical Note, the Company shall execute, and the Trustee, upon receipt of an Officers Certificate and a Company Order for the authentication and delivery of Notes, shall authenticate and deliver (x) in the case of clause (iii), a Physical Note to such beneficial owner in a principal amount equal to the principal amount of such Note corresponding to such beneficial owners beneficial interest and (y) in the case of clause (i) or (ii), Physical Notes to each beneficial owner of the related Global Notes (or a portion thereof) in an aggregate principal amount equal to the aggregate principal amount of such Global Notes in exchange for such Global Notes, and upon delivery of the Global Notes to the Note Registrar such Global Notes shall be canceled.
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Physical Notes issued in exchange for all or a part of the Global Note pursuant to this Section 2.05(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Note Registrar in writing. Upon execution and authentication, the Note Registrar shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered.
At such time as all interests in a Global Note have been converted, canceled, repurchased, redeemed or transferred, such Global Note shall be, upon receipt thereof, canceled by the Note Registrar in accordance with standing procedures and existing instructions of the Depositary. At any time prior to such cancellation, if any interest in a Global Note is exchanged for Physical Notes, converted, canceled, repurchased, redeemed or transferred to a transferee who receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of such Global Note, the principal amount of such Global Note shall, in accordance with the standing procedures and existing instructions of the Depositary, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on such Global Note, by the Note Registrar, to reflect such reduction or increase.
None of the Company, the Trustee, the Paying Agent, any agent of the Company or any agent of the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
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(d) Until the Resale Restriction Termination Date, any certificate representing ADSs (including the Ordinary Shares represented thereby) issued upon conversion of such Note shall bear a legend in substantially the following form (unless the Note or such ADSs (including the Ordinary Shares represented thereby) has been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or such ADS or the Ordinary Shares represented thereby have been issued upon conversion of Notes that have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 under the Securities Act or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company with written notice thereof to the Note Registrar and any transfer agent for the ADSs):
THE AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT OR CONTRACTUALLY RESTRICTED SECURITIES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND LOCATED OUTSIDE THE UNITED STATES (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT, AND HAS NOT FOR THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF BILIBILI INC. (THE COMPANY), AND
(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY, OR ANY BENEFICIAL INTEREST HEREIN OR THEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE OF THE SERIES OF NOTES UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) TO A NON-U.S. PERSON LOCATED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
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PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY, THE DEPOSITARY AND THE TRANSFER AGENT FOR THE COMPANYS CLASS Z ORDINARY SHARES RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE, OTHERWISE ACQUIRE OR OWN THE AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY OR A BENEFICIAL INTEREST THEREIN.
Any such ADSs as to which such restrictions on transfer shall have expired in accordance with their terms may, upon surrender of the certificates representing such ADSs for exchange in accordance with the procedures of the transfer agent for the ADSs and the Restricted Deposit Agreement, as applicable, be exchanged for a new certificate or certificates for a like aggregate number of ADSs, which shall not bear the restrictive legend required by this Section 2.05(d).
(e) Any Note or ADS delivered upon the conversion or exchange of any Note that is repurchased or owned by any Affiliate of the Company may not be resold by such Affiliate (or a Holder that was the Companys Affiliate at any time during three months preceding the resale) unless registered under the Securities Act or resold pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act in a transaction that results in such Note or ADS, as the case may be, no longer being a restricted security (as defined under Rule 144 under the Securities Act). The Company shall cause any Note that is repurchased or owned by it to be surrendered to the Note Registrar for cancellation in accordance with Section 2.08.
(f) Until the Resale Restriction Termination Date, prior to any sale of Regulation S Notes, the ADSs deliverable upon conversion thereof or the Ordinary Shares represented thereby, to a qualified institutional buyer in compliance with Rule 144A, the Holder thereof shall deliver to the Trustee, Transfer Agent and/or Depositary, as the case may be, written confirmation that the prospective purchaser is a Person such Holder reasonably believes is a qualified institutional buyer (within the meaning of Rule 144A) that is purchasing for its own account or for the account of another qualified institutional buyer and to whom notice is given that the transfer is being made in reliance on Rule 144A.
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Section 2.06 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon receipt of a Company Order, the Trustee shall authenticate and deliver, a new Note, bearing a registration number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company and to the Trustee such security and/or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.
The Trustee may authenticate any such substituted Note and deliver the same upon the receipt of such security and/or indemnity as the Trustee and the Company may require. No service charge shall be imposed by the Company, the Transfer Agent, the Note Registrar, any co- Note Registrar or the Paying Agent upon the issuance of any substitute Note, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp, issue, transfer or similar tax required in connection therewith as a result of the name of the Holder of the new substitute Note being different from the name of the Holder of the old Note that became mutilated or was destroyed, lost or stolen. In case any Note that has matured or is about to mature or has been surrendered for repurchase (and not withdrawn) in accordance with Article 15 or has been selected for redemption in accordance with Article 16 or is about to be converted in accordance with Article 14 shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company and to the Trustee such security and/or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, evidence satisfactory to the Company, and the Trustee evidence of their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section 2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement, payment, redemption, conversion or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement, payment, redemption, conversion or repurchase of negotiable instruments or other securities without their surrender.
Section 2.07 Temporary Notes. Pending the preparation of Physical Notes, the Company may execute and the Trustee shall, upon receipt of a Company Order, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Physical Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the Physical Notes. Without unreasonable delay, the Company shall execute and deliver to the Trustee Physical Notes (other than any Global Note) and thereupon any or all temporary Notes (other than any Global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.02 and the Trustee shall upon receipt of a Company Order authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of Physical Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Physical Notes authenticated and delivered hereunder.
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Section 2.08 Cancellation of Notes Paid, Converted, Etc. The Company shall cause all Notes surrendered for the purpose of payment, repurchase, redemption, registration of transfer or exchange or conversion, if surrendered to any Person other than the Note Registrar (including any of the Companys agents, Subsidiaries or Affiliates), to be delivered and surrendered to the Note Registrar for cancellation. All Notes delivered to the Note Registrar shall be canceled promptly by it, and no Notes shall be authenticated in exchange thereof except as expressly permitted by any of the provisions of this Indenture. The Note Registrar shall dispose of canceled Notes in accordance with its customary procedures and, after such disposition, shall deliver a certificate of such cancellation and disposition to the Company, at the Companys written request in a Company Order.
Section 2.09 CUSIP Numbers. The Company in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in all notices issued to Holders as a convenience to such Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or on such notice and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee in writing of any change in the CUSIP numbers. Prior to the Notes Fungibility Date, the Rule 144A Notes and the Regulation S Notes shall have different CUSIP numbers. Following the Notes Fungibility Date, the Rule 144A Notes and the Regulation S Notes shall have the same CUSIP number.
Section 2.10 Additional Notes; Repurchases. The Company may, without the consent of, or notice to, the Holders and notwithstanding Section 2.01, reopen this Indenture and issue additional Notes hereunder with the same terms as the Notes initially issued hereunder (except for any differences in the issue price, the issue date and interest accrued, if any, and, if applicable, restrictions on transfer in respect of such additional Notes) in an unlimited aggregate principal amount; provided that if any such additional Notes are not fungible with the Notes initially issued hereunder for U.S. federal income tax or securities law purposes, such additional Notes shall have a separate CUSIP number from both the Rule 144A Notes and the Regulation S Notes. Prior to the issuance of any such additional Notes, the Company shall deliver to the Trustee a Company Order, an Officers Certificate and an Opinion of Counsel, such Officers Certificate and Opinion of Counsel to cover such matters, in addition to those required by Section 17.06, as the Trustee shall reasonably request. In addition, the Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or through its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements. The Company shall cause any Notes so repurchased to be surrendered to the Note Registrar for cancellation in accordance with Section 2.08 and upon receipt of a Company Order, the Note Registrar shall cancel all Notes so surrendered and such Notes shall no longer be considered outstanding under this Indenture upon their repurchase. The Company may also enter into cash-settled swaps or other derivatives with respect to the Notes. For the avoidance of doubt, any Notes underlying such cash-settled swaps or other derivatives shall not be required to be surrendered to the Note Registrar for cancellation in accordance with Section 2.08 and will continue to be considered outstanding for purposes of this Indenture, subject to the provisions of Section 8.04.
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ARTICLE 3
SATISFACTION AND DISCHARGE
Section 3.01 Satisfaction and Discharge. This Indenture shall upon request of the Company contained in an Officers Certificate cease to be of further effect, and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) (i) all Notes theretofore authenticated and delivered (other than (x) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.06 and (y) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.04(d)) have been delivered to the Note Registrar for cancellation; or (ii) the Company has deposited with the Paying Agent or delivered to Holders, as applicable, after the Notes have become due and payable, whether on the Maturity Date, the Redemption Date, any Repurchase Date, any Fundamental Change Repurchase Date, upon conversion or otherwise, cash or cash and ADSs (solely to satisfy the Companys Conversion Obligation, if applicable), sufficient to pay all of the outstanding Notes and all other sums due and payable under this Indenture by the Company; and (b) the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.06 shall survive.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01 Payment of Principal and Interest. The Company covenants and agrees that it will cause to be paid the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.
Section 4.02 Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency (which will be the Corporate Trust Office initially) where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or repurchase (Paying Agent) or for conversion (Conversion Agent) and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, provided, however, that the legal service of process against the Company shall in no circumstance be made at an office or agency of the Trustee.
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The Company may also from time to time designate as co-Note Registrars one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The terms Paying Agent and Conversion Agent include any such additional or other offices or agencies, as applicable.
The Company hereby initially designates Deutsche Bank Trust Company Americas as the Paying Agent, Note Registrar, Transfer Agent and Conversion Agent and the Corporate Trust Office and the office or agency of Deutsche Bank Trust Company Americas in the Borough of Manhattan, The City of New York, each shall be considered as one such office or agency of the Company for each of the aforesaid purposes.
Section 4.03 Appointments to Fill Vacancies in Trustees Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.09, a trustee, so that there shall at all times be a trustee hereunder.
Section 4.04 Provisions as to Paying Agent. (a) If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.04:
(i) that it will hold all sums held by it as such agent for the payment of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes for the benefit of the Holders of the Notes;
(ii) that it will give the Trustee prompt notice of any failure by the Company to make any payment of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes when the same shall be due and payable; and
(iii) that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held.
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The Company shall, on or before each due date of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes, deposit with the Paying Agent a sum sufficient to pay such principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) or accrued and unpaid interest and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action; provided that such deposit must be received by the Paying Agent by 10:00 a.m., New York City time, one Business Day prior to the relevant due date. The Paying Agent shall not be bound to make any payment until it has received, in immediately available and cleared funds, an amount which shall be sufficient to pay, as applicable, the aggregate amount of principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes when such principal or interest shall become due and payable. The Paying Agent shall not be responsible or liable for any delay in making the payment if it does not receive funds before 10:00 a.m. one Business Day prior to the payment date. The Company shall use reasonable efforts to procure that, before 10:00 a.m., New York City time, on the second Business Day before each payment date, the bank effecting payment for it has confirmed by email or facsimile to the Paying Agent the payment instructions relating to such payment.
(b) If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) and accrued and unpaid interest so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes when the same shall become due and payable. Upon an Event of Default under Section 6.01(i) or Section 6.01(j) hereof, the Trustee shall automatically become the Paying Agent.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay, cause to be paid or deliver to the Trustee all sums or amounts held by the Company in trust or by any Paying Agent as required by this Section 4.04, such sums or amounts to be held by the Trustee upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts.
(d) Any money and ADSs deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, any Note (or, in the case of ADSs, in satisfaction of the Conversion Obligation) and remaining unclaimed for two years after such principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) or interest has become due and payable or such Conversion Obligation has become due shall be paid or delivered, as the case may be, to the Company on request of the Company contained in an Officers Certificate, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such money and ADSs, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment or delivery, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The Borough of Manhattan, The City of New York, notice that such money and ADSs remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money and ADSs then remaining will be repaid or delivered to the Company.
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Section 4.05 Existence. Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. The Company shall promptly provide the Trustee with written notice of any change to its name, jurisdiction of incorporation or change to its corporate organization.
Section 4.06 Rule 144A Information Requirement and Annual Reports. (a) At any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall, so long as any of the Notes, any ADSs deliverable upon conversion thereof or any Ordinary Shares underlying ADSs deliverable upon conversion thereof shall, at such time, constitute restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, promptly provide to the Trustee and shall, upon written request, provide to any Holder, beneficial owner or prospective purchaser of such Notes or the ADSs deliverable upon conversion of such Notes, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such Notes or ADSs pursuant to Rule 144A. The Company shall take such further action as any Holder or beneficial owner of such Notes or such ADSs may reasonably request to the extent from time to time required to enable such Holder or beneficial owner to sell such Notes or ADSs in accordance with Rule 144A, as such rule may be amended from time to time.
(b) The Company shall provide to the Trustee within 15 days after the same are required to be filed with the Commission, copies of any documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (giving effect to any applicable grace period provided by Rule 12b-25 under the Exchange Act). Any such document or report that the Company files with the Commission via the Commissions EDGAR system (or any successor thereto) shall be deemed to be provided to the Trustee for purposes of this Section 4.06(b) at the time such documents are filed via the EDGAR system (or any successor thereto). The Trustee shall have no obligation to determine if and when the Companys statements or reports are publically available and/or accessible electronically.
(c) Delivery of the reports and documents described in subsection (b) above to the Trustee is for informational purposes only, and the Trustees receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Companys compliance with any of its covenants hereunder (as to which the Trustee is entitled to conclusively rely on an Officers Certificate).
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(d) If, at any time during the six-month period beginning on, and including, the date that is six months after the last date of original issuance of the Notes, the Company fails to timely file any document or report that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after (i) giving effect to all applicable grace periods thereunder and (ii) other than reports on Form 6-K to the extent such reports are not required to satisfy the current public information requirement of Rule 144), or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Companys Affiliates or Holders that were the Companys Affiliates at any time during the three months immediately preceding (as a result of restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes), the Company shall pay or cause the Paying Agent (on behalf of the Company and subject to receipt of funds from the Company pursuant to the last paragraph in Section 4.04(a)) to pay Additional Interest on the Notes. Such Additional Interest shall accrue on the Notes at the rate of 0.50% per annum of the principal amount of the Notes outstanding for each day during such period for which the Companys failure to file has occurred and is continuing or the period during which the Notes are not freely tradable, as described above, by Holders other than Affiliates of the Company (or Holders that were Affiliates of the Company during the three months immediately preceding). As used in this Section 4.06(d), documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act does not include documents or reports that the Company furnishes to the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
(e) If, and for so long as, (x) the restrictive legend on the Notes specified in Section 2.05(c) has not been removed, (y) the Notes are assigned a restricted CUSIP or (z) the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders thereof without restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes (in each case (x), (y) and (z), except for the Notes that are owned by the Companys Affiliates or Holders that were the Companys Affiliates at any time during the three months immediately preceding) as of the 370th day after the last date of original issuance of the Notes, the Company shall pay or cause the Paying Agent (on behalf of the Company and subject to receipt of funds from the Company pursuant to the last paragraph in Section 4.04(a)) to pay Additional Interest on the Notes at a rate equal to 0.50% per annum of the principal amount of Notes outstanding until (x) the restrictive legend on the Notes has been removed in accordance with Section 2.05(c), (y) the Notes have been assigned an unrestricted CUSIP and (z) the Notes are freely tradable by Holders thereof without restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes (in each case (x), (y) and (z), except for the Notes that are owned by the Companys Affiliates or Holders that were the Companys Affiliates at any time during the three months immediately preceding).
(f) Additional Interest will be payable in arrears on each Interest Payment Date following accrual in the same manner as regular interest on the Notes.
(g) The Additional Interest that is payable in accordance with Section 4.06(d) or Section 4.06(e) shall be in addition to, and not in lieu of, any Additional Interest that may be payable as a result of the Companys election pursuant to Section 6.03. In no event shall Additional Interest accrue on any day under the terms of this Indenture (taking any Additional Interest payable pursuant to Section 4.06(d) and Section 4.06(e) together with any Additional Interest payable pursuant to Section 6.03) at an annual rate in excess of 0.50%, in the aggregate, for any violation or Default caused by the Companys failure to be current in respect of its Exchange Act reporting obligations.
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(h) If Additional Interest is payable by the Company pursuant to Section 4.06(d) or Section 4.06(e), the Company shall deliver to the Trustee an Officers Certificate to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume without inquiry that no such Additional Interest is payable. If the Company has paid such Additional Interest directly to the Persons entitled to it, the Company shall deliver to the Trustee an Officers Certificate setting forth the particulars of such payment.
Section 4.07 Additional Amounts. (a) All payments and deliveries made by, or on behalf of, the Company or any successor to the Company under or with respect to this Indenture and the Notes, including, but not limited to, payments of principal (including, if applicable, the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price), premium, if any, payments of interest and deliveries of ADSs or any other consideration due on conversion of a Note (together with payments of cash for any Fractional ADS or other consideration) shall be made without withholding, deduction or reduction for any other collection at source for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied (including any penalties and interest related thereto) (applicable taxes) by or within any jurisdiction in which the Company or any successor to the Company is, for tax purposes, incorporated, organized or resident or doing business (each, as applicable, a Relevant Taxing Jurisdiction) or through which payment is made or deemed made (together with each Relevant Taxing Jurisdiction, a Relevant Jurisdiction, and in each case, any political subdivision or taxing authority thereof or therein) unless such withholding, deduction or reduction is required by law or by regulation or governmental policy having the force of law. In the event that any such withholding, deduction or reduction is so required, the Company or any successor to the Company shall pay or deliver to each Holder such additional amounts of cash, ADSs or other consideration, as applicable (Additional Amounts) as may be necessary to ensure that the net amount received by the beneficial owner of the Notes after such withholding, deduction or reduction (and after deducting any taxes on the Additional Amounts) shall equal the amounts that would have been received by such beneficial owner had no such withholding, deduction or reduction been required; provided that no Additional Amounts shall be payable:
(i) for or on account of:
(A) any applicable taxes that would not have been imposed but for:
(1) the existence of any present or former connection between the relevant Holder or beneficial owner of such Note and the Relevant Jurisdiction, other than merely acquiring or holding such Note, receiving ADSs (together with the payment of cash for any Fractional ADS) or other consideration upon conversion of such Note or the receipt of payments or the exercise or enforcement of rights thereunder, including, without limitation, such Holder or beneficial owner being or having been a national, domiciliary or resident of such Relevant Jurisdiction or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having had a permanent establishment therein;
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(2) the presentation of such Note (in cases in which presentation is required) more than 30 days after the later of the date on which the payment of the principal of (including the Redemption Price, the Repurchase Price and Fundamental Change Repurchase Price, if applicable) and interest on, such Note or the delivery of ADSs (together with payment of cash for any Fractional ADS) upon conversion of such Note became due and payable pursuant to the terms thereof or was made or duly provided for;
(3) the failure of the Holder or beneficial owner to comply with a timely written request from the Company or any successor of the Company, addressed to the Holder, to the extent such Holder or beneficial owner is legally entitled, to provide certification, information, documents or other evidence concerning such Holders or beneficial owners nationality, residence, identity or connection with the Relevant Taxing Jurisdiction, or to make any declaration or satisfy any other reporting requirement relating to such matters, if and to the extent that due and timely compliance with such request is required by statute, regulation or administrative practice of the Relevant Jurisdiction in order to reduce or eliminate any withholding or deduction as to which Additional Amounts would have otherwise been payable to such Holder or beneficial owner; or
(4) the presentation of such Note (in cases in which presentation is required) for payment in the Relevant Jurisdiction, unless such Note could not have been presented for payment elsewhere;
(B) any estate, inheritance, gift, sale, transfer, personal property or similar applicable tax or any excise or similar taxes imposed with respect to a transfer;
(C) any applicable tax that is payable otherwise than by withholding, deduction or reduction for any other collection at source from payments or deliveries under or with respect to the Notes;
(D) any applicable tax required to be withheld or deducted under Sections 1471 to 1474 of the Code (or any amended or successor versions of such Sections) (FATCA), any regulations or other official guidance thereunder, any intergovernmental agreement or agreement pursuant to Section 1471(b)(1) of the Code entered into in connection with FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement; or
(E) any combination of applicable taxes referred to in the preceding clauses (A), (B), (C) or (D); or
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(ii) with respect to any payment of the principal of (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable), and interest on, such Note or the delivery of ADSs (together with payment of cash for any Fractional ADS) upon conversion of such Note, to a Holder, if the Holder is a fiduciary, partnership or person other than the sole beneficial owner of that payment to the extent that such payment would be required to be included in the income under the laws of the Relevant Jurisdiction, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a partner or member of that partnership or a beneficial owner who would not have been entitled to such Additional Amounts had that beneficiary, settlor, partner, member or beneficial owner been the Holder thereof.
(b) If the Company or its successor becomes obligated to pay Additional Amounts with respect to any payment or delivery under or with respect to the Notes, the Company or its successor shall deliver to the Trustee and the Paying Agent, if other than the Trustee, on a date that is at least 30 days prior to the date of that payment or delivery (unless the obligation to pay Additional Amounts arises after the 30th day prior to that payment date, in which case the Company or its successor shall notify the Trustee and the Paying Agent promptly thereafter) an Officers Certificate stating the fact that Additional Amounts will be payable and the amount estimated to be so payable. The Officers Certificate must also set forth any other information reasonably necessary to enable the Paying Agent or the Conversion Agent, as the case may be, (on behalf of the Company and subject to receipt of funds from the Company pursuant to the last paragraph in Section 4.04(a)) to pay Additional Amounts to Holders on the relevant payment date. The Trustee and the Paying Agent shall be entitled to rely solely on such Officers Certificate as conclusive proof that such payments are necessary. The Company or its successor shall provide the Trustee and the Paying Agent with documentation reasonably satisfactory to the Trustee evidencing the payment of Additional Amounts.
(c) The Company or its successor shall make all withholdings and deductions required by law and shall remit the full amount deducted or withheld to the relevant tax authority in accordance with applicable law. Upon request, the Company or its successor shall provide to the Trustee an official receipt or, if official receipts are not obtainable, an Officers Certificate evidencing the payment of any applicable taxes so deducted or withheld. Copies of those receipts or other documentation, as the case may be, shall be made available by the Trustee to the Holders of the Notes upon written request.
(d) Any reference in this Indenture or the Notes in any context to the delivery of ADSs (together with payment of cash for any Fractional ADS) or other consideration upon conversion of any Note or the payment of principal of (including the Redemption Price, the Repurchase Price and Fundamental Change Repurchase Price, if applicable) and any premium or interest (including any Additional Interest) on any Note or any other amount payable with respect to such Note, shall be deemed to include payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable with respect to that amount pursuant to this Section 4.07.
(e) Notwithstanding any other provisions, the Company or its successor, the Trustee and the Paying Agent shall be entitled to make any withholding or deduction pursuant to FATCA.
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(f) If the Company or its successor is required to make any deduction or withholding from any payments or deliveries with respect to the Notes, it will deliver to the Trustee official tax receipts evidencing the remittance to the relevant tax authorities of the amounts so withheld or deducted.
(g) The foregoing obligations shall survive termination or discharge of this Indenture.
Section 4.08 Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
Section 4.09 Compliance Certificate; Statements as to Defaults. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2020) an Officers Certificate stating that a review has been conducted of the Companys activities under this Indenture and the Company has fulfilled its obligations hereunder, and whether the authorized Officers thereof have knowledge of any Default by the Company that occurred during the previous year that is then continuing and, if so, specifying each such Default and the nature thereof.
In addition, the Company shall deliver to the Trustee, as soon as possible, and in any event within 30 days after the Company becomes aware of the occurrence of any Default if such Default is then continuing, an Officers Certificate setting forth the details of such Default, its status and the action that the Company is taking or proposing to take in respect thereof. The Trustee shall have no responsibility to take any steps to ascertain whether any Event of Default or Default has occurred, and until (i) a Responsible Officer of the Trustee has received an Officers Certificate regarding such an occurrence, or (ii) the Trustee has received written notice at the Corporate Trust Office from the Holders of at least 25% in aggregate principal amount of the Notes then outstanding regarding such an occurrence, the Trustee is entitled to assume, without liability, that no Event of Default or Default has occurred.
Section 4.10 Further Instruments and Acts. The Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.
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ARTICLE 5
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 5.01 Lists of Holders. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semi-annually, not more than 15 days after each June 1 and December 1 in each year beginning with December 1, 2020, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the Holders as of a date not more than 15 days (or such other date as the Trustee may reasonably request in order to so provide any such notices) prior to the time such information is furnished, except that no such list need be furnished so long as the Deutsche Bank Trust Company Americas is acting as Note Registrar.
Section 5.02 Preservation and Disclosure of Lists. The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 5.01 or maintained by the Trustee in its capacity as Note Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default. The following events shall be Events of Default with respect to the Notes:
(a) default in any payment of interest or Additional Amounts, if any, on any Note when due and payable and the default continues for a period of 30 days;
(b) default in the payment of principal of any Note when due and payable on the Maturity Date, upon redemption, upon any required repurchase, upon declaration of acceleration or otherwise;
(c) failure by the Company to comply with its obligation to convert the Notes in accordance with this Indenture upon exercise of a Holders conversion right and such failure continues for a period of five Business Days;
(d) failure by the Company to issue notices in connection with redemption in respect of a Change in Tax Law in accordance with Section 16.01 or Section 14.03(g), a Company Notice in accordance with Section 15.01(a), a Fundamental Change Company Notice in accordance with Section 15.02(c) or a notice of a Make-Whole Fundamental Change in accordance with Section 14.03(a), in each case, when due and such failure continues for a period of five Business Days;
(e) failure by the Company to comply with its obligations under Article 11;
(f) failure by the Company for 60 days after written notice from the Trustee or by the Trustee at the request of the Holders of at least 25% in aggregate principal amount of the Notes then outstanding has been received by the Company to comply with any of its other agreements contained in the Notes or this Indenture;
(g) default by the Company or any Significant Subsidiary of the Company with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of US$50 million (or the foreign currency equivalent thereof) in the aggregate of the Company and/or any such Significant Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise;
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(h) a final judgment for the payment of US$50 million (or the foreign currency equivalent thereof) or more (excluding any amounts covered by insurance) rendered against the Company or any Significant Subsidiary of the Company, which judgment is not paid, bonded or otherwise discharged or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;
(i) the Company or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or any such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any such Significant Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or
(j) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 30 consecutive days.
Section 6.02 Acceleration; Rescission and Annulment. If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 6.01(i) or Section 6.01(j) with respect to the Company or any of its Significant Subsidiaries), unless the principal of all of the Notes shall have already become due and payable, the Trustee may by notice in writing to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.04, by notice in writing to the Company and to the Trustee may, and the Trustee at the written request of such Holders shall (subject to being indemnified and/or secured and/or pre-funded to its reasonable satisfaction), declare 100% of the principal of, and accrued and unpaid interest on, all the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, notwithstanding anything contained in this Indenture or in the Notes to the contrary. If an Event of Default specified in Section 6.01(i) or Section 6.01(j) with respect to the Company or any of its Significant Subsidiaries occurs and is continuing, 100% of the principal of, and accrued and unpaid interest on, all Notes shall become and shall automatically be immediately due and payable without any action on the part of the Trustee. If an Event of Default occurs and is continuing, all agents of the Company appointed under this Indenture will be required to act on the direction of the Trustee.
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The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest to the extent that payment of such interest is enforceable under applicable law, and on such principal at the rate per annum borne by the Notes plus one percent) and amounts due to the Trustee pursuant to Section 7.06, and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all existing Events of Default under this Indenture, other than the nonpayment of the principal of and accrued and unpaid interest on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.09, then and in every such case (except as provided in the immediately succeeding sentence) the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon. Notwithstanding anything to the contrary herein, no such waiver or rescission and annulment shall extend to or shall affect any Default or Event of Default resulting from (i) the nonpayment of the principal of, or accrued and unpaid interest on, any Notes, (ii) a failure to repurchase any Notes when required or (iii) a failure to pay or deliver, as the case may be, the consideration due upon conversion of the Notes.
Section 6.03 Additional Interest. Notwithstanding anything in this Indenture or in the Notes to the contrary, to the extent the Company elects, the sole remedy for Event of Default relating to the Companys failure to comply with its obligations as set forth in Section 4.06(b) shall after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the Notes at a rate equal to:
(a) 0.25% per annum of the principal amount of the Notes outstanding for each day during the period beginning on, and including, the date on which such an Event of Default first occurs and ending on the earlier of (i) the date on which such Event of Default is cured or validly waived and (ii) the 90th day immediately following, and including, the date on which such Event of Default first occurred; and
(b) if such Event of Default has not been cured or validly waived prior to the 91st day immediately following, and including, the date on which such Event of Default first occurred, 0.50% per annum of the principal amount of the Notes outstanding for each day during the period beginning on, and including, the 91st day immediately following, and including, the date on which such an Event of Default first occurred and ending on the earlier of (i) the date on which such Event of Default is cured or validly waived and (ii) the 180th day immediately following, and including, the date on which such Event of Default first occurred.
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Interest payable pursuant to this Section 6.03 shall be in addition to, not in lieu of, any Additional Interest payable pursuant to Section 4.06(d) or Section 4.06(e). In no event shall Additional Interest accrue on the Notes on any day under this Indenture (taking any Additional Interest payable pursuant to this Section 6.03 together with any Additional Interest payable pursuant to Section 4.06(d) and Section 4.06(e)) at an annual rate accruing in excess of 0.50%, in the aggregate, for any violation or Default caused by the Companys failure to be current in respect of its Exchange Act reporting obligations. If the Company so elects, such Additional Interest shall be payable in the same manner and on the same dates as regular interest on the Notes. On the 181st day after such Event of Default (if the Event of Default with respect to the Companys obligations under Section 4.06(b) is not cured or waived prior to such 181st day), the Notes will be subject to acceleration as provided in Section 6.02. In the event the Company does not elect to pay Additional Interest following an Event of Default in accordance with this Section 6.03 or the Company elected to make such payment but does not pay the Additional Interest when due, the Notes shall be subject to acceleration as provided in Section 6.02.
In order to elect to pay Additional Interest as the sole remedy during the first 180 days after the occurrence of any Event of Default described in the immediately preceding paragraph, the Company must notify in writing all Holders of the Notes, the Trustee and the Paying Agent of such election prior to the beginning of such 180-day period. Upon the failure to timely give such notice, the Notes shall be immediately subject to acceleration as provided in Section 6.02.
Section 6.04 Payments of Notes on Default; Suit Therefor. If an Event of Default described in clause (a) or (b) of Section 6.01 shall have occurred, the Company shall, upon demand of the Trustee acting in its own discretion or at the request of Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.04 and subject to indemnity and/or security and/or pre-funding reasonably satisfactory to the Trustee, pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal and interest, if any, with interest on any overdue principal and interest, if any, at the rate per annum borne by the Notes at such time plus one percent, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 7.06. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.
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In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the event of any other judicial proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.04, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and accrued and unpaid interest, if any, in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents and to take such other actions as it may deem necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, properly incurred expenses, properly incurred disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due to the Trustee under Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Holders to make such payments to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for compensation, properly incurred expenses, advances and properly incurred disbursements, including agents and counsel fees and expenses, and including any other amounts due to the Trustee under Section 7.06, incurred by it up to the date of such distribution. To the extent that such payment of compensation, properly incurred expenses, advances and properly incurred disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting such Holder or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name or as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the compensation, properly incurred expenses, properly incurred disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings.
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In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of any waiver pursuant to Section 6.09 or any rescission and annulment pursuant to Section 6.02 or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Holders, and the Trustee shall, subject to any determination in such proceeding, be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Holders, and the Trustee shall continue as though no such proceeding had been instituted.
Section 6.05 Application of Monies Collected by Trustee. Any monies collected by the Trustee pursuant to this Article 6 with respect to the Notes shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:
First, to the payment of all amounts due to the Trustee, including to its agents and counsel, under Section 7.06 and any payments due to the Paying Agent, the Transfer Agent, the Conversion Agent and the Note Registrar;
Second, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on, the Notes in default in the order of the date due of the payments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon such overdue payments at the rate per annum borne by the Notes at such time (including, without duplication, any additional interest on such overdue payments pursuant to Section 6.04), such payments to be made ratably to the Persons entitled thereto;
Third, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount (including, if applicable, the payment of the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price and any cash due upon conversion) then owing and unpaid upon the Notes for principal and interest, if any, with interest on the overdue principal and, to the extent that such interest has been collected by the Trustee, upon overdue installments of interest at the rate per annum borne by the Notes at such time plus one percent, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal (including, if applicable, the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price and the cash due upon conversion) and interest without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal (including, if applicable, the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price) and accrued and unpaid interest; and
Fourth, to the payment of the remainder, if any, to the Company.
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Section 6.06 Proceedings by Holders. Except to enforce the right to receive payment of principal (including, if applicable, the Redemption Price, the Repurchase Price or Fundamental Change Repurchase Price) or interest when due, or the right to receive payment or delivery of the consideration due upon conversion, no Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless:
(a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as herein provided;
(b) Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder;
(c) such Holders shall have offered to the Trustee such security and/or indemnity and/or pre-funding reasonably satisfactory to it against any loss, liability or expense to be incurred therein or thereby;
(d) the Trustee for 60 days after its receipt of such notice, request and offer of security and/or indemnity and/or pre-funding, shall have not complied with such written request of the Holders to institute any such action, suit or proceeding; and
(e) no direction that, in the opinion of the Trustee, is inconsistent with such written request shall have been given to the Trustee by the Holders of a majority of the aggregate principal amount of the Notes then outstanding within such 60-day period pursuant to Section 6.09,
it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders (except as otherwise provided herein). For the protection and enforcement of this Section 6.06, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of any Note, the right of any Holder to receive payment or delivery, as the case may be, of (x) the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, (y) accrued and unpaid interest on, and (z) the consideration due upon conversion of, such Note, on or after the respective due dates expressed or provided for in such Note or in this Indenture, or to institute suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates against the Company shall not be impaired or affected without the consent of such Holder.
Section 6.07 Proceedings by Trustee. In case of an Event of Default, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.
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Section 6.08 Remedies Cumulative and Continuing. Except as provided in the last paragraph of Section 2.06, all powers and remedies given by this Article 6 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and, subject to the provisions of Section 6.06, every power and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.
Section 6.09 Direction of Proceedings and Waiver of Defaults by Majority of Holders. The Holders of a majority of the aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to Notes; provided, however, that (a) such direction shall not be in conflict with any rule of law or with this Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. The Trustee may refuse to follow any direction that would involve the Trustee in personal liability, or if it is not provided with security and/or indemnity and/or pre-funding to its reasonable satisfaction, or that the Trustee determines is unduly prejudicial to the rights of any other Holder. In addition, the Trustee will not be required to expend its own funds under any circumstances. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of accrued and unpaid interest on, or the principal (including, if applicable, the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.02, (ii) a failure by the Company to pay or deliver, or cause to be delivered, as the case may be, the consideration due upon conversion of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.09, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
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Section 6.10 Notice of Defaults and Events of Default. If a Default or Event of Default occurs and is continuing and is notified in writing to the Trustee, the Trustee shall, within 90 days after the occurrence and continuance of such Default or Event of Default, mail to all Holders (at the Companys expense) as the names and addresses of such Holders appear upon the Note Register, notice of all Defaults so notified in writing, unless such Defaults shall have been cured or waived before the giving of such notice; provided that the Trustee shall not be deemed to have knowledge of any occurrence of a Default or Event of Default unless it has received written notice. Except in the case of a Default in the payment of the principal of (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable), or accrued and unpaid interest on, any of the Notes or a Default in the payment or delivery of the consideration due upon conversion, the Trustee shall be protected in withholding such notice if and so long as the Trustees board of directors, a Responsible Officer, an executive committee or a committee of Responsible Officers of the Trustee (in its sole discretion) in good faith determines that the withholding of such notice is in the interests of the Holders.
Section 6.11 Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess costs, including attorneys fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 6.11 (to the extent permitted by law) shall not apply to any suit instituted by or against the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.04, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or accrued and unpaid interest on any Note (including, but not limited to, the Redemption Price and the Repurchase Price and Fundamental Change Repurchase Price with respect to the Notes being repurchased as provided in this Indenture) on or after the due date expressed or provided for in such Note or to any suit for the enforcement of the right to convert any Note in accordance with the provisions of Article 14.
ARTICLE 7
CONCERNING THE TRUSTEE
Section 7.01 Duties and Responsibilities of Trustee. The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations will be read into the Indenture against the Trustee. In case an Event of Default, of which the Trustee has actual written notice, has occurred that has not been cured or waived the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such persons own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity and/or security and/or pre-funding reasonably satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request or direction.
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No provision of this Indenture shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred:
(i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of gross negligence and willful misconduct on the part of the Trustee, as proven in a final decision of a court of competent jurisdiction, the Trustee may conclusively and without liability rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of any mathematical calculations or other facts, statements, opinions or conclusions stated therein);
(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved in a final decision in a court of competent jurisdiction that the Trustee was grossly negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority of the aggregate principal amount of the Notes at the time outstanding determined as provided in Section 8.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;
(d) whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section;
(e) the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any Paying Agent or any records maintained by any co-Note Registrar with respect to the Notes;
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(f) if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively and without liability rely on its failure to receive such notice as reason to act as if no such event occurred;
(g) [RESERVED]
(h) in the event that the Trustee is also acting as Note Registrar, Paying Agent, Conversion Agent or Transfer Agent hereunder, the rights, immunities, privileges, disclaimers from liability and protections (including the right to compensation and indemnity) afforded to the Trustee pursuant to this Article 7 shall also be afforded to such Note Registrar, Paying Agent, Conversion Agent or Transfer Agent;
(i) the Trustee shall have no duty to inquire, no duty to determine and no duty to monitor as to the performance of the Companys covenants in this Indenture or the financial performance of the Company; the Trustee shall be entitled to assume, until it has received written notice in accordance with this Indenture, that the Company is properly performing its duties hereunder;
(j) the Trustee shall be under no obligation to enforce any of the provisions of this Indenture unless it is instructed by Holders of at least 25% of the aggregate principal amount of outstanding Notes and is provided with security and/or indemnity and/or pre-funding reasonably satisfactory to it;
(k) the Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity and/or security and/or pre-funding reasonably satisfactory to it against any costs, expenses and liabilities that might be incurred by it in compliance with such requests or direction.
(l) before the Trustee acts or refrains from acting, it may require an Officers Certificate or an Opinion of Counsel prepared and delivered at the cost of the Company conforming to Section 17.06 and the Trustee and the Agents may rely conclusively on such certificate or opinion and will not be liable for any action it takes or omits to take in good faith in reliance on such Officers Certificate or Opinion of Counsel;
(m) in connection with the exercise by it of its trusts, powers, authorities or discretions (including, without limitation, any modification, waiver, authorization or determination), the Trustee shall have regard to the general interests of the Holders as a class but shall not have regard to any interests arising from circumstances particular to individual Holders (whatever their number) and in particular, but without limitation, shall not have regard to the consequences of the exercise of its trusts, powers, authorities or discretions for individual Holders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any country, state or territory; and
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(n) the Trustee is not obliged to do or omit to do anything which in its reasonable opinion, would or may be illegal or would constitute a breach of any fiduciary duty or duty of confidentiality, or any law, rule, regulation, or any decree, order or judgment of any court, or practice, request, direction, notice, announcement or similar action (whether or not having the force of law) of any relevant government, government agency, regulatory authority, stock exchange or self-regulatory organization to which the Trustee is subject. The Trustee may without liability do anything which is, in its reasonable opinion, necessary to comply with any such law, directive or regulations.
None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.
Section 7.02 Reliance on Documents, Opinions, Etc. Except as otherwise provided in Section 7.01:
(a) the Trustee may conclusively and without liability rely and shall be fully protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, Note, coupon or other paper or document (whether in its original or facsimile form) believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and require an Opinion of Counsel and any advice of such counsel or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation;
(e) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, delegates, custodians, nominees or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, delegate, representative, custodian, nominee or attorney appointed by it with due care hereunder;
(f) the permissive rights of the Trustee enumerated herein shall not be construed as duties;
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(g) under no circumstances and notwithstanding any contrary provision included herein, neither the Trustee, the Paying Agent, the Conversion Agent nor the Note Registrar shall be responsible or liable for special, indirect, punitive, or consequential damages or loss of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether any of them have been advised of the likelihood of such loss or damage and regardless of the form of action; this provision shall remain in full force and effect notwithstanding the discharge of the Notes, the termination of this Indenture or the resignation, replacement or removal of the Trustee, the Paying Agent, the Conversion Agent and the Note Registrar;
(h) the Trustee, the Paying Agent, the Conversion Agent and the Note Registrar may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction or, to the extent applicable, of New York; furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or New York or if, in its opinion based on such legal advice, it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that jurisdiction or in New York or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power;
(i) [RESERVED];
(j) the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;
(k) the Trustee may request that the Company deliver Officers Certificates setting forth the names of individuals and their titles and specimen signatures of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers Certificates may be signed by any Person authorized to sign an Officers Certificate, as the case may be, including any Person specified as so authorized in any such certificate previously delivered and not superseded;
(l) the Trustee shall not be responsible or liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers;
(m) the Trustee shall not be responsible or liable for any action taken or omitted by it in good faith at the direction, in accordance with Section 6.09, of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 as to the time, method and place of conducting any proceeding for any remedy available to the Trustee or the exercising of any power conferred by this Indenture; and
(n) the Trustee shall not be responsible for any inaccuracy in the information obtained from the Company or for any inaccuracy or omission in the records which may result from such information or any failure by the Trustee to perform its duties as set forth herein as a result of any inaccuracy or incompleteness of such information; and
(o) neither the Trustee nor any agent thereof shall have any responsibility or liability for any actions taken or not taken by the Depositary.
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Section 7.03 No Responsibility for Recitals, Etc. The recitals, statements, warranties and representations contained herein and in the Notes (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the accuracy or correctness of the same or for any failure by the Company or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information, or the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture. Notwithstanding the generality of the foregoing, each Holder shall be solely responsible for making its own independent appraisal of, and investigation into, the financial condition, creditworthiness, condition, affairs, status and nature of the Company, and the Trustee shall not at any time have any responsibility for the same and each Holder shall not rely on the Trustee in respect thereof.
Section 7.04 Trustee, Paying Agents, Conversion Agents or Note Registrar May Own Notes. The Trustee, any Paying Agent, any Conversion Agent or Note Registrar, in its individual or any other capacity, may engage in business and contractual relationships with the Company or its Affiliates and may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee, Paying Agent, Conversion Agent or Note Registrar, and nothing herein shall obligate any of them to account for any profits earned from any business or transactional relationship.
Section 7.05 Monies to Be Held in Trust. All monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money held by the Trustee in trust or by the Paying Agent hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor the Paying Agent shall be under any liability for interest on any money received by it hereunder.
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Section 7.06 Compensation and Expenses of Trustee. (a) The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to in writing between the Trustee and the Company (which sum shall be paid free and clear of deduction and withholding on account of taxation, set-off and counterclaim), and the Company will pay or reimburse the Trustee upon its request for all properly incurred expenses, disbursements and advances properly incurred or made by the Trustee in accordance with any of the provisions of this Indenture in any capacity thereunder (including the compensation and the properly incurred expenses and disbursements of its agents and counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as shall have been caused by its gross negligence or willful misconduct as proven in a final decision in a court of competent jurisdiction. The Company also covenants to indemnify the Trustee (which for the purposes of this Section 7.06 shall be deemed to include its officers, directors, agents and employees) in any capacity under this Indenture (including without limitation as Note Registrar, Transfer Agent, Conversion Agent and Paying Agent) and any other document or transaction entered into in connection herewith, and to hold it harmless against, any loss, claim, damage,liability or expense (whether arising from third party claims or claims by or against the Company) incurred without gross negligence or willful misconduct on the part of the Trustee, its officers, directors, agents or employees, as the case may be, as proven in a final decision of a court of competent jurisdiction, and arising out of or in connection with the acceptance or administration of this Indenture or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the process of enforcing this indemnity. The obligations of the Company under this Section 7.06 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall be secured by a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by the Trustee, except, subject to the effect of Section 6.05, funds held in trust herewith for the benefit of the Holders of particular Notes. The Trustees right to receive payment of any amounts due under this Section 7.06 shall not be subordinate to any other liability or indebtedness of the Company. The indemnity under this Section 7.06(a) is payable upon demand by the Trustee. The obligation of the Company under this Section 7.06(a) shall survive the satisfaction and discharge of the Notes, the termination or discharge of this Indenture and the resignation, replacement or removal or the Trustee. The indemnification provided in this Section 7.06(a) shall extend to the officers, directors, agents and employees of the Trustee. Subject to Section 7.02(e), any negligence or misconduct of any agent, delegate, attorney or representative, in each case, of the Trustee, shall not affect indemnification of the Trustee.
Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee and its agents incur expenses or render services after an Event of Default specified in Section 6.01(i) or Section 6.01(j) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws. If a Default or Event of Default shall have occurred or if the Trustee finds it expedient or necessary or is requested by the Company and/or the Holders to undertake duties which are of an exceptional nature or otherwise outside the scope of the Trustees normal duties under this Indenture, the Company will pay such additional remuneration as the Company and the Trustee may separately agree in writing.
(b) The Paying Agent, the Conversion Agent and the Note Registrar shall be entitled to the compensation to be agreed upon in writing with the Company for all services rendered by it under this Indenture, and the Company agrees promptly to pay such compensation and to reimburse the Paying Agent, the Conversion Agent and the Note Registrar for its out-of-pocket expenses (including fees and expenses of counsel) properly incurred by it in connection with the services rendered by it under this Indenture. The Company hereby agrees to indemnify the Paying Agent, the Conversion Agent and the Note Registrar and their respective officers, directors, agents and employees and any successors thereto for, and to hold it harmless against, any loss, liability or expense (including fees and expenses of counsel) properly incurred without gross negligence or willful misconduct on its part arising out of or in connection with its acting as the Paying Agent, the Conversion Agent and the Note Registrar hereunder. The obligations of the Company under this paragraph (b) shall survive the payment of the Notes, the termination or discharge of the Indenture and the resignation, replacement or removal of the Paying Agent, the Conversion Agent and the Note Registrar.
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Section 7.07 Officers Certificate as Evidence. Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by an Officers Certificate delivered to the Trustee, and such Officers Certificate shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.
Section 7.08 Eligibility of Trustee. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least US$50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 7.09 Resignation or Removal of Trustee. (a) The Trustee may at any time resign by giving 30 days written notice of such resignation to the Company and by mailing notice thereof to the Holders at their addresses as they shall appear on the Note Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation to the Holders, the resigning Trustee may at the expense of the Company petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide holder of a Note or Notes for at least six months may, subject to the provisions of Section 6.11, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.08 and shall fail to resign after written request therefor by the Company or by any such Holder, or
(ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in either case, the Company may by a Board Resolution remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.11, any Holder who has been a bona fide holder of a Note or Notes for at least six months may, on behalf of himself or herself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
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(c) The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, as determined in accordance with Section 8.04, may at any time remove the Trustee and nominate a successor trustee that shall be deemed appointed as successor trustee unless within ten days after notice to the Company of such nomination the Company objects thereto, in which case the Trustee so removed or any Holder, upon the terms and conditions and otherwise as in Section 7.09(a) provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 7.09 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.10.
Section 7.10 Acceptance by Successor Trustee. Any successor trustee appointed as provided in Section 7.09 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of Section 7.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by such trustee as such, except for funds held in trust for the benefit of Holders of particular Notes, to secure any amounts then due to it pursuant to the provisions of Section 7.06.
No successor trustee shall accept appointment as provided in this Section 7.10 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 7.08.
Upon acceptance of appointment by a successor trustee as provided in this Section 7.10, each of the Company and the successor trustee, at the written direction and at the expense of the Company shall mail or cause to be mailed notice of the succession of such trustee hereunder to the Holders at their addresses as they shall appear on the Note Register. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company.
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Section 7.11 Succession by Merger, Etc. Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee (including the administration of this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that in the case of any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee such corporation or other entity shall be eligible under the provisions of Section 7.08.
In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor trustee hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Notes in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.
Section 7.12 Trustees Application for Instructions from the Company. Any application by the Trustee for written instructions from the Company (other than with regard to any action proposed to be taken or omitted to be taken by the Trustee that affects the rights of the Holders of the Notes under this Indenture) may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer that the Company has indicated to the Trustee should receive such application actually receives such application, unless any such officer shall have consented in writing to any earlier date), unless, prior to taking any such action (or the effective date in the case of any omission), the Trustee shall have received written instructions in accordance with this Indenture in response to such application specifying the action to be taken or omitted.
ARTICLE 8
CONCERNING THE HOLDERS
Section 8.01 Action by Holders. Whenever in this Indenture it is provided that the Holders of a specified percentage of the aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Holders in person or by agent or proxy appointed in writing, or (b) by the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Article 9, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Holders. Whenever the Company or the Trustee solicits the taking of any action by the Holders of the Notes, the Company or the Trustee may fix, but shall not be required to, in advance of such solicitation, a date as the record date for determining Holders entitled to take such action. The record date if one is selected shall be not more than fifteen days prior to the date of commencement of solicitation of such action.
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Section 8.02 Proof of Execution by Holders. Subject to the provisions of Section 7.01, Section 7.02 and Section 9.05, proof of the execution of any instrument by a Holder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note Register or by a certificate of the Note Registrar. The record of any Holders meeting shall be proved in the manner provided in Section 9.06.
Section 8.03 Who Are Deemed Absolute Owners. The Company, the Trustee, any Paying Agent, any Conversion Agent and any Note Registrar may deem the Person in whose name a Note shall be registered upon the Note Register to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal of and (subject to Section 2.03) accrued and unpaid interest on such Note, for the purpose of conversion of such Note and for all other purposes; and neither the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor any Note Registrar shall be affected by any notice to the contrary. All such payments or deliveries so made to any Holder for the time being, or upon its order, shall be valid, and, to the extent of the sums or ADSs so paid or delivered, effectual to satisfy and discharge the liability for monies payable or ADSs deliverable upon any such Note. Notwithstanding anything to the contrary in this Indenture or the Notes following an Event of Default, any Holder of a beneficial interest in a Global Note may directly enforce against the Company, without the consent, solicitation, proxy, authorization or any other action of the Depositary or any other Person, such Holders right to exchange such beneficial interest for a Note in certificated form in accordance with the provisions of this Indenture.
Section 8.04 Company-Owned Notes Disregarded. In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Indenture, Notes that are owned by the Company, by any Subsidiary or Consolidated Affiliated Entity thereof or by any Affiliate of the Company or any Subsidiary or Consolidated Affiliated Entity thereof shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action only Notes in respect of which a Responsible Officer is notified in writing shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.04 if the pledgee shall establish its right to so act with respect to such Notes and that the pledgee is not the Company, a Subsidiary or Consolidated Affiliated Entity thereof or an Affiliate of the Company or a Subsidiary or Consolidated Affiliated Entity thereof. Within five days of acquisition of the Notes by any of the above described persons or entities or at the request of the Trustee, the Company shall furnish to the Trustee promptly an Officers Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and, subject to Section 7.01, the Trustee shall be entitled to accept such Officers Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.
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Section 8.05 Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the Holders of the percentage of the aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note that is shown by the evidence to be included in the Notes the Holders of which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Note. Except as aforesaid, any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor or upon registration of transfer thereof, irrespective of whether any notation in regard thereto is made upon such Note or any Note issued in exchange or substitution therefor or upon registration of transfer thereof.
ARTICLE 9
HOLDERS MEETINGS
Section 9.01 Purpose of Meetings. A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article 9 for any of the following purposes:
(a) to give any notice to the Company or to the Trustee or to give any directions to the Trustee permitted under this Indenture, or to consent to the waiving of any Default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article 6;
(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article 7;
(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.02; or
(d) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture or under applicable law.
Section 9.02 Call of Meetings by Trustee. The Trustee may (in its sole discretion and without obligation) at any time call a meeting of Holders to take any action specified in Section 9.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to Section 8.01, shall be mailed to Holders of such Notes at their addresses as they shall appear on the Note Register. Such notice shall also be mailed to the Company. Such notices shall be mailed not less than 20 nor more than 90 days prior to the date fixed for the meeting.
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Any meeting of Holders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the Holders of all Notes then outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.
Section 9.03 Call of Meetings by Company or Holders. In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% of the aggregate principal amount of the Notes then outstanding, shall have requested the Company to call a meeting of Holders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Company shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Trustee or such Holders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 9.01, by mailing notice thereof as provided in Section 9.02.
Section 9.04 Qualifications for Voting. To be entitled to vote at any meeting of Holders a Person shall (a) be a Holder of one or more Notes on the record date pertaining to such meeting or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more Notes on the record date pertaining to such meeting. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.
Section 9.05 Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 9.03, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Notes represented at the meeting and entitled to vote at the meeting.
Subject to the provisions of Section 8.04, at any meeting of Holders each Holder or proxyholder shall be entitled to one vote for each US$1,000 principal amount of Notes held or represented by him or her; provided, however, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by it or instruments in writing as aforesaid duly designating it as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 9.02 or Section 9.03 may be adjourned from time to time by the Holders of a majority of the aggregate principal amount of Notes represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.
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Minutes shall be made of all resolutions and proceedings at every meeting and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting of Holders of the Notes, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.
Section 9.06 Voting. The vote upon any resolution submitted to any meeting of Holders shall be by written ballot on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the outstanding principal amount of the Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 9.02. The record shall show the principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters therein stated.
Section 9.07 No Delay of Rights by Meeting. Nothing contained in this Article 9 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Notes.
ARTICLE 10
SUPPLEMENTAL INDENTURES
Section 10.01 Supplemental Indentures Without Consent of Holders. The Company, when authorized by the resolutions of the Board of Directors, and the Trustee, at the Companys expense and direction, may from time to time and at any time amend or supplement this Indenture or the Notes for one or more of the following purposes:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to provide for the assumption by a Successor Company of the obligations of the Company under this Indenture and the Notes pursuant to Article 11;
(c) to add guarantees or any credit enhancements of similar nature with respect to the Notes;
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(d) to secure the Notes;
(e) to add to the covenants or Events of Defaults of the Company for the benefit of the Holders or surrender any right or power conferred upon the Company;
(f) upon the occurrence of any transaction or event described in Section 14.07(a), to (i) provide that the Notes are convertible into Reference Property, subject to Section 14.02, and (ii) effect the related changes to the terms of the Notes described under Section 14.07(a), in each case, in accordance with Section 14.07;
(g) to make any change that does not adversely affect the rights of any Holder;
(h) to comply with the rules of the Depositary, including The Depository Trust Company (DTC);
(i) to evidence and provide for the acceptance of the appointment of a successor trustee in accordance with this Indenture; or
(j) to conform the provisions of this Indenture or the Notes to the Description of the
Notes section of the Offering Memorandum.
Upon the written request of the Company, the Trustee is hereby authorized to join with the Company in the execution of any such amendment or supplement to this Indenture or the Notes, to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustees own rights, duties or immunities under this Indenture or otherwise. The Trustee shall seek an Officers Certificate and an Opinion of Counsel, at the Companys expense, that any such amendment or supplement to this Indenture or the Notes is authorized and permitted by the terms of this Indenture and not contrary to law.
Any amendment or supplement to this Indenture or the Notes authorized by the provisions of this Section 10.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 10.02.
Section 10.02 Supplemental Indentures with Consent of Holders. With the consent (evidenced as provided in Article 8) of the Holders of at least a majority of the aggregate principal amount of the Notes then outstanding (determined in accordance with Article 8 and including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, Notes), the Company, when authorized by the resolutions of the Board of Directors, and the Trustee, at the Companys expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or any supplemental indenture or the Notes or modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder of an outstanding Note affected, no such supplemental indenture shall:
(a) reduce the amount of Notes whose Holders must consent to an amendment or waiver;
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(b) reduce the rate of or extend the stated time for payment of interest on any Notes;
(c) reduce the principal of or extend the Maturity Date of any Notes;
(d) make any change that adversely affects the conversion rights of any Notes;
(e) reduce the Repurchase Price payable on the relevant Repurchase Date, the Fundamental Change Repurchase Price or the Redemption Price of any Note or amend or modify in any manner adverse to the Holders the Companys obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;
(f) make any Note payable in a currency other than U.S. dollars;
(g) change the ranking of the Notes;
(h) impair the right of any Holder to receive payment of principal and interest on such Holders Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holders Note;
(i) change the Companys obligation to pay Additional Amounts on any Note; or
(j) make any change in this Article 10 that requires each Holders consent or in the waiver provisions in Section 6.02 or Section 6.09.
Upon the written request of the Company, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid and subject to Section 10.05, the Trustee shall join with the Company in the execution of such supplemental indenture unless (i) the Trustee has not received an Officers Certificate and an Opinion of Counsel that such supplemental indenture is authorized and permitted by the terms of this Indenture and not contrary to law or (ii) such supplemental indenture affects the Trustees own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.
Holders do not need under this Section 10.02 to approve the particular form of any proposed supplemental indenture. It shall be sufficient if such Holders approve the substance thereof. After any supplemental indenture becomes effective under Section 10.01 or Section 10.02, the Company shall mail to the Holders a notice briefly describing such supplemental indenture. However, the failure to give such notice to all the Holders, or any defect in the notice, will not impair or affect the validity of the supplemental indenture.
Section 10.03 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Article 10, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
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Section 10.04 Notation on Notes. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 10 may, at the Companys expense, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Companys expense, be prepared and executed by the Company, authenticated by the Trustee upon receipt of a Company Order and delivered in exchange for the Notes then outstanding,
upon surrender of such Notes then outstanding.
Section 10.05 Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee. In addition to the documents required by Section 17.06, the Trustee shall receive an Officers Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article 10 and is permitted or authorized by this Indenture and is not contrary to law.
ARTICLE 11
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 11.01 Company May Consolidate, Etc. on Certain Terms. Subject to the provisions of Section 11.02, the Company shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of the consolidated assets of the Company, its Subsidiaries and its Consolidated Affiliated Entities, taken as a whole, to another Person, unless:
(a) the resulting, surviving or transferee Person (the Successor Company), if not the Company, shall be a corporation organized and existing under the laws of the United States, any State thereof, the District of Columbia, the Cayman Islands, the British Virgin Islands, Bermuda or Hong Kong and the Successor Company (if not the Company) shall expressly assume, by supplemental indenture all of the obligations of the Company under the Notes and this Indenture (including, for the avoidance of doubt, the obligation to pay Additional Amounts pursuant to Section 4.07);
(b) if the Company will not be the resulting or surviving corporation, the Company shall have, at or prior to the effective date of such transaction, delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that the execution and delivery of the supplemental indenture do not conflict with the requirements set forth in the Indenture and that all conditions precedent to the execution and delivery of such supplemental indenture have been satisfied; and
(c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture.
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For purposes of this Section 11.01, the sale, conveyance, transfer or lease of all or substantially all of the assets of one or more Subsidiaries or Consolidated Affiliated Entities of the Company to another Person, which properties and assets, if held by the Company instead of such Subsidiaries or Consolidated Affiliated Entities, would constitute all or substantially all of the assets of the Company on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the consolidated assets of the Company to another Person.
Section 11.02 Successor Corporation to Be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and accrued and unpaid interest on all of the Notes (including, for the avoidance of doubt, any Additional Amounts), the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes (including, for the avoidance of doubt, any Additional Amounts) and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such Successor Company (if not the Company) shall succeed to and, except in the case of a lease of all or substantially all of the Companys properties and assets, shall be substituted for the Company, with the same effect as if it had been named herein as the party of the first part. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the Officers of the Company to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Article 11 the Person named as the Company in the first paragraph of this Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture and the Notes.
In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.
Section 11.03 Opinion of Counsel to Be Given to Trustee. No consolidation, merger, sale, conveyance, transfer or lease shall be effective unless the Trustee shall receive an Officers Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the provisions of this Article 11, that all conditions precedent thereto have been satisfied and that the Notes and such supplemental indenture are the legal, valid and binding obligations of the Successor Company, enforceable against it in accordance with its terms, subject to customary assumptions, qualifications, and exceptions.
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ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 12.01 Indenture and Notes Solely Corporate Obligations. No recourse for the payment of the principal of or accrued and unpaid interest on any Note, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Note, nor because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, Officer or director or Subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE 13
INTENTIONALLY OMITTED
ARTICLE 14
CONVERSION OF NOTES
Section 14.01 Conversion Privilege. Subject to and upon compliance with the provisions of this Article 14, each Holder of a Note shall have the right, at such Holders option, to convert all or any portion (if the portion to be converted is US$1,000 principal amount or an integral multiple thereof) of such Note at any time prior to the close of business on the second Business Day immediately preceding the Maturity Date into ADSs at an initial conversion rate of 24.5516 ADSs (subject to adjustment as provided in this Article 14, the Conversion Rate) per US$1,000 principal amount of Notes (subject to the settlement provisions of Section 14.02, the Conversion Obligation).
Section 14.02 Conversion Procedure; Settlement Upon Conversion.
(a) Upon conversion of any Note, the Company shall cause to be delivered to the converting Holder, in respect of each US$1,000 principal amount of Notes being converted, a number of ADSs equal to the Conversion Rate in effect immediately prior to the close of business on the relevant Conversion Date, together with a cash payment, if applicable, in lieu of any fractional ADSs (Fractional ADSs) (assuming delivery of the maximum number of ADSs due upon conversion that do not represent a fractional ADS) in accordance with subsection (j) of this Section 14.02, on the third Business Day immediately following the relevant Conversion Date; provided that, if a Conversion Date occurs (i) following the Regular Record Date immediately preceding the Maturity Date, subject to clause (ii) below, the Company shall cause such delivery (and payment, if applicable) to be made on the Maturity Date or (ii) after the Ordinary Shares have been replaced by the Reference Property consisting solely of cash in accordance with Section 14.07, the Company shall cause the consideration due in respect of the conversion to be paid to the converting Holder on the tenth Business Day immediately following the related Conversion Date. For the avoidance of doubt, neither the Trustee nor any Agent shall have any responsibility to deliver ADSs upon conversion of any Note to any person or deal with cash payments in relation to conversions, except for cash payments in lieu of any fractional ADS.
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(b) Subject to Section 14.02(e), before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time and, if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.02(h), and complete, manually sign and deliver a duly completed irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a Notice of Conversion) and/or all transfer or similar taxes set forth herein and (ii) in the case of a Physical Note (1) complete, manually sign and deliver a duly completed irrevocable Notice of Conversion to the Conversion Agent, the Company and the ADS Depositary at the specified office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any ADSs to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the specified office of the Trustee, (3) if required, furnish appropriate endorsements and transfer documents, (4) if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.02(h) and (5) if required, pay any transfer or similar taxes as set forth herein. The Trustee (and if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this Article 14 on the Conversion Date for such conversion. No Notice of Conversion with respect to any Notes may be delivered and no Notes may be surrendered by a Holder for conversion thereof if such Holder has also delivered a Repurchase Notice or Fundamental Change Repurchase Notice to the Company in respect of such Notes and not validly withdrawn such Repurchase Notice or Fundamental Change Repurchase Notice in accordance with Section 15.03. A Notice of Conversion shall be deposited at the office of any Conversion Agent on any Business Day from 9:00 a.m. to 3:00 p.m. at the location of the Conversion Agent to which such Notice of Conversion is delivered. Any Notice of Conversion and any Physical Note (if issued) deposited outside the hours specified or on a day that is not a Business Day at the location of the Conversion Agent shall for all purposes be deemed to have been deposited with that Conversion Agent between 9:00 a.m. and 3:00 p.m. on the next Business Day.
If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered. None of the Agents of the Trustee shall have any responsibility whatsoever with respect to the issuance and delivery of the ADSs to the converting Holder.
(c) A Note shall be deemed to have been converted immediately prior to the close of business on the date (the Conversion Date) that the Holder has complied with the requirements set forth in subsection (b) above. The Company shall issue or cause to be issued, and deliver or cause to be delivered to such Holder, or such Holders nominee or nominees, certificates or a book-entry transfer through the Depositary for the full number of ADSs to which such Holder shall be entitled in satisfaction of the Companys Conversion Obligation.
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(d) In case any Note shall be surrendered for partial conversion, the Company shall execute and instruct the Trustee who shall authenticate and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.
(e) If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp, issue, transfer or similar tax due on the delivery of the ADSs upon conversion of the Notes (or the issuance of the underlying Ordinary Shares), unless the tax is due because the Holder requests such ADSs (or such Ordinary Shares) to be issued in a name other than the Holders name, in which case the Holder shall pay that tax. The Conversion Agent may refuse to deliver the certificates representing the ADSs (or the Ordinary Shares) being issued in a name other than the Holders name until the Trustee receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence. The Company shall pay the ADS Depositarys fees for issuance of the ADSs.
(f) Except as provided in Section 14.04, no adjustment shall be made for dividends on any ADSs delivered upon the conversion of any Note as provided in this Article 14.
(g) Upon the conversion of an interest in a Global Note, the Trustee shall make a notation on such Global Note as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.
(h) Upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest, if any, except as set forth below. The Companys settlement of the Conversion Obligation shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but not including, the relevant Conversion Date. As a result, accrued and unpaid interest, if any, to, but not including, the relevant Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited. Notwithstanding the foregoing, if Notes are converted after the close of business on a Regular Record Date but prior to the open of business on the corresponding Interest Payment Date, Holders of such Notes as of the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. Notes surrendered for conversion during the period from the close of business on any Regular Record Date to the open of business on the immediately following Interest Payment Date must be accompanied by funds equal to the amount of interest payable on the Notes so converted; provided that no such payment shall be required (1) for conversions following the close of business on the Regular Record Date immediately preceding the Maturity Date; (2) if the Company has specified the Redemption Date that is after a Regular Record Date and on or prior to the third Business Day immediately succeeding the corresponding Interest Payment Date; (3) if the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the third Business Day immediately succeeding the corresponding Interest Payment Date; or (4) to the extent of any Defaulted Amounts, if any Defaulted Amounts exist at the time of conversion with respect to such Note. Therefore, for the avoidance of doubt, all Holders as of the close of business on the Regular Record Date immediately preceding the Maturity Date shall receive the full interest payment due on the Maturity Date in cash regardless of whether their Notes have been converted following such Regular Record Date.
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(i) The Person in whose name the certificate for any ADSs delivered upon conversion is registered shall be treated as a holder of record of such ADSs as of the close of business on the relevant Conversion Date. Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.
(j) The Company shall not issue any Fractional ADS upon conversion of the Notes and shall instead pay cash in lieu of any Fractional ADS deliverable upon conversion based on the Last Reported Sale Price of the ADSs on the relevant Conversion Date (or if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(k) In accordance with the Unrestricted Deposit Agreement or the Restricted Deposit Agreement, as applicable, the Company shall issue to the ADS Custodian such Ordinary Shares required for the issuance of the ADSs upon conversion of the Notes, plus written delivery instructions (if requested by the ADS Depositary or the ADS Custodian) for such ADSs, shall deliver such legal opinions and any other information or documentation and shall comply with the Unrestricted Deposit Agreement and the Restricted Deposit Agreement (as the case may be), in each case, as required by the ADS Depositary or the ADS Custodian in connection with each issue of Ordinary Shares and issuance and delivery of ADSs.
Section 14.03 Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes. (a) If a Make-Whole Fundamental Change occurs prior to the Maturity Date and a Holder elects to convert its Notes in connection with such Make-Whole Fundamental Change, the Company shall, under the circumstances described below, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional ADSs (the Additional ADSs), as described below. A conversion of Notes shall be deemed for these purposes to be in connection with such Make-Whole Fundamental Change if the relevant Notice of Conversion is received by the Conversion Agent from, and including, the Effective Date of the Make-Whole Fundamental Change up to, and including, the second Business Day immediately prior to the related Fundamental Change Repurchase Date (or, in the case of a Make-Whole Fundamental Change that would have been a Fundamental Change but for the proviso in clause (b) of the definition thereof, the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental Change). The Company shall provide written notification to Holders and the Trustee (and the Conversion Agent, if other than the Trustee) of the Effective Date of any Make-Whole Fundamental Change and issue a press release announcing such Effective Date no later than five Business Days after such Effective Date.
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(b) Upon surrender of Notes for conversion in connection with a Make-Whole Fundamental Change, the Company shall cause to be delivered ADSs, including the Additional ADSs, in accordance with Section 14.02; provided, however, that if, at the effective time of a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Reference Property following such Make-Whole Fundamental Change is composed entirely of cash, for any conversion of Notes following the Effective Date of such Make-Whole Fundamental Change, the Conversion Obligation shall be calculated based solely on the ADS Price for the transaction and shall be deemed to be an amount of cash per US$1,000 principal amount of converted Notes equal to the Conversion Rate (including any adjustment for Additional ADSs), multiplied by such ADS Price.
(c) The number of Additional ADSs, if any, by which the Conversion Rate shall be increased shall be determined by reference to the table below, based on the date on which the Make-Whole Fundamental Change occurs or becomes effective (the Effective Date) and the price (the ADS Price) paid (or deemed to be paid) per ADS in the Make-Whole Fundamental Change. If the holders of the ADSs receive in exchange for their ADSs only cash in a Make- Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the ADS Price shall be the cash amount paid per ADS. Otherwise, the ADS Price shall be the average of the Last Reported Sale Prices of the ADSs over the five Trading Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the Make- Whole Fundamental Change.
(d) The ADS Prices set forth in the column headings of the table below shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise adjusted. The adjusted ADS Prices shall equal the ADS Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment giving rise to the ADS Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional ADSs set forth in the table below shall be adjusted in the same manner and at the same time as the Conversion Rate as set forth in Section 14.04.
(e) The following table sets forth the number of Additional ADSs to be received per US$1,000 principal amount of Notes pursuant to this Section 14.03 for each ADS Price and Effective Date set forth below:
Effective Date |
$30.74 | $35.00 | $40.73 | $45.00 | $50.00 |
ADS Price
$60.00 |
$75.00 | $100.00 | $125.00 | $150.00 | $200.00 | |||||||||||||||||||||||||||||||||
June 2, 2020 |
7.9793 | 6.0686 | 4.3327 | 3.4356 | 2.6636 | 1.6718 | 0.8932 | 0.3402 | 0.1234 | 0.0323 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2021 |
7.9793 | 6.0686 | 4.2750 | 3.3260 | 2.5286 | 1.5365 | 0.7896 | 0.2832 | 0.0945 | 0.0206 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2022 |
7.9793 | 6.0686 | 4.0732 | 3.1018 | 2.3102 | 1.3572 | 0.6672 | 0.2211 | 0.0650 | 0.0095 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2023 |
7.9793 | 5.5866 | 3.7164 | 2.7987 | 2.0470 | 1.1530 | 0.5319 | 0.1577 | 0.0379 | 0.0019 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2024 |
7.9793 | 5.4686 | 3.4144 | 2.4667 | 1.7286 | 0.9063 | 0.3824 | 0.0970 | 0.0162 | 0.0000 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2025 |
7.9793 | 4.6494 | 2.8164 | 1.9656 | 1.3126 | 0.6205 | 0.2277 | 0.0454 | 0.0028 | 0.0000 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2026 |
7.9793 | 4.3946 | 2.2254 | 1.3429 | 0.7642 | 0.2830 | 0.0855 | 0.0130 | 0.0000 | 0.0000 | 0.0000 | |||||||||||||||||||||||||||||||||
June 15, 2027 |
7.9793 | 4.0197 | 0.0002 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 |
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The exact ADS Prices and Effective Dates may not be set forth in the table above, in which case:
(i) if the ADS Price is between two ADS Prices in the table above or the Effective Date is between two Effective Dates in the table, the number of Additional ADSs shall be determined by a straight-line interpolation between the number of Additional ADSs set forth for the higher and lower ADS Prices and the earlier and later Effective Dates, as applicable, based on a 365-day year;
(ii) if the ADS Price is greater than US$200.00 per ADS (subject to adjustment in the same manner as the ADS Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional ADSs shall be added to the Conversion Rate; and
(iii) if the ADS Price is less than US$30.74 per ADS (subject to adjustment in the same manner as the ADS Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional ADSs shall be added to the Conversion Rate.
Notwithstanding the foregoing, in no event shall the Conversion Rate per US$1,000 principal amount of Notes exceed 32.5309 ADSs, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.04.
(f) Nothing in this Section 14.03 shall prevent an adjustment to the Conversion Rate pursuant to Section 14.04.
(g) If the Holder elects to convert its Notes in connection with the Companys election to redeem the Notes in respect of a Change in Tax Law pursuant to Section 16.01, the Conversion Rate shall be increased by a number of additional ADSs determined pursuant to this Section 14.03(g). The Company shall settle conversions of Notes as described in Section 14.02 and, for the avoidance of doubt, pay Additional Amounts, if any, with respect to any such conversion.
A conversion shall be deemed to be in connection with the Companys election to redeem the Notes in respect of a Change in Tax Law if such conversion occurs during the period from, and including, the date the Company provides the related notice of redemption to Holders until the close of business on the Business Day immediately preceding the Redemption Date (or, if the Company fails to pay the Redemption Price, such later date on which the Company pays the Redemption Price).
Simultaneously with providing such notice of redemption, the Company shall publish a notice containing this information in a newspaper of general circulation in The City of New York or publish the information on the Companys website or through such other public medium as the Company may use at that time.
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The number of additional ADSs by which the Conversion Rate will be increased in the event the Company elects to redeem the Notes in respect of a Change in Tax Law will be determined by reference to the table in clause (e) above based on the Redemption Reference Date and the Redemption Reference Price (each as defined below), but determined for purposes of this Section 14.03(g) as if (x) the Holder had elected to convert its Notes in connection with a Make-Whole Fundamental Change, (y) the applicable Redemption Reference Date were the Effective Date as specified in clause (c) above and (z) the applicable Redemption Reference Price were the ADS price as specified in clause (c) above (and subject, for the avoidance of doubt, to the two paragraphs immediately following such table). For this purpose, the date on which the Company delivers notice of redemption is the Redemption Reference Date and the average of the Last Reported Sale Prices of the ADSs over the five Trading Day period immediately preceding the date the Company delivers such notice of redemption is the Redemption Reference Price.
Section 14.04 Adjustment of Conversion Rate. If the number of Ordinary Shares represented by the ADSs is changed, after the date of this Indenture, for any reason other than one or more of the events described in this Section 14.04, the Company shall make an appropriate adjustment to the Conversion Rate such that the number of Ordinary Shares represented by the ADSs upon which conversion of the Notes is based remains the same.
Notwithstanding the adjustment provisions described in this Section 14.04, if the Company distributes to holders of the Ordinary Shares any cash, rights, options, warrants, shares of Capital Stock or similar equity interest, evidences of indebtedness or other assets or property of the Company (but excluding Expiring Rights) and a corresponding distribution is not made to holders of the ADSs, but, instead, the ADSs shall represent, in addition to Ordinary Shares, such cash, rights, options, warrants, shares of Capital Stock or similar equity interest, evidences of indebtedness or other assets or property of the Company, then an adjustment to the Conversion Rate described in this Section 14.04 shall not be made until and unless a corresponding distribution (if any) is made to holders of the ADSs, and such adjustment to the Conversion Rate shall be based on the distribution made to the holders of the ADSs and not on the distribution made to the holders of the Ordinary Shares. However, in the event that the Company issues or distributes to all holders of the Ordinary Shares any Expiring Rights, notwithstanding the immediately preceding sentence, the Company shall adjust the Conversion Rate pursuant to Section 14.04(b) (in the case of Expiring Rights entitling holders of the Ordinary Shares for a period of not more than 45 calendar days after the announcement date of such issuance to subscribe for or purchase Ordinary Shares or ADSs) or Section 14.04(c) (in the case of all other Expiring Rights).
For the avoidance of doubt, if any event described in this Section 14.04 results in a change to the number of Ordinary Shares represented by the ADSs, then such a change shall be deemed to satisfy the Companys obligation to effect the relevant adjustment to the Conversion Rate on account of such an event to the extent such change reflects what a corresponding change to the Conversion Rate would have been on account of such event.
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The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the ADSs and solely as a result of holding the Notes, in any of the transactions described in this Section 14.04, without having to convert their Notes, as if they held a number of ADSs equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder. Neither the Trustee nor the Conversion Agent shall have any responsibility to monitor the accuracy of any calculation of any adjustment to the Conversion Rate and the same shall be conclusive and binding on the Holders, absent manifest error. Notice of such adjustment to the Conversion Rate shall be given by the Company promptly to the Holders, the Trustee and the Paying Agent and Conversion Agent and shall be conclusive and binding on the Holders, absent manifest error.
(a) If the Company exclusively issues Ordinary Shares as a dividend or distribution on the Ordinary Shares, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution, or immediately prior to the open of business on the effective date of such share split or share combination, as applicable; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on such Record Date or immediately after the open of business on such effective date, as applicable; | ||
OS0 | = | the number of Ordinary Shares outstanding immediately prior to the close of business on such Record Date or immediately prior to the open of business on such effective date, as applicable; and | ||
OS1 | = | the number of Ordinary Shares outstanding immediately after giving effect to such dividend, distribution, share split or share combination. |
Any adjustment made under this Section 14.04(a) shall become effective immediately after the close of business on the Record Date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this Section 14.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
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(b) If the Company issues to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs) any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase Ordinary Shares (directly or in the form of ADSs) at a price per Ordinary Share that is less than the average of the Last Reported Sale Prices of the Ordinary Shares or the ADSs, as the case may be (divided by, in the case of the ADSs, the number of Ordinary Shares then represented by one ADS), for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula:
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for such issuance; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on such Record Date; | ||
OS0 | = | the number of Ordinary Shares outstanding immediately prior to the close of business on such Record Date; | ||
X | = | the total number of Ordinary Shares (directly or in the form of ADSs) deliverable pursuant to such rights, options or warrants; and | ||
Y | = | the number of Ordinary Shares equal to (i) the aggregate price payable to exercise such rights, options or warrants, divided by (ii) the quotient of (a) the average of the Last Reported Sale Prices of the ADSs over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants divided by (b) the number of Ordinary Shares then represented by one ADS. |
Any increase made under this Section 14.04(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the close of business on the Record Date for such issuance. To the extent that Ordinary Shares or ADSs are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of Ordinary Shares actually delivered (directly or in the form of ADSs). If such rights, options or warrants are not so issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such the Record Date for such issuance had not occurred.
For purposes of this Section 14.04(b), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase Ordinary Shares (directly or in the form of ADSs) at a price per Ordinary Share that is less than such average of the Last Reported Sale Prices of the Ordinary Shares or the ADSs, as the case may be (divided by, in the case of the ADSs, the number of Ordinary Shares then represented by one ADS), for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, and in determining the aggregate offering price of such Ordinary Shares or ADSs, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.
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(c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs), excluding (i) dividends, distributions or issuances as to which an adjustment was effected pursuant to Section 14.04(a) or Section 14.04(b), (ii) dividends or distributions paid exclusively in cash as to which an adjustment was effected pursuant to Section 14.04(d), and (iii) Spin-Offs as to which the provisions set forth below in this Section 14.04(c) shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities of the Company, the Distributed Property), then the Conversion Rate shall be increased based on the following formula:
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for such distribution; | ||
CR1 | = |
the Conversion Rate in effect immediately after the close of business on such Record Date; |
||
SP0 | = | the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and | ||
FMV | = | the fair market value (as determined by the Board of Directors) of the Distributed Property with respect to each outstanding Ordinary Share (directly or in the form of ADSs) on the Ex-Dividend Date for such distribution. |
Any increase made under the foregoing portion of this Section 14.04(c) above shall become effective immediately after the close of business on the Record Date for such distribution. If such distribution is not so paid or made at all or in full, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the adjustment been made on the basis of only such amount of such distribution, if any, actually paid or made. Notwithstanding the foregoing, if FMV (as defined above) is equal to or greater than SP0 (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each US$1,000 principal amount thereof, at the same time and upon the same terms as holders of the ADSs receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of ADSs equal to the Conversion Rate in effect on the Record Date for the distribution.
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With respect to an adjustment pursuant to this Section 14.04(c) where there has been a payment of a dividend or other distribution on the Ordinary Shares (directly or in the form of ADSs) of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a Spin-Off), the Conversion Rate shall be increased based on the following formula:
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the last Trading Day of the Valuation Period; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on the last Trading Day of the Valuation Period; | ||
FMV0 | = | the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Ordinary Shares (directly or in the form of ADSs) applicable to one Ordinary Share (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.01 as if references therein to the ADSs were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the Valuation Period); and | ||
MP0 | = | the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the Valuation Period. |
The adjustment to the Conversion Rate under the preceding paragraph shall occur immediately after the close of business on the last Trading Day of the Valuation Period; provided that in respect of any conversion during the Valuation Period, references in the portion of this Section 14.04(c) related to Spin-Offs to 10 Trading Days shall be deemed to be replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date of such Spin-Off to, and including, the Conversion Date in determining the Conversion Rate.
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For purposes of this Section 14.04(c) (and subject in all respect to Section 14.11), rights, options or warrants distributed by the Company to all holders of the Ordinary Shares (directly or in the form of ADSs) entitling them to subscribe for or purchase shares of the Companys Capital Stock, including Ordinary Shares (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (Trigger Event): (i) are deemed to be transferred with such Ordinary Shares (directly or in the form of ADSs); (ii) are not exercisable; and (iii) are also issued in respect of future issuances of the Ordinary Shares (directly or in the form of ADSs), shall be deemed not to have been distributed for purposes of this Section 14.04(c) (and no adjustment to the Conversion Rate under this Section 14.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 14.04(c). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 14.04(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per Ordinary Share redemption or purchase price received by a holder or holders of Ordinary Shares (directly or in the form of ADSs) with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Ordinary Shares (directly or in the form of ADSs) as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.
For purposes of Section 14.04(a), Section 14.04(b) and this Section 14.04(c), if any dividend or distribution to which this Section 14.04(c) is applicable also includes one or both of:
(A) a dividend or distribution of Ordinary Shares (directly or in the form of ADSs) to which Section 14.04(a) is applicable (the Clause A Distribution); or
(B) a dividend or distribution of rights, options or warrants to which Section 14.04(b) is applicable (the Clause B Distribution),
then (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14.04(c) is applicable (the Clause C Distribution) and any Conversion Rate adjustment required by this Section 14.04(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 14.04(a) and Section 14.04(b) with respect thereto shall then be made, except that, if determined by the Company (I) the Record Date of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Record Date of the Clause C Distribution and (II) any Ordinary Shares (directly or in the form of ADSs) included in the Clause A Distribution or Clause B Distribution shall be deemed not to be outstanding immediately prior to the close of business on such Record Date or immediately after the open of business on such effective date, as applicable within the meaning of Section 14.04(a) or outstanding immediately prior to the close of business on such Record Date within the meaning of Section 14.04(b).
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(d) If any cash dividend or distribution is made to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs), the Conversion Rate shall be adjusted based on the following formula:
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution; | ||
CR1 | = |
the Conversion Rate in effect immediately after the close of business on such Record Date; |
||
SP0 | = |
the Last Reported Sale Price of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and |
||
C | = | the amount in cash per Ordinary Share the Company distributes to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs) (for the avoidance of doubt, without giving effect to any applicable fees and expenses payable to, or withheld by, the ADS Depositary with respect to such distribution). |
Any increase pursuant to this Section 14.04(d) shall become effective immediately after the close of business on the Record Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if C (as defined above) is equal to or greater than SP0 (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each US$1,000 principal amount of Notes, at the same time and upon the same terms as holders of the ADSs, the amount of cash that such Holder would have received if such Holder owned a number of ADSs equal to the Conversion Rate on the Record Date for such cash dividend or distribution.
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(e) If the Company or any of its Subsidiaries or Consolidated Affiliated Entities makes a payment in respect of a tender or exchange offer for the Ordinary Shares (directly or in the form of ADSs), to the extent that the cash and value of any other consideration included in the payment per Ordinary Share exceeds the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires, the Conversion Rate shall be increased based on the following formula:
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; | ||
CR1 | = |
the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; |
||
AC | = | the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for Ordinary Shares or ADSs, as the case may be, purchased in such tender or exchange offer; | ||
OS0 | = | the number of Ordinary Shares outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer); | ||
OS1 | = | the number of Ordinary Shares outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer); and | ||
SP1 | = | the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires. |
The adjustment to the Conversion Rate under this Section 14.04(e) shall occur at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; provided that in respect of any Conversion Date within the 10 Trading Days immediately following, and including, the Trading Day next succeeding the expiration date of any tender or exchange offer, references in this Section 14.04(e) with respect to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the expiration date of such tender or exchange offer to, and including, the Conversion Date in determining the Conversion Rate. For the avoidance of doubt, no adjustment to the Conversion Rate under this Section 14.04(e) shall be made if such adjustment would result in a decrease in the Conversion Rate.
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(f) [RESERVED]
(g) Except as stated herein, the Company shall not adjust the Conversion Rate for the issuance of Ordinary Shares or ADSs or any securities convertible into or exchangeable for Ordinary Shares or ADSs or the right to purchase Ordinary Shares or ADSs or such convertible or exchangeable securities.
(h) In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this Section 14.04, and to the extent permitted by applicable law and subject to the applicable rules of The NASDAQ Global Select Market and any other securities exchange on which any of the Companys securities are then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Companys best interest, and the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of the Ordinary Shares or the ADSs or rights to purchase Ordinary Shares or ADSs in connection with a dividend or distribution of Ordinary Shares or ADSs (or rights to acquire Ordinary Shares or ADSs) or similar event.
(i) Notwithstanding anything to the contrary in this Article 14, the Conversion Rate shall not be adjusted:
(i) upon the issuance of any Ordinary Shares or ADSs pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Companys securities and the investment of additional optional amounts in Ordinary Shares or ADSs under any plan;
(ii) upon the issuance of any Ordinary Shares or ADSs or options or rights to purchase those Ordinary Shares or ADSs pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Companys Subsidiaries or Consolidated Affiliated Entities;
(iii) upon the issuance of any Ordinary Shares or ADSs pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection and outstanding as of the date the Notes were first issued;
(iv) upon the repurchase of any Ordinary Shares or ADSs pursuant to an open market share purchase program or other buy-back transaction, including derivative transactions or other buy-back transaction, that is not a tender offer or exchange offer of the kind described under Section 14.04(e) above;
(v) solely for a change in the par value of the Ordinary Shares; or
(vi) for accrued and unpaid interest, if any.
(j) All calculations and other determinations under this Article 14 shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000) of an ADS.
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(k) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee (and the Conversion Agent if not the Trustee) an Officers Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officers Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to each Holder at its last address appearing on the Note Register of this Indenture. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.
(l) For purposes of this Section 14.04, the number of Ordinary Shares at any time outstanding shall not include Ordinary Shares held in the treasury of the Company (directly or in the form of ADSs) so long as the Company does not pay any dividend or make any distribution on Ordinary Shares held in the treasury of the Company (directly or in the form of ADSs), but shall include Ordinary Shares issuable in respect of scrip certificates issued in lieu of fractions of Ordinary Shares.
(m) For purposes of this Section 14.04, the effective date means the first date on which the ADSs trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.
Section 14.05 Adjustments of Prices. Whenever any provision of this Indenture requires the Company to calculate the Last Reported Sale Prices, the ADS Price for purposes of a Make- Whole Fundamental Change or the Redemption Reference Price for purposes of a redemption of the Notes in connection with a Change in Tax Law over a span of multiple days, the Board of Directors shall make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective pursuant to Section 14.04, or any event requiring an adjustment to the Conversion Rate pursuant to Section 14.04 where the Record Date, Ex- Dividend Date, effective date or expiration date, as the case may be, of the event occurs, at any time during the period when such Last Reported Sale Prices, ADS Prices or Redemption Reference Price are to be calculated.
Section 14.06 Ordinary Shares to Be Fully Paid. The Company shall provide, free from preemptive rights, out of its authorized but unissued Ordinary Shares or Ordinary Shares held in treasury, a sufficient number of Ordinary Shares that corresponds to the number of ADSs due upon conversion of the Notes from time to time as such Notes are presented for conversion (assuming that at the time of computation of such number of Ordinary Shares, all such Notes would be converted by a single Holder).
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Section 14.07 Effect of Recapitalizations, Reclassifications and Changes of the Ordinary Shares.
(a) In the case of:
(i) any recapitalization, reclassification or change of the Ordinary Shares (other than changes resulting from a subdivision or combination),
(ii) any consolidation, merger, combination or similar transaction involving the Company,
(iii) any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Companys Subsidiaries and Consolidated Affiliated Entities substantially as an entirety or
(iv) any statutory share exchange,
in each case, as a result of which the Ordinary Shares would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a Merger Event), then, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 10.01(f) providing that, at and after the effective time of such Merger Event, the right to convert each US$1,000 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of ADSs equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the Reference Property, with each unit of Reference Property meaning the kind and amount of Reference Property that a holder of one ADS would be entitled to receive) upon such Merger Event; provided, however, that at and after the effective time of the Merger Event the number of ADSs otherwise deliverable upon conversion of the Notes in accordance with Section 14.02 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of ADSs would have been entitled to receive in such Merger Event.
If the Merger Event causes the Ordinary Shares to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of holder election), then (i) the Reference Property into which the Notes will be convertible shall be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of the ADSs and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one ADS. The Company shall provide written notice to Holders, the Trustee and the Conversion Agent (if other than the Trustee) of such weighted average as soon as practicable after such determination is made.
Such supplemental indenture described in the second immediately preceding paragraph shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is practicable to the adjustments provided for in this Article 14 (it being understood that no such adjustments shall be required with respect to any portion of the Reference Property that does not consist of shares of Common Equity (however evidenced) or depositary receipts in respect thereof). If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the Company or the successor or purchasing Person, as the case may be, in such Merger Event, then such other Person shall also execute such supplemental indenture, and such supplemental indenture shall contain such additional provisions to protect the interests of the Holders of the Notes, including the right of Holders to require the Company to repurchase their Notes upon a Fundamental Change pursuant to Section 15.02 and the right of Holders to require the Company to repurchase their Notes on the Repurchase Date pursuant to Section 15.01, as the Board of Directors shall reasonably consider necessary by reason of the foregoing.
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(b) [RESERVED]
(c) The Company shall not become a party to any Merger Event unless its terms are consistent with this Section 14.07. None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into ADSs as set forth in Section 14.01 and Section 14.02 prior to the effective date of such Merger Event.
(d) The above provisions of this Section shall similarly apply to successive Merger Events.
Section 14.08 Certain Covenants. (a) The Company covenants that all ADSs delivered upon conversion of Notes, and all Ordinary Shares represented by such ADSs, will be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.
(b) The Company covenants that, if any ADSs to be provided for the purpose of conversion of Notes hereunder, or any Ordinary Shares represented by such ADSs, require registration with or approval of any governmental authority under any federal or state law before such ADSs may be validly issued upon conversion, the Company will, to the extent then permitted by the rules and interpretations of the Commission, secure such registration or approval, as the case may be.
(c) The Company further covenants that if at any time the ADSs shall be listed on any national securities exchange or automated quotation system the Company will list and keep listed, so long as the ADSs shall be so listed on such exchange or automated quotation system, any ADSs deliverable upon conversion of the Notes.
(d) The Company further covenants to take all actions and obtain all approvals and registrations required with respect to the conversion of the Notes into ADSs and the issuance, and deposit into the ADS facility, of the Ordinary Shares represented by such ADSs. The Company also undertakes to maintain, as long as any Notes are outstanding, the effectiveness of a registration statement on Form F-6 relating to the ADSs and an adequate number of ADSs available for issuance thereunder such that ADSs can be delivered in accordance with the terms of this Indenture, the Notes and the Unrestricted Deposit Agreement or the Restricted Deposit Agreement, as applicable, upon conversion of the Notes. In addition, the Company further covenants to provide Holders with a reasonably detailed description of the mechanics for the delivery of ADSs upon conversion of Notes as set forth in the Unrestricted Deposit Agreement or the Restricted Deposit Agreement (including pursuant to a certain procedures letter for the issuance of restricted ADSs contemplated by Section 11 of the Restricted Deposit Agreement) upon request.
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Section 14.09 Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any ADSs, or of any securities, property or cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any ADSs or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion, the accuracy or inaccuracy of any mathematical calculation or formulae under this Indenture, whether by the Company or any Person so authorized by the Company for such purpose under this Indenture or the failure by the Company to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.07 relating either to the kind or amount of ADSs or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 14.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.
Section 14.10 Notice to Holders Prior to Certain Actions. In case of any:
(a) action by the Company or one of its Subsidiaries that would require an adjustment in the Conversion Rate pursuant to Section 14.04 or Section 14.11;
(b) Merger Event; or
(c) voluntary or involuntary dissolution, liquidation or winding-up of the Company or any of its Subsidiaries;
then, in each case (unless notice of such event is otherwise required pursuant to another provision of this Indenture), the Company shall cause to be filed with the Trustee and the Conversion Agent (if other than the Trustee) and to be mailed to each Holder at its address appearing on the Note Register, as promptly as possible but in any event at least 20 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action by the Company or one of its Subsidiaries or, if a record is not to be taken, the date as of which the holders of Ordinary Shares or ADSs, as the case may be, of record are to be determined for the purposes of such action by the Company or one of its Subsidiaries, or (ii) the date on which such Merger Event, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Ordinary Shares or ADSs, as the case may be, of record shall be entitled to exchange their Ordinary Shares or ADSs, as the case may be, for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such action by the Company or one of its Subsidiaries, Merger Event, dissolution, liquidation or winding-up.
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Section 14.11 Stockholder Rights Plans. To the extent that the Company has a rights plan in effect upon conversion of the Notes, each ADS delivered upon such conversion shall be entitled to receive (either directly or in respect of the Ordinary Shares underlying such ADSs) the appropriate number of rights, if any, and the certificates representing the ADSs delivered upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time. However, if, prior to any Conversion Date, the rights have separated from the Ordinary Shares underlying the ADSs in accordance with the provisions of the applicable stockholder rights plan, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all or substantially all holders of the Ordinary Shares Distributed Property as provided in Section 14.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.
Section 14.12 Termination of Depositary Receipt Program. If the Ordinary Shares cease to be represented by American Depositary Shares issued under a depositary receipt program sponsored by the Company, all references in this Indenture to the ADSs shall be deemed to have been replaced by a reference to the number of Ordinary Shares (and other property, if any) represented by the ADSs on the last day on which the ADSs represented the Ordinary Shares and as if the Ordinary Shares and the other property had been distributed to holders of the ADSs on that day. In addition, all references to the Last Reported Sale Price of the ADSs will be deemed to refer to the Last Reported Sale Price of the Ordinary Shares, and other appropriate adjustments, including adjustments to the Conversion Rate, will be made to reflect such change. In making such adjustments, where currency translations between U.S. dollars and any other currency are required, the exchange rate in effect on the date of determination will apply.
ARTICLE 15
REPURCHASE OF NOTES AT OPTION OF HOLDERS
Section 15.01 Repurchase at Option of Holders.
(a) Each Holder shall have the right, at such Holders option, to require the Company to repurchase for cash on June 15, 2023 and June 15, 2025 (each, a Repurchase Date), all of such Holders Notes, or any portion thereof that is an integral multiple of US$1,000 principal amount, at a repurchase price (the Repurchase Price) that is equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant Repurchase Date; provided that any such accrued and unpaid interest shall be paid not to the Holders submitting the Notes for repurchase on the relevant Repurchase Date but instead to the Holders of such Notes at the close of business on the Regular Record Date immediately preceding the relevant Repurchase Date. Not later than 20 Business Days prior to each Repurchase Date, the Company shall mail a notice (the Company Notice) by first class mail to the Trustee, to the Paying Agent and the Conversion Agent (if other than the Trustee) and to each Holder at its address shown in the Note Register of the Note Registrar (and to beneficial owners as required by applicable law and to the Conversion Agent if other than the Trustee). The Company Notice shall include a Form of Repurchase Notice to be completed by a holder and shall state:
(i) the last relevant date on which a Holder may exercise its repurchase right pursuant to this Section 15.01 (the Repurchase Expiration Time);
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(ii) the Repurchase Price;
(iii) the relevant Repurchase Date;
(iv) the name and address of the Conversion Agent and Paying Agent;
(v) that the Notes with respect to which a Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Repurchase Notice in accordance with the terms of this Indenture;
(vi) that the Holder shall have the right to withdraw any Notes surrendered prior to the Repurchase Expiration Time; and
(vii) the procedures a Holder must follow to exercise its repurchase rights under this Section 15.01 and a brief description of those rights.
At the Companys request, the Trustee shall give such notice in the Companys name and at the Companys expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company.
Simultaneously with providing the Company Notice, the Company shall publish a notice containing the information included in the Company Notice in a newspaper of general circulation in The City of New York or publish such information on the Companys website or through such other public medium as the Company may use at that time.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.01.
Repurchases of Notes under this Section 15.01 shall be made, at the option of the Holder thereof, upon:
(A) delivery to the Trustee (or other agent appointed for such purpose) by the Holder of a duly completed notice (the Repurchase Notice) in the form set forth in Attachment 3 to the Form of Note attached hereto as Exhibit A, if the Notes are Physical Notes, or in compliance with the Depositarys procedures for surrendering interests in global notes, if the Notes are Global Notes, in each case at any time during the period beginning from the open of business on the date that is 20 Business Days prior to the relevant Repurchase Date until the close of business on the second Business Day immediately preceding the relevant Repurchase Date; and
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(B) delivery of the Notes, if the Notes are Physical Notes, to the Trustee at any time after delivery of the Repurchase Notice (together with all necessary endorsements) at the Corporate Trust Office of the Trustee (or other agent appointed for such purpose), or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Repurchase Price therefor.
Each Repurchase Notice shall state:
(A) in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;
(B) the portion of the principal amount of the Notes to be repurchased, which must be US$1,000 or an integral multiple thereof; and
(C) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture;
provided, however, that if the Notes are Global Notes, the Repurchase Notice must comply with appropriate Depositary procedures.
Notwithstanding anything herein to the contrary, any Holder delivering to the Trustee the Repurchase Notice contemplated by this Section 15.01 shall have the right to withdraw, in whole or in part, such Repurchase Notice at any time prior to the close of business on the second Business Day immediately preceding the relevant Repurchase Date by delivery of a duly completed written notice of withdrawal to the Trustee (or other agent appointed for such purpose) in accordance with Section 15.03.
The Trustee shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof.
No Repurchase Notice with respect to any Notes may be delivered and no Note may be surrendered for repurchase pursuant to this Section 15.01 by a Holder thereof to the extent such Holder has also delivered a Fundamental Change Repurchase Notice with respect to such Note in accordance with Section 15.02 and not validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section 15.03.
(b) Notwithstanding the foregoing, no Notes may be repurchased by the Company at the option of the Holders on the relevant Repurchase Date if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such Repurchase Date (except in the case of an acceleration resulting from a default by the Company in the payment of the Repurchase Price with respect to such Notes). The Trustee will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a default by the Company in the payment of the Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn.
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Section 15.02 Repurchase at Option of Holders Upon a Fundamental Change. (a) If a Fundamental Change occurs at any time, each Holder shall have the right, at such Holders option, to require the Company to repurchase for cash all of such Holders Notes, or any portion thereof that is equal to US$1,000 or an integral multiple of US$1,000, on the Business Day (the Fundamental Change Repurchase Date) notified in writing by the Company as set forth in Section 15.02(c) that is not less than 20 Business Days or more than 35 Business Days following the date of the Fundamental Change Company Notice at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the Fundamental Change Repurchase Price), unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this Article 15. The Trustee and the Conversion Agent, Paying Agent or any other agent appointed for such purpose shall have no responsibility to determine the Fundamental Change Repurchase Price.
(b) Repurchases of Notes under this Section 15.02 shall be made, at the option of the Holder thereof, upon:
(i) delivery to the Trustee (or other agent appointed for this purpose) by a Holder of a duly completed notice (the Fundamental Change Repurchase Notice) in the form set forth in Attachment 2 to the Form of Note attached hereto as Exhibit A, if the Notes are Physical Notes, or in compliance with the Depositarys procedures for surrendering interests in global notes, if the Notes are Global Notes, in each case on or before the close of business on the second Business Day immediately preceding the Fundamental Change Repurchase Date; and
(ii) delivery of the Notes, if the Notes are Physical Notes, at any time after delivery of the Fundamental Change Repurchase Notice (together with all necessary endorsements for transfer) at the Corporate Trust Office of the Trustee or to other agent appointed for such purpose, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor.
The Fundamental Change Repurchase Notice in respect of any Notes to be repurchased shall state:
(i) in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;
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(ii) the portion of the principal amount of Notes to be repurchased, which must be US$1,000 or an integral multiple thereof; and
(iii) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture;
provided, however, that if the Notes are Global Notes, the Fundamental Change Repurchase Notice must comply with appropriate Depositary procedures.
Notwithstanding anything herein to the contrary, any Holder delivering to the Trustee the Fundamental Change Repurchase Notice contemplated by this Section 15.02 shall have the right to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the close of business on the second Business Day immediately preceding the Fundamental Change Repurchase Date by delivery of a duly completed written notice of withdrawal to the Trustee in accordance with Section 15.03.
The Trustee shall promptly notify the Company of the receipt by it of any Fundamental Change Repurchase Notice or written notice of withdrawal thereof.
No Fundamental Change Repurchase Notice with respect to any Notes may be delivered and no Note may be surrendered by a Holder for repurchase thereof if such Holder has also surrendered a Repurchase Notice in accordance with Section 15.01 and not validly withdrawn such Repurchase Notice in accordance with Section 15.03.
(c) On or before the 20th calendar day after the occurrence of the effective date of a Fundamental Change, the Company shall provide to all Holders, the Trustee (and the Conversion Agent, Paying Agent and any other agent appointed for this purpose, in each case, if other than the Trustee) a written notice (the Fundamental Change Company Notice) of the occurrence of the effective date of the Fundamental Change and of the repurchase right at the option of the Holders arising as a result thereof. In the case of Physical Notes, such notice shall be by first class mail or, in the case of Global Notes, such notice shall be delivered in accordance with the applicable procedures of the Depositary. Simultaneously with providing such notice, the Company shall publish a notice containing the information set forth in the Fundamental Change Company Notice in a newspaper of general circulation in The City of New York or publish such information on the Companys website or through such other public medium as the Company may use at that time. Each Fundamental Change Company Notice shall specify:
(i) the events causing the Fundamental Change and whether such transaction or event also constitute a Make-Whole Fundamental Change;
(ii) the effective date of the Fundamental Change;
(iii) the last date on which a Holder may exercise the repurchase right pursuant to this Article 15;
(iv) the Fundamental Change Repurchase Price;
(v) the Fundamental Change Repurchase Date;
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(vi) the name and address of the Trustee, the Paying Agent, the Conversion Agent or any other agent appointed for repurchase, if applicable;
(vii) if applicable, the Conversion Rate and any adjustments to the Conversion Rate as a result of such Fundamental Change if it is a Make-Whole Fundamental Change;
(viii) if applicable, that the Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Fundamental Change Repurchase Notice in accordance with the terms of this Indenture; and
(ix) the procedures that Holders must follow to require the Company to repurchase their Notes.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.02.
At the Companys request, the Trustee shall give such notice in the Companys name and at the Companys expense; provided, however, that, in all cases, the text of such Fundamental Change Company Notice shall be prepared by the Company.
(d) Notwithstanding the foregoing, no Notes may be repurchased by the Company on any date at the option of the Holders upon a Fundamental Change if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes). The Trustee will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Fundamental Change Repurchase Notice with respect thereto shall be deemed to have been withdrawn.
Section 15.03 Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice. (a) A Repurchase Notice or Fundamental Change Repurchase Notice may be withdrawn (in whole or in part) by means of a duly completed written notice of withdrawal delivered to the Trustee (or other agent appointed for such purpose) in accordance with this Section 15.03 at any time prior to the close of business on the second Business Day immediately preceding the relevant Repurchase Date or prior to the close of business on the second Business Day immediately preceding the Fundamental Change Repurchase Date, as the case may be, specifying:
(i) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted,
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(ii) if Physical Notes have been issued, the certificate number of the Note in respect of which such notice of withdrawal is being submitted, and
(iii) the principal amount, if any, of such Note that remains subject to the original Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, which portion must be in principal amounts of US$1,000 or an integral multiple of US$1,000;
provided, however, that if the Notes are Global Notes, the notice must comply with appropriate procedures of the Depositary.
Section 15.04 Deposit of Repurchase Price or Fundamental Change Repurchase Price. (a) The Company will deposit with the Paying Agent (or any other agent appointed for this purpose by the Company), or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 4.04) on or prior to 10:00 a.m., New York City time, one Business Day prior to the relevant Repurchase Date or Fundamental Change Repurchase Date, as the case may be, an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Repurchase Price or Fundamental Change Repurchase Price. Subject to receipt of funds and/or Notes by the Paying Agent (or other agent appointed for this purpose by the Company) and the Trustee, as applicable, payment for Notes surrendered for repurchase (and not withdrawn in accordance with Section 15.03) will be made on the later of (i) the relevant Repurchase Date or Fundamental Change Repurchase Date, as the case may be, (provided the Holder has satisfied the conditions in Section 15.01 or Section 15.02, as the case may be) and (ii) the time of book-entry transfer or the delivery of such Note to the Trustee (or other agent appointed for this purpose by the Company) by the Holder thereof in the manner required by Section 15.01 or Section 15.02, as applicable, by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Note Register; provided, however, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. The Paying Agent (or other agent appointed for this purpose by the Company) shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Repurchase Price or Fundamental Change Repurchase Price, as the case may be.
(b) If by 10:00 a.m., New York City time, on the relevant Repurchase Date or Fundamental Change Repurchase Date, as the case may be, the Paying Agent (or other agent appointed for this purpose by the Company) holds money sufficient to make payment on all the Notes or portions thereof that are to be repurchased on such Repurchase Date or Fundamental Change Repurchase Date, as the case may be, then, with respect to the Notes that have been properly surrendered for repurchase and not validly withdrawn, on such Repurchase Date or Fundamental Change Repurchase Date, as the case may be, (i) such Notes will cease to be outstanding, (ii) interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee) and (iii) all other rights of the Holders of such Notes will terminate (other than the right to receive the Repurchase Price or Fundamental Change Repurchase Price, as the case may be, and previously accrued and unpaid interest upon delivery or transfer of the Notes to the extent not included in the Repurchase Price or Fundamental Change Repurchase Price, as the case may be).
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(c) Upon surrender of a Note that is to be repurchased in part pursuant to Section 15.01 or Section 15.02, the Company shall execute and the Trustee, upon receipt of a Company Order, shall authenticate and deliver to the Holder a new Note in an authorized denomination equal in principal amount to the unrepurchased portion of the Note surrendered.
Section 15.05 Covenant to Comply with Applicable Laws Upon Repurchase of Notes. In connection with any repurchase offer, the Company will, if required:
(a) comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act;
(b) file a Schedule TO or other required schedule under the Exchange Act; and
(c) otherwise comply with all federal and state securities laws in connection with any offer by the Company to repurchase the Notes;
in each case, so as to permit the rights and obligations under this Article 15 to be exercised in the time and in the manner specified in this Article 15.
ARTICLE 16
OPTIONAL REDEMPTION
Section 16.01 Optional Redemption for Changes in the Tax Law of the Relevant Jurisdiction. (a) Other than as described in this Article 16, the Notes may not be redeemed by the Company at its option prior to maturity. If the Company has, or on the next Interest Payment Date would, become obligated to pay to the Holder of any Note Additional Amounts that are more than a de minimis amount, as a result of:
(i) any change or amendment that is publicly announced and becomes effective on or after May 28, 2020 (or, in the case of a jurisdiction that becomes a Relevant Jurisdiction after such date, after such later date) in the laws or any rules or regulations of a Relevant Jurisdiction; or
(ii) any change that is publicly announced and becomes effective on or after May 28, 2020 (or, in the case of a jurisdiction that becomes a Relevant Jurisdiction after such date, after such later date) in an interpretation, administration or application of such laws, rules or regulations by any legislative body, court, governmental agency, taxing authority or regulatory or administrative authority of such Relevant Jurisdiction (including the enactment of any legislation and the announcement or publication of any judicial decision or regulatory or administrative interpretation or determination);
(each, a Change in Tax Law), the Company may, at its option, redeem all but not part of the Notes (except in respect of certain Holders that elect otherwise as described below) at a redemption price equal to 100% of the principal amount thereof (the Redemption Price), plus accrued and unpaid interest, if any, to, but not including the date fixed by the Company for redemption (the Redemption Date), including, for the avoidance of doubt, any Additional Amounts with respect to such Redemption Price; provided that the Company may only redeem the Notes if: (i) the Company cannot avoid such obligations by taking commercially reasonable measures available to the Company (provided that changing the jurisdiction of incorporation of the Company shall be deemed not to be a commercially reasonable measure); and (ii) the Company delivers to the Trustee an opinion of outside legal counsel of recognized standing in the Relevant Jurisdiction and an Officers Certificate attesting to such Change in Tax Law and obligation to pay Additional Amounts. The Trustee shall and is entitled to rely upon such opinion and Officers Certificate (without further investigation and enquiry) and it shall be conclusive and binding on the Holders.
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Notwithstanding anything to the contrary in this Article 16, neither the Company nor any successor Person may redeem any of the Notes in the case that Additional Amounts are payable in respect of PRC withholding tax and any other tax collected at source at the Applicable PRC Rate or less solely as a result of the Company or its successor Person being considered a PRC tax resident under the PRC Enterprise Income Tax law.
(b) If the Redemption Date occurs after a Regular Record Date and on or prior to the corresponding Interest Payment Date, the Company shall pay or cause the Paying Agent to pay, on or at its election, before such Interest Payment Date, the full amount of accrued and unpaid interest, if any, and any Additional Amounts with respect to such interest, due on such Interest Payment Date to the record holder of the Notes on the Regular Record Date corresponding to such Interest Payment Date, and the Redemption Price payable to any Holder (other than a Holder that elects to not have its Notes redeemed pursuant to the provisions described below) shall be equal to 100% of the principal amount of such Note to be redeemed, including, for the avoidance of doubt, any Additional Amounts with respect to such Redemption Price. The Company shall notify the Trustee in writing of its election and the date on which such interest and any Additional Amounts with respect to such interest shall be paid at the time the Company provides notice of such redemption.
(c) The Company shall give the Trustee and Holders of Notes not less than 30 days but no more than 60 days notice of redemption prior to the Redemption Date. Simultaneously with providing such notice, the Company shall publish a notice containing this information in a newspaper of general circulation in The City of New York or publish the information on the Companys website or through such other public medium as the Company may use at that time. The Redemption Date must be a Business Day.
(d) Upon receiving such notice of redemption, each Holder shall have the right to elect to not have its Notes redeemed, provided that (i) the Company shall not be obligated to pay any Additional Amounts on any payment with respect to such Notes solely as a result of such Change in Tax Law that resulted in the obligation to pay such Additional Amounts (whether upon conversion, required repurchase in connection with a Fundamental Change or on the relevant Repurchase Date, at maturity or otherwise, and whether in ADSs, Reference Property or otherwise) after the Redemption Date (or, if the Company fails to pay the Redemption Price on the Redemption Date, such later date on which the Company pays the Redemption Price), and (ii) all future payments with respect to such Notes shall be subject to the deduction or withholding of such Relevant Taxing Jurisdiction and taxes required by law to be deducted or withheld as a result of such Change in Tax Law; provided further that, notwithstanding the foregoing, if a Holder electing not to have its Notes redeemed converts its Notes in connection with the Companys election to redeem the Notes in respect of such Change in Tax Law pursuant to Section 14.03(g), the Company shall be obligated to pay Additional Amounts, if any, with respect to such conversion.
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(e) Subject to the applicable procedures of the Depositary in the case of Global Notes, a Holder electing to not have its Notes redeemed must deliver to the Paying Agent a written notice of election so as to be received by the Paying Agent no later than the close of business on the second Business Day immediately preceding the Redemption Date; provided that, a Holder that complies with the requirements for conversion in Section 14.02(b) shall be deemed to have delivered a notice of its election to not have its Notes so redeemed. A Holder may withdraw any notice of election (other than such a deemed notice of election in connection with a conversion) by delivering to the Paying Agent a written notice of withdrawal prior to the close of business on the Business Day immediately preceding the Redemption Date (or, if the Company fails to pay the Redemption Price on the Redemption Date, such later date on which the Company pays the Redemption Price). If no election is made or deemed to have been made, the Holder shall have its Notes redeemed without any further action.
(f) No Notes may be redeemed by the Company or its successor if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to the Redemption Date.
ARTICLE 17
MISCELLANEOUS PROVISIONS
Section 17.01 Provisions Binding on Companys Successors. All the covenants, stipulations, promises and agreements of the Company contained in this Indenture shall bind its successors and assigns whether so expressed or not.
Section 17.02 Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or Officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation or other entity that shall at the time be the lawful sole successor of the Company.
Section 17.03 Addresses for Notices, Etc. Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders on the Company shall be deemed to have been sufficiently given or made, for all purposes if given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company with the Trustee) to Building 3, Guozheng Center, No. 485 Zhengli Road, Yangpu District, Shanghai, Peoples Republic of China. Any notice, direction, request or demand hereunder to or upon the Trustee shall be given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed to Deutsche Bank Trust Company Americas, Trust and Agency Services, 60 Wall Street, 24th Floor, Mail Stop: NYC60-2405, New York, New York 10005, Attn: Corporates Team, BILIBILI INC. DEAL ID SF1928, Facsimile: (732) 578-4635.
All notices and other communications under this Indenture shall be in writing in English.
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So long as and to the extent that the Notes are represented by Global Notes and such Global Notes are held by DTC, notices to owners of beneficial interests in the Global Notes may be given by delivery of the relevant notice to DTC for communication by it to entitled account holders.
The Company hereby acknowledges that it is fully aware of the risks associated with transmitting instructions via electronic methods (including facsimile), and being aware of these risks, authorizes the Trustee to accept and act upon any instruction sent to it or any Paying Agent, Transfer Agent, Conversion Agent or Note Registrar in the Companys name or in the name of one or more appropriate authorized signers of the Company via electronic methods (including facsimile). The Trustee shall be entitled to rely on Section 7.06 of this Indenture when accepting or acting upon any instructions, communications or documents transmitted by facsimile, and shall not be liable in the event any facsimile transmission is not received, or is mutilated, illegible, interrupted, duplicated, incomplete, unauthorized or delayed for any reason, including (but not limited to) electronic or telecommunications failure.
Furthermore, notwithstanding the above, if any Trustee receives information or instructions delivered by electronic mail, other electronic method or other unsecured method of communication believed by it to be genuine and to have been sent by the proper person or persons, the Trustee or any Paying Agent, Transfer Agent, Conversion Agent or Note Registrar shall have (i) no duty or obligation to verify or confirm that the person who sent such instructions is in fact a person authorized to give instructions or directions on behalf of the Company and (ii) absent its or their gross negligence or willful misconduct, no liability for any losses, liabilities, costs or expenses incurred or sustained by any holder, the Company or any other person as a result of such reliance on or compliance with such information or instructions.
The Trustee, by notice to the Company, may designate additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to it by first class mail, postage prepaid, at its address as it appears on the Note Register and shall be sufficiently given to it if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 17.04 Governing Law; Jurisdiction. THIS INDENTURE AND EACH NOTE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS INDENTURE AND EACH NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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The Company irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Indenture or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.
The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
Section 17.05 Submission to Jurisdiction; Service of Process. The Company irrevocably appoints Law Debenture Corporate Service Inc. as its authorized agent in the Borough of Manhattan in the City of New York upon which process may be served in any such suit or proceeding, and agrees that service of process upon such agent, and written notice of said service to the Company by the person serving the same to Building 20, No. 56 AnTuo Road, Jiading District, Shanghai, 201804, Peoples Republic of China, Facsimile No. +86 (21) 3913 0192, shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. The Company further agrees to take any and all action as may be necessary to maintain such designation and appointment of such agent in full force and effect for a period of seven years from the date of this Indenture. If for any reason such agent shall cease to be such agent for service of process, the Company shall forthwith appoint a new agent of recognized standing for service of process in the State of New York and deliver to the Trustee a copy of the new agents acceptance of that appointment within ten Business Days of such acceptance. Nothing herein shall affect the right of the Trustee, any agent or any Holder to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other court of competent jurisdiction. To the extent that the Company has or hereafter may acquire any sovereign or other immunity from jurisdiction of any court or from any legal process with respect to itself or its property, the Company irrevocably waives such immunity in respect of its obligations hereunder or under any Note.
Section 17.06 Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers Certificate stating that such action is permitted by the terms of this Indenture.
Each Officers Certificate provided for, by or on behalf of the Company in this Indenture and delivered to the Trustee with respect to compliance with this Indenture (other than the Officers Certificates provided for in Section 4.09) shall include (a) a statement that the person making such certificate is familiar with the requested action and this Indenture; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statement contained in such certificate is based; (c) a statement that, in the judgment of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed judgment as to whether or not such action is permitted by this Indenture; and (d) a statement as to whether or not, in the judgment of such person, such action is permitted by this Indenture.
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Notwithstanding anything to the contrary in this Section 17.06, if any provision in this Indenture specifically provides that the Trustee shall or may receive an Opinion of Counsel in connection with any action to be taken by the Trustee or the Company hereunder, the Trustee shall be entitled to, or entitled to request, such Opinion of Counsel.
Section 17.07 Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Fundamental Change Repurchase Date, Conversion Date, Repurchase Date or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date, and no interest shall accrue in respect of the delay.
Section 17.08 No Security Interest Created. Nothing in this Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.
Section 17.09 Benefits of Indenture. Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the Holders, the parties hereto, any Paying Agent, any Conversion Agent, any Note Registrar and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 17.10 Table of Contents, Headings, Etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 17.11 Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.
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Facsimile, documents executed, scanned and transmitted electronically and electronic signatures, including those created or transmitted through a software platform or application, shall be deemed original signatures for purposes of this Indenture and all other related documents and all matters and agreements related thereto, with such facsimile, scanned and electronic signatures having the same legal effect as original signatures. The parties agree that this Indenture or any other related document or any instrument, agreement or document necessary for the consummation of the transactions contemplated by this Indenture or the other related documents or related hereto or thereto (including, without limitation, addendums, amendments, notices, instructions, communications with respect to the delivery of securities or the wire transfer of funds or other communications) (Executed Documentation) may be accepted, executed or agreed to through the use of an electronic signature in accordance with applicable laws, rules and regulations in effect from time to time applicable to the effectiveness and enforceability of electronic signatures. Any Executed Documentation accepted, executed or agreed to in conformity with such laws, rules and regulations will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any third party electronic signature capture service providers as may be reasonably chosen by a signatory hereto or thereto. When the Trustee acts on any Executed Documentation sent by electronic transmission, the Trustee will not be responsible or liable for any losses, costs or expenses arising directly or indirectly from its reliance upon and compliance with such Executed Documentation, notwithstanding that such Executed Documentation (a) may not be an authorized or authentic communication of the party involved or in the form such party sent or intended to send (whether due to fraud, distortion or otherwise) or (b) may conflict with, or be inconsistent with, a subsequent written instruction or communication; it being understood and agreed that the Trustee shall conclusively presume that Executed Documentation that purports to have been sent by an authorized officer of a Person has been sent by an authorized officer of such Person. The party providing Executed Documentation through electronic transmission or otherwise with electronic signatures agrees to assume all risks arising out of such electronic methods, including, without limitation, the risk of the Trustee acting on unauthorized instructions and the risk of interception and misuse by third parties.
Section 17.12 Severability. In the event any provision of this Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.
Section 17.13 Waiver of Jury Trial. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 17.14 Force Majeure. In no event shall the Trustee or the Agents be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, epidemic, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee or the Agents, as the case may be, shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
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Section 17.15 Calculations. Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under the Notes. These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the ADSs, accrued interest payable on the Notes, any Additional Interest or Additional Amounts payable on the Notes, the number of Additional ADSs to be added to the Conversion Rate upon a Make-Whole Fundamental Change, if any, the Conversion Rate of the Notes and any adjustments thereto. The Company shall make all these calculations in good faith and, absent manifest error, the Companys calculations shall be final and binding on Holders. The Company shall provide a schedule of its calculations to each of the Trustee, the Paying Agent and the Conversion Agent, and each of the Trustee, the Paying Agent and the Conversion Agent is entitled to rely conclusively and without liability upon the accuracy of the Companys calculations without independent verification. The Trustee will forward the Companys calculations to any Holder of Notes upon the prior written request of that Holder at the sole cost and expense of the Company.
Section 17.16 U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The Company agrees that it will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
BILIBILI INC. | ||||
By: |
/s/ Rui Chen |
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Name: | Rui Chen | |||
Title: | Chairman of the Board of Directors and Chief Executive Officer |
Signature Page to Indenture
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee |
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By: |
/s/ Bridgette Casasnovas |
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Name: | Bridgette Casasnovas | |||
Title: | Vice President | |||
By: |
/s/ Annie Jaghatspanyan |
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Name: | Annie Jaghatspanyan | |||
Title: | Vice President |
Signature Page to Indenture
EXHIBIT A
[FORM OF FACE OF NOTE]
[INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]
[THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS THE OWNER AND HOLDER OF THIS NOTE FOR ALL PURPOSES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[INCLUDE FOLLOWING LEGEND IF A RESTRICTED SECURITY]
[THIS SECURITY, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION OF THIS SECURITY AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT OR CONTRACTUALLY RESTRICTED SECURITIES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND LOCATED OUTSIDE THE UNITED STATES (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT, AND HAS NOT BEEN FOR THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF BILIBILI INC. (THE COMPANY), AND
A-1
(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION OF THIS SECURITY AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY, OR ANY BENEFICIAL INTEREST HEREIN OR THEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) TO A NON-U.S. PERSON LOCATED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY, THE DEPOSITARY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE, OTHERWISE ACQUIRE OR OWN THIS NOTE, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION HEREOF AND THE CLASS Z ORDINARY SHARES REPRESENTED THEREBY, OR A BENEFICIAL INTEREST HEREIN OR THEREIN.]
A-2
BILIBILI INC.
1.25% Convertible Senior Note due 2027
No. [ ] |
[Initially]1 US$ |
CUSIP No. [ ]
BILIBILI Inc., a company duly organized and validly existing under the laws of the Cayman Islands (the Company, which term includes any successor company or corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.]2 [ ]3, or registered assigns, the principal sum [as set forth in the Schedule of Exchanges of Notes attached hereto]4 [of US$[ ]]5, which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed US$800,000,000 in aggregate at any time, in accordance with the rules and procedures of the Depositary, on June 15, 2027, and interest thereon as set forth below.
This Note shall bear cash interest at the rate of 1.25% per year from, and including, June 2, 2020, or from, and including, the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until June 15, 2027. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on December 15, 2020, to Holders at the close of business on the preceding June 1 and December 1 (whether or not such day is a Business Day), respectively. Additional Interest will be payable as set forth in Section 4.06(d), Section 4.06(e) and Section 6.03 of the within-mentioned Indenture, and any reference to interest on, or in respect of, any Note therein shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of such Section 4.06(d), Section 4.06(e) and Section 6.03, and any express mention of the payment of Additional Interest in any provision therein shall not be construed as excluding Additional Interest in those provisions thereof where such express mention is not made.
Any Defaulted Amounts shall accrue interest per annum at the rate per annum borne by the Notes plus one percent, subject to the enforceability thereof under applicable law, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Company, at its election, in accordance with Section 2.03(c) of the Indenture.
1 |
Include if a Global Note. |
2 |
Include if a Global Note. |
3 |
Include if a Physical Note. |
4 |
Include if a Global Note. |
5 |
Include if a Physical Note. |
A-3
The Company shall pay or cause the Paying Agent to pay the principal of and interest on this Note, so long as such Note is a Global Note, in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Note. As provided in and subject to the provisions of the Indenture, the Company shall pay the principal of any Notes (other than Notes that are Global Notes) at the office or agency designated by the Company for that purpose. The Company has initially designated the Deutsche Bank Trust Company Americas as its Paying Agent, Conversion Agent and Note Registrar in respect of the Notes and its agency in the Borough of Manhattan, The City of New York, as a place where Notes may be presented for payment or for registration of transfer.
Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into ADSs on the terms and subject to the limitations set forth in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Note, and any claim, controversy or dispute arising under or related to this Note, shall be construed in accordance with and governed by the laws of the State of New York (without regard to the conflicts of laws provisions thereof).
In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control and govern.
This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually or electronically by the Trustee under the Indenture.
[Remainder of page intentionally left blank]
A-4
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
BILIBILI INC. | ||
By: |
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Name: | ||
Title: |
A-5
Dated: | ||
TRUSTEES CERTIFICATE OF AUTHENTICATION | ||
DEUTSCHE BANK TRUST COMPANY AMERICAS as Trustee, certifies that this is one of the Notes described in the within-named Indenture. |
By: |
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Title: |
A-6
[FORM OF REVERSE OF NOTE]
BILIBILI INC.
1.25% Convertible Senior Note due 2027
This Note is one of a duly authorized issue of Notes of the Company, designated as its 1.25% Convertible Senior Notes due 2027 (the Notes), limited to the aggregate principal amount of US$800,000,000, subject to Section 2.10 of the Indenture, all issued or to be issued under and pursuant to an Indenture dated as of June 2, 2020 (the Indenture), between the Company and Deutsche Bank Trust Company Americas, as trustee (the Trustee), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties, privileges, disclaimers from liability and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture. The Rule 144A Notes and the Regulation S Notes initially have separate CUSIP numbers and will initially not be fungible.
In the case certain Events of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, and interest on, all Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of Notes then outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture. In the case certain Events of Default relating to a bankruptcy (or similar proceeding) with respect to the Company or a Significant Subsidiary of the Company shall have occurred, the principal of, and interest on, all Notes shall automatically become immediately due and payable, as set forth in the Indenture.
Subject to the terms and conditions of the Indenture, the Company will make or cause the Paying Agent to make all payments in respect of the principal amount on the Maturity Date, the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, as the case may be, to the Holder who surrenders a Note to collect such payments in respect of the Note. The Company will pay or cause the Paying Agent to pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.
Subject to the terms and conditions of the Indenture, Additional Amounts will be paid in connection with any payments made and deliveries caused to be made by the Company or any successor to the Company under or with respect to the Indenture and the Notes, including, but not limited to, payments of principal (including, if applicable, the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price), premium, if any, payments of interest and deliveries of ADSs or any other consideration due on conversion of a Note (together with payments of cash for any Fractional ADS or other consideration) upon conversion of the Notes to ensure that the net amount received by the beneficial owner of the Notes after any applicable withholding, deduction or reduction (and after deducting any taxes on the Additional Amounts) will equal the amounts that would have been received by such beneficial owner had no such withholding, deduction or reduction been required.
A-7
The Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein. It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or cause to be delivered, as the case may be, the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.
The Notes are issuable in registered form without interest coupons in denominations of US$1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer or similar tax that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange.
The Notes may not be redeemed by the Company at its option prior to maturity other than in the event of certain Changes in Tax Law as described in Section 16.01 of the Indenture. No sinking fund is provided for the Notes.
The Holder has the right, at such Holders option, to require the Company to repurchase for cash all of such Holders Notes or any portion thereof (in principal amounts of US$1,000 or integral multiples thereof) on the relevant Repurchase Date at a price equal to the Repurchase Price.
Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holders option, to require the Company to repurchase for cash all of such Holders Notes or any portion thereof (in principal amounts of US$1,000 or integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price.
Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, prior to the close of business on the second Business Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is US$1,000 principal amount of Notes or an integral multiple thereof, into ADSs at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.
Terms used in this Note and defined in the Indenture are used herein as therein defined.
A-8
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM = as tenants in common
UNIF GIFT MIN ACT = Uniform Gifts to Minors Act
CUST = Custodian
TEN ENT = as tenants by the entireties
JT TEN = joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
A-9
SCHEDULE A6
SCHEDULE OF EXCHANGES OF NOTES
BILIBILI INC.
1.25% Convertible Senior Notes due 2027
The initial principal amount of this Global Note is [ ] UNITED STATES DOLLARS (US$[ ]). The following increases or decreases in this Global Note have been made:
Date of exchange |
Amount of decrease
in principal amount of this Global Note |
Amount of increase
in principal amount of this Global Note |
Principal amount of
this Global Note following such decrease or increase |
Signature of
authorized signatory of Trustee |
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6 |
Include if a Global Note. |
A-10
ATTACHMENT 1
[FORM OF NOTICE OF CONVERSION]
To: |
BILIBILI INC. |
Building 3, Guozheng Center, No. 485 Zhengli Road,
Yangpu District Shanghai, 200433
Peoples Republic of China, +86 21-25099255
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Conversion Agent
Deutsche Bank Trust Company Americas
c/o DB Services Americas, Inc., Attn: Reorg Dept.,
5022 Gate Parkway, Suite 200, Jacksonville, FL 32256
Ref: CUSIP: , SF1928, Bilibili Inc.
Tel. 877-843-9767, Email: db.reorg@db.com
DEUTSCHE BANK TRUST COMPANY AMERICAS, as ADS Depositary
60 Wall Street
New York, NY 10005
United States
Fax: 1-732-544-6346, Email: adr@db.com
The undersigned registered holder of this Note (ISIN: ; CUSIP: ) hereby exercises the option to convert that Note, or the portion thereof (that is US$1,000 principal amount or an integral multiple thereof) below designated, into ADSs in accordance with the terms of the Indenture referred to in this Note, and directs that any ADSs deliverable upon such conversion, together with any cash payable for any Fractional ADS, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. Terms defined in the Unrestricted Deposit Agreement, the Restricted Deposit Agreement or the Indenture referred to in this Notice are used herein as so defined. If any ADSs or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp, issue, transfer or similar taxes, if any, in accordance with Section 14.02(d) and Section 14.02(e) of the Indenture. Any amount required to be paid to the undersigned on account of interest accompanies this Notice.
In connection with the conversion of this Note, or the portion hereof below designated, the undersigned acknowledges, represents to and agrees with the Company that the undersigned is not an affiliate (as defined in Rule 144 under the Securities Act) of the Company and has not been an affiliate (as defined in Rule 144 under the Securities Act) during the three months immediately preceding the date hereof.
1
[The undersigned further certifies:
1. The undersigned acknowledges (and if the undersigned is acting for the account of another person, that person has confirmed that it acknowledges) that the Restricted Securities received upon conversion of this Note (or securities represented thereby) have not been and are not expected to be registered under the Securities Act.
2. The undersigned further certifies that either:
(a) The undersigned is, and at the time ADSs are delivered in conversion of its Notes will be, the holder of the ADSs and the Ordinary Shares represented thereby, and (i) the undersigned is not a U.S. person (as defined in Regulation S under the Securities Act) and is located outside the United States (within the meaning of Regulation S) and acquired, or have agreed to acquire and will have acquired, the Notes being converted and the ADSs and the Ordinary Shares represented thereby being delivered in the conversion outside the United States and (ii) the undersigned is not in the business of buying and selling securities or, if the undersigned is in such business, the undersigned did not acquire the Notes being converted from the Company or any affiliate thereof in the initial distribution of the Notes.
OR
(b) The undersigned is a broker-dealer acting on behalf of its customer; its customer has confirmed to the undersigned that it is, and at the time ADSs are delivered in conversion of the said Notes will be, the holder of the ADSs and the Ordinary Shares represented thereby, and (i) it is not a U.S. person (as defined in Regulation S under the Securities Act) and it is located outside the United States (within the meaning of Regulation S) and acquired, or have agreed to acquire and will have acquired, the Notes being converted and the ADSs and the Ordinary Shares represented thereby being delivered in the conversion outside the United States and (ii) it is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Notes being converted from the Company or any affiliate thereof in the initial distribution of the Notes.
OR
(c) The undersigned is a qualified institutional buyer (as defined in Rule 144A under the Securities Act) acting for its own account or for the account of one or more qualified institutional buyers and the undersigned is (or such account or accounts are) the sole beneficial owner(s) of the ADSs to be received upon conversion of the Notes.]7
[3.] The undersigned acknowledges that the undersigned (and any such other account) may not continue to hold or retain any interest in Conversion ADSs if the undersigned (or such other account) becomes an Affiliate of the Company.
7 |
Include if a Restricted Security. |
2
[4. The undersigned agrees (and if the undersigned is acting for the account of another person, that person has confirmed that it agrees) that, prior to the Resale Restriction Termination Date, the undersigned (and such other account) will not offer, sell, pledge or otherwise transfer the Restricted Security (or securities represented by such Restricted Security) except in accordance with the restrictions set forth in that legend and any applicable securities laws of the United States and any state thereof.]8
The undersigned hereby instructs the ADS Depositary to register the ADSs in the name of:
1. | Name of Beneficial Owner to receive ADSs (English): | |||
2. | Address of Beneficial Owner to receive ADSs (English): | |||
3. | Name of Registered Holder of the Deposited Shares: | |||
4. | Number of Deposited Shares: | |||
5. | Number of ADSs to be issued: | |||
6. | Beneficial Owners Tax ID Number: | |||
7. | Contact Name and Tel No/email address: |
[The undersigned instructs the Depositary to deliver the ADRs representing the ADSs to the following account:
ADS Receiving Broker ( * are mandatory fields):
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DTC Broker Name*: |
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DTC Brokers Participant Account with DTC *: |
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DTC Broker Contact Name: |
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DTC Broker Contact Tel No/email: |
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Beneficial Owners Account # with DTC Broker*: |
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e) Local Broker Name (have account with DTC Broker)*: |
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Local Broker Sub-Account # with DTC Broker*: |
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Local Broker Contact Name: |
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Local Broker Contact Tel No/email: |
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ADS Delivering Party: |
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Name: |
Deutsche Bank Trust Company Americas |
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DTC Account: #2655]9 |
8 |
Include if a Restricted Security. |
9 |
Include bracketed language in the conversion Notice if the Note being converted is not a Restricted Security. |
3
For any ADS settlement inquiries, please contact DBTCA Broker Desk:
Tel: +1-212-250-9100 (New York) / +44-207-547-6500 (London)
Email: adr@db.com
4
Dated: | ||
Signature(s) | ||
Signature Guarantee | ||
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if ADSs are to be issued, or Notes are to be delivered, other than to and in the name of the registered holder. | ||
Fill in for registration of ADSs if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder: | ||
(Name) | ||
(Street Address) | ||
(City, State and Zip Code) Please print name and address |
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Principal amount to be converted (if less than all): US$ ,000 |
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NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. | ||
Social Security or Other Taxpayer Identification Number |
5
ATTACHMENT 2
[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]
To: |
BILIBILI INC. |
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee
The undersigned registered owner of this Note hereby acknowledges receipt of a notice from BILIBILI Inc. (the Company) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with Section 15.02 of the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is US$1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Fundamental Change Repurchase Date.
In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below:
Certificate Number(s):
Dated: | ||||
Signature(s) | ||||
Social Security or Other Taxpayer Identification Number |
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Principal amount to be repaid (if less than all): US$ ,000 | ||||
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. |
1
ATTACHMENT 3
[FORM OF REPURCHASE NOTICE]
To: |
BILIBILI INC. |
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee
The undersigned registered owner of this Note hereby acknowledges receipt of a notice from BILIBILI Inc. (the Company) regarding the right of Holders to elect to require the Company to repurchase the entire principal amount of this Note, or the portion thereof (that is US$1,000 principal amount or an integral multiple thereof) below designated, in accordance with the applicable provisions of the Indenture referred to in this Note, at the Repurchase Price to the registered Holder hereof.
In the case of certificated Notes, the certificate numbers of the Notes to be purchased are as set forth below:
Certificate Number(s):
Dated: |
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Signature(s) |
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Social Security or Other Taxpayer |
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Identification Number |
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Principal amount to be repaid (if less than all): US$ ,000 |
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NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. |
1
ATTACHMENT 4
[FORM OF ASSIGNMENT AND TRANSFER]
For value received hereby sell(s), assign(s) and transfer(s) unto (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Indenture governing such Note, the undersigned confirms that such Note is being transferred:
☐ To BILIBILI Inc. or a subsidiary thereof; or
☐ Pursuant to a registration statement that has become or been declared effective under the Securities Act of 1933, as amended; or
☐ Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended [(Rule 144A), and the undersigned confirms that the undersigned reasonably believes that the transferee of such Note is a qualified institutional buyer (within the meaning of Rule 144A) that is purchasing for its own account or for the account of another qualified institutional buyer and the undersigned has provided such transferee notice that the transfer is being made in reliance on Rule 144A]10; or
☐ Outside the United States in accordance with Regulation S under the Securities Act of 1933, as amended; or
☐ Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended (if available).
10 |
Include if Regulation S Note. |
1
Dated: | ||
Signature(s) | ||
Signature Guarantee | ||
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if Notes are to be delivered, other than to and in the name of the registered holder. |
NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
2
EXHIBIT B
[FORM OF AUTHORIZATION CERTIFICATE]
I, [Name], [Title], acting on behalf of BILIBILI Inc. (the Company) hereby certify that:
(A) the persons listed below are (i) authorized Officers of the Company for purposes of the Indenture (the Indenture) dated as of June 2, 2020 between the Company and Deutsche Bank Trust Company Americas, as trustee, in relation to the 1.25% Convertible Senior Notes due 2027 (the Notes), (ii) duly elected or appointed, qualified and acting as the holder of the respective office or offices set forth opposite their names and (iii) the duly authorized persons who executed or will execute the Indenture and the Notes issued pursuant to the Indenture by their manual or facsimile signatures and were at the time of such execution, duly elected or appointed, qualified and acting as the holder of the offices set forth opposite their names;
(B) each of the individuals listed below have the authority to receive call backs at the telephone numbers noted below upon request of Deutsche Bank Trust Company Americas in connection with the Notes issued pursuant to the Indenture;
(C) each signature appearing below is the persons genuine signature; and
(D) attached hereto as Schedule I is a true, correct and complete specimen of the certificates representing the Notes.
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IN WITNESS WHEREOF, I have hereunto executed and delivered this certificate on behalf of the Company as of the date indicated.
Dated:
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SCHEDULE I
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B-3
Description of rights of each class of securities
registered under Section 12 of the Securities Exchange Act of 1934 (the Exchange Act)
American Depositary Shares (ADSs) representing one Class Z ordinary share of Bilibili Inc. (we, Bilibili or the Company), as the case may be (the Shares) are listed and traded on the Nasdaq Global Select Market under the symbol BILI and, in connection with this listing (but not for trading), the shares are registered under Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of (i) the holders of shares and (ii) ADS holders. Shares underlying the ADSs are held by Deutsche Bank Trust Company Americas, as depositary, and holders of ADSs will not be treated as holders of the shares.
Shares
Type and Class of Securities (Item 9.A.5 of Form 20-F)
The ordinary shares of Bilibili are divided into Class Z ordinary shares and Class Y ordinary shares, each par value $0.0001 per share. The respective number of Class Z ordinary shares and Class Y ordinary shares outstanding as of the last day of the Companys respective fiscal year is provided on the cover of the annual report on Form 20-F (the Form 20-F) of the Company. Certificates representing the ordinary shares are issued in registered form. Bilibili will issue only non-negotiable shares, and will not issue bearer or negotiable shares.
Preemptive Rights (Item 9.A.3 of Form 20-F)
The shareholders of Bilibili does not have preemptive rights.
Limitations or Qualifications (Item 9.A.6 of Form 20-F)
We keep and intend to maintain a dual-class voting structure. Holders of Class Z ordinary shares are entitled to one vote per share, while holders of Class Y ordinary shares are entitled to ten votes per share.
As a result of the dual-class share structure and the concentration of ownership, holders of Class Y ordinary shares will have considerable influence over matters such as decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. Such holders may take actions that are not in the best interest of the other shareholders of Bilibili. This concentration of ownership may discourage, delay or prevent a change in control of Bilibili, which could have the effect of depriving other shareholders of the opportunity to receive a premium for their shares as part of a sale of Bilibili and may reduce the price of the ADSs. This concentrated control will limit the ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class Z ordinary shares and ADSs may view as beneficial.
A description of the differences between Class Z ordinary shares and Class Y ordinary shares is provided in Part IItem 10. Additional InformationB. Memorandum and Articles of AssociationOrdinary Shares of the Form 20-F.
Other Rights (Item 9.A.7 of Form 20-F)
Not applicable.
Rights of the Shares (Item 10.B.3 of Form 20-F)
See Item 10.B. Additional InformationMemorandum and Articles of AssociationOrdinary Shares of the Form 20-F.
Requirements for Amendments (Item 10.B.4 of Form 20-F)
See Item 10.B. Additional InformationMemorandum and Articles of Association of the Form 20-F.
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Limitations on the Rights to Own Shares (Item 10.B.6 of Form 20-F)
There are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares.
Provisions Affecting Any Change of Control (Item 10.B.7 of Form 20-F)
See Item 10.B. Additional InformationMemorandum and Articles of Association of the Form 20-F.
Ownership Threshold (Item 10.B.8 of Form 20-F)
There are no provisions in Bilibilis sixth amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed. However, shareholders of Bilibili will be required to disclose shareholder ownership in accordance with applicable laws and regulations.
Differences Between the Law of Different Jurisdictions (Item 10.B.9 of Form 20-F)
The Companies Act is modeled after that of England but does not follow recent English statutory enactments and differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements. The 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 consolidated company and the vesting of the undertaking, property and liabilities of such companies to 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 companys articles of association. The plan must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and 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 parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company is a parent of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of 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, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
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Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or 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. 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:
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the statutory provisions as to the required majority vote have been met; |
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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; |
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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 |
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the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the squeeze out of dissentient minority shareholder 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 is thus approved, or if a tender offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, 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 and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:
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a company acts or proposes to act illegally or ultra vires; |
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the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
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those who control the company are perpetrating a fraud on the minority. |
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a companys 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 civil fraud or the consequences of committing a crime. Bilibilis sixth amended and restated memorandum and articles of association permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, Bilibili has entered into indemnification agreements with its directors and executive officers that provide such persons with additional indemnification beyond that provided in Bilibilis sixth amended and restated memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under 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.
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Directors Fiduciary Duties. Under Delaware corporate 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 acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest 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, the 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 of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the companya duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and Bilibilis sixth amended and restated articles of association provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.
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. 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.
The Companies Act provide 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 companys articles of association. Bilibilis sixth amended and restated articles of association allow its shareholders holding in aggregate not less than one-third of all votes attaching to the outstanding shares of Bilibili entitled to vote at general meetings to requisition an extraordinary general meeting of the shareholders, in which case the board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders meeting, Bilibilis sixth amended and restated articles of association do not provide its shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands company, Bilibili is not obliged by law to call shareholders annual general meetings.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporations 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 shareholders voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but Bilibilis sixth amended and restated articles of association do not provide for cumulative voting. As a result, the shareholders of Bilibili are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
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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. Under Bilibilis sixth amended and restated articles of association, directors may be removed with or without cause, by an ordinary resolution of its shareholders.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, 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 targets outstanding voting share 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 targets board of directors.
Cayman Islands law 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 Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company 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 corporations 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.
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. 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. Under the Companies Act and Bilibilis sixth amended and restated articles of association, Bilibili may be dissolved, liquidated or wound up by a special resolution of its shareholders.
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 Cayman Islands law and Bilibilis sixth amended and restated articles of association, if its share capital is divided into more than one class of shares, Bilibili may vary the rights attached to any class with the written consent of the holders of a majority of the issued shares of that class or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporations governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, Bilibilis sixth amended and restated memorandum and articles of association may only be amended with a special resolution of its shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by Bilibilis sixth amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on its shares. In addition, there are no provisions in Bilibilis sixth amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
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Changes in Capital (Item 10.B.10 of Form 20-F)
See Item 10.B. Additional InformationMemorandum and Articles of Association of the Form 20-F.
Debt Securities (Item 12.A of Form 20-F)
Not applicable.
Warrants and Rights (Item 12.B of Form 20-F)
Not applicable.
Other Securities (Item 12.C of Form 20-F)
Not applicable.
American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
The name of the depositary is Deutsche Bank Trust Company Americas. The depositarys corporate trust office at which the ADSs will be administered is located at 60 Wall Street, New York, NY 10005, USA. The principal executive office of the depositary is located at 60 Wall Street, New York, NY 10005, USA.
Each ADS will represent an ownership interest of one Class Z ordinary share, deposited with Deutsche Bank AG, Hong Kong Branch, as custodian for the depositary. Each ADS will also represent ownership of any other securities, cash or other property which may be held by the depositary.
The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, or DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto.
We will not treat ADS holders as our shareholders and accordingly, you, as an ADS holder, will not have shareholder rights. Cayman Islands law governs shareholder rights. The depositary will be the holder of the Class Z ordinary shares underlying your ADSs. As a holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary and you, as an ADS holder, and the beneficial owners of ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. The laws of the State of New York govern the deposit agreement and the ADSs.
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of American Depositary Receipt. This summary does not purport to be complete and is subject to and qualified in its entirety by our Form F-6 filed on March 16, 2018 (Commission file No. 333- 223711), which is incorporated herein by reference, including the exhibits thereto. For directions on how to obtain copies of those documents, see Item 10.H. Additional InformationDocuments on Display of the Form 20-F.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class Z ordinary shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class Z ordinary shares your ADSs represent as of the record date (which will be as close as practicable to the record date for our Class Z ordinary shares) set by the depositary with respect to the ADSs.
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Cash. The depositary will convert or cause to be converted any cash dividend or other cash distribution we pay on the Class Z ordinary shares or any net proceeds from the sale of any Class Z ordinary shares, rights, securities or other entitlements under the terms of the deposit agreement into U.S. dollars if it can do so on a practicable basis, and can transfer the U.S. dollars to the United States and will distribute promptly the amount thus received. If the depositary shall determine in its judgment that such conversions or transfers are not practical or lawful or if any government approval or license is needed and cannot be obtained at a reasonable cost within a reasonable period or otherwise sought, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold or cause the custodian to hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid and such funds will be held for the respective accounts of the ADS holders. It will not invest the foreign currency and it will not be liable for any interest for the respective accounts of the ADS holders. |
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Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary, that must be paid, will be deducted. See Taxation. It will distribute only whole U.S. dollars and cents and will round down fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.
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Shares. For any Class Z ordinary shares we distribute as a dividend or free distribution, either (1) the depositary will distribute additional ADSs representing such Class Z ordinary shares or (2) existing ADSs as of the applicable record date will represent rights and interests in the additional Class Z ordinary shares distributed, to the extent reasonably practicable and permissible under law, in either case, net of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary will only distribute whole ADSs. It will try to sell Class Z ordinary shares which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may sell a portion of the distributed Class Z ordinary shares sufficient to pay its fees and expenses, and any taxes and governmental charges, in connection with that distribution. |
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Elective Distributions in Cash or Shares. If we offer holders of our Class Z ordinary shares the option to receive dividends in either cash or shares, the depositary, after consultation with us and having received timely notice as described in the deposit agreement of such elective distribution by us, has discretion to determine to what extent such elective distribution will be made available to you as a holder of the ADSs. We must timely first instruct the depositary to make such elective distribution available to you and furnish it with satisfactory evidence that it is legal to do so. The depositary could decide it is not legal or reasonably practicable to make such elective distribution available to you. In such case, the depositary shall, on the basis of the same determination as is made in respect of the Class Z ordinary shares for which no election is made, distribute either cash in the same way as it does in a cash distribution, or additional ADSs representing Class Z ordinary shares in the same way as it does in a share distribution. The depositary is not obligated to make available to you a method to receive the elective dividend in shares rather than in ADSs. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Class Z ordinary shares. |
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Rights to Purchase Additional Shares. If we offer holders of our Class Z ordinary shares any rights to subscribe for additional shares, the depositary shall having received timely notice as described in the deposit agreement of such distribution by us, consult with us, and we must determine whether it is lawful and reasonably practicable to make these rights available to you. We must first instruct the depositary to make such rights available to you and furnish the depositary with satisfactory evidence that it is legal to do so. If the depositary decides it is not legal or reasonably practicable to make the rights available but that it is lawful and reasonably practicable to sell the rights, the depositary will endeavor to sell the rights and in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper distribute the net proceeds in the same way as it does with cash. |
The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.
If the depositary makes rights available to you, it will establish procedures to distribute such rights and enable you to exercise the rights upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The Depositary shall not be obliged to make available to you a method to exercise such rights to subscribe for Class Z ordinary shares (rather than ADSs).
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U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.
There can be no assurance that you will be given the opportunity to exercise rights on the same terms and conditions as the holders of Class Z ordinary shares or be able to exercise such rights.
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Other Distributions. Subject to receipt of timely notice, as described in the deposit agreement, from us with the request to make any such distribution available to you, and provided the depositary has determined such distribution is lawful and reasonably practicable and feasible and in accordance with the terms of the deposit agreement, the depositary will distribute to you anything else we distribute on deposited securities by any means it may deem practicable, upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. If any of the conditions above are not met, the depositary will endeavor to sell, or cause to be sold, what we distributed and distribute the net proceeds in the same way as it does with cash; or, if it is unable to sell such property, the depositary may dispose of such property in any way it deems reasonably practicable under the circumstances for nominal or no consideration, such that you may have no rights to or arising from such property. |
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if we and/or the depositary determines that it is illegal or not practicable for us or the depositary to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposit Class Z ordinary shares or evidence of rights to receive Class Z ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons entitled thereto.
Except for Class Z ordinary shares deposited by us in connection with this offering, no shares will be accepted for deposit during a period of 180 days after the date of this prospectus. The 180 day lock up period is subject to adjustment under certain circumstances as described in the section entitled Shares Eligible for Future SalesLock-up Agreements.
How do ADS holders cancel an American Depositary Share?
You may turn in your ADSs at the depositarys corporate trust office or by providing appropriate instructions to your broker. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the Class Z ordinary shares and any other deposited securities underlying the ADSs to you or a person you designate at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, to the extent permitted by law.
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How do ADS holders interchange between Certificated ADSs and Uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to you an ADR evidencing those ADSs.
Voting Rights
How do you vote?
You may instruct the depositary to vote the Class Z ordinary shares or other deposited securities underlying your ADSs at any meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities. Otherwise, you could exercise your right to vote directly if you withdraw the Class Z ordinary shares. However, you may not know about the meeting sufficiently enough in advance to withdraw the Class Z ordinary shares.
If we ask for your instructions and upon timely notice from us by regular, ordinary mail delivery, or by electronic transmission, as described in the deposit agreement, the depositary will notify you of the upcoming meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities, and arrange to deliver our voting materials to you. The materials will include or reproduce (a) such notice of meeting or solicitation of consents or proxies; (b) a statement that the ADS holders at the close of business on the ADS record date will be entitled, subject to any applicable law, the provisions of our memorandum and articles of association, and the provisions of or governing the deposited securities, to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the Class Z ordinary shares or other deposited securities represented by such holders ADSs; and (c) a brief statement as to the manner in which such instructions may be given or deemed given in accordance with the second to last sentence of this paragraph if no instruction is received, to the depositary to give a discretionary proxy to a person designated by us. Voting instructions may be given only in respect of a number of ADSs representing an integral number of Class Z ordinary shares or other deposited securities. For instructions to be valid, the depositary must receive them in writing on or before the date specified. The depositary will try, as far as practical, subject to applicable law and the provisions of our memorandum and articles of association, to vote or to have its agents vote the Class Z ordinary shares or other deposited securities (in person or by proxy) as you instruct. The depositary will only vote or attempt to vote as you instruct. If we timely requested the depositary to solicit your instructions but no instructions are received by the depositary from an owner with respect to any of the deposited securities represented by the ADSs of that owner on or before the date established by the depositary for such purpose, the depositary shall deem that owner to have instructed the depositary to give a discretionary proxy to a person designated by us with respect to such deposited securities, and the depositary shall give a discretionary proxy to a person designated by us to vote such deposited securities. However, no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter if we inform the depositary we do not wish such proxy given, substantial opposition exists or the matter materially and adversely affects the rights of holders of the Class Z ordinary shares.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the Class Z ordinary shares underlying your ADSs. In addition, there can be no assurance that ADS holders and beneficial owners generally, or any holder or beneficial owner in particular, will be given the opportunity to vote or cause the custodian to vote on the same terms and conditions as the holders of our Class Z ordinary shares.
The depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if the Class Z ordinary shares underlying your ADSs are not voted as you requested.
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In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will give the depositary notice of any such meeting and details concerning the matters to be voted at least 30 business days in advance of the meeting date.
Compliance with Regulations
Information Requests
Each ADS holder and beneficial owner shall (a) provide such information as we or the depositary may request pursuant to law, including, without limitation, relevant Cayman Islands law, any applicable law of the United States of America, our memorandum and articles of association, any resolutions of our Board of Directors adopted pursuant to such memorandum and articles of association, the requirements of any markets or exchanges upon which the Class Z ordinary shares, ADSs or ADRs are listed or traded, or to any requirements of any electronic book-entry system by which the ADSs or ADRs may be transferred, regarding the capacity in which they own or owned ADRs, the identity of any other persons then or previously interested in such ADRs and the nature of such interest, and any other applicable matters, and (b) be bound by and subject to applicable provisions of the laws of the Cayman Islands, our memorandum and articles of association, and the requirements of any markets or exchanges upon which the ADSs, ADRs or Class Z ordinary shares are listed or traded, or pursuant to any requirements of any electronic book-entry system by which the ADSs, ADRs or Class Z ordinary shares may be transferred, to the same extent as if such ADS holder or beneficial owner held Class Z ordinary shares directly, in each case irrespective of whether or not they are ADS holders or beneficial owners at the time such request is made.
Disclosure of Interests
Each ADS holder and beneficial owner shall comply with our requests pursuant to Cayman Islands law, the rules and requirements of the New York Stock Exchange and any other stock exchange on which the Class Z ordinary shares are, or will be, registered, traded or listed or our memorandum and articles of association, which requests are made to provide information, inter alia, as to the capacity in which such ADS holder or beneficial owner owns ADS and regarding the identity of any other person interested in such ADS and the nature of such interest and various other matters, whether or not they are ADS holders or beneficial owners at the time of such requests.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable, or which become payable, on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register or transfer your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any net proceeds, or send to you any property, remaining after it has paid the taxes. You agree to indemnify us, the depositary, the custodian and each of our and their respective agents, directors, employees and affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any refund of taxes, reduced rate of withholding at source or other tax benefit obtained for you. Your obligations under this paragraph shall survive any transfer of ADRs, any surrender of ADRs and withdrawal of deposited securities or the termination of the deposit agreement.
Reclassifications, Recapitalizations and Mergers
If we: |
Then: | |
Change the nominal or par value of our Class Z ordinary shares | The cash, shares or other securities received by the depositary will become deposited securities. | |
Reclassify, split up or consolidate any of the deposited securities | Each ADS will automatically represent its equal share of the new deposited securities. | |
Distribute securities on the Class Z ordinary shares that are not distributed to you, or Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action | The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
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Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the form of ADR without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, including expenses incurred in connection with foreign exchange control regulations and other charges specifically payable by ADS holders under the deposit agreement, or materially prejudices a substantial existing right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended. If any new laws are adopted which would require the deposit agreement to be amended in order to comply therewith, we and the depositary may amend the deposit agreement in accordance with such laws and such amendment may become effective before notice thereof is given to ADS holders.
How may the deposit agreement be terminated?
The depositary will terminate the deposit agreement if we ask it to do so, in which case the depositary will give notice to you at least 90 days prior to termination. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign, or if we have removed the depositary, and in either case we have not appointed a new depositary within 90 days. In either such case, the depositary must notify you at least 30 days before termination.
After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property and deliver Class Z ordinary shares and other deposited securities upon cancellation of ADSs after payment of any fees, charges, taxes or other governmental charges. Six months or more after the date of termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. After such sale, the depositarys only obligations will be to account for the money and other cash. After termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary thereunder.
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the Company, the ADRs and the deposit agreement.
The depositary will maintain facilities in the Borough of Manhattan, The City of New York to record and process the issuance, cancellation, combination, split-up and transfer of ADRs.
These facilities may be closed at any time or from time to time when such action is deemed necessary or advisable by the depositary in connection with the performance of its duties under the deposit agreement or at our reasonable written request.
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Limitations on Obligations and Liability
Limits on our Obligations and the Obligations of the Depositary and the Custodian; Limits on Liability to Holders of ADSs
The deposit agreement expressly limits our obligations and the obligations of the depositary and the custodian. It also limits our liability and the liability of the depositary. The depositary and the custodian:
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are only obligated to take the actions specifically set forth in the deposit agreement without gross negligence or willful misconduct; |
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are not liable if any of us or our respective controlling persons or agents are prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement and any ADR, by reason of any provision of any present or future law or regulation of the United States or any state thereof, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of our memorandum and articles of association or any provision of or governing any deposited securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, revolutions, rebellions, explosions and computer failure); |
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are not liable by reason of any exercise of, or failure to exercise, any discretion provided for in the deposit agreement or in our memorandum and articles of association or provisions of or governing deposited securities; |
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are not liable for any action or inaction of the depositary, the custodian or us or their or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, any person presenting Class Z ordinary shares for deposit or any other person believed by it in good faith to be competent to give such advice or information; |
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are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement; |
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are not liable for any special, consequential, indirect or punitive damages for any breach of the terms of the deposit agreement, or otherwise; |
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may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party; |
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disclaim any liability for any action or inaction or inaction of any of us or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, accountants, any person presenting Class Z ordinary shares for deposit, holders and beneficial owners (or authorized representatives) of ADSs, or any person believed in good faith to be competent to give such advice or information; and |
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disclaim any liability for inability of any holder to benefit from any distribution, offering, right or other benefit made available to holders of deposited securities but not made available to holders of ADS. |
The depositary and any of its agents also disclaim any liability (i) for any failure to carry out any instructions to vote, the manner in which any vote is cast or the effect of any vote or failure to determine that any distribution or action may be lawful or reasonably practicable or for allowing any rights to lapse in accordance with the provisions of the deposit agreement, (ii) the failure or timeliness of any notice from us, the content of any information submitted to it by us for distribution to you or for any inaccuracy of any translation thereof, (iii) any investment risk associated with the acquisition of an interest in the deposited securities, the validity or worth of the deposited securities, the credit¬worthiness of any third party, (iv) for any tax consequences that may result from ownership of ADSs, Class Z ordinary shares or deposited securities, or (v) for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary, provided that in connection with the issue out of which such potential liability arises the depositary performed its obligations without gross negligence or willful misconduct while it acted as depositary.
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In addition, the deposit agreement provides that each party to the deposit agreement (including each holder, beneficial owner and holder of interests in the ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any lawsuit or proceeding against the depositary or Bilibili related to its shares, the ADSs or the deposit agreement.
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Requirements for Depositary Actions
Before the depositary will issue, deliver or register a transfer of an ADS, split-up, subdivide or combine ADSs, make a distribution on an ADS, or permit withdrawal of Class Z ordinary shares, the depositary may require:
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payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any Class Z ordinary shares or other deposited securities and payment of the applicable fees, expenses and charges of the depositary; |
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satisfactory proof of the identity and genuineness of any signature or any other matters contemplated in the deposit agreement; and |
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compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal or delivery of deposited securities and (B) such reasonable regulations and procedures as the depositary may establish, from time to time, consistent with the deposit agreement and applicable laws, including presentation of transfer documents. |
The depositary may refuse to issue and deliver ADSs or register transfers of ADSs generally when the register of the depositary or our transfer books are closed or at any time if the depositary or we determine that it is necessary or advisable to do so.
Your Right to Receive the Shares Underlying Your ADSs
You have the right to cancel your ADSs and withdraw the underlying Class Z ordinary shares at any time except:
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when temporary delays arise because: (1) the depositary has closed its transfer books or we have closed our transfer books; (2) the transfer of Class Z ordinary shares is blocked to permit voting at a shareholders meeting; or (3) we are paying a dividend on our Class Z ordinary shares; |
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when you owe money to pay fees, taxes and similar charges; |
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when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of Class Z ordinary shares or other deposited securities, or |
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other circumstances specifically contemplated by Section I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time); or |
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for any other reason if the depositary or we determine, in good faith, that it is necessary or advisable to prohibit withdrawals. |
The depositary shall not knowingly accept for deposit under the deposit agreement any Class Z ordinary shares or other deposited securities required to be registered under the provisions of the Securities Act, unless a registration statement is in effect as to such Class Z ordinary shares.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of an ADS holder, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register such transfer.
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Power of Attorney
Date: December 23, 2020
Place: Shanghai
I, Chen Rui, a citizen of the Peoples Republic of China with ID card no. ***, on the execution date of this Power of Attorney (hereinafter referred to as this Power of Attorney), holds 100% equity of Shanghai Kuanyu Digital Technology Co., Ltd. (hereinafter referred to as the Company) corresponding to a capital contribution of RMB 100,000,000 (hereinafter referred to as the Target Equity).
Whereas:
1. |
Hode Shanghai Limited (hereinafter referred to as the Attorney), the related parties and I executed an Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) on December 23, 2020. When the laws of the Peoples Republic of China permit and the corresponding conditions are met, if the Attorney makes a purchase request according to its independent judgment: (a) I shall transfer all or part of my equity in the Company to the Attorney or its designated party at its request; (b) the Company shall, at its request, transfer all or part of its assets to the Attorney or to its designated party; |
2. |
The Attorney and the Company executed an Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement) on December 23, 2020, whereby the Attorney shall provide the Company with exclusive technical services, technical advice and other services; and |
3. |
I signed a Power of Attorney (hereinafter referred to as the Original Power of Attorney) on April 24, 2019. I hereby agree to amend and restate the terms and conditions of the Original Power of Attorney and agree to execute this Power of Attorney in lieu of the Original Power of Attorney. |
I hereby irrevocably authorize the Attorney to exercise the rights hereunder within the term hereof.
1. |
Entrusted Rights |
I unconditionally and irrevocably undertake to authorize the Attorney or, at the direction of the Attorney, to authorize the director of its direct or indirect overseas parent company it designated and a liquidator or any other successor acting for such director (except any person who is non-independent or who may cause any potential conflicts of interest)(hereinafter referred to as the Trustees) to exercise all the shareholder rights as a shareholder of the Company. Such rights (hereinafter referred to as the Entrusted Rights) include but are not limited to:
1) |
proposing, convening and attending the shareholders meeting of the Company in accordance with the Companys articles of association, and sign any and all written resolutions and minutes for and on my behalf, as my agent; |
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2) |
exercising the rights of shareholders to vote, to appoint directors and amend the articles of association I am entitled to according to the PRC laws (including any laws, regulations, rules, notices or other legally binding documents issued by any central or local legislative, administrative or judicial authority of Mainland China prior to or after the signing of this Power of Attorney, hereinafter referred to as the PRC Laws) and the articles of association of the Company (including any other voting rights as stipulated in the amended articles of association); taking over or managing the business of the Company, dissolving or liquidating the Company; forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group during the liquidation period according to law; |
3) |
nominating, designating, appointing or replacing, on behalf of me, the legal representative, board chairman, directors, supervisors of the Company and other senior management officers who shall be appointed or removed by the shareholder (or the shareholders meeting), in accordance with the articles of association of the Company; instituting proceedings against, or taking other legal actions against, the directors, supervisors or senior management officers of the Company when their actions impair the interests of the Company or its shareholders; |
4) |
signing the relevant equity transfer agreement, asset transfer agreement, resolution of the shareholders meeting/shareholders decision and other relevant documents on my behalf, and handling the procedures of government approval, registration and filing required for the transfer, when I transfer the shares of the Company under the Exclusive Option Agreement and agree to transfer the assets of the Company; and |
5) |
signing the minutes of the meeting, written resolutions and/or other relevant documents of the shareholders meeting and filing the documents with the competent administration for market regulation and any other governmental authority. |
2. |
Representations and Warranties Related to the Entrusted Rights |
2.1 |
I undertake not to engage in any action in violation of the purpose or intention of this Power of Attorney nor use the information obtained from the Attorney to cause the conflict between the interest of the Attorney and its shareholders. |
2.2 |
I undertake that the authorization hereunder will not lead to a real or potential conflict of interest between me and the Attorney. If there is a potential conflict of interest between me and the Attorney or the direct or indirect overseas parent company of the Attorney or any other subsidiary of such overseas parent company, without conflict with the PRC Laws, I will give a priority to the protection and will not harm the interests of the Attorney or the direct or indirect overseas parent company of the Attorney. In the event that I am a director or senior management officer of the Attorney or direct or indirect overseas parent company of the Attorney, I will authorize the Attorney or, at the direction of the Attorney, any other director or senior management officer other than me to exercise the rights hereunder. |
2.3 |
I undertake that, without the prior written consent of the Attorney, I will not, in any way, directly or indirectly participate in, engage in any business that has or may compete with the business of the Attorney, the Company and any company under the control of the Attorney or the Company, or hold the rights, interests and assets of any relevant entity that has or may have a competitive business with the Attorney, the Company and any company under the control of the Attorney or the Company, and that the Attorney will have the right to ultimately determine whether or not I have or may have any of the above circumstances. |
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2.4 |
I hereby undertake that, in the event of bankruptcy, liquidation, dissolution or termination of the Company, all the assets, including the equity of the Company, acquired by me after the bankruptcy, liquidation, dissolution or termination of the Company, will be transferred to the Attorney or the party designated by the Attorney free of charge or at the lowest price permitted by Chinese law at that time or will be disposed of by the liquidator at that time on the basis of the protection of the interests of the direct or indirect shareholders and/or creditors of the Attorney. |
2.5 |
I agree that the Attorney will have the right to entrust the Trustees with matters under Article 1 hereof. The Trustees and/or the Attorney exercise the Entrusted Rights as I personally exercise the rights of shareholders. The authorization and entrustment of such Entrusted Rights shall be based on the precondition that the person designated by the Attorney is the director of its direct or indirect overseas parent company and the liquidator or other successor acting as such director, and I agree to the above authorization and entrustment. When the Attorney gives me a written notice to replace the Trustees, I will immediately appoint other entities or Chinese citizens designated by the Attorney and to the satisfaction of the Trustees at that time to exercise the above Entrusted Rights. The new authorization in line with this Power of Attorney may replace the original authorization once it is made. In addition, I will not revoke the entrustment and authorization made to the Trustees and/or the Attorney. |
2.6 |
I will acknowledge and approve any legal consequence arising from the exercise of the above Entrusted Rights by the Trustees and/or the Attorney in accordance with this Power of Attorney and will bear the corresponding legal liability. |
2.7 |
All the actions of the Trustees and/ or the Attorney relating to the equity of the Company and/or the other Entrusted Rights shall be the actions of mine. All the meeting minutes and resolutions of the shareholders meeting or shareholders decisions, as appropriate, signed by the Trustees and/ or the Attorney shall be deemed to be signed by me. The Trustees and/or the Attorney may act according to their own will without prior consent of mine, but after the resolution of the shareholders meeting or the decision of the shareholder (as the case may be), the Trustees and/or the Attorney shall inform me in time. I hereby acknowledge and approve such acts and/or documents of the Trustees and/or the Attorney. |
2.8 |
During the term of this Power of Attorney, I agree and acknowledge that I will not exercise all the rights relating to the equity of the Company authorized to the Trustees and/or the Attorney herein without the prior written consent of the Attorney. |
2.9 |
In the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other occurrence that may affect the exercise of the Companys equity rights held by me, the shareholder or transferee holding the original Target Equity of mine shall be deemed to be a party hereto, inheriting/assuming all my rights and obligations hereunder. |
3. |
Entrustment Term |
3.1 |
This Power of Attorney shall take effect from the execution date and shall be irrevocable and shall remain in force unless the Attorney gives the contrary written instruction, or this Power of Attorney terminates in accordance with Article 3.2 hereof. |
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3.2 |
This Power of Attorney will be automatically terminated on the date on which the Attorney or the relevant party designated by the Attorney is registered as the sole shareholder of the Company, once the PRC Laws allow the Attorney or the Attorneys direct or indirect overseas parent company or a subsidiary directly or indirectly controlled by the Attorneys foreign parent company to directly hold shares in the Company and legally engage in the Companys business. |
4. |
Applicable Law and Dispute Settlement |
4.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Power of Attorney and the settlement of disputes hereunder shall be governed by the PRC Laws. |
4.2 |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Attorney and I. If the Attorney and I fail to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other Parties to settle such dispute through negotiation, any Party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Attorney and I. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The arbitral tribunal may rule on the Companys equity interests, assets or property interests as the compensation or satisfaction to the Attorney for the losses caused by the breach of contract hereunder, rule on injunctive relief in respect of the relevant business or asset transfer, or order the Company to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where the Company is incorporated and where the Company or the Attorneys main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of the Companys business, restrictions on and/or disposition of the Companys equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of the Company, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling that the breaching party not to carry out acts that may lead to further expansion of the loss suffered by the Attorney. |
4.3 |
After the execution of this Power of Attorney, if at any time, due to the promulgation or change of any PRC Laws, or due to the change of interpretation or application of such PRC Laws, the following provisions shall apply: if the change of law or the newly promulgated provisions directly or indirectly materially affect the economic interests of the Attorney hereunder, the Attorney and I shall consult in time and make all necessary amendments to this Power of Attorney in order to make the best and reasonable efforts to maintain the economic interests of the Attorney hereunder. |
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4.4 |
Where the stock exchange of Hong Kong or NASDAQ of the United States or other regulatory agency proposes any amendment to this Power of Attorney, or where the listing rules or other relevant regulations, rules, codes, guidelines of Hong Kong or NASDAQ of the United States require amending this Power of Attorney or any arrangement hereunder, I shall amend this Power of Attorney accordingly in accordance with the requirements and instructions of the Attorney. |
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[This page has no text and is the signature page of Power of Attorney]
IN WITNESS WHEREOF, this Power of Attorney was executed as of the date and place set forth at the beginning hereof.
Chen Rui | ||
By: |
/s/ Chen Rui |
Signature page of Power of Attorney
Equity Pledge Agreement
This Equity Pledge Agreement (hereinafter referred to as this Agreement) is made and entered into by and among the following parties in Shanghai, China on December 23, 2020:
Party A: | HODE SHANGHAI LIMITED, a wholly foreign-owned enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 4031, 4/F, Building 1, No. 310 Fasai Road, China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the Pledgee). | |
Party B: | CHEN RUI, a citizen of the PRC with ID card no. ***; | |
(hereinafter referred to as the Pledgor). | ||
Party C: | SHANGHAI KUANYU DIGITAL TECHNOLOGY CO., LTD., a limited liability enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 801, No. 489 Zhengli Road, Yangpu District, Shanghai. |
In this Agreement, the Pledgee, the Pledgor and Party C shall hereinafter be individually referred to as a Party and collectively as the Parties.
Whereas:
1. |
Party C is a limited liability company registered in Shanghai, China, with a registered capital of RMB100,000,000. The Pledgor is a shareholder of Party C on the execution date hereof and hold a total of 100% shares in Party C. |
2. |
The Pledgee is a wholly foreign-owned enterprise registered in Shanghai, China. The Pledgee and Party C executed an Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement), whereby the Pledgee shall provide Party C with exclusive technical services, technical advice and other services; and |
3. |
The related parties hereto executed an Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) on the execution date hereof. When the PRC Laws permit and the corresponding conditions are met, if the Pledgee makes a purchase request: (a) the Pledgor shall, at its request, transfer all or part of its equity in Party C to the Pledgee and/or to any other entity or individual it designates; (b) Party C shall, at its request, transfer all or part of its assets to the Pledgee and/or to any other entity or individual it designates; |
4. |
Chen Rui has executed a Power of Attorney (hereinafter referred to as the Power of Attorney) on the execution date hereof, and the Pledgor irrevocably entrusts the Pledgee and/or the person designated by it at that time to exercise on behalf of the Pledgor all the voting rights of the shareholder held by it in Party C; and |
5. |
Party A, Party B and Party C intend to execute this Agreement on the equity pledge provided by Party B to Party A, as the security for the performance of the Contractual Obligations (as defined below) and the settlement of the Secured Indebtedness (as defined below) by the Pledgor, and the Pledgor shall pledge to the Pledgee all the shares in Party C held by the Pledgee. |
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1. |
Definitions |
Unless otherwise defined by the Agreement, the following words herein shall have the meanings as follows:
1.1 |
Pledge shall mean the Security Interest granted by the Pledgor to the Pledgee under Article 2 hereof, i.e. the right the Pledgee is entitled to and to be repaid firstly with the discount, conversion, auction or sale price of the equity pledged by the Pledgor to the Pledgee. |
1.2 |
Equity shall mean all the equity in Party C that is held and may be disposed of by the Pledgor at the time of entry into force of this Agreement and is pledged to the Pledgee in accordance with this Agreement as security for the performance of its Contractual Obligations and Secured Indebtedness with Party C (including all the equity interests owned by the Pledgor at present and constituting all the registered capital of Party C and all the equity interests held by the Pledgor in any form from time to time for any reason in the future) and any additional equity in accordance with Article 6.5 hereof. |
1.3 |
Pledge Term shall mean the term as defined in Article 3 hereof. |
1.4 |
Default Event shall mean any circumstance as set forth in Article 7 hereof. |
1.5 |
Default Notice shall mean the notice delivered by the Pledgee according to this Agreement to declare Default Event. |
1.6 |
Contractual Obligations shall mean all the Contractual Obligations of the Pledgor under the Exclusive Option Agreement and all the obligations under the Power of Attorney; all the Contractual Obligations of Party C under the Business Cooperation Agreement and the Exclusive Option Agreement; and all the Contractual Obligations of the Pledgor and Party C hereunder. |
1.7 |
Original Transaction Agreements shall mean the Exclusive Option Agreement, the Exclusive Technology Consulting and Services Agreement and the Power of Attorney signed by the Pledgee, the Pledgor and/or Party C on April 24, 2019. |
1.8 |
Original Pledge Agreement shall mean the Equity Pledge Contract signed by the Pledgee and the Pledgor on April 24, 2019. |
1.9 |
Transaction Agreements shall mean the Business Cooperation Agreement, Exclusive Option Agreement and the Power of Attorney, and shall be the revision and restatement of the Original Transaction Agreements. |
1.10 |
Secured Indebtedness shall mean (a) all the payments due to the Pledgee by Party C and/or the Pledgor (including but not limited to, consultancy and service fees payable to the Pledgee under the Transaction Agreements and any payment (whether on the specified maturity date, through prepayment or otherwise) and its interest, liquidated damages (if any), indemnity and attorneys fee, arbitration fee, equity assessment and auction fee and other fees to realize the Pledge); (b) all direct, indirect, derivative and foreseeable losses suffered by the Pledgee as a result of any breach of contract by the Pledgor or Party C, the amount of which shall be based on, but not limited to, the reasonable business plan and profit forecast of the Pledgee; and (c) all costs incurred by the Pledgee in enforcing the Pledgor and/or Party C to perform their/its Contractual Obligations. |
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1.11 |
PRC Laws shall mean the laws, regulations, rules, notices or other legally binding documents issued by any central or local legislative, administrative or judicial authority of Mainland China prior to or after the execution of this Agreement. |
1.12 |
Security Interest shall include mortgage, pledge, lien and any security over third party right or interest, any equity interest call option, acquisition right, right of first refusal, set-off right, ownership retention or other security arrangements. |
2. |
Pledge |
2.1 |
As a guarantee for the timely and complete payment of the Secured Indebtedness and the performance of the Contractual Obligations, the Pledgor hereby pledge the equity to the Pledgee who shall be repaid in the first order as agreed in this Agreement. Party C agrees that the Pledgor will pledge the equity to the Pledgee in accordance with this Agreement. |
2.2 |
The Parties understand and agree that the valuation of the currency resulting from or associated with the Secured Indebtedness until the date of final accounts (as defined in Article 2.4) is a variable and floating valuation. The Pledgor and the Pledgee may, by agreement of the Parties to amend and supplement this Agreement, adjust and confirm from time to time the maximum amount of the Secured Indebtedness to be secured before the Date of Final Accounts due to the change in the valuation of the Secured Indebtedness and the equity currency. |
2.3 |
In any of the following events (hereinafter referred to as Event of Final Accounts), the value of the Secured Indebtedness shall be determined on the basis of the total amount of the Secured Indebtedness due and unpaid by Party C and/or the Pledgor to the Pledgee on the Date of the Event of Final Accounts (hereinafter referred to as the Determined Indebtedness): |
(a) |
Where the Business Cooperation Agreement, the Exclusive Option Agreement or the Power of Attorney is terminated in accordance with the relevant provisions thereunder, resulting in the Pledgee serving to the Pledgor a written notice determining the Secured Indebtedness; |
(b) |
Where a Default Event under Article 7 hereof has occurred and has not been resolved, resulting in the Pledgee serving a Default Notice to the Pledgor in accordance with Article 7.3; |
(c) |
Where the Pledgee, through an appropriate investigation, reasonably believes that the Pledgor and/or Party C are/is insolvent or may be insolvent; or |
(d) |
Any other event requiring the determination of the Secured Indebtedness in accordance with the provisions of the PRC Laws. |
2.4 |
For the avoidance of doubt, the date of occurrence of the Event of Final Accounts shall be the date of final accounts (hereinafter referred to as the Date of Final Accounts). The Pledgee shall have the right to realize the pledge in accordance with Article 8 on or after the Date of Final Accounts. |
2.5 |
During the Pledge Term, the Pledgee shall have the right to deposit any bonus, dividend or any other distributable benefit arising from the equity (hereinafter referred to as Interest) and to use it for the priority repayment of the Secured Indebtedness. The Pledgor shall, upon receipt of the written request of the Pledgee, deposit (or induce Party C to deposit) the Interest into the account designated in writing by the Pledgee, subject to the supervision of the Pledgee; the above Interest deposited in the account designated by the Pledgee in writing shall not be withdrawn by the Pledgor without the written consent of the Pledgee. |
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2.6 |
During the term of this Agreement, the Pledgee shall not be liable for any reduction in the value of the equity unless due to the intentional or gross negligence of the Pledgee, and the Pledgor shall not have the right to pursue or make any claim against the Pledgee in any form. |
2.7 |
The equity pledge established hereunder is a continuous guarantee and its validity shall extend until any one of the circumstances as listed in Article 3.1 hereof happens. Any waiver or concession of any breach of contract by the Pledgor or any delay in the exercise by the Pledgee of any of its rights under the Transaction Agreements and this Agreement shall not affect the rights of the Pledgee under this Agreement, the Transaction Agreements and the relevant RPC Laws at any time thereafter to require the Pledgor and Party C to strictly perform their obligations under the Transaction Agreements and this Agreement or to exercise the rights of the Pledgee as a result of the subsequent breach of the Transactions Agreements and/or this Agreement by the Pledgor and Party C. |
3. |
Pledge Term |
3.1 |
The Pledge shall take effect from the date of registration of the pledged equity under this Agreement at the competent administration for market regulation (hereinafter referred to as the Registry) in the place where Party C is located, the term of the pledge (hereinafter referred to as the Pledge Term) shall be from the above effective date until: (a) the last Secured Indebtedness and Contractual Obligation secured by the pledge is fully repaid and fulfilled; (b) the Pledgee decides, subject to the PRC Laws, to purchase all the equity of Party C held by the Pledgor in accordance with the Exclusive Option Agreement, and all the equity of Party C has been transferred to the name of the Pledgee and/or its designated party, the Pledgee and/or its designated party and its subsidiaries and branches may legally engage in the business of Party C with above equity according to law; or (c) the Pledgee decides, subject to the PRC Laws, to purchase all the assets of Party C in accordance with the Exclusive Option Agreement, and all the assets of Party C have been transferred to the name of the Pledgee and/or its designated party, the Pledgee and/or its designated party and its subsidiaries and branches may legally engage in the business of Party C with above assets according to law; or (d) the Pledgee unilaterally requests the termination of this Contract (the right of the Pledgee to terminate this Agreement is the right without any restrictive conditions, and the right only belongs to the Pledgee, and the Pledgor or Party C does not have the right to terminate this Agreement unilaterally); or (e) the pledge shall be terminated in accordance with the applicable laws and regulations of China. |
3.2 |
During the Pledge Term, if the Pledgor and/or Party C fail to perform their Contractual Obligations or repay the Secured Indebtedness (including but not limited to the failure to pay the service fee in accordance with the Business Cooperation Agreement or failure to fulfill any other provision of any transaction agreement), the Pledgee shall have the right other than the obligation to dispose of the Pledge in accordance with this Agreement. |
4. |
Registration of Pledge and Custody of Equity Records |
4.1 |
The Parties acknowledge that this Agreement and the Transaction Agreement are re-signed for the revision of the Original Pledge Agreement and the Original Transaction Agreements. Prior to the execution of this Agreement, the Parties have completed the registration of the equity pledge at the Registry for the Original Pledge Agreement. The Parties agree that, as this Agreement and the Original Pledge Agreement are consistent such registered matters as the company of the pledged equity, the amount of the pledged equity, the Pledgor, the Pledgee, there may not have a second equity pledge registration. In order to avoid ambiguity, for the purpose hereof, if any provision of the Original Pledge Agreement conflicts with any provision of this Agreement, the provision of this Agreement shall prevail, and the provision of the Original Pledge Agreement that does not conflict with this Agreement shall continue to be valid. |
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4.2 |
Within the Pledge Term as set forth herein, Party C/the Pledgor shall deliver the original of the certificate of equity contribution, the register of shareholders bearing the Pledge (in the form as set forth in Annex I) (and other documents reasonably required by the Pledgee, including but not limited to the registration notice of equity pledge establishment issued by the competent administration for market regulation) to the Pledgee for custody. The Pledgee shall keep such documents throughout the Pledge Term as provided herein. |
5. |
Representations and Warranties of the Pledgor and Party C |
The representations and warranties of the Pledgor to the Pledgee are as follows:
5.1 |
The Pledgor is a natural person with full capacity for civil conduct and capacity for civil rights, and has the right to execute, deliver and perform this Agreement, and can act as an independent subject of litigation. |
5.2 |
The Pledgor is the legal and beneficial owner of the Equity of Party C, and the Pledgor has the full right and capability to pledge the Equity to the Pledgee in accordance with the provisions of this Agreement, and the Pledgor has the right to dispose of the Equity and any part thereof. Except subject to this Agreement and the Transaction Agreements between the Pledgor and the Pledgee, it has legal and complete ownership of the Equity. |
5.3 |
The Pledgee shall have the right to dispose of and transfer the Equity as specified in this Agreement. |
5.4 |
Except for the Pledge hereunder, the Pledgor does not create any Security Interests or other encumbrance on the Equity, there is no dispute over the ownership of the Equity, there are no subscribed contributions, taxes, fees payable but unpaid in connection with the Equity, the Equity is not subject to any seizure or other legal proceedings or a similar threat and may be used for pledge and transfer under the applicable law. |
5.5 |
The execution of this Agreement by the Pledgor and the exercise of its rights hereunder or the performance of its obligations hereunder shall not violate or contravene the PRC Laws, any judicial decisions, rulings of any arbitration agency, decisions of any administrative agency, any agreement or contract to which the Pledgor is a party or which is binding on its assets, or any undertaking made by the Pledgor to any third party. |
5.6 |
All documents, information, statements and documents provided by the Pledgor to the Pledgee, whether provided before or after the entry into force hereof and during the Pledge Term, are true, accurate, complete and valid. |
5.7 |
This Agreement constitutes a legal, valid and binding obligation to the Pledgor after this Agreement is duly executed by the Pledgor and has entered into force in accordance with the terms of this Agreement. |
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5.8 |
The Pledgor has the full right and authority to execute and deliver this Agreement and all other documents relating to the transactions contemplated herein which it will execute, and to complete the transactions contemplated herein. |
5.9 |
Except for the registration of the creation of an equity pledge required to be made with the Registry, the consent, permission, waiver, authorization of any third party or the approval, permission, exemption of any governmental registry or filing formalities with any governmental agency (if required by law) as required for the execution and performance of this Agreement and the entry into force of the equity pledge hereunder have been obtained and shall remain in force and effect for the term hereof. |
5.10 |
The Pledge under this Agreement constitutes a first ranking Security Interest on the Equity. |
5.11 |
There are no pending or, to the knowledge of the Pledgor, threatened actions, legal proceedings or claims before any court or arbitral tribunal, and before any governmental authority or administrative authority against the Pledgor or its assets or Equity, which will have a material or adverse effect on the economic conditions of the Pledgor or the Pledgors ability to perform its obligations and security liability under this Agreement. |
5.12 |
Except as otherwise provided herein, there shall be no interference from any other party at any time upon the exercise by the Pledgee of the Pledge under this Agreement. |
The representations and warranties of Party C to the Pledgee are as follows:
5.13 |
Party C is a limited liability company incorporated and legally existing under the laws of China. It has the status of an independent legal person, can act independently as the subject of litigation of one party, has full and independent legal status and legal capacity, and has been duly authorized to sign, deliver and perform this Agreement. |
5.14 |
This Agreement constitutes a legal, valid and binding obligation to Party C after this Agreement is duly executed by Party C and has entered into force in accordance with the terms of this Agreement. |
5.15 |
Party C has the full right and authority to execute and deliver this Agreement and all other documents relating to the transactions contemplated herein which it will execute, and to complete the transactions contemplated herein. |
5.16 |
For assets owned by Party C, there is no significant Security Interest or other property right burden that may affect the rights and interests of the Pledgee in the equity (including but not limited to, any transfer of intellectual property or any assets worth more than RMB1 million of Party C, or any property right or right of use attached to such assets). |
5.17 |
There are no pending or, to the knowledge of Party C, threatened actions, arbitration, administrative proceedings, administrative penalties or other legal proceedings before any court or arbitral tribunal, and before any governmental authority or administrative authority against the Equity, Party C or its assets, which will have a material or adverse effect on the economic conditions of Party C or the ability of the Pledgor or Party C to perform its obligations and security liability under this Agreement. |
5.18 |
The execution of this Agreement by Party C and the exercise of its rights hereunder or the performance of its obligations hereunder shall not violate or contravene the PRC Laws, any judicial decisions, rulings of any arbitration agency, decisions of any administrative agency, any agreement or contract to which Party C is a party or which is binding on its assets, or any undertaking made by Party C to any third party. |
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5.19 |
All the documents, information, statements and certificates provided by Party C for the Pledgee, whether provided before or after the entry into force hereof and during the Pledge Term, are true, accurate, complete and valid. |
5.20 |
Except for the registration of the creation of an equity pledge required to be made with the Registry, the consent, permission, waiver, authorization of any third party or the approval, permission, exemption of any governmental registry or filing formalities with any governmental agency (if required by law) as required for the execution and performance of this Agreement and the entry into force of the equity pledge hereunder have been obtained and shall remain in force and effect for the term hereof. |
5.21 |
The Pledge under this Agreement constitutes a first ranking Security Interest on the Equity. |
5.22 |
Party C hereby warrants to the Pledgee that the above representations and warranties are true and correct at any time before the full performance of the Contractual Obligations or the full settlement of the Secured Indebtedness and will be fully complied with. |
6. |
The Undertakings and Further Agreement of the Pledgor and Party C |
The Undertakings and Further Agreement of the Pledgor are as follows:
6.1 |
During the term of this Agreement, the Pledgor hereby undertakes to the Pledgee that: |
6.1.1 |
Except for the performance of the Exclusive Option Agreement, without the prior written consent of the Pledgee, the Pledgor will not carry out or consent to the transfer of all or any part of the Equity, create or permit the existence of any Security Interest or other encumbrance that may affect the rights and interests of the Pledgee in the Equity. In terms of the equity transfer as approved by the Pledgee, the Pledgor shall first use the proceeds from the transfer of the Equity to pay off the Secured Indebtedness to the Pledgee in advance; |
6.1.2 |
The Pledgor will comply with and implement all the PRC Laws applicable to the pledge of the Equity and shall, within five (5) days after receiving any notice, order or recommendation on the Pledge issued or made by the competent authority concerned (or any other relevant authority), present such notice, order or recommendation to the Pledgee and will comply with such notice, order or recommendation or make objections and statements on the above matter at the reasonable request of the Pledgee or with the consent of the Pledgee. |
6.1.3 |
The Pledgor will notify immediately the Pledgee of any event that may affect the rights of the Pledgee or any part thereof or the interests of the Pledgee under the Transaction Agreement and this Agreement (including but not limited to, any legal action, arbitration, other request, any third partys ownership dispute over the equity, or any other adverse effect on the Pledgees rights by or from any third party, any civil or criminal proceedings, administrative proceedings, arbitration or any other legal proceedings against the Pledgor or the equity, or any threat of any such action, arbitration or any other legal proceedings to the knowledge of the Pledgor) or any notice received by the Pledgor, any event that may affect any warranty or any other obligation arising from the Pledgor in this Agreement or any notice received by the Pledgor, and take all necessary measures to ensure the pledge interest of the Equity of the Pledgee in accordance with the reasonable requirements of the Pledgee. |
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6.2 |
In order to protect or improve the Security Interests granted in this Agreement in the settlement of the Secured Indebtedness and in the performance of the Contractual Obligations, and to ensure the Pledgees interest in the Equity and the exercise and realization of such rights, the Pledgor hereby undertakes to execute in good faith and to cause other parties holding interests in the Equity to execute all documents (including but not limited to, supplementary agreements hereto), certificates, agreements, deeds and/or undertakings required by the Pledgee. |
6.3 |
The Pledgor hereby undertakes to the Pledgee that all warranties, undertakings, agreements, statements and conditions hereunder will be complied with and fulfilled. If the Pledgor fails to fulfil all or part of its undertakings, commitments, agreements, statements and conditions, the Pledgor shall indemnify the Pledgee for all losses suffered as a result. |
6.4 |
If the equity relates to any property preservation, enforcement or any coercive measure imposed by the court or any other governmental agency for any reason, or if the value of the equity is reduced or lost in any way sufficient to endanger the rights of the Pledgee, the Pledgor shall immediately notify the Pledgee in writing of such circumstances and take effective measures to safeguard the rights and interests of the Pledgee, including but not limited to the provision of additional property for mortgage or security. If the Pledgee fails to do so, the Pledgee may auction or sell the equity at any time, and use the price of the auction or sale to pay off the Secured Indebtedness or deposit in advance; any expenses arising therefrom shall be borne by the Pledgor. |
6.5 |
Without the prior written consent of the Pledgee, Party C shall not increase or decrease the registered capital, and the Pledgor shall not transfer the equity of Party C or impose any Security Interest, or any other encumbrance on it. Subject to this provision, the equity rights of Party C acquired by the Pledgor after the date of execution of this Agreement (that is, the future equity of Party C (including but not limited to the equity corresponding to the expanded registered capital formed by the capital increase) held by the Pledgor from time to time during the term of this Agreement, hereinafter referred to as the Additional Equity) shall also belong to the equity pledged by the Pledgor to the Pledgee in accordance with this Agreement. The Pledgor and Party C shall sign a supplementary Equity Pledge Agreement with the Pledgee on the Additional Equity before or at the same time as the Pledgor acquires the Additional Equity, and prompt the board of directors or executive director of Party C (as the case may be) and the shareholders meeting or shareholder of Party C (as the case may be) to approve the supplementary Equity Pledge Agreement, and shall submit to the Pledgor all documents required for the supplementary Equity Pledge Agreement, including but not limited to: (a) the original shareholder contribution certificate issued by Party C on the Additional Equity; (b) the register of shareholders recording the Additional Equity and pledge rights; and (c) other documents reasonably required by the Pledgee. The Pledgor and Party C shall, in accordance with the provisions of this Agreement, register the establishment (or change) of Additional Equity and deliver the relevant documents to the Pledgee for custody. |
6.6 |
Unless the Pledgee has previously issued a written instruction to the contrary, the Pledgor and/or Party C agree that, if part or all of the equity is transferred between the Pledgor and any third party (hereinafter referred to as the Equity Transferee), the Pledgor and/ or Party C shall ensure that the Equity Transferee will unconditionally recognize the pledge and perform the necessary registration procedures for the change of pledge (including but not limited to, execution of the relevant documents) to ensure the existence of the Pledge. If the equity transfer referred to in this Article is a transfer in violation of this Agreement, the performance of the provisions of this Article by the Pledgor and/or Party C shall not be deemed to have waived the prosecution of the Pledgor and/or Party C for breach of contract. The Pledgee hereby expressly reserves the right to investigate the breach of contract by the Pledgor and/or Party C. |
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6.7 |
If any transfer of equity arises as a result of the exercise of the Pledge hereunder, the Pledgor undertakes it will take all measures to achieve such transfer. |
6.8 |
Unless the Pledgee agrees, the Pledgor shall not dispose of the equity by any means, such as transfer, sale, pledge or mortgage, and/or give up the Interest arising from the holding of the equity, until the performance of the Contractual Obligations has been completed and the Secured Indebtedness has been fully paid off or this Agreement is cancelled. |
6.9 |
The Pledgor shall not execute any documents or make any relevant undertakings which are in conflict with any agreement or any other legal document that is executed and being performed by Party C and/or the Pledgee and/or its Affiliate; the Pledgor shall not cause any conflict of interest between the Pledgor and the Pledgee as well as its shareholders through any act or omission. In case of any such conflict of interest (the Pledgee shall have the right to decide unilaterally whether such conflict of interest arises), the Pledgor shall take measures in a timely manner to eliminate it as soon as possible with the consent of the Pledgee and/or its Affiliates. If the Pledgor refuses to take measures to eliminate the conflict of interest, the Pledgee shall be entitled to exercise its Call Options under the Exclusive Option Agreement; |
6.10 |
If, in accordance with applicable law, any amendment, supplement or renewal in respect of this Agreement shall take effect upon signature or seal by the Parties, the Pledgor shall, within five (5) days from the date of completion of such amendment, supplement or renewal, register such changes with the competent Registry. |
6.11 |
The Pledgor has made all appropriate arrangements and signed all necessary documents to ensure that in the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other circumstance that may affect the exercise of its equity, its heir, agent, guardian or shareholder or transferee holding the equity of Party C at that time shall be deemed to be a Party hereto, inheriting and assuming all the rights and obligations of the Pledgor hereunder. |
6.12 |
The Pledgor agrees to execute an irrevocable Power of Attorney granting all rights as the shareholder of Party C to Party A or the entity or individual designated of Party A, who may vote on all matters requiring the discussion of the shareholders meeting or decision of the shareholder (as the case may be), resolution by the shareholders meeting, and make and execute resolutions, minutes of meetings and other relevant documents, including but not limited to: appointing and electing directors, supervisors, and other senior management officers to be appointed and removed by shareholder or the shareholders meeting; disposing of the assets of the company; and amending the articles of association; taking over or managing Party Cs business, or dissolving or liquidating Party C and forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group in the liquidation period in accordance with the law. |
9
The Undertakings and Further Agreement of Party C:
6.13 |
If the consent, permission, waiver, authorization of any third party or the approval, permission, exemption of any governmental agency or the registration or filing formalities with any governmental agency (if required by law) is required for the execution and performance of this Agreement and the entry into force of the equity pledge hereunder, Party C will try its best to assist in obtaining the same and make it remain in force for the term hereof. If the business term of Party C expires within the term hereof, Party C shall complete the registration procedures for the extension of the business term before the expiration of its business term to ensure the continuity of the effect of this Agreement. |
6.14 |
Without the prior written consent of the Pledgee, Party C shall not transfer or sell its assets or set or allow the existence of significant Security Interest or any other encumbrance that may affect the rights and interests of the Pledgee in the equity (including but not limited to, any transfer of intellectual property or any assets worth more than RMB1 million of Party C, or any property right or right of use attached to such assets). |
6.15 |
In the event of any legal action, arbitration or any other request that may adversely affect the interests of Party Cs equity or the interest of the Pledgee under the Transaction Agreements and this Agreement, Party C shall undertake to notify the Pledgee in writing as soon as possible and in a timely manner, and take all necessary measures to ensure the Pledgees rights and interests in the equity at the reasonable request of the Pledgee. |
6.16 |
Party C shall not carry out or permit any act or action that may adversely affect the interests or equity of the Pledgee under the Transaction Agreement and this Agreement. |
6.17 |
Within 60 business days after the end of each financial year (hereinafter referred to as the Previous Financial Year) or at the request of the Pledgee, Party C shall provide the Pledgee with the audited consolidated financial statements of Party C for the Previous Financial Year and other information on the operating results and financial position of Party C, including but not limited to the balance sheet, income statement, and cash flow statement. |
6.18 |
Party C undertakes it will take all necessary measures and sign all necessary documents in accordance with the reasonable requirements of the Pledgee to ensure the exercise and realization of the Pledgees pledge of equity and such rights and interests. |
6.19 |
In the event that Party C is dissolved or liquidated as required by the PRC Laws, this Agreement shall terminate, and Party C and the Pledgor shall, to the extent permitted by the PRC Laws, transfer all the assets, including the equity, to Party A free of charge or at the lowest price permitted by the PRC Laws, or the liquidator at that time disposes of all the assets, including the equity, on the basis of protecting the interests of shareholders and/or creditors of the direct or indirect overseas parent company of Party A. |
6.20 |
Each Party separately warrants to the other Parties that once the PRC Laws permit and the Pledgee decides to purchase all the equity of Party C held by the Pledgor in accordance with the Exclusive Option Agreement and all the Secured Indebtedness and Contractual Obligations are fully paid and fulfilled, the Parties hereto shall immediately terminate this Agreement. |
7. |
Default Event |
7.1 |
A Default Event shall be deemed to occur: |
7.1.1 |
in case of the breach or non-performance by the Pledgor of any of its Contractual Obligations under the Exclusive Option Agreement, Power of Attorney and/or this Agreement, and the breach or non-performance by Party C of any of its Contractual Obligations under the Exclusive Option Agreement, Power of Attorney, Business Cooperation Agreement and/or this Agreement; |
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7.1.2 |
if any representation or warranty made by the Pledgor in Article 5 of this Agreement contains false statement or error, and/or the Pledgor breaches any warranty in Article 5 hereof and/or any undertaking in Article 6 hereof; |
7.1.3 |
if the Pledgor and Party C fail to complete the registration/change of registration/Additional Equity pledge registration at the Registry as agreed in this Agreement; |
7.1.4 |
if the Pledgor and Party C violate any provisions or terms of this Agreement; |
7.1.5 |
if the Pledgors own loan, guarantee, compensation, undertaking or other liability to any third party (a) is required to be repaid or fulfilled in advance due to the Pledgors default; or (b) is due but can not be repaid or fulfilled as scheduled; |
7.1.6 |
if any approval, license, consent, permission or authorization of a governmental agency that makes this Agreement enforceable, legal and effective is withdrawn, suspended, invalidated or substantially altered; |
7.1.7 |
if the enactment of the applicable law makes this Agreement illegal or prevents the Pledgor from continuing to perform its obligations hereunder; |
7.1.8 |
if the adverse changes in the property owned by the Pledgor result in the view of the Pledgee that the ability of the Pledgor to fulfil its obligations hereunder has been affected; |
7.1.9 |
if Party C or its successor or trustee may only partially perform or refuse to perform their payment obligations under the Business Cooperation Agreement or the Pledgor and/or Party C may only partially or refuse to pay off the Secured Indebtedness; and |
7.1.10 |
in any other circumstance where the Pledgee is not able to or may not be able to exercise its rights on the Pledge. |
7.2 |
The Pledgor and Party C shall promptly notify the Pledgee upon knowledge or discovery of any of the circumstances referred to in Article 7.1 or any event that may lead to the above. |
7.3 |
The Pledgee may, at the time of or at any time after the occurrence of the breach, give a Default Notice to the Pledgor and exercise all its remedies rights and powers under the PRC Laws, the Transaction Agreements and this Agreement, including but not limited to: |
(a) |
requiring the Pledgor and/or Party C to pay immediately all outstanding amounts due and payable under the Business Cooperation Agreement, all arrears under the transaction agreement and all other amounts due and payable to the Pledgee, and/or to repay the loan; and/or |
(b) |
Disposing of the Pledge as provided for in Article 8 of this Agreement and/or otherwise disposing of the equity to the extent permitted by law (including but not limited to, discounting all or part of the equity, or giving priority to the repayment of the debt to the Pledgee with the amount from the auction or sale of the Equity). |
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The Pledgee has the right to choose to exercise any of the above rights on the basis of its independent judgment. In this case, the other parties hereto shall unconditionally agree to cooperate fully. The Pledgee is not responsible for any loss caused by its reasonable exercise of such rights and powers.
7.4 |
The Pledgee shall have the right to appoint its lawyer or any other agent in writing to exercise any and all of its rights and powers mentioned above, and neither the Pledgor nor Party C shall object to this. |
7.5 |
The Pledgee shall have the right to choose to exercise at the same time or successively any remedy for breach of contract, and the Pledgee shall not have to exercise other relief for breach of contract before exercising the right to auction or sell equity under this Agreement. |
8. |
Exercise of Pledge |
8.1 |
The Pledgee may give written notice to the Pledgor when exercising its Pledge. |
8.2 |
When the Pledgee exercises the Pledge, the Pledgee shall, within the scope permitted and in accordance with applicable PRC Laws, have the right to dispose of the equity in accordance with law. All the payments received by the Pledgee in the exercise of its Pledge shall be dealt with in the following order: |
(a) |
paying all the costs incurred in relation to the disposition of the Equity and the exercise of the rights by the Pledgee (including payment of the attorneys fee and the commission for the agent); |
(b) |
paying taxes due to the disposition of the equity; and |
(c) |
repaying the Secured Indebtedness to the Pledgee. |
8.3 |
When the Pledgee disposes of the Pledge in accordance with this Agreement, the Pledgor and Party C shall provide the necessary assistance to enable the Pledgee to enforce the Pledge in accordance with this Agreement. |
8.4 |
All actual expenses, taxes and fees and all legal expenses related to the establishment of equity pledge hereunder and the realization of the rights of the Pledgee shall be borne by Party C, except those to be borne by the Pledgee according to the PRC Laws; and the Pledgee shall have the right to deduct such expenses actually incurred in the exercise of its rights from the amount gained through exercise of its rights. |
8.5 |
The amount of the Secured Indebtedness determined by the Pledgee in the exercise of its equity pledge in accordance with this Agreement shall be used as final evidence to determine the Secured Indebtedness hereunder. |
9. |
Transfer |
9.1 |
The Pledgor shall not transfer or assign their rights and obligations hereunder without the prior written consent of the Pledgee. |
9.2 |
The Pledgor and Party C agree that, subject to the PRC Laws, after the Pledgee has notified the Pledgor and Party C, the Pledgee may, in any way and on such terms and conditions as it deems appropriate, assign or transfer to any third party any right it may exercise under this Agreement, the Transaction Agreements and other security documents. |
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9.3 |
This Agreement shall be binding on the Pledgor and Party C and their respective successors and permitted transferees, if any, and shall be valid for the Pledgee and each of its successors and transferees. |
9.4 |
At any time, if the Pledgee transfers any and all of its rights and obligations under the Transaction Agreements to any party it designates, the transferee shall have and assume the rights and obligations of the Pledgee hereunder as if it were a Party hereto. Where the Pledgee transfers the rights and obligations under the transaction agreement, at the request of the Pledgee, the Pledgor and/or Party C shall execute the relevant agreement or other documents relating to such transfer. |
9.5 |
If the Pledgee changes as a result of the transfer of the Transaction Agreement and/or this Agreement, at the request of the Pledgee, the Pledgor and Party C shall sign a new Equity Pledge Agreement with the new Pledgee on the same terms and conditions as this Agreement and register the pledge accordingly. |
9.6 |
The Pledgor shall strictly abide by this Agreement and any other contract signed jointly or separately by the Parties hereto or any of them, including the Transaction Agreements, perform its obligations under this Agreement and other contracts (including the Transaction Agreements), and refrain from acts/omissions that may affect their validity and enforceability. The Pledgor shall not exercise any of its remaining rights in respect of the Equity unless otherwise directed in writing by the Pledgee. |
10. |
Termination |
At the expiration of the Pledge Term, this Agreement shall terminate and release the equity pledge hereunder, and the Pledgor and Party C shall record the cancellation of the equity pledge in the register of shareholders of Party C, and shall register the cancellation of the equity pledge with the relevant registry. The reasonable expenses arising from the release of equity pledge shall be borne by the Pledgor and Party C. Articles 12, 13 and 19.6 of this Agreement shall survive termination hereof.
11. |
Service Charges and other Expenses |
Party C shall bear all costs and actual expenses relating to this Agreement, including but not limited to attorneys fees, certificate costs, stamp duties and any other taxes and expenses. If the applicable PRC Laws require the Pledgee to bear a number of related taxes and expenses, the Pledgor shall cause Party C to repay in full the taxes and expenses paid by the Pledgee.
12. |
Liability for Confidentiality |
The Parties acknowledge that any oral or written information they exchange in connection with this Agreement is confidential. The Pledgor and Party C shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of Pledgee, other than the information: (a) known to the public (but not disclosed to the public by any recipient); (b) required to be disclosed by applicable law or by the rules or regulations of any stock exchange; or (c) required to be disclosed by the Pledgor and Party C to their legal or financial advisers, who shall be bound by a confidentiality obligation similar to the obligations in this Article, in respect of transactions as contemplated herein. The disclosure of any confidential information by the staff or agencies employed by the Pledgor and Party C shall be deemed to be the disclosure of such confidential information by such Party, which shall be liable for breach of this Agreement. This Article shall remain in force regardless of the invalidity or termination of this Agreement for any reason.
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13. |
Applicable Law and Dispute Settlement |
13.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and the settlement of disputes hereunder shall be governed by the law of the Peoples Republic of China. |
13.2 |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Parties. If the any Party fails to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other Parties to settle such dispute through negotiation, any Party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Parties. The arbitral tribunal may rule on Party Cs equity interests, assets or property interests as the compensation or satisfaction to the pledgee for the losses caused by the breach of contract by other Parties hereto, rule on injunctive relief in respect of the relevant business or asset transfer, or order Party C to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where Party C is incorporated and where Party C or the Pledgees main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including but not limited to, restrictions on the operation of Party Cs business, restrictions on and/or disposition of Party Cs equity interests, assets or property interests (including but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of Party C, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling for the breaching party not to carry out acts that may lead to further expansion of the loss suffered by the Pledgee. |
13.3 |
In the event of any dispute arising from the interpretation and performance of this Agreement or any dispute being arbitrated, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder, except in the matter in dispute. |
13.4 |
After the date of execution hereof, if at any time, as a result of the promulgation of or change in any PRC Laws, statutes or regulations, or as a result of the interpretation or application of such PRC Laws, statutes or regulations, the following agreements shall apply: to the extent permitted by the PRC Laws, (a) if the change in law or the newly promulgated provisions are more favorable to the Pledgee than the relevant PRC Laws, statutes and regulations in force on the date of execution hereof (while the other Parties are not seriously adversely affected), the Parties shall promptly apply for benefits arising from the change or new provisions and do their best to obtain the approval of such application; or (b) if the Pledgees economic interests under this Agreement are directly or indirectly adversely affected by the above legal changes or newly promulgated provisions, this Agreement shall continue to be performed in accordance with the original terms, and the parties shall use all legal means to waive compliance with such change or provisions. If the adverse effects on the Pledgees economic interests can not be resolved in accordance with this Agreement, the Parties shall promptly negotiate and make all necessary amendments to this Agreement in order to maintain the Pledgees economic interests hereunder. |
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14. |
Force Majeure |
14.1 |
Force Majeure means an event which is unforeseeable, unavoidable and insurmountable and which renders any partial or total default under this Agreement by one Party hereto. Such Force Majeure events include, but are not limited to, earthquakes, typhoons, floods, wars, strikes, riots, government actions, changes in legal provisions or the applicability of the legal provisions. |
14.2 |
In event of a Force Majeure event, the obligation of one party to be affected by such event under this Agreement shall automatically be suspended during the delay caused by such event, and its performance shall be automatically extended for the period of suspension. The party shall not be punished or liable for this. In the event of force majeure, the Parties shall immediately negotiate a fair solution and make every reasonable effort to minimize the impact of force majeure. |
15. |
Notices |
15.1 |
All notices and other correspondences required or permitted to be given under this Agreement shall be sent personally, by registered mail with postage prepaid, courier service, facsimile or e-mail to the address, fax number or e-mail of the other Party hereto as listed in Annex II hereto. An additional confirmation shall be sent by e-mail for each notice. Such notice shall be deemed to be duly served on: |
(1) |
If sent personally, by registered mail with postage prepaid, courier service, on the date of acceptance or refusal thereof at the recipients address specified for such notice; |
(2) |
If sent by fax, on the date of successful transmission (as evidenced by automatically generated confirmation of transmission); |
(3) |
If sent by e-mail, on the date of successful transmission. |
15.2 |
Any Party may, in accordance with the terms of this Article, change its receiving address, fax and/or email address at any time by giving notice to other Parties hereto. |
16. |
Severability |
If one or more of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any way under any applicable law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultations in good faith, seek to replace such invalid, illegal or unenforceable provisions with valid provisions to the maximum extent permitted by law and expected by the Parties, and the economic effects of such valid provisions shall be as similar as those of such invalid, illegal or unenforceable provisions to the extent possible.
17. |
Annex |
The annexes to this Agreement shall constitute an integral part of this Agreement.
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18. |
Entry into force, Amendment, Modification, Supplementation and Counterparts |
18.1 |
This Agreement shall take effect from the date when the Parties hereto sign hereonto, and the pledge of the Equity hereunder shall take effect from the date of completion of the relevant registration procedures by the Registry. |
18.2 |
Any amendment, modification and supplement in respect of this Agreement shall be made in writing and shall take effect upon signature or seal by the Parties. |
18.3 |
Where the stock exchange or other regulatory agency of Hong Kong or NASDAQ of the United States proposes any amendment to this Agreement, or in case of any change in the listing rules or related requirements of Hong Kong or NASDAQ of the United States in relation to this Agreement, the Parties hereto shall amend this Agreement accordingly. |
18.4 |
This Agreement is made in four (4) counterparts. The Pledgor and the Pledgee holds one (1) counterpart respectively, and Party C shall hold two (2) counterparts. Each counterpart shall have the same legal effect. |
19. |
Miscellaneous |
19.1 |
This Agreement shall be binding on and shall be valid for the respective successors of the Parties and the permitted transferees of such Parties. |
19.2 |
Any Party hereto may waive the rights such Party is entitled to under this Agreement, provided that such waiver by the Pledgor and Party C must be in writing and signed by Pledgee. No waiver by any Party in respect of a breach by the other Parties in certain circumstances shall be deemed as a waiver of any similar breach in other circumstances. |
19.3 |
The headings of this Agreement are for ease of reading only and shall not be used to interpret, explain or otherwise affect the meaning of the provisions hereof. |
19.4 |
The Parties agree to execute in a timely manner documents or take further actions that are reasonably required for the implementation of the provisions and purposes of this Agreement or beneficial to such purposes. |
19.5 |
Without prejudice to the Transaction Agreements and other provisions hereof, if at any time, as a result of the promulgation or change of any PRC Laws, or as a result of any change in the interpretation or application of such PRC Laws, or as a result of change in the relevant registration procedures, the Pledgee considers it unlawful or contrary to such PRC Laws to maintain the entry into force of this Agreement, maintain the validity of the Pledge hereunder and/or dispose of the Equity in the manner provided for herein, the Pledgor and Party C shall immediately take any action, and/or sign any agreement or any other document, in accordance with the written instructions of the Pledgee and the reasonable request of the Pledgee, in order to: (a) maintain the validity of the Pledge hereunder and this Agreement; (b) facilitate the disposition of the Equity in the manner as specified in this Agreement; and/or (c) maintain or realize the security established or intended to be established by this Agreement. |
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19.6 |
This Agreement is a legal document independent of the Transaction Agreements and other security documents. The invalidity of the Transaction Agreements or other security documents shall not affect the rights and obligations of the Parties hereunder. If the Transaction Agreements or other security documents are declared null and void and the Pledgor still has outstanding Contractual Obligations and/or still owes the Secured Indebtedness to the Pledgee, the Equity under this Agreement shall remain as a pledge security of the Contractual Obligations and Secured Indebtedness until the Pledgor pays off all the Secured Indebtedness and performs all Contractual Obligations. |
(The remainder of this page is intentionally left blank)
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[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY A:
HODE SHANGHAI LIMITED (COMPANY STAMP)
/s/ Hode Shanghai Limited |
By: |
/s/ Chen Rui |
|
Name: | Chen Rui | |
Title: | Legal Representative |
Signature page to Equity Pledge Agreement
[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
CHEN RUI | ||
By: |
/s/ Chen Rui |
Signature page to Equity Pledge Agreement
[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY C:
SHANGHAI KUANYU DIGITAL TECHNOLOGY CO., LTD. (COMPANY STAMP)
/s/ Shanghai Kuanyu Digital Technology Co., Ltd. |
By: |
/s/ Chen Rui |
|
Name: | Chen Rui | |
Title: | Legal Representative |
Signature page to Equity Pledge Agreement
Exclusive Business Cooperation Agreement
This Exclusive Business Cooperation Agreement (hereinafter referred to as this Agreement) is made and entered into by and among the following parties in Shanghai, China on December 23, 2020:
Party A: | HODE SHANGHAI LIMITED | |
Address: | Room 4031, 4/F, Building 1, No. 310 Fasai Road, China (Shanghai) Pilot Free Trade Zone | |
Party B: | SHANGHAI KUANYU DIGITAL TECHNOLOGY CO., LTD. | |
Address: | Room 801, No. 489 Zhengli Road, Yangpu District, Shanghai |
Party A and Party B are hereinafter individually referred to as the Party and collectively, the Parties.
Whereas:
1. |
Party A is a wholly foreign-owned enterprise established in the Peoples Republic of China (hereinafter referred to as the PRC). Its main business includes technology development, transfer, technical consultation and technical services, business information consultation, business management consultation, animation design and advertising in the field of information technology and network technology; |
2. |
Party B is a limited liability company established in the PRC, its main business includes value-added telecommunications service, information network dissemination of audio-visual program business, radio and television program production and operation, commercial performances, online cultural business . All business activities operated and developed by Party B at present and at any time during the term hereof are hereinafter referred to as the Main Business; |
3. |
Party A agrees to make use of its human resource, technology and information advantages to provide Party B with the relevant exclusive technical services, technical consultations and other services as stipulated in the terms of this Agreement during the term hereof (see below for the specific scope), and Party B agrees to accept such services provided by Party A or its designated party (including Party As direct or indirect overseas parent company or a subsidiary directly or indirectly controlled by Party As direct or indirect overseas parent company) in accordance with the terms of this Agreement; |
4. |
The Parties have executed an Exclusive Technology Consulting and Services Agreement (hereinafter referred to as the Original Agreement) on April 24, 2019. The Parties hereby agree to amend and restate the terms and conditions of the Original Agreement and agree to execute this Agreement in lieu of the Original Agreement. |
THEREFORE, Party A and Party B hereby agree as follows through mutual negotiation:
1. |
Provision of Services by Party A |
1.1 |
Pursuant to the terms and conditions of this Agreement, Party B hereby appoints Party A as Party Bs exclusive service provider to provide Party B with comprehensive business support, technical services and consultation services, specifically including all or part of the services decided by Party A from time to time within the business scope of Party A, including, but not limited to, the contents listed in Annex I as well as other consultations and services related to the above and provided by Party A from time to time upon the request of Party B to the extent permitted by the PRC Laws (including any laws, regulations, rules, notices or other binding documents promulgated by any central or local legislative, administrative or judicial department of Mainland China before or after the execution of this Agreement, hereinafter PRC Laws) (hereinafter referred to as Services). |
1
1.2 |
Party B agrees to accept the consultations and services provided by Party A. Party B further agrees that except with Party As prior written consent, during the term hereof, Party B shall not accept, or cause its controlled subsidiaries to accept any consultation and/or services provided by any third party, and shall not cooperate with any third party, in respect of the consultations and services contemplated herein. Party A may appoint other parties, who may enter into some or all agreements described in Article 1.4 with Party B, to provide Party B with the consultations and/or services under this Agreement. |
1.3 |
In order to ensure that Party B meets the cash flow requirements in its daily operation and / or offset any losses arising from its operation, whether or not Party B actually incurs any such operating losses, Party A may, at its discretion, decide to provide Party B with financial support (only to the extent permitted by the PRC Laws). Party A may provide financial support to Party B in the form of loans permitted by the PRC Laws, and shall execute the contract in respect of such loan separately. |
1.4 |
Manner of Providing Services |
(1) |
In order to fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, the Parties may, directly or through their respective Affiliates with the corresponding service capabilities and resources, sign other technical service agreements and consulting service agreements for the purpose of providing services to Party B by Party A, and agree on the specific contents, methods, personnel and expenses in respect of specific services. For the purposes of this paragraph and this Agreement, the Affiliate means, in case of any specific subject, that specific subject directly or indirectly controlled through one or more intermediaries, or any other subject under the control of or the common control with such specific subject. |
(2) |
In order to perform this Agreement, Party A and Party B agree that, during the term hereof, the Parties may execute intellectual property (including but not limited to the copyright, trademark, patent, domain name, know-how, trade secret and otherwise) license agreements directly or through their respective Affiliates, which shall permit Party B to use the relevant intellectual properties owned by Party A and its Affiliates at any time based on Party Bs business needs, and Party A may charge the relevant fees (including the service fee stipulated in Article 2.1 below). |
(3) |
In order to perform this Agreement, Party A and Party B agree that during the term hereof, the Parties may execute the equipment lease agreement directly or through their respective Affiliates, which shall permit Party B to use the relevant equipment owned by Party A at any time based on Party Bs business needs, and Party A shall charge the relevant fees (including the service fee stipulated in Article 2.1 below). |
2
(4) |
In order to fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, the Parties may, directly or through their respective Affiliates, sign other agreements for the purpose of providing services by Party A to Party B. |
(5) |
Party A may, at its own discretion, decide to appoint any third party with the service capability and resources to provide all or part of the services under this Agreement, but Party A shall be prudently responsible for the selection of such third party. Party A agrees to bear its legal liability under this Agreement for the work products of such third party, except where Party B and such third party agree otherwise. Party B hereby acknowledges that Party A shall have the right to transfer its rights and obligations under this Agreement to any third party. |
1.5 |
In order to fulfill this agreement, Party A and Party B shall communicate and exchange all kinds of information related to their business and/or their customers in a timely manner. |
The services provided by Party A in this Agreement are exclusive. Party B may continue to perform the agreement in respect of the same or similar services provided to Party B by a third party as to those provided by Party A on the date of execution hereof, subject to the written approval of Party A; Party A does not agree, Party B shall promptly cancel such agreement with such third party and bear any costs and liabilities arising from the cancellation thereof. Party B shall continue to perform other contracts that Party B is performing or other legal documents which are binding upon Party B, and Party B shall not amend, modify or terminate such contracts or legal documents without Party As prior written consent.
1.6 |
In order to clarify the rights and obligations of the Parties and to enable the above-mentioned service agreement to be performed in practice, the Parties agree, subject to the provisions of the PRC Laws: |
(1) |
Party B shall operate based on Party As opinions or suggestions under Article 1.1 hereof. |
(2) |
Except that Party Bs former directors, supervisors and senior management officers agreed by Party A may remain in office, Party B shall, in accordance with the procedures prescribed by PRC laws, appoint Party As recommended candidates as Party Bs directors and supervisors, and shall, subject to the PRC laws, appoint Party As recommended personnel as Party Bs general manager, chief financial officer and other senior management officers to be responsible for and supervise Party Bs business and operation. Subject to the PRC Laws, Party B shall not remove the directors, supervisors and senior management officers of its company recommended by Party A for any other reason except for reasons of retirement, resignation, incompetence or death, unless with the prior written consent of Party A. |
(3) |
Party B agrees to cause Party Bs directors, supervisors and senior management officers to exercise or perform their authorities or obligations under the PRC Laws and Party Bs articles of association as instructed by Party A. |
3
(4) |
Party A has the right to set up and adjust Party Bs organization and conduct the human resource management. |
(5) |
Party A shall have the right to carry out service-related business in the name of Party B. Party B shall provide Party A with all necessary support and facilities for the smooth development of the business, including, but not limited to, issuing to Party A all necessary authorizations for the provision of the relevant services. |
(6) |
Subject to the PRC Laws, Party A shall have the right to check Party Bs accounts regularly and at any time, and Party B shall keep accounts in a timely and accurate manner and provide Party A with its accounts as required by Party A. Within the term hereof, Party B agrees to cooperate with Party A and Party As legal person shareholders (only referred to Hode HK Limited and its controlled subsidiaries, the same as follows) to conduct audits (including but not limited to related transaction audits and other types of audits), to provide Party A and Party As legal person shareholders and/or auditors entrusted by Party A with relevant data and information on Party Bs operations, business, customers, finance, employees, etc., and to agree that Party As shareholders disclose such data and information in order to meet the requirements of securities supervision. |
(7) |
Party B agrees that the relevant certificates and company seals important to Party Bs daily operation, including Party Bs business license, qualification certificate, official seal, contract seal, financial special seal and legal representative seal involved in the operation of the business, shall be kept by Party Bs directors, legal representative, general manager, chief financial officer and other senior management officers recommended by Party A and appointed by Party B in accordance with the legal procedures. |
1.7 |
The Parties agree that the services provided by Party A to Party B hereunder shall also apply to the subsidiaries controlled by the Parties, and the Parties shall urge their controlled subsidiaries to exercise their rights and perform their obligations in accordance with this Agreement. |
2. |
Calculation of Service Charges, Payment Methods, Financial Statements, Audit and Taxation |
2.1 |
For the services provided by Party A in accordance with this Agreement, and subject to the PRC Laws, during the term of this Agreement, after Party B and its controlled subsidiaries shall, after the end of each financial year, make up for the losses of the previous year (if necessary) and deduct the necessary costs, expenses, taxes and fees incurred in the corresponding financial year, and draw the statutory provident funds that must be drawn according to law, the incomes of Party B and its controlled subsidiaries (including the accumulated incomes of the previous financial year) shall be equal to the combined net profits and shall be paid to Party A as service charges (hereinafter referred to as Service Charges); and Party A shall have the right to determine the above deductible items. The amount of such Service Charges shall be determined by Party A, and their calculation and adjustment shall take into account, but not limited to, the following factors, and Party A shall have the right to decide independently to adjust such Service Charges: (a) the difficulty of the management and technology provided by Party A and the complexity of the management and technical advice and other services provided; (b) the time required for Party As related personnel to provide such management and technical advice and other services; (c) the specific content and commercial value of the management and technical advice and other services provided by Party A; (d) the specific content and commercial value of the intellectual property license and lease service provided by Party A; and (e) the market price of the same kind of services. The above Service Charges shall be transferred by Party B to the bank account designated by Party A by remittance or any other means approved by the Parties within five (5) business days after Party A issues payment instructions to Party B. Party A may change such payment instructions from time to time. The Parties agree that the payment of the above Service Charges shall not, in principle, cause any difficulty in the operation of either Party in the current year. For the above purpose, Party A shall have the right to agree to Party Bs deferred payment to avoid any financial difficulties of the Party B. Party A shall also have the right to make any other adjustment to the Service Charges that it deems reasonable, but shall notify Party B in writing in advance. |
4
2.2 |
Party A agrees that, in case of Party Bs operating losses or serious operating difficulties, it will have the right to decide to provide financial support for Party B; in the event of the foregoing, only Party A shall have the right to decide whether Party B will continue to operate and Party B shall unconditionally approve and agree to Party As above decision. |
2.3 |
Party B shall, within 60 business days after the end of each financial year (hereinafter referred to as the Previous Financial Year) or at the request of Party A, (a) provide Party A with the Party Bs audited consolidated financial statements in the Previous Financial Year, which shall be audited by an independent certified public accountant approved by Party A; (b) if the audited financial statements show any deficiency in the total amount of the Service Charges paid by Party B to Party A during the Previous Financial Year, Party B shall pay the difference to Party A within 5 days from the date Party A or Party B finds the difference. |
2.4 |
Party B shall, in accordance with the applicable laws, generally recognized accounting standards and commercial practices, prepare financial statements that meet the requirements of Party A. |
2.5 |
Upon prior notice from Party A, Party A and/or its designated auditor shall have the right to review Party Bs relevant books and records at Party Bs main office and copy the required books and records in order to verify Party Bs income amount and the accuracy of the statements. Party B shall, in accordance with the requirements of Party A, provide relevant information and materials concerning Party Bs operation, business, customers, finance, employees, etc., and agree that Party A or Party As legal person shareholders may disclose or publish such information and materials if necessary. |
2.6 |
The tax burden arising from the performance of this Agreement shall be borne by the Parties. |
3. |
Intellectual Property and Confidentiality |
3.1 |
In order to perform this Agreement, Party A and Party B agree that, during the term hereof, the Parties and their respective Affiliates may execute the licensing agreement of intellectual property (including but not limited to copyright, trademark, patent, domain name, know-how, trade secret and otherwise) directly or through their respective Affiliates, which shall permit either Party to use the relevant intellectual properties owned by the other Party. In particular, Party A or its Affiliates shall have the right to use the intellectual property owned by Party B or its Affiliates free of charge in accordance with such agreement. |
5
3.2 |
Unless with the prior written consent of Party A, on basis of the provision of the services hereunder for Party B and its controlled subsidiaries, Party A shall have unique and proprietary rights and interests in any right, title, equity and intellectual property including but not limited to all present and future copyrights, patents (including invention patents, utility model patents and design patents), trademarks, trade names, brands, software, know-hows, trade secrets, all related goodwill, domain names and any other similar rights (hereinafter referred to as Such Rights) arising or created during the performance of this Agreement by Party B and its controlled subsidiaries, whether developed by Party A or by Party B. Party B shall not claim any of Such Rights from Party A. Party B shall sign all the documents required to make Party A the owner of Such Rights and take all actions necessary to make Party A the owner of Such Rights. Party B warrants that there are no defects in Such Rights and will compensate Party A for any losses caused by such defects (if any). |
3.3 |
Without the written consent of Party A, Party B shall not, and shall compel its controlled subsidiaries not to, transfer, assign, pledge, licence or dispose of any of Such Rights and any intellectual property Party B and its controlled subsidiaries are entitled to as of the execution date hereof, including but not limited to all the present and future copyrights, patents (including invention patents, utility model patents and design patents), trademarks, trade names, brands, software, know-hows, trade secrets, all relevant goodwill, domain names and any other similar right (hereinafter referred to as Corresponding Rights). |
3.4 |
Party B shall dispose of any corresponding rights in accordance with Party As instructions from time to time, including, but not limited to, the transfer or authorization of the corresponding rights to Party A or its designated person without violating the PRC Laws. |
3.5 |
The Parties hereto acknowledge that any oral or written information they exchange in connection with this Agreement is confidential. Party B shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of Party A, other than the information: (a) known to the public (but not disclosed to the public by any recipient); (b) required to be disclosed by applicable law or by the rules or regulations of any stock exchange; or (c) required to be disclosed by Party B to their legal or financial advisers, who shall be bound by a confidentiality obligation similar to the obligations in this Article, in respect of transactions as contemplated herein. The disclosure of any confidential information by the staff or agencies employed by Party B shall be deemed to be the disclosure of such confidential information by Party B, which shall be liable for breach of this Agreement. This Article shall remain in force regardless of the termination of this Agreement for any reason. |
3.6 |
Party B shall not execute any document or make any relevant undertaking which is in conflict with any agreement or any other legal document that is executed and being performed by Party A and/or its Affiliates; Party B shall not cause any conflict of interest between Party B and Party A as well as its Affiliates through any act or omission. In case of any such conflict of interest (Party A shall have the right to decide unilaterally whether such conflict of interest arises), Party B shall take measures in a timely manner to eliminate it as soon as possible with the consent of Party A and/or its Affiliates. If Party B refuses to take measures to eliminate conflicts of interest, Party A shall have the right to exercise its call options under the Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) executed with Party B and Party Bs shareholders on the execution date hereof. |
6
3.7 |
Within the term hereof, all customer information and other relevant information related to Party Bs business and the services provided by Party A shall be owned by Party A. |
3.8 |
The Parties hereto agree that, this Article 3 hereto shall survive the change, cancellation or termination hereof. |
4. |
Representations and Warranties |
4.1 |
The representations and warranties of Party A are as follows: |
(1) |
Party A is a wholly foreign-owned enterprise (WFOE) duly registered and validly existing under the PRC Laws with the independent legal person qualification; has full and independent legal status and legal capacity, and has obtained appropriate authorization to execute, deliver and perform this Agreement, and can act as an independent subject of litigation; |
(2) |
Party A signs and performs this Agreement within its legal personality and the scope of its business operations and has the permission, record and qualification required to provide the services as stipulated herein. Party A has taken the necessary corporate actions and has been duly authorized and obtained the consent and approval (if necessary) of third parties and government agencies to complete the transactions mentioned herein and will not violate the laws or other restrictions binding or affecting Party A. |
(3) |
After its execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of Party A and may be enforced in accordance with the terms of this Agreement. |
(4) |
Party A has no litigation, arbitration or any other judicial or administrative procedure having occurred and outstanding that will affect Party As ability to perform its obligations hereunder, and to the best of its knowledge no one threatens to take such action. |
4.2 |
The representations, warranties and undertakings of Party B are as follows: |
(1) |
Party B is a limited liability company duly registered and validly existing under the PRC Laws with the independent legal person qualification; has full and independent legal status and legal capacity, and has obtained appropriate authorization to execute, deliver and perform this Agreement, and can act as an independent subject of litigation. |
(2) |
Party Bs acceptance of the services provided by Party A will not violate any PRC Laws. Party B will sign and perform this Agreement within its legal personality and the scope of its business operations and Party B has taken the necessary corporate actions and has been duly authorized and obtained the consent, approval or filing of third parties and government agencies to complete the transactions mentioned herein and will not violate the laws or other restrictions binding or affecting Party B. |
7
(3) |
After its execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of Party B and may be enforced in accordance with the terms of this Agreement. |
(4) |
Party B has no litigation, arbitration or any other judicial or administrative procedure having occurred and outstanding that will affect Party Bs ability to perform its obligations hereunder, and to the best of its knowledge no one threatens to take such action. If any litigation, arbitration or any other judicial proceeding or administrative punishment occurs or may occur in relation to Party Bs assets, business or income, Party B will notify Party A immediately after knowing such litigation, arbitration or any other judicial proceeding or administrative punishment, and will only reach a settlement on such proceedings with the prior written consent of Party A. |
(5) |
In accordance with this Agreement, Party B shall pay Party A the Service Charges in full and on time, and maintain the continuous validity of the license and qualification related to the business of Party B and its controlled subsidiaries within the service period. In all the matters necessary for Party A to effectively perform its duties and obligations hereunder, Party B will assist Party A, provide Party A with full cooperation and actively work with the services provided by Party A, and accept Party As reasonable opinions and suggestions on the business of Party B and its controlled subsidiaries. |
(6) |
Without the prior written consent of Party A, from the execution date hereof, Party B will not, and shall urge its controlled subsidiaries not to sell, transfer, mortgage or otherwise dispose of legal rights and interests in any assets (including tangible assets or intangible assets, excluding assets within RMB 1 million as required in the normal business operations), business, operation right or income, or cause any Security Interest or other encumbrance to be placed on the same. For the purpose of this Paragraph and this Agreement, the Security Interest shall include mortgage, pledge, lien and any security over third party right or interest, including any equity interest call option, acquisition right, right of first refusal, set-off right, ownership retention or other security arrangements. |
(7) |
Without the prior written consent of Party A, except for the reasonable expenses in the normal course of operation, Party B shall not pay any fee to any third party in any name, shall not exempt any third party from its debts, shall not lend or borrow a loan to any third party, or provide a security or guarantee for any third party, or allow any third party to establish any other Security Interest in its assets or interests. |
(8) |
Without the prior written consent of Party A, from the execution date hereof, Party B shall not, and shall cause its controlled subsidiaries not to, incur, inherit, guarantee or permit the existence of any debt , (except (i) the debts incurred in the normal course of business but not through loans; and (ii) the debts that have been disclosed to and consented in writing by Party A). |
8
(9) |
Without the prior written consent of Party A, from the execution date hereof, Party B shall not, and shall cause its controlled subsidiaries not to, execute any major contract other than those executed in the course of normal business and those executed between Party B with Party A and its Affiliates (in this Paragraph, a contract shall be deemed as a major contract if its value exceeds RMB 1 million). |
(10) |
Without the prior written consent of Party A, from the execution date hereof, Party B shall not, and shall cause its controlled subsidiaries not to: (a) be merged, consolidated with or become a united entity with any third party; (b) invest or acquire any third party or be invested, acquired or controlled by any third party; (c) increase or decrease its registered capital, or otherwise change the form of the company or its registered capital structure or accept the investment or capital increase of Party B by the existing shareholders or third parties ; (d) be liquidated and dissolved. |
(11) |
Subject to the applicable PRC Laws, Party B shall appoint the person recommended by Party A as its director, supervisor or senior management officer; Party B shall not, for any other reason, refuse to appoint the person recommended by Party A unless with the prior written consent of Party A or as otherwise agreed herein. |
(12) |
Party B shall hold any and all governmental permits, licenses, authorizations and approvals necessary for its business within the term of this Agreement and shall ensure that all such governmental permits, licenses, authorizations and approvals will continue to be valid and legal throughout the term of this Agreement. Any and all government licenses, permits, authorizations and approvals necessary for Party Bs business to be changed and/or increased as a result of changes in the provisions of the competent governmental authorities shall be changed and/or obtained by Party B in accordance with the requirements of the applicable laws during the term of this Agreement. |
(13) |
Party B shall promptly inform Party A of the circumstances that have or may have a significant adverse effect on the business and operation of Party A, and shall do its utmost to prevent the occurrence and/or expansion of such circumstance. |
(14) |
Without the prior written consent of Party A, Party B and/or its controlled subsidiaries shall not amend the articles of association or change the main business or make major adjustments to the business scope, model, profit model, marketing strategy, business policy or customer relationship of Party B and/or its controlled subsidiaries. |
(15) |
Without the prior written consent of Party A, Party B and / or its controlled subsidiaries shall not enter into any partnership or joint venture or profit sharing arrangement with any third party, or any other arrangement for the purpose of transfer of benefits or the realization of profit sharing in the form of royalties, service fees or consultancy fees. |
9
(16) |
At the request of Party A from time to time, Party B shall provide Party A with information on Party Bs operation, management and financial situation. |
(17) |
Without the prior written consent of Party A, Party B shall not announce or distribute bonuses, dividends or any other benefit to its shareholders. |
(18) |
Party B shall provide Party A with any technical or other information it deems necessary or useful to provide services hereunder, and allow Party A to use Party Bs relevant facilities, data or information it deems necessary or useful to provide services hereunder. |
4.3 |
In the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other circumstance that may affect the holding of Party Bs equity, Party B shall guarantee that such circumstance shall not affect its performance of this Agreement. |
4.4 |
Either Party A or Party B respectively guarantee to the other Party that once the PRC Laws allow Party A to hold directly and Party A decides that it directly or designates its Affiliate to hold Party Bs equity and Party A and / or its Affiliate may legally engage in Party Bs business, the Parties shall terminate this Agreement upon the request of Party A after Party A or its designated Affiliate has formally registered as Party Bs shareholder at the competent administration for industry and commerce. |
5. |
Effect and Term |
This Agreement shall enter into force on the date when it is executed by and between the Parties and shall remain in force unless this Agreement terminates in accordance with Article 6.1.
6. |
Termination |
6.1 |
This Agreement shall be terminated in any of the following circumstances: |
(a) |
On the date of bankruptcy, liquidation, termination or dissolution according to law if Party B goes bankrupt, is liquidated, terminated or dissolved according to law during the term of this Agreement; |
(b) |
On the date on which all the shares or assets of Party B have been transferred to Party A or the Affiliate designated by Party A in accordance with the Exclusive Option Agreement; |
(c) |
On the date when Party A or its designated Affiliate is formally registered as Party Bs shareholder at the competent administration for industry and commerce once the PRC Laws allow Party A to hold the shares of Party B directly and Party A and its subsidiaries can legally engage in Party Bs business; |
(d) |
On the date of the expiration of such written notice when Party A terminates this Agreement by giving Party B a written notice thirty (30) days in advance at any time within the term hereof; |
(e) |
Earlier termination according to Article 7 hereof. |
10
6.2 |
Within the term hereof, Party B shall not cancel this Agreement unilaterally. Party A may terminate this Agreement in accordance with Article 6.1(d) above without any liability for breach of contract for its unilateral cancellation hereof. |
6.3 |
After the termination of this Agreement, the rights and obligations of the Parties under Articles 3, 8, 10, 11, 16.3 shall remain in force. |
6.4 |
The early termination of this Agreement for any reason does not exempt either Party from all the payment obligations hereunder (including, but not limited to, the payment of Service Charges) arising from or due to this Agreement prior to the termination hereof, nor does it exempt any liability for breach of contract arising prior to the termination hereof. Party B shall pay Party A the Service Charges payable before the termination hereof within fifteen (15) business days from the date of termination hereof. |
7. |
Liability for Breach |
7.1 |
Except as otherwise provided herein, if a party (hereinafter referred to as the Breaching Party) fails to perform an obligation hereunder or violates this Agreement in other manner, the other Party (hereinafter referred to as the Aggrieved Party) may (a) send a written notice to the Breaching Party indicating the nature and scope of the breach and requesting the Breaching Party to remedy it at its own cost within the reasonable period provided in the notice (hereinafter referred to as the Remedy Period); if the Breaching Party fails to remedy it during the Remedy Period, the Aggrieved Party shall have the right to request the Breaching Party to assume all liabilities caused by its breach and compensate the Aggrieved Party for all actual economic losses caused to the Aggrieved Party by its breach, including but not limited to lawyers fees, litigation or arbitration fees arising from any litigation or arbitration proceedings relating to such breach, and furthermore, the Aggrieved Party shall also have the right to request the Breaching Party to enforce this Agreement and request the competent arbitral institution or court to order specific performance and/or enforcement of the terms agreed herein; (b) terminate this Agreement, and request the Breaching Party to assume all liabilities caused by its breach, and provide all damages; or (c) discount, auction or sell off the pledged equity interests as agreed in the Equity Pledge Agreement entered into by the Parties and the existing shareholders of Party B on the execution date hereof, and have priority in compensation with the proceeds from the discounting, auctioning or selling off and request the Breaching Party to assume all losses caused thereby. The exercise of the aforesaid remedial rights by the Aggrieved Parties shall not prevent them from exercise of other remedial rights pursuant to the provisions of this Agreement and the laws. |
7.2 |
The Parties hereto agree and acknowledge that except as compulsorily provided by the PRC Laws, if Party B is a Breaching Party, Party A shall have the right to unilaterally terminate this Agreement immediately and request the Breaching Party to provide the liquidated damages. If Party A is the Breaching Party, Party B shall waive Party As obligation to provide damages, and unless otherwise provided by the laws, Party B shall not in any event have any right to terminate or cancel this Agreement. |
8. |
Applicable Law, Dispute Settlement and Law Change |
8.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and the settlement of disputes hereunder shall be governed by the law of the Peoples Republic of China. |
11
8.2 |
Any dispute arising from the interpretation and performance hereof shall be settled through friendly negotiation between the Parties hereto. If the Parties fail to reach an agreement on the settlement of such dispute within thirty (30) days after either Party requests the other parties to settle such dispute through negotiation, any Party may submit such dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Parties hereto. The arbitral tribunal may rule on Party Bs equity interests, assets or property interests as the compensation or satisfaction to Party A for the losses caused by the breach of contract by Party B, rule on injunctive relief in respect of the relevant business or asset transfer, or order Party B to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court in the place where Party B is incorporated and where Party B or Party As main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of Party Bs business, restrictions on and/or disposition of Party Bs equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of Party B, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling for the breaching party not to carry out acts that may lead to further expansion of the loss suffered by Party A. |
8.3 |
In the event of any dispute arising from the interpretation and performance of this Agreement or any dispute being arbitrated, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder, except in the matter in dispute. |
8.4 |
After the date of execution hereof, if at any time, as a result of the promulgation of or change in any PRC Laws, or as a result of the interpretation or application of such PRC Laws, the following agreements shall apply: to the extent permitted by the PRC Laws, (a) if the change in law or the newly promulgated provisions are more favorable to Party A than the relevant PRC Laws in force on the date of execution hereof (while Party B is not seriously adversely affected), the Parties shall promptly apply for benefits arising from the change or new provisions and do their best to obtain the approval of such application; or (b) if Party As economic interests under this Agreement are directly or indirectly adversely affected by the above changes of the PRC Laws or newly promulgated provisions, this Agreement shall continue to be performed in accordance with the original terms, and the parties shall use all legal means to waive compliance with such change or provisions. If the adverse effect on Party As economic interests can not be resolved in accordance with this Agreement, the Parties hereto shall promptly negotiate and make all necessary amendments hereto in order to maintain Party As economic interests hereunder. |
12
9. |
Force Majeure |
9.1 |
Force Majeure means an event which is unforeseeable, unavoidable and insurmountable and which renders any partial or total default under this Agreement by one Party hereto. Such Force Majeure events include, but are not limited to, earthquakes, typhoons, floods, wars, strikes, riots, government actions, changes in legal provisions or the applicability of the legal provisions. |
9.2 |
In event of a Force Majeure event, the obligation of one party to be affected by such event under this Agreement shall automatically be suspended during the delay caused by such event, and its performance shall be automatically extended for the period of suspension. The party shall not be punished or liable for this. In the event of force majeure, the Parties shall immediately negotiate a fair solution and make every reasonable effort to minimize the impact of force majeure. |
10. |
Indemnification |
Party B shall indemnify Party A for any loss, damage, liability or expense caused by or arising from any action, claim or any other demand against Party A in respect of any consultation or service provided by Party A at the request of Party B, and shall hold Party A free from damage, unless such loss, damage, liability or expense is caused by Party As gross negligence or intentional misconduct.
11. |
Notices |
11.1 |
All notices and other correspondences required or permitted to be given under this Agreement shall be sent personally, by registered mail with postage prepaid, courier service, facsimile or e-mail to the address, fax number or e-mail of the other Party hereto as listed in Annex II hereto. An additional confirmation shall be sent by e-mail for each notice. Such notice shall be deemed to be duly served on: |
(1) |
If sent personally, by registered mail with postage prepaid, courier service, on the date of acceptance or refusal thereof at the recipients address specified for such notice; |
(2) |
If sent by fax, on the date of successful transmission (as evidenced by automatically generated confirmation of transmission); |
(3) |
If sent by e-mail, on the date of successful transmission. |
11.2 |
Any Party may, in accordance with the terms of this Article, change its receiving address, fax and/or email address at any time by giving notice to other Parties hereto. |
12. |
Transfer |
12.1 |
Party B may not assign its respective rights and obligations hereunder to any third party without the prior written consent of Party A. |
12.2 |
Party B agrees that Party A may transfer its rights and obligations hereunder to any third party by giving Party B prior written notice without Party Bs consent. |
13
13. |
Severability |
If one or more of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any way under any applicable law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultations in good faith, seek to replace such invalid, illegal or unenforceable provisions with valid provisions to the maximum extent permitted by law and expected by the Parties, and the economic effects of such valid provisions shall be as similar as those of such invalid, illegal or unenforceable provisions to the extent possible.
14. |
Modification and Supplement |
14.1 |
Any amendment or supplement hereto shall be made in writing. The amendment agreement and supplementary agreement relating hereto by the Parties hereto shall be an indivisible part hereof and shall have the same legal effect as this Agreement. |
14.2 |
Where the stock exchange or other regulatory agency of Hong Kong or NASDAQ of the United States proposes any amendment to this Agreement, or where the listing rules or other relevant regulations, rules, codes, guidelines of Hong Kong or NASDAQ of the United States require amending this Agreement or any arrangement hereunder, the Parties hereto shall amend this Agreement accordingly. |
15. |
Counterparts |
This Agreement is made in two (2) counterparts. Each party holds one (1) counterpart respectively, and all of them shall have the same legal effect.
16. |
Miscellaneous |
16.1 |
Except written amendments, supplementations or modifications made after the signing hereof, this Agreement shall constitute the entire agreement between the Parties hereto in respect of the cooperation hereunder and shall supersede all prior oral and written consultations, representations and contracts in respect of the cooperation hereunder. |
16.2 |
This Agreement shall be binding on the respective successors of the Parties hereto and the permitted assignees of the Parties hereto. |
16.3 |
Any Party hereto may waive the rights it is entitled to under this Agreement, provided that such waiver by Party B must be in writing and signed by Party A. No waiver by any Party in respect of a breach by the other Party hereto in a certain circumstance shall be deemed as a waiver of any similar breach in any other circumstance. |
16.4 |
The headings of this Agreement are for ease of reading only and shall not be used to interpret, explain or otherwise affect the meaning of the provisions hereof. |
(The remainder of this page is intentionally left blank)
14
[This page has no text and is the signature page of the Exclusive Business Cooperation Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Business Cooperation Agreement to be executed as of the date and place set forth at the beginning hereof.
HODE SHANGHAI LIMITED (COMPANY STAMP)
/s/ Hode Shanghai Limited |
By: | /s/ Chen Rui |
Name: Chen Rui | ||
Title: Legal Representative |
Signature page to Exclusive Business Cooperation Agreement
[This page has no text and is the signature page of the Exclusive Business Cooperation Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Business Cooperation Agreement to be executed as of the date and place set forth at the beginning hereof.
SHANGHAI KUANYU DIGITAL TECHNOLOGY CO., LTD. (COMPANY STAMP)
/s/ Shanghai Kuanyu Digital Technology Co., Ltd.
By: | /s/ Chen Rui |
Name: Chen Rui |
Title: Legal Representative |
Signature page to Exclusive Business Cooperation Agreement
Exclusive Option Agreement
This Exclusive Option Agreement (hereinafter referred to as this Agreement) is made and entered into by and among the following parties in Shanghai, China on December 23, 2020:
Party A: | HODE SHANGHAI LIMITED, a wholly foreign-owned enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 4031, 4/F, Building 1, No. 310 Fasai Road, China (Shanghai) Pilot Free Trade Zone. | |
Party B: | CHEN RUI, a citizen of the PRC with ID card no. *** | |
Party C: | SHANGHAI KUANYU DIGITAL TECHNOLOGY CO., LTD., a limited liability enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 801, No. 489 Zhengli Road, Yangpu District, Shanghai. |
In this Agreement, Party A, Party B and Party C shall hereinafter be individually referred to as a Party and collectively as the Parties.
Whereas:
1 |
Party C is a limited liability company registered in Shanghai, China. Party B is the shareholder of Party C on the date of execution hereof and hold a total of 100% equity interests in Party C; |
2 |
Party B intends to grant Party A an irrevocable and exclusive option to purchase all or part of the equity interests in Party C held by Party B; |
3 |
Party C intends to grant Party A an irrevocable and exclusive option to purchase all or part of the assets held by Party C; and |
4 |
The Parties have signed an Exclusive Option Agreement (hereinafter referred to as the Original Agreement) on April 24, 2019. The Parties hereby agree to amend and restate the terms and conditions of the Original Agreement and agree to execute this Agreement in lieu of the Original Agreement. |
NOW, THEREFORE, the Parties hereby agree as follows:
1. |
Sale and Purchase of Equity Interests and Assets |
1.1 |
Granting of Options |
Party B agrees that he shall hereby irrevocably and unconditionally grant to Party A, an irrevocable and exclusive option, during the term of this Agreement, to purchase by itself or designate a related party (hereinafter the Designee, including the direct or indirect overseas parent company of Party A or the subsidiary directly or indirectly controlled by Party As direct or indirect overseas parent company) to purchase from Party B all or part of the equity interests in Party C held by Party B from time to time in one time or multiple times, at the price referred to in Article 1.3 hereof and in line with the exercise steps at the election of Party A under Article 1.2, to the extent permitted by the PRC Laws (including any laws, regulations, rules, notices or other binding documents promulgated by any central or local legislative, administrative or judicial department of Mainland China before or after the execution of this Agreement, hereinafter PRC Laws)(hereinafter Equity Call Option). Party C hereby irrevocably and unconditionally grants to Party A, an irrevocable and exclusive option, during the term of this Agreement, to purchase by itself or cause the Designee to purchase all or part of the assets of Party C from time to time in one time or multiple times at the price referred to in Article 1.3 hereof and in line with the exercise steps determined by Party A under Article 1.2 (hereinafter Assets Call Option, together with the Equity Call Option, collectively referred to as the Call Options), to the extent permitted by the PRC Laws. No third party other than Party A and the Designee shall have the Call Options or other rights related to Party Bs ownership of Party Cs equity interests and assets. Party C hereby agrees that Party B may grant the Equity Call Option to Party A, and Party B hereby agrees that Party C may grant the Assets Call Option to Party A. The term person under this paragraph and this Agreement means a natural person, a legal person or an unincorporated organization. The term assets referred to in this Article includes tangible and intangible assets.
1
For the sake of clarity, all shares of Party C held by Party B under this Article shall be 100% of the registered capital of Party C, also include the registered capital of Party C held by Party B from time to time in the future in any form during the term of this Agreement (including but not limited to the expanded registered capital formed by capital increase).
1.2 |
Exercise Steps |
The exercise by Party A of its Call Options shall be subject to the provisions of the PRC Laws. In exercising its Call Options under Article 1.1, Party A shall give written notice to Party B and/or Party C (hereinafter referred to as the Notice of Equity Interest Purchase or Notice of Assets Purchase). The Notice of Equity Purchase or Notice of Assets Purchase shall specify: (a) Party As decision on the exercise of the Call Options; (b) the equities to be purchased from Party B by Party A and/or the Designee (hereinafter referred to as Purchased Equity Interests) and/or the assets to be purchased from Party C by Party A and/or the Designee (hereinafter referred to as Purchased Assets); and (c) the date of purchase/transfer of the Purchased Equity Interests and/or Purchased Assets. Party B and/or Party C shall, upon receipt of the Notice of Equity Interest Purchase or Notice of Assets Purchase, transfer the Purchased Equity Interests and/or Purchased Assets to Party A and/or the Designee pursuant to such notice in the manner set forth in Article 1.4 hereof.
1.3 |
Purchase Price and Payment |
Where Party A decides to exercise its Call Options under this Agreement, the purchase price of the Purchased Equity Interests and/or Purchased Assets (hereinafter referred to as Purchase Price) shall be zero or nominal price, provided that it is the minimum price to the satisfaction of the price requirement otherwise provided by the competent governmental authority or the PRC Laws. Nevertheless, Party B and Party C hereby severally and jointly irrevocably undertake that, subject to the provisions and requirements of the PRC Laws in force at that time, all of the payment made by Party A at any such price to Party B and/or Party C shall be returned by Party B and/or Party C to Party A or the Designee within seven (7) days; where such return is not allowed in accordance with the PRC Laws in force at that time, Party B and Party C undertake to trust such payment for Party A in the form of trusteeship, and to cooperate with Party A in signing the trusteeship agreement or other relevant legal documents. After necessary tax deduction and withholding is made in respect of the Purchase Price in accordance with the PRC Laws, Party A shall transfer the Purchase Price to the account designated by Party B and/or Party C within seven (7) days after the Purchased Equity Interests and/or Purchased Assets are duly transferred to Party A.
1.4 |
Transfer of the Purchased Equity Interests and/or Purchased Assets |
2
At each exercise of the Call Options by Party A,
1.4.1 |
Party B shall cause Party C to hold the shareholders meeting in a timely manner or make the decision by the shareholder (as the case may be); at such meeting, a resolution/decision shall be made to approve Party B and/ Party C to transfer the Purchased Equity Interests and/or Purchased Assets to Party A and/or the Designee; |
1.4.2 |
Party B and/or Party C shall enter into the equity transfer contract and/or assets transfer contract and other relevant legal documents with Party A and/or the Designee in respect of each transfer pursuant to this Agreement and the Notice of Equity Interest Purchase and/or Notice of Assets Purchase; |
1.4.3 |
The relevant Parties shall execute all other necessary contracts, agreements or documents (including but not limited to the amendments to the articles of association of Party C), obtain all necessary internal approvals, authorizations, governmental approvals, licenses, consents and permits, and take all necessary actions, to transfer the valid title of the Purchased Equity Interests and/or Purchased Assets to Party A and/or the Designee and cause Party A and/or the Designee to become the registered owner of the Purchased Equity Interests (subject to the completion of the industrial and commercial registration) or the owner of the Purchased Assets, free from any Security Interest. For the purposes of this paragraph and this Agreement, the Security Interest includes mortgage, pledge, lien and any security over third party rights or interests, any equity interest call option, acquisition right, right of first refusal, set-off right, ownership retention or other security arrangements; for the avoidance of doubt, it does not include any Security Interest incurred under this Agreement and the Equity Pledge Agreement. The Equity Pledge Agreement under this paragraph and this Agreement means the Equity Pledge Agreement entered into by and among Party A, Party B and Party C at the date of execution of this Agreement. Pursuant to the Equity Pledge Agreement, Party B shall pledge to Party A all its equity interests in Party C held by Party B in order to guarantee Party C may perform the Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement) executed between Party C and Party A on the date of execution hereof and the power of attorney issued by Party B on the date of execution hereof and its obligations hereunder. |
2. |
Undertakings |
2.1 |
Undertakings of Party B and Party C |
Party B (as the shareholder of Party C) and Party C hereby jointly and severally undertake that:
2.1.1 |
Without the prior written consent of Party A, they will not supplement, modify or amend the articles of association and internal regulations of Party C in any form, increase or decrease its registered capital, change its registered capital structure in any other manner, or take any action of dividing or dissolving Party Cs company or changing its form; |
2.1.2 |
In accordance with good financial and commercial standards and practice, they will maintain the existence of Party C, prudently and effectively operate its business and handle its affairs, and procure Party C to perform its obligations under the Business Cooperation Agreement; |
3
2.1.3 |
Without the prior written consent of Party A, from the date of execution hereof, they shall not sell, transfer, mortgage or otherwise dispose of legal rights and interests in any assets (including tangible assets or intangible assets, excluding assets within RMB 1 million as required in the normal business operations), business or income, or cause any Security Interest or other encumbrance to be placed on the same; |
2.1.4 |
Unless required by the PRC Laws, Party C shall not be dissolved or liquidated without the written consent of Party A; after the statutory liquidation set forth in Article 3.6 hereof, Party B irrevocably undertakes, subject to the provisions and requirements of the PRC Laws in force at that time, Party B shall pay Party A or the Designee all proceeds of the distribution of surplus assets received arising from the shares of Party C held by Party B or facilitate such payment. Where such payment is not allowed in accordance with the PRC Laws in force at that time, Party B undertakes to trust such payment for Party A in the form of trusteeship, and to cooperate with Party A in signing the trusteeship agreement or other relevant legal documents; |
2.1.5 |
Party C shall not incur, inherit, guarantee or permit the existence of any debts without the prior written consent of Party A, other than (i) the debts incurred in the normal course of business but not through loans; and (ii) the debts that have been disclosed to and consented in writing by Party A; |
2.1.6 |
They will conduct all of Party Cs business in the normal course of business to maintain Party Cs asset value, and will not engage in any act/omission that may have adverse effect on the state of operation and asset value of Party C; and Party A will have the right to supervise Party Cs assets and assess whether it has the right to control Party Cs assets. If Party A determines that Party Cs operational activity affects the value of its assets or Party As control of Party Cs assets, Party A shall engage a legal adviser or other professionals to handle such issue and Party B and Party C shall take any necessary action to cooperate in such handling; |
2.1.7 |
Without the prior written consent of Party A, they shall not cause Party C to execute any major contract other than those executed in the course of normal business and those executed between Party C and Party A, its direct or indirect overseas parent company or subsidiaries directly or indirectly controlled by Party As overseas parent company (hereinafter referred to as Party As Affiliates) (in this paragraph, a contract shall be deemed as a major contract if the value of such contract exceeds RMB 1 million); |
2.1.8 |
Without the prior written consent of Party A, they shall not cause Party C to provide any form of guarantee such as loan, financial aid or mortgage or pledge to any person, or to permit a third party to create any Security Interest in their assets or equity; |
2.1.9 |
Within 60 business days after the end of each financial year (hereinafter referred to as the Previous Financial Year) or at the request of Party A, they shall provide Party A with the audited consolidated financial statements of Party C for the Previous Financial Year and other information on the operating results and financial position of Party C; |
2.1.10 |
At the request of Party A, Party C shall procure and maintain insurance on the assets and business of Party C from the insurer recognized by Party A. The amount and type of such insurance shall be the same or have the same effect as the amount and type of insurance normally maintained by a company operating similar business and owning similar property or assets in China; |
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2.1.11 |
Without the prior written consent of Party A, they shall not cause or permit Party C to enter into merger, partnership, joint venture or alliance with or acquire or invest in any person; |
2.1.12 |
They shall immediately notify Party A of any ongoing or potential lawsuit, arbitration or administrative procedures relating to Party Cs assets, business or revenues, and take all necessary actions reasonably requested by Party A, and shall not settle such procedures without the prior written consent of Party A; |
2.1.13 |
They shall execute all documents, take all actions and file all complaints or defend all claims necessary or appropriate to maintain Party Cs ownership of all of its assets; |
2.1.14 |
Without the prior written consent of Party A, Party C shall not pay dividends to its shareholders in any form, but upon the written request of Party A, Party C shall immediately distribute all distributable profits to its shareholders and require and cause the shareholders to comply with Article 2.2.5 hereof; |
2.1.15 |
They shall, at the request of Party A, appoint a party designated by Party A to act as the directors, supervisors and/or senior management officers of Party C and/or remove the directors, supervisors and/or senior management officers of Party C from office and perform all relevant resolutions and filing procedures; Party A shall have the right to require Party B and Party C to replace the above-mentioned personnel; |
2.1.16 |
If the failure by any of Party Cs shareholders or Party C to perform its tax obligations under any applicable PRC Laws prevents Party A from exercising its Call Options, Party A shall have the right to request Party C or its shareholder to perform such tax obligations, or request Party C or its shareholder to pay such tax amount to Party A who will make the payment on its behalf; |
2.1.17 |
Party B and Party C shall, in respect of the undertakings applicable to Party C under this Article 2.1, cause the subsidiaries of Party C to comply with such undertakings as if they were parties to this Agreement; and |
2.1.18 |
They shall take all measures to ensure that all qualification certificates relating to Party Cs main business are legal, valid and renewed on time in accordance with the law; any and all government permission, licenses, authorizations and approvals necessary for Party Cs business to be changed and/or increased as a result of changes in the provisions of the competent governmental authorities shall be changed and/or obtained in accordance with the requirements of the applicable laws during the term of this Agreement. |
2.2 |
Further Undertakings of Party B |
Party B hereby irrevocably undertakes that:
2.2.1 |
Without the prior written consent of Party A, Party B shall not sell, transfer, mortgage or otherwise dispose of any beneficial interests in its equity interests in Party C or create any Security Interest or other encumbrance on the them from the effective date of this agreement, except for the pledge created on the equity interests in Party C pursuant to the Equity Pledge Agreement; |
5
2.2.2 |
Party B shall not engage in any business or any other action which will have adverse impact on Party Cs reputation; |
2.2.3 |
Party B shall not execute any documents or make any relevant undertakings which are in conflict with any agreements and other legal documents that are executed and being performed by Party C or Party A and its Designee; Party B shall not cause any conflict of interest between Party B and Party A as well as its shareholders through any act or omission. In case of any such conflict of interest (Party A shall have the right to decide unilaterally whether such conflict of interest arises), Party B shall take measures in a timely manner to eliminate it as soon as possible with the consent of Party A or the Designee. If Party B refuses to take measures to eliminate the conflict of interest, Party A shall be entitled to exercise its Call Options hereunder; |
2.2.4 |
Without the prior written consent of Party A, Party B shall not, in any way, directly or indirectly participate in or engage in any business that is or may be competitive with the business of Party A, Party As Affiliates, Party C and Party Cs controlled subsidiaries, or hold the rights and interests in, or assets of, the relevant entities whose business is or may be competitive with the business of Party A, Party As Affiliates, Party C and Party Cs controlled subsidiaries (except that Party B has no more than 5% of the rights and interests in such relevant entities, or that such relevant entities are controlled by Party A and Party As Affiliates, or other cases approved by Party A), and Party A shall have the right to decide whether the above circumstances exist or may exist to Party B; |
2.2.5 |
Unless requested by Party A in writing, Party B shall not require Party C to grant bonus or conduct other profit distribution with respect to Party Bs equity interests in Party C, or make any proposal of the shareholders meeting related thereto, vote in favour of such resolution or make a decision related thereto (as the case may be). In any case, if Party B receives any of Party Cs gains, profit distribution or bonus, to the extent permitted by the PRC Laws, Party B shall waive the receipt thereof, and immediately pay or transfer such gains, profit distribution or bonus to Party A or the Designee; |
2.2.6 |
Party B shall cause the shareholders meeting or shareholder of Party C (as the case may be) and/or the board of directors or the executive director of Party C (as the case may be) not to approve the sale, transfer, mortgage, creating any Security Interest over or otherwise disposal of any legal or beneficial interests in its equity interests in Party C, without the prior written consent of Party A, except for the pledge created on the equity interests in Party C pursuant to the Equity Pledge Agreement; |
2.2.7 |
Party B shall cause the shareholders meeting or shareholder of Party C (as the case may be) and/or the board of directors or the executive director of Party C (as the case may be) not to approve Party Cs merger, partnership, joint venture or alliance with any person, or acquisition or investment in any person, Party Cs division, amendment to the articles of association of Party C, change to its registered capital or company form, without the prior written consent of Party A; |
2.2.8 |
Party B shall immediately notify Party A of any ongoing or potential lawsuit, arbitration or administrative procedures relating to its equity interests in Party C, and take all necessary actions reasonably requested by Party A, and shall not settle such procedures without the prior written consent of Party A; |
6
2.2.9 |
Party B shall cause the shareholders meeting or shareholder of Party C (as the case may be) and/or the board of directors or the executive director of Party C (as the case may be) to vote for the transfer of the Purchased Equity Interests and/or Purchased Assets provided herein and take any and all other actions that Party A may request; |
2.2.10 |
Upon requested by Party A from time to time, Party B and/or Party C shall immediately and unconditionally transfer its equity interests in and/or assets of Party C to Party A or its Designee pursuant to the Call Options hereunder, and Party B hereby waives its right of first refusal with respect to the transfer of equity interests by other shareholders of Party C (if any); |
2.2.11 |
Party B shall strictly comply with the provisions of this Agreement and other agreements jointly and severally executed by Party B, Party C and Party A, including but not limited to the Equity Pledge Agreement and the Business Cooperation Agreement, perform its obligations under this Agreement and such other agreements, and shall not engage in any act/omission that may affect the validity and enforceability thereof. If Party B has any remaining right to the equity interests under this Agreement or the Equity Pledge Agreement or the power of attorney granted in favor or Party A, it shall not exercise such right unless instructed by Party A in writing; |
2.2.12 |
If Party A (or its Designee) has paid Party B the Purchase Price of the equity interests but the relevant changes of industrial and commercial registration have not been completed prior to dissolution of Party C, upon or after the dissolution of Party C, Party B shall timely and gratuitously deliver to Party A (or the Designee) all of the proceeds of the remaining property distribution it receives by the reason of holding Party Cs equity interests. In this case, Party B shall not make any claim for the proceeds of the remaining property distribution, except for the exercise as instructed by Party A; |
2.2.13 |
Party B shall promptly fulfill their tax obligations under the applicable PRC Laws to ensure the smooth exercise of the Call Options by Party A; |
2.2.14 |
Party B agrees to execute an irrevocable power of attorney granting all rights of Party B as the shareholder of Party C to Party A or the Designee, who may exercise voting rights on all matters required to be discussed at the shareholders meeting or decided by the shareholders (as the case may be) and resolved, and make and sign resolutions, minutes and other relevant documents, including but not limited to, appointing and electing directors, supervisors, and other officers to be appointed and removed by shareholders or the board of shareholders; disposing of the assets of the company; and amending the articles of association; taking over or managing Party Cs business, or dissolving or liquidating Party C and forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group in the liquidation period in accordance with the law; and |
2.2.15 |
Party B shall ensure that Party C will be validly existing, not be terminated, liquidated or dissolved (except with the prior written consent of Party A). |
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3. |
Representations and Warranties |
Party B and Party C hereby jointly and severally represents and warrants to Party A on the date of execution of this Agreement and each date of transfer of the Purchased Equity Interests and Purchased Assets that:
3.1 |
Party B is a natural person with full capacity for civil conduct and capacity for civil rights, and has the right to execute, deliver and perform this Agreement, and can act as an independent subject of litigation; |
3.2 |
Party C is a limited liability company duly registered and validly existing under the PRC Laws with the independent legal person qualification; has full and independent legal status and legal capacity to execute, deliver and perform this Agreement, and can act as an independent subject of litigation; |
3.3 |
Party B and Party C have the right and capacity to execute and deliver this Agreement and any transfer contract to which each of them is a party and relating to the Purchased Equity Interests and/or Purchased Assets to be transferred (hereinafter Transfer Contract) thereunder, and perform its obligations under this Agreement and any Transfer Contract. Each of Party B and Party C agrees to execute a Transfer Contract consistent with the terms of this Agreement when Party A exercises its Call Options. This Agreement and any Transfer Contract to which it is a party constitute or will constitute its legal, valid and binding obligations and are enforceable against it pursuant to the terms thereof; |
3.4 |
Neither the execution and delivery nor the performance of the obligations under this Agreement or any Transfer Contract may or will result in: (i) violation of any applicable PRC Laws; (ii) contravention of Party Cs articles of association, regulations or other constitutional documents; (iii) violation of or default under any contract or instrument to which it is a party or by which it is bound; (iv) violation of any condition of granting any party any license or permit and/or the continued validity thereof; or (v) suspension, revocation of or attachment with additional conditions to any license or permit granted to any Party; |
3.5 |
Party B has ownership of its equity interests in Party C. Party B does not have any Security Interests and other encumbrance on its equity interests in Party C, except for the pledge created on such equity interests under the Equity Pledge Agreement; |
3.6 |
Party C has ownership of all its assets and does not create any Security Interests or other encumbrance on them; |
3.7 |
Party C does not have any outstanding debts, other than (i) the debts incurred in the normal course of business but not through loans; and (ii) the debts that have been disclosed to and consented in writing by Party A; |
3.8 |
If Party C is dissolved or liquidated as required by the PRC Laws, (i) Party B shall, to the extent permitted by the applicable Chinese laws and regulations, set up a liquidation group within fifteen (15) days from the date of the occurrence of the dissolution cause, and authorize the person or entity recommended by Party A to preside over the liquidation and administer the property of Party C; (ii) Party C shall, subject to and to the extent permitted by the PRC Laws, sell all its assets to Party A or the Designee at the lowest price permitted by the PRC Laws, whether or not the provisions of Item (i) of this Article are enforced. Party C shall, to the extent permitted by the PRC Laws in force at that time, exempt Party A or its designated eligible entity from any payment obligation incurred thereby; any proceeds arising from such transactions shall be paid to Party A or the Designee as part of the service charge under the Business Cooperation Agreement to the extent permitted by the PRC Laws in force at that time; |
8
3.9 |
Party C complies with all PRC Laws applicable to the acquisition of equity or assets; |
3.10 |
Except as expressly disclosed to Party A in writing, there is no ongoing, pending or potential litigation, arbitration or other administrative proceedings in respect of the equity interests of Party C or assets of Party C, or Party C; |
3.11 |
Where Party B is divorced, incapacitated, declared lost/dead, dead, bankrupt or suffers from any other situation which may affect its exercise of holding Party Cs equity interests, its successor, agent, guardian, or the shareholder or assignee of Party Cs equity interests shall be deemed as a party to this Agreement, inherit exercise and perform all rights and obligations of Party B hereunder, and transfer related equity interests to Party A or the Designee in accordance with the applicable laws then in force and this Agreement; Party B has made all appropriate arrangements and executed all necessary documents to ensure that, in the foregoing circumstances, the successors, guardians, creditors, spouses or otherwise of Party B, who may thus acquire the equity interests, assets or related rights of Party C, shall not affect or hinder the performance of this Agreement; |
3.12 |
The equity interests in Party C held by Party B are not the common property of Party B and the spouse of Party B (where applicable), Party Bs spouse(where applicable) does not have nor control such equity interests in Party C; Party Bs operating and management of Party C and other voting matters based on the equity interests held by Party B in Party C shall not be influenced by the spouse of Party B (where applicable). |
4. |
Effective Date |
This Agreement shall enter into force on the date of execution by the Parties and shall remain effective until the date on which all the Purchased Equity Interests and/or Purchased Assets held by Party B are transferred to Party A and/or the Designee (in case of the Purchased Equity Interests, subject to the date of completion of the change of industrial and commercial registration) and Party A and its subsidiaries and branches may legally engage in the business of Party C. Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement unilaterally and immediately by giving written notice to Party B and Party C at any time, without any liability for breach of contract for its unilateral termination hereof. Unless compulsorily provided by the PRC Laws, Party B and Party C shall not have the right to terminate this Agreement unilaterally.
5. |
Liability for Breach |
5.1 |
Except as otherwise provided herein, if a party (hereinafter the Breaching Party) fails to perform an obligation hereunder or violates this Agreement in other manner, the other parties (hereinafter the Aggrieved Parties) may (a) send a written notice to the Breaching Party indicating the nature and scope of the breach and requesting the Breaching Party to remedy at its own cost within the reasonable period provided in the notice (hereinafter Remedy Period); if the Breaching Party fails to remedy it during the Remedy Period, the Aggrieved Parties shall have the right to request the Breaching Party to assume all liabilities caused by its breach and compensate the Aggrieved Parties for all actual economic losses caused to the Aggrieved Parties by its breach, including but not limited to lawyers fees, litigation or arbitration fees arising from any litigation or arbitration proceedings relating to such breach, and furthermore, the Aggrieved Parties shall also have the right to request the Breaching Party to enforce this Agreement and request the competent arbitral institution or court to order specific performance and/or enforcement of the terms agreed herein; (b) terminate this Agreement, and request the Breaching Party to assume all liabilities caused by its breach, and provide all damages; or (c) discount, auction or sell off the pledged equity interests as agreed in the Equity Pledge Agreement, and have priority in compensation with the proceeds from the discounting, auctioning or selling off and request the Breaching Party to assume all losses caused thereby. The exercise of the aforesaid remedial rights by the Aggrieved Parties shall not prevent them from exercise of other remedial rights pursuant to the provisions of this Agreement and the laws. |
9
5.2 |
Each of the Parties agrees and acknowledges that except as compulsorily provided by the PRC Laws, if Party B or Party C is the Breaching Party, Party A shall have the right to unilaterally terminates this Agreement immediately and request the Breaching Party to provide the damages. If Party A is the Breaching Party, Party B or Party C shall waive Party As obligation to provide damages, and unless otherwise provided by the laws, Party B or Party C shall not in any event have any right to terminate or cancel this Agreement. |
6. |
Applicable Law and Dispute Settlement |
6.1 |
Applicable Law |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and the settlement of disputes hereunder shall be governed by the law of the Peoples Republic of China.
6.2 |
Dispute Settlement |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Parties. If the Parties fail to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other parties to settle such dispute through negotiation, any Party may submit such dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Parties. The arbitral tribunal may rule on Party Cs equity interests, assets or property interests as the compensation or satisfaction to Party A for the losses caused by the breach of contract by other Parties hereto, rule on injunctive relief in respect of the relevant business or asset transfer, or order Party C to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where Party C is incorporated and where Party C or Party As main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of Party Cs business, restrictions on and/or disposition of Party Cs equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of Party C, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling that the Breaching Party not to carry out acts that may lead to further expansion of the loss suffered by Party A.
10
6.3 |
In the event of any dispute arising from the interpretation and performance of this Agreement or any dispute being arbitrated, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder, except for the matter in dispute. |
6.4 |
After the date of execution hereof, if at any time, as a result of the promulgation of or change in any PRC Law, or as a result of the interpretation or application of such PRC Laws, the following agreements shall apply: to the extent permitted by the PRC Laws, (a) if the change in law or the newly promulgated provisions are more favorable to Party A than the relevant PRC Laws in force on the date of execution hereof (while the other Parties are not seriously adversely affected), the Parties shall promptly apply for benefits arising from the change or new provisions and do their best to obtain the approval of such application; or (b) if Party As economic interests under this Agreement are directly or indirectly adversely affected by the above legal changes or newly promulgated provisions, this Agreement shall continue to be performed in accordance with the original terms, and the Parties shall use all legal means to waive compliance with such change or provisions. If the adverse effects on Party As economic interests can not be resolved in accordance with this Agreement, the Parties shall promptly negotiate and make all necessary amendments to this Agreement in order to maintain Party As economic interests hereunder. |
7. |
Taxes and Fees |
Each Party shall, in accordance with the PRC Laws, pay any and all taxes, costs and expenses incurred by or levied on such Party in respect of the preparation and execution of this Agreement and the Transfer Contract and the completion of the transactions contemplated under this Agreement and the Transfer Contract.
8. |
Notices |
8.1 |
All notices and other correspondence required or permitted to be given under this Agreement shall be sent personally, by registered mail with postage prepaid, courier service, facsimile or e-mail to the address, fax numbers and e-mail addresses of the Parties listed in Annex I. An additional confirmation shall be sent by e-mail for each notice. Such notice shall be deemed to be duly served on: |
8.1.1 |
If sent personally, by registered mail with postage prepaid, courier service, on the date of acceptance or refusal thereof at the recipients address specified for such notice; |
8.1.2 |
If sent by fax, on the date of successful transmission (as evidenced by automatically generated confirmation of transmission); |
8.1.3 |
If sent by e-mail, on the date of successful transmission. |
8.2 |
Any Party may, in accordance with the terms of this Article, change its receiving address, fax and/or email address at any time by giving notice to other Parties hereto. |
9. |
Liability for Confidentiality |
The Parties acknowledge that any oral or written information they exchange in connection with this Agreement is confidential. Party B and Party C shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of Party A, other than the information: (a) known to the public (but not disclosed to the public by any recipient);(b) required to be disclosed by applicable law or by the rules or regulations of any stock exchange; or (c) required to be disclosed by Party B and Party C to their legal or financial advisers, who shall be bound by a confidentiality obligation similar to the obligations in this Article, in respect of transactions as contemplated herein. The disclosure of any confidential information by the staff or agencies employed by Party B and Party C shall be deemed to be the disclosure of such confidential information by such Party, which shall be liable for breach of this Agreement. This Article shall remain in force regardless of the invalidity or termination of this Agreement for any reason.
11
10. |
Further Warranties |
The Parties agree to execute in a timely manner documents or take further actions that are reasonably required for the implementation of the provisions and purposes of this Agreement or beneficial to such purposes.
11. |
Force Majeure |
11.1 |
Force Majeure means an event which is unforeseeable, unavoidable and insurmountable and which renders any partial or total default under this Agreement by one Party hereto. Such Force Majeure events include, but are not limited to, earthquakes, typhoons, floods, wars, strikes, riots, government actions, changes in legal provisions or the applicability of the legal provisions. |
11.2 |
In event of a Force Majeure event, the obligation of one party to be affected by such event under this Agreement shall automatically be suspended during the delay caused by such event, and its performance shall be automatically extended for the period of suspension. The party shall not be punished or liable for this. In the event of force majeure, the Parties shall immediately negotiate a fair solution and make every reasonable effort to minimize the impact of force majeure. |
12. |
Miscellaneous |
12.1 |
Amendment, Modification and Supplementation |
Any matter not contained herein shall be subject to further negotiation among the Parties hereto. No amendment, modification or supplementation shall be effective unless a written agreement is executed by the Parties hereto. The amendment agreement and supplementary agreement relating to this Agreement and its annex duly executed by the Parties hereto are an integral part of this Agreement and shall have the same legal effect as this Agreement.
Where the stock exchange or other regulatory agency of Hong Kong or NASDAQ of the United States proposes any amendment to this Agreement, or in case of any change in the listing rules or related requirements of Hong Kong or NASDAQ of the United States in relation to this Agreement, the Parties hereto shall amend this Agreement accordingly.
12.2 |
Entire Agreement |
Except written amendments, supplementations or modifications made after the execution hereof, this Agreement shall constitute the entire agreement among the Parties in respect of the matters related hereto or the subject matter hereof and shall supersede all prior oral and written consultations, representations and contracts in respect of the matters related hereto or the subject matter hereof.
12
12.3 |
Headings |
The headings of this Agreement are for ease of reading only and shall not be used to interpret, explain or otherwise affect the meaning of the provisions hereof.
12.4 |
Counterparts |
This Agreement is made in three (3) counterparts. Party A, Party B and Party C each holds one (1) counterpart respectively, and all of them shall have the same legal effect.
12.5 |
Severability |
If one or more of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any way under any applicable law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultations in good faith, seek to supersede such invalid, illegal or unenforceable provisions with valid provisions to the maximum extent permitted by law and expected by the Parties, and the economic effects of such valid provisions shall be as similar as those of such invalid, illegal or unenforceable provisions to the extent possible.
12.6 |
Successors |
This Agreement shall be binding on and shall be valid for the respective successors of the Parties and the permitted assignees of such Parties.
12.7 |
Survival |
12.7.1 |
Any obligations arising out of or to be performed prior to the termination of this Agreement shall survive the termination hereof. |
12.7.2 |
The provisions of Articles 6, 8, 9, 12.7 and 12.8 shall survive the termination hereof. |
12.8 |
Waiver |
Any Party hereto may waiver the rights such Party is entitled to under this Agreement, provided that such waiver by Party B and Party C must be made in writing and executed by Party A for confirmation. No waiver by any Party in respect of a breach by the other Parties in certain circumstances shall be deemed as a waiver of any similar breach in other circumstances.
12.9 |
Transfer of Rights |
Without the prior written consent of Party A, Party C and/or Party B shall not transfer to any third party any of their rights and/or obligations under this Agreement. Party C and Party B hereby agree that Party A shall have the right to transfer any of its rights and/or obligations hereunder to any third party without the consent of Party C and Party B by giving written notice to Party C and Party B, and Party B and Party C shall execute a supplementary agreement with the transferee or an agreement of the same substance as this Agreement.
(The remainder of this page is intentionally left blank)
13
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY A:
HODE SHANGHAI LIMITED (COMPANY STAMP) | ||
/s/ Hode Shanghai Limited |
By: | /s/ Chen Rui |
Name: Chen Rui |
Title: Legal Representative |
Signature Page to Exclusive Option Agreement
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B: | ||
CHEN RUI | ||
By: | /s/ Chen Rui |
Signature Page to Exclusive Option Agreement
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY C:
SHANGHAI KUANYU DIGITAL TECHNOLOGY CO., LTD. (COMPANY STAMP)
/s/ Shanghai Kuanyu Digital Technology Co., Ltd. | ||
By: | /s/ Chen Rui | |
Name: Chen Rui | ||
Title: Legal Representative |
Signature Page to Exclusive Option Agreement
Letter of Undertakings
Whereas:
1. |
I, Yang Qitao (a Chinese citizen, ID card no.***), the spouse of Chen Rui, a natural person, (ID card no.***) who holds 100% equity in Shanghai Kuanyu Digital Technology Co., Ltd. (the Company) (hereinafter referred to as the Target Equity); |
2. |
In respect the aforesaid Target Equity, on December 23, 2020, Hode Shanghai Limited respectively: (1) executed the Exclusive Business Cooperation Agreement with the Company; (2) executed the Exclusive Option Agreement with the Company and its shareholder; (3) executed the Equity Pledge Agreement with the Company and its shareholder; (4) the shareholder of the Company executed the Power of Attorney, which constitutes the contractual arrangements in respect of the Company, together with the aforesaid Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and the Equity Pledge Agreement (hereinafter referred to as the Contractual Arrangements). |
I hereby acknowledge and unconditionally and irrevocably undertake:
1. |
I acknowledge that the aforesaid Target Equity shall be attributable to Chen Rui regardless of the circumstances, and Chen Rui may mortgage, sell or otherwise dispose of the Target Equity in accordance with the Contractual Arrangements without my consent. |
2. |
I acknowledge that the foresaid Target Equity is not the common property of me and Chen Rui, and that I do not enjoy any interests in the foresaid Target Equity (including rights acquired through the relevant Contractual Arrangements), and that I will not take any action to interfere with the Contractual Arrangements, including but not limited to any claim for the foresaid Target Equity and rights obtained through the Contractual Arrangements. |
3. |
I undertake that I have not and will not plan to actually participate in the management of the Company and will not claim any interest relating to the equity and assets of the Company. |
4. |
Chen Rui may execute any amendment or change document to the Contractual Arrangements on the Target Equity without my signature, confirmation, consent or affirmation. If necessary, I undertake to execute all necessary documents and take all necessary actions to ensure that the Contractual Arrangements revised from time to time are properly performed. If, for any reason, I directly or indirectly acquire part or all of the Target Equity, my successor, agent and/or assets administrator and I agree unconditionally to be bound by this Letter of Undertakings and the Contractual Arrangements. To this end, I agree to cooperate in all necessary actions and execute all necessary documents. |
5. |
I acknowledge and agree that, after the execution hereof, the equity of the Company newly acquired by Chen Rui will also be bound by this Letter of Undertakings and the Contractual Arrangements. |
1
6. |
I further undertake and warrant that, under no circumstances, directly or indirectly, actively or passively, will I take any action or make any claim or lawsuit with the intention which conflicts with the above arrangement, or act or not act as an obstacle to the continued validity and performance of the Contractual Arrangement. If the regulatory agency requests me to amend the contents of this Letter of Undertakings, I will cooperate unconditionally and promptly. At the same time, I undertake that this Letter of Undertakings, once executed, shall supersede any other legal documents previously issued or executed by me on the same subject matter. |
7. |
I acknowledge that the above undertaking is my true intention without any coercion or threat. I fully understand the contents and legal consequences of this Letter of Undertakings and agree to execute this Letter of Undertakings. |
8. |
I further acknowledge that the undertaking, acknowledgement, consent and authorization contained herein are unconditional and irrevocable and shall not be revoked, derogated, void or otherwise adversely affected by my loss of civil capacity, limitation of civil capacity, my death, my divorce or other similar events. |
This Letter of Undertakings shall take effect immediately upon my signature and shall remain in force and effect.
(The remainder of this page is intentionally left blank)
2
[This page has no text and is the signature page of the Letter of Undertakings]
Signature: |
/s/ Yang Qitao |
|
December 23, 2020 |
Signature page of Letter of Undertakings
Power of Attorney
Date: December 23, 2020
Place: Shanghai
I, Chen Rui, a citizen of the Peoples Republic of China with ID card no. ***, on the execution date of this Power of Attorney (hereinafter referred to as this Power of Attorney), holds 52.3030% equity of Shanghai Hode Information Technology Co., Ltd. (hereinafter referred to as the Company) corresponding to a capital contribution of RMB 5,749,953 (hereinafter referred to as the Target Equity).
Whereas:
1. |
Hode Shanghai Limited (hereinafter referred to as the Attorney), the related parties and I executed an Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) on December 23, 2020. When the laws of the Peoples Republic of China permit and the corresponding conditions are met, if the Attorney makes a purchase request according to its independent judgment: (a) I shall transfer all or part of my equity in the Company to the Attorney or its designated party at its request; (b) the Company shall, at its request, transfer all or part of its assets to the Attorney or to its designated party; |
2. |
The Attorney and the Company executed an Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement) on December 23, 2020, whereby the Attorney shall provide the Company with exclusive technical services, technical advice and other services; and |
3. |
I signed a Power of Attorney (hereinafter referred to as the Original Power of Attorney) on October 10, 2017. I hereby agree to amend and restate the terms and conditions of the Original Power of Attorney and agree to execute this Power of Attorney in lieu of the Original Power of Attorney. |
I hereby irrevocably authorize the Attorney to exercise the rights hereunder within the term hereof.
1. |
Entrusted Rights |
I unconditionally and irrevocably undertake to authorize the Attorney or, at the direction of the Attorney, to authorize the director of its direct or indirect overseas parent company it designated and a liquidator or any other successor acting for such director (except any person who is non-independent or who may cause any potential conflicts of interest)(hereinafter referred to as the Trustees) to exercise all the shareholder rights as a shareholder of the Company. Such rights (hereinafter referred to as the Entrusted Rights) include but are not limited to:
1) |
proposing, convening and attending the shareholders meeting of the Company in accordance with the Companys articles of association, and sign any and all written resolutions and minutes for and on my behalf, as my agent; |
2) |
exercising the rights of shareholders to vote, to appoint directors and amend the articles of association I am entitled to according to the PRC laws (including any laws, regulations, rules, notices or other legally binding documents issued by any central or local legislative, administrative or judicial authority of Mainland China prior to or after the signing of this Power of Attorney, hereinafter referred to as the PRC Laws) and the articles of association of the Company (including any other voting rights as stipulated in the amended articles of association); taking over or managing the business of the Company, dissolving or liquidating the Company; forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group during the liquidation period according to law; |
3) |
nominating, designating, appointing or replacing, on behalf of me, the legal representative, board chairman, directors, supervisors of the Company and other senior management officers who shall be appointed or removed by the shareholder (or the shareholders meeting), in accordance with the articles of association of the Company; instituting proceedings against, or taking other legal actions against, the directors, supervisors or senior management officers of the Company when their actions impair the interests of the Company or its shareholders; |
4) |
signing the relevant equity transfer agreement, asset transfer agreement, resolution of the shareholders meeting/shareholders decision and other relevant documents on my behalf, and handling the procedures of government approval, registration and filing required for the transfer, when I transfer the shares of the Company under the Exclusive Option Agreement and agree to transfer the assets of the Company; and |
5) |
signing the minutes of the meeting, written resolutions and/or other relevant documents of the shareholders meeting and filing the documents with the competent administration for market regulation and any other governmental authority. |
2. |
Representations and Warranties Related to the Entrusted Rights |
2.1 |
I undertake not to engage in any action in violation of the purpose or intention of this Power of Attorney nor use the information obtained from the Attorney to cause the conflict between the interest of the Attorney and its shareholders. |
2.2 |
I undertake that the authorization hereunder will not lead to a real or potential conflict of interest between me and the Attorney. If there is a potential conflict of interest between me and the Attorney or the direct or indirect overseas parent company of the Attorney or any other subsidiary of such overseas parent company, without conflict with the PRC Laws, I will give a priority to the protection and will not harm the interests of the Attorney or the direct or indirect overseas parent company of the Attorney. In the event that I am a director or senior management officer of the Attorney or direct or indirect overseas parent company of the Attorney, I will authorize the Attorney or, at the direction of the Attorney, any other director or senior management officer other than me to exercise the rights hereunder. |
2.3 |
I undertake that, without the prior written consent of the Attorney, I will not, in any way, directly or indirectly participate in, engage in any business that has or may compete with the business of the Attorney, the Company and any company under the control of the Attorney or the Company, or hold the rights, interests and assets of any relevant entity that has or may have a competitive business with the Attorney, the Company and any company under the control of the Attorney or the Company, and that the Attorney will have the right to ultimately determine whether or not I have or may have any of the above circumstances. |
2.4 |
I hereby undertake that, in the event of bankruptcy, liquidation, dissolution or termination of the Company, all the assets, including the equity of the Company, acquired by me after the bankruptcy, liquidation, dissolution or termination of the Company, will be transferred to the Attorney or the party designated by the Attorney free of charge or at the lowest price permitted by Chinese law at that time or will be disposed of by the liquidator at that time on the basis of the protection of the interests of the direct or indirect shareholders and/or creditors of the Attorney. |
2.5 |
I agree that the Attorney will have the right to entrust the Trustees with matters under Article 1 hereof. The Trustees and/or the Attorney exercise the Entrusted Rights as I personally exercise the rights of shareholders. The authorization and entrustment of such Entrusted Rights shall be based on the precondition that the person designated by the Attorney is the director of its direct or indirect overseas parent company and the liquidator or other successor acting as such director, and I agree to the above authorization and entrustment. When the Attorney gives me a written notice to replace the Trustees, I will immediately appoint other entities or Chinese citizens designated by the Attorney and to the satisfaction of the Trustees at that time to exercise the above Entrusted Rights. The new authorization in line with this Power of Attorney may replace the original authorization once it is made. In addition, I will not revoke the entrustment and authorization made to the Trustees and/or the Attorney. |
2.6 |
I will acknowledge and approve any legal consequence arising from the exercise of the above Entrusted Rights by the Trustees and/or the Attorney in accordance with this Power of Attorney and will bear the corresponding legal liability. |
2.7 |
All the actions of the Trustees and/ or the Attorney relating to the equity of the Company and/or the other Entrusted Rights shall be the actions of mine. All the meeting minutes and resolutions of the shareholders meeting or shareholders decisions, as appropriate, signed by the Trustees and/ or the Attorney shall be deemed to be signed by me. The Trustees and/or the Attorney may act according to their own will without prior consent of mine, but after the resolution of the shareholders meeting or the decision of the shareholder (as the case may be), the Trustees and/or the Attorney shall inform me in time. I hereby acknowledge and approve such acts and/or documents of the Trustees and/or the Attorney. |
2.8 |
During the term of this Power of Attorney, I agree and acknowledge that I will not exercise all the rights relating to the equity of the Company authorized to the Trustees and/or the Attorney herein without the prior written consent of the Attorney. |
2.9 |
In the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other occurrence that may affect the exercise of the Companys equity rights held by me, the shareholder or transferee holding the original Target Equity of mine shall be deemed to be a party hereto, inheriting/assuming all my rights and obligations hereunder. |
3. |
Entrustment Term |
3.1 |
This Power of Attorney shall take effect from the execution date and shall be irrevocable and shall remain in force unless the Attorney gives the contrary written instruction, or this Power of Attorney terminates in accordance with Article 3.2 hereof. |
3.2 |
This Power of Attorney will be automatically terminated on the date on which the Attorney or the relevant party designated by the Attorney is registered as the sole shareholder of the Company, once the PRC Laws allow the Attorney or the Attorneys direct or indirect overseas parent company or a subsidiary directly or indirectly controlled by the Attorneys foreign parent company to directly hold shares in the Company and legally engage in the Companys business. |
4. |
Applicable Law and Dispute Settlement |
4.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Power of Attorney and the settlement of disputes hereunder shall be governed by the PRC Laws. |
4.2 |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Attorney and I. If the Attorney and I fail to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other Parties to settle such dispute through negotiation, any Party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Attorney and I. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The arbitral tribunal may rule on the Companys equity interests, assets or property interests as the compensation or satisfaction to the Attorney for the losses caused by the breach of contract hereunder, rule on injunctive relief in respect of the relevant business or asset transfer, or order the Company to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where the Company is incorporated and where the Company or the Attorneys main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of the Companys business, restrictions on and/or disposition of the Companys equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of the Company, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling that the breaching party not to carry out acts that may lead to further expansion of the loss suffered by the Attorney. |
4.3 |
After the execution of this Power of Attorney, if at any time, due to the promulgation or change of any PRC Laws, or due to the change of interpretation or application of such PRC Laws, the following provisions shall apply: if the change of law or the newly promulgated provisions directly or indirectly materially affect the economic interests of the Attorney hereunder, the Attorney and I shall consult in time and make all necessary amendments to this Power of Attorney in order to make the best and reasonable efforts to maintain the economic interests of the Attorney hereunder. |
4.4 |
Where the stock exchange of Hong Kong or NASDAQ of the United States or other regulatory agency proposes any amendment to this Power of Attorney, or where the listing rules or other relevant regulations, rules, codes, guidelines of Hong Kong or NASDAQ of the United States require amending this Power of Attorney or any arrangement hereunder, I shall amend this Power of Attorney accordingly in accordance with the requirements and instructions of the Attorney. |
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[This page has no text and is the signature page of Power of Attorney]
IN WITNESS WHEREOF, this Power of Attorney was executed as of the date and place set forth at the beginning hereof.
Chen Rui | ||
By: | /s/ Chen Rui |
Signature page of Power of Attorney
Power of Attorney
Date: December 23, 2020
Place: Shanghai
I, Li Ni, a citizen of the Peoples Republic of China with ID card no. ***, on the execution date of this Power of Attorney (hereinafter referred to as this Power of Attorney), holds 3.3890% equity of Shanghai Hode Information Technology Co., Ltd. (hereinafter referred to as the Company) corresponding to a capital contribution of RMB 372,575 (hereinafter referred to as the Target Equity).
Whereas:
1. |
Hode Shanghai Limited (hereinafter referred to as the Attorney), the related parties and I executed an Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) on December 23, 2020. When the laws of the Peoples Republic of China permit and the corresponding conditions are met, if the Attorney makes a purchase request according to its independent judgment: (a) I shall transfer all or part of my equity in the Company to the Attorney or its designated party at its request; (b) the Company shall, at its request, transfer all or part of its assets to the Attorney or to its designated party; |
2. |
The Attorney and the Company executed an Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement) on December 23, 2020, whereby the Attorney shall provide the Company with exclusive technical services, technical advice and other services; and |
3. |
I signed a Power of Attorney (hereinafter referred to as the Original Power of Attorney) on October 10, 2017. I hereby agree to amend and restate the terms and conditions of the Original Power of Attorney and agree to execute this Power of Attorney in lieu of the Original Power of Attorney. |
I hereby irrevocably authorize the Attorney to exercise the rights hereunder within the term hereof.
1. |
Entrusted Rights |
I unconditionally and irrevocably undertake to authorize the Attorney or, at the direction of the Attorney, to authorize the director of its direct or indirect overseas parent company it designated and a liquidator or any other successor acting for such director (except any person who is non-independent or who may cause any potential conflicts of interest)(hereinafter referred to as the Trustees) to exercise all the shareholder rights as a shareholder of the Company. Such rights (hereinafter referred to as the Entrusted Rights) include but are not limited to:
1) |
proposing, convening and attending the shareholders meeting of the Company in accordance with the Companys articles of association, and sign any and all written resolutions and minutes for and on my behalf, as my agent; |
2) |
exercising the rights of shareholders to vote, to appoint directors and amend the articles of association I am entitled to according to the PRC laws (including any laws, regulations, rules, notices or other legally binding documents issued by any central or local legislative, administrative or judicial authority of Mainland China prior to or after the signing of this Power of Attorney, hereinafter referred to as the PRC Laws) and the articles of association of the Company (including any other voting rights as stipulated in the amended articles of association); taking over or managing the business of the Company, dissolving or liquidating the Company; forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group during the liquidation period according to law; |
3) |
nominating, designating, appointing or replacing, on behalf of me, the legal representative, board chairman, directors, supervisors of the Company and other senior management officers who shall be appointed or removed by the shareholder (or the shareholders meeting), in accordance with the articles of association of the Company; instituting proceedings against, or taking other legal actions against, the directors, supervisors or senior management officers of the Company when their actions impair the interests of the Company or its shareholders; |
4) |
signing the relevant equity transfer agreement, asset transfer agreement, resolution of the shareholders meeting/shareholders decision and other relevant documents on my behalf, and handling the procedures of government approval, registration and filing required for the transfer, when I transfer the shares of the Company under the Exclusive Option Agreement and agree to transfer the assets of the Company; and |
5) |
signing the minutes of the meeting, written resolutions and/or other relevant documents of the shareholders meeting and filing the documents with the competent administration for market regulation and any other governmental authority. |
2. |
Representations and Warranties Related to the Entrusted Rights |
2.1 |
I undertake not to engage in any action in violation of the purpose or intention of this Power of Attorney nor use the information obtained from the Attorney to cause the conflict between the interest of the Attorney and its shareholders. |
2.2 |
I undertake that the authorization hereunder will not lead to a real or potential conflict of interest between me and the Attorney. If there is a potential conflict of interest between me and the Attorney or the direct or indirect overseas parent company of the Attorney or any other subsidiary of such overseas parent company, without conflict with the PRC Laws, I will give a priority to the protection and will not harm the interests of the Attorney or the direct or indirect overseas parent company of the Attorney. In the event that I am a director or senior management officer of the Attorney or direct or indirect overseas parent company of the Attorney, I will authorize the Attorney or, at the direction of the Attorney, any other director or senior management officer other than me to exercise the rights hereunder. |
2.3 |
I undertake that, without the prior written consent of the Attorney, I will not, in any way, directly or indirectly participate in, engage in any business that has or may compete with the business of the Attorney, the Company and any company under the control of the Attorney or the Company, or hold the rights, interests and assets of any relevant entity that has or may have a competitive business with the Attorney, the Company and any company under the control of the Attorney or the Company, and that the Attorney will have the right to ultimately determine whether or not I have or may have any of the above circumstances. |
2.4 |
I hereby undertake that, in the event of bankruptcy, liquidation, dissolution or termination of the Company, all the assets, including the equity of the Company, acquired by me after the bankruptcy, liquidation, dissolution or termination of the Company, will be transferred to the Attorney or the party designated by the Attorney free of charge or at the lowest price permitted by Chinese law at that time or will be disposed of by the liquidator at that time on the basis of the protection of the interests of the direct or indirect shareholders and/or creditors of the Attorney. |
2.5 |
I agree that the Attorney will have the right to entrust the Trustees with matters under Article 1 hereof. The Trustees and/or the Attorney exercise the Entrusted Rights as I personally exercise the rights of shareholders. The authorization and entrustment of such Entrusted Rights shall be based on the precondition that the person designated by the Attorney is the director of its direct or indirect overseas parent company and the liquidator or other successor acting as such director, and I agree to the above authorization and entrustment. When the Attorney gives me a written notice to replace the Trustees, I will immediately appoint other entities or Chinese citizens designated by the Attorney and to the satisfaction of the Trustees at that time to exercise the above Entrusted Rights. The new authorization in line with this Power of Attorney may replace the original authorization once it is made. In addition, I will not revoke the entrustment and authorization made to the Trustees and/or the Attorney. |
2.6 |
I will acknowledge and approve any legal consequence arising from the exercise of the above Entrusted Rights by the Trustees and/or the Attorney in accordance with this Power of Attorney and will bear the corresponding legal liability. |
2.7 |
All the actions of the Trustees and/ or the Attorney relating to the equity of the Company and/or the other Entrusted Rights shall be the actions of mine. All the meeting minutes and resolutions of the shareholders meeting or shareholders decisions, as appropriate, signed by the Trustees and/ or the Attorney shall be deemed to be signed by me. The Trustees and/or the Attorney may act according to their own will without prior consent of mine, but after the resolution of the shareholders meeting or the decision of the shareholder (as the case may be), the Trustees and/or the Attorney shall inform me in time. I hereby acknowledge and approve such acts and/or documents of the Trustees and/or the Attorney. |
2.8 |
During the term of this Power of Attorney, I agree and acknowledge that I will not exercise all the rights relating to the equity of the Company authorized to the Trustees and/or the Attorney herein without the prior written consent of the Attorney. |
2.9 |
In the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other occurrence that may affect the exercise of the Companys equity rights held by me, the shareholder or transferee holding the original Target Equity of mine shall be deemed to be a party hereto, inheriting/assuming all my rights and obligations hereunder. |
3. |
Entrustment Term |
3.1 |
This Power of Attorney shall take effect from the execution date and shall be irrevocable and shall remain in force unless the Attorney gives the contrary written instruction, or this Power of Attorney terminates in accordance with Article 3.2 hereof. |
3.2 |
This Power of Attorney will be automatically terminated on the date on which the Attorney or the relevant party designated by the Attorney is registered as the sole shareholder of the Company, once the PRC Laws allow the Attorney or the Attorneys direct or indirect overseas parent company or a subsidiary directly or indirectly controlled by the Attorneys foreign parent company to directly hold shares in the Company and legally engage in the Companys business. |
4. |
Applicable Law and Dispute Settlement |
4.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Power of Attorney and the settlement of disputes hereunder shall be governed by the PRC Laws. |
4.2 |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Attorney and I. If the Attorney and I fail to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other Parties to settle such dispute through negotiation, any Party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Attorney and I. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The arbitral tribunal may rule on the Companys equity interests, assets or property interests as the compensation or satisfaction to the Attorney for the losses caused by the breach of contract hereunder, rule on injunctive relief in respect of the relevant business or asset transfer, or order the Company to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where the Company is incorporated and where the Company or the Attorneys main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of the Companys business, restrictions on and/or disposition of the Companys equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of the Company, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling that the breaching party not to carry out acts that may lead to further expansion of the loss suffered by the Attorney. |
4.3 |
After the execution of this Power of Attorney, if at any time, due to the promulgation or change of any PRC Laws, or due to the change of interpretation or application of such PRC Laws, the following provisions shall apply: if the change of law or the newly promulgated provisions directly or indirectly materially affect the economic interests of the Attorney hereunder, the Attorney and I shall consult in time and make all necessary amendments to this Power of Attorney in order to make the best and reasonable efforts to maintain the economic interests of the Attorney hereunder. |
4.4 |
Where the stock exchange of Hong Kong or NASDAQ of the United States or other regulatory agency proposes any amendment to this Power of Attorney, or where the listing rules or other relevant regulations, rules, codes, guidelines of Hong Kong or NASDAQ of the United States require amending this Power of Attorney or any arrangement hereunder, I shall amend this Power of Attorney accordingly in accordance with the requirements and instructions of the Attorney. |
(The remainder of this page is intentionally left blank)
[This page has no text and is the signature page of Power of Attorney]
IN WITNESS WHEREOF, this Power of Attorney was executed as of the date and place set forth at the beginning hereof.
Li Ni | ||
By: | /s/ Li Ni |
Signature page of Power of Attorney
Power of Attorney
Date: December 23, 2020
Place: Shanghai
I, Xu Yi, a citizen of the Peoples Republic of China with ID card no. ***, on the execution date of this Power of Attorney (hereinafter referred to as this Power of Attorney), holds 44.3080% equity of Shanghai Hode Information Technology Co., Ltd. (hereinafter referred to as the Company) corresponding to a capital contribution of RMB 4,871,011 (hereinafter referred to as the Target Equity).
Whereas:
1. |
Hode Shanghai Limited (hereinafter referred to as the Attorney), the related parties and I executed an Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) on December 23, 2020. When the laws of the Peoples Republic of China permit and the corresponding conditions are met, if the Attorney makes a purchase request according to its independent judgment: (a) I shall transfer all or part of my equity in the Company to the Attorney or its designated party at its request; (b) the Company shall, at its request, transfer all or part of its assets to the Attorney or to its designated party; |
2. |
The Attorney and the Company executed an Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement) on December 23, 2020, whereby the Attorney shall provide the Company with exclusive technical services, technical advice and other services; and |
3. |
I signed a Power of Attorney (hereinafter referred to as the Original Power of Attorney) on October 10, 2017. I hereby agree to amend and restate the terms and conditions of the Original Power of Attorney and agree to execute this Power of Attorney in lieu of the Original Power of Attorney. |
I hereby irrevocably authorize the Attorney to exercise the rights hereunder within the term hereof.
1. |
Entrusted Rights |
I unconditionally and irrevocably undertake to authorize the Attorney or, at the direction of the Attorney, to authorize the director of its direct or indirect overseas parent company it designated and a liquidator or any other successor acting for such director (except any person who is non-independent or who may cause any potential conflicts of interest)(hereinafter referred to as the Trustees) to exercise all the shareholder rights as a shareholder of the Company. Such rights (hereinafter referred to as the Entrusted Rights) include but are not limited to:
1) |
proposing, convening and attending the shareholders meeting of the Company in accordance with the Companys articles of association, and sign any and all written resolutions and minutes for and on my behalf, as my agent; |
2) |
exercising the rights of shareholders to vote, to appoint directors and amend the articles of association I am entitled to according to the PRC laws (including any laws, regulations, rules, notices or other legally binding documents issued by any central or local legislative, administrative or judicial authority of Mainland China prior to or after the signing of this Power of Attorney, hereinafter referred to as the PRC Laws) and the articles of association of the Company (including any other voting rights as stipulated in the amended articles of association); taking over or managing the business of the Company, dissolving or liquidating the Company; forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group during the liquidation period according to law; |
3) |
nominating, designating, appointing or replacing, on behalf of me, the legal representative, board chairman, directors, supervisors of the Company and other senior management officers who shall be appointed or removed by the shareholder (or the shareholders meeting), in accordance with the articles of association of the Company; instituting proceedings against, or taking other legal actions against, the directors, supervisors or senior management officers of the Company when their actions impair the interests of the Company or its shareholders; |
4) |
signing the relevant equity transfer agreement, asset transfer agreement, resolution of the shareholders meeting/shareholders decision and other relevant documents on my behalf, and handling the procedures of government approval, registration and filing required for the transfer, when I transfer the shares of the Company under the Exclusive Option Agreement and agree to transfer the assets of the Company; and |
5) |
signing the minutes of the meeting, written resolutions and/or other relevant documents of the shareholders meeting and filing the documents with the competent administration for market regulation and any other governmental authority. |
2. |
Representations and Warranties Related to the Entrusted Rights |
2.1 |
I undertake not to engage in any action in violation of the purpose or intention of this Power of Attorney nor use the information obtained from the Attorney to cause the conflict between the interest of the Attorney and its shareholders. |
2.2 |
I undertake that the authorization hereunder will not lead to a real or potential conflict of interest between me and the Attorney. If there is a potential conflict of interest between me and the Attorney or the direct or indirect overseas parent company of the Attorney or any other subsidiary of such overseas parent company, without conflict with the PRC Laws, I will give a priority to the protection and will not harm the interests of the Attorney or the direct or indirect overseas parent company of the Attorney. In the event that I am a director or senior management officer of the Attorney or direct or indirect overseas parent company of the Attorney, I will authorize the Attorney or, at the direction of the Attorney, any other director or senior management officer other than me to exercise the rights hereunder. |
2.3 |
I undertake that, without the prior written consent of the Attorney, I will not, in any way, directly or indirectly participate in, engage in any business that has or may compete with the business of the Attorney, the Company and any company under the control of the Attorney or the Company, or hold the rights, interests and assets of any relevant entity that has or may have a competitive business with the Attorney, the Company and any company under the control of the Attorney or the Company, and that the Attorney will have the right to ultimately determine whether or not I have or may have any of the above circumstances. |
2.4 |
I hereby undertake that, in the event of bankruptcy, liquidation, dissolution or termination of the Company, all the assets, including the equity of the Company, acquired by me after the bankruptcy, liquidation, dissolution or termination of the Company, will be transferred to the Attorney or the party designated by the Attorney free of charge or at the lowest price permitted by Chinese law at that time or will be disposed of by the liquidator at that time on the basis of the protection of the interests of the direct or indirect shareholders and/or creditors of the Attorney. |
2.5 |
I agree that the Attorney will have the right to entrust the Trustees with matters under Article 1 hereof. The Trustees and/or the Attorney exercise the Entrusted Rights as I personally exercise the rights of shareholders. The authorization and entrustment of such Entrusted Rights shall be based on the precondition that the person designated by the Attorney is the director of its direct or indirect overseas parent company and the liquidator or other successor acting as such director, and I agree to the above authorization and entrustment. When the Attorney gives me a written notice to replace the Trustees, I will immediately appoint other entities or Chinese citizens designated by the Attorney and to the satisfaction of the Trustees at that time to exercise the above Entrusted Rights. The new authorization in line with this Power of Attorney may replace the original authorization once it is made. In addition, I will not revoke the entrustment and authorization made to the Trustees and/or the Attorney. |
2.6 |
I will acknowledge and approve any legal consequence arising from the exercise of the above Entrusted Rights by the Trustees and/or the Attorney in accordance with this Power of Attorney and will bear the corresponding legal liability. |
2.7 |
All the actions of the Trustees and/ or the Attorney relating to the equity of the Company and/or the other Entrusted Rights shall be the actions of mine. All the meeting minutes and resolutions of the shareholders meeting or shareholders decisions, as appropriate, signed by the Trustees and/ or the Attorney shall be deemed to be signed by me. The Trustees and/or the Attorney may act according to their own will without prior consent of mine, but after the resolution of the shareholders meeting or the decision of the shareholder (as the case may be), the Trustees and/or the Attorney shall inform me in time. I hereby acknowledge and approve such acts and/or documents of the Trustees and/or the Attorney. |
2.8 |
During the term of this Power of Attorney, I agree and acknowledge that I will not exercise all the rights relating to the equity of the Company authorized to the Trustees and/or the Attorney herein without the prior written consent of the Attorney. |
2.9 |
In the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other occurrence that may affect the exercise of the Companys equity rights held by me, the shareholder or transferee holding the original Target Equity of mine shall be deemed to be a party hereto, inheriting/assuming all my rights and obligations hereunder. |
3. |
Entrustment Term |
3.1 |
This Power of Attorney shall take effect from the execution date and shall be irrevocable and shall remain in force unless the Attorney gives the contrary written instruction, or this Power of Attorney terminates in accordance with Article 3.2 hereof. |
3.2 |
This Power of Attorney will be automatically terminated on the date on which the Attorney or the relevant party designated by the Attorney is registered as the sole shareholder of the Company, once the PRC Laws allow the Attorney or the Attorneys direct or indirect overseas parent company or a subsidiary directly or indirectly controlled by the Attorneys foreign parent company to directly hold shares in the Company and legally engage in the Companys business. |
4. |
Applicable Law and Dispute Settlement |
4.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Power of Attorney and the settlement of disputes hereunder shall be governed by the PRC Laws. |
4.2 |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Attorney and I. If the Attorney and I fail to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other Parties to settle such dispute through negotiation, any Party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Attorney and I. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The arbitral tribunal may rule on the Companys equity interests, assets or property interests as the compensation or satisfaction to the Attorney for the losses caused by the breach of contract hereunder, rule on injunctive relief in respect of the relevant business or asset transfer, or order the Company to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where the Company is incorporated and where the Company or the Attorneys main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of the Companys business, restrictions on and/or disposition of the Companys equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of the Company, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling that the breaching party not to carry out acts that may lead to further expansion of the loss suffered by the Attorney. |
4.3 |
After the execution of this Power of Attorney, if at any time, due to the promulgation or change of any PRC Laws, or due to the change of interpretation or application of such PRC Laws, the following provisions shall apply: if the change of law or the newly promulgated provisions directly or indirectly materially affect the economic interests of the Attorney hereunder, the Attorney and I shall consult in time and make all necessary amendments to this Power of Attorney in order to make the best and reasonable efforts to maintain the economic interests of the Attorney hereunder. |
4.4 |
Where the stock exchange of Hong Kong or NASDAQ of the United States or other regulatory agency proposes any amendment to this Power of Attorney, or where the listing rules or other relevant regulations, rules, codes, guidelines of Hong Kong or NASDAQ of the United States require amending this Power of Attorney or any arrangement hereunder, I shall amend this Power of Attorney accordingly in accordance with the requirements and instructions of the Attorney. |
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[This page has no text and is the signature page of Power of Attorney]
IN WITNESS WHEREOF, this Power of Attorney was executed as of the date and place set forth at the beginning hereof.
Xu Yi | ||
By: | /s/ Xu Yi |
Signature page of Power of Attorney
Equity Pledge Agreement
This Equity Pledge Agreement (hereinafter referred to as this Agreement) is made and entered into by and among the following parties in Shanghai, China on December 23, 2020:
Party A: | HODE SHANGHAI LIMITED, a wholly foreign-owned enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 4031, 4/F, Building 1, No. 310 Fasai Road, China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the Pledgee). | |
Party B: | XU YI, a citizen of the PRC with ID card no. ***; | |
CHEN RUI, a citizen of the PRC with ID card no. ***; | ||
LI NI, a citizen of the PRC with ID card no. ***; | ||
(collectively referred to as the Pledgor). | ||
Party C: | SHANGHAI HODE INFORMATION TECHNOLOGY CO., LTD., a limited liability enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 905-906, No. 2277-1 Zuchongzhi Road, China (Shanghai) Pilot Free Trade Zone. |
In this Agreement, the Pledgee, the Pledgor and Party C shall hereinafter be individually referred to as a Party and collectively as the Parties.
Whereas:
1. |
Party C is a limited liability company registered in Shanghai, China, with a registered capital of RMB10,993,539. The Pledgor are shareholders of Party C on the execution date hereof and collectively hold a total of 100% shares in Party C, of which XU YI holds 44.3080%, CHEN RUI holds 52.3030%, and LI NI holds 3.3890%. |
2. |
The Pledgee is a wholly foreign-owned enterprise registered in Shanghai, China. The Pledgee and Party C executed an Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement), whereby the Pledgee shall provide Party C with exclusive technical services, technical advice and other services; and |
3. |
The related parties hereto executed an Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) on the execution date hereof. When the PRC Laws permit and the corresponding conditions are met, if the Pledgee makes a purchase request: (a) the Pledgor shall, at its request, transfer all or part of its equity in Party C to the Pledgee and/or to any other entity or individual it designates; (b) Party C shall, at its request, transfer all or part of its assets to the Pledgee and/or to any other entity or individual it designates; |
4. |
The Pledgor has executed a Power of Attorney (hereinafter referred to as the Power of Attorney) on the execution date hereof, and the Pledgor irrevocably entrusts the Pledgee and/or the person designated by it at that time to exercise on behalf of the Pledgor all the voting rights of the shareholders held by it in Party C; and |
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5. |
Party A, Party B and Party C intend to execute this Agreement on the equity pledge provided by Party B to Party A, as the security for the performance of the Contractual Obligations (as defined below) and the settlement of the Secured Indebtedness (as defined below) by the Pledgor, and the Pledgor shall pledge to the Pledgee all the shares in Party C held by the Pledgee. |
1. |
Definitions |
Unless otherwise defined by the Agreement, the following words herein shall have the meanings as follows:
1.1 |
Pledge shall mean the Security Interest granted by the Pledgor to the Pledgee under Article 2 hereof, i.e. the right the Pledgee is entitled to and to be repaid firstly with the discount, conversion, auction or sale price of the equity pledged by the Pledgor to the Pledgee. |
1.2 |
Equity shall mean all the equity in Party C that is held and may be disposed of by the Pledgor at the time of entry into force of this Agreement and is pledged to the Pledgee in accordance with this Agreement as security for the performance of its Contractual Obligations and Secured Indebtedness with Party C (including all the equity interests owned by the Pledgor at present and constituting all the registered capital of Party C and all the equity interests held by the Pledgor in any form from time to time for any reason in the future) and any additional equity in accordance with Article 6.5 hereof. |
1.3 |
Pledge Term shall mean the term as defined in Article 3 hereof. |
1.4 |
Default Event shall mean any circumstance as set forth in Article 7 hereof. |
1.5 |
Default Notice shall mean the notice delivered by the Pledgee according to this Agreement to declare Default Event. |
1.6 |
Contractual Obligations shall mean all the Contractual Obligations of the Pledgor under the Exclusive Option Agreement and all the obligations under the Power of Attorney; all the Contractual Obligations of Party C under the Business Cooperation Agreement and the Exclusive Option Agreement; and all the Contractual Obligations of the Pledgor and Party C hereunder. |
1.7 |
Original Transaction Agreements shall mean the Exclusive Option Agreement, the Exclusive Technology Consulting and Services Agreement and the Power of Attorney signed by the Pledgee, the Pledgor and/or Party C on October 10, 2017. |
1.8 |
Original Pledge Agreement shall mean the Equity Pledge Contract signed by the Pledgee and the Pledgor on October 10, 2017. |
1.9 |
Transaction Agreements shall mean the Business Cooperation Agreement, Exclusive Option Agreement and the Power of Attorney, and shall be the revision and restatement of the Original Transaction Agreements. |
1.10 |
Secured Indebtedness shall mean (a) all the payments due to the Pledgee by Party C and/or the Pledgor (including but not limited to, consultancy and service fees payable to the Pledgee under the Transaction Agreements and any payment (whether on the specified maturity date, through prepayment or otherwise) and its interest, liquidated damages (if any), indemnity and attorneys fee, arbitration fee, equity assessment and auction fee and other fees to realize the Pledge); (b) all direct, indirect, derivative and foreseeable losses suffered by the Pledgee as a result of any breach of contract by the Pledgor or Party C, the amount of which shall be based on, but not limited to, the reasonable business plan and profit forecast of the Pledgee; and (c) all costs incurred by the Pledgee in enforcing the Pledgor and/or Party C to perform their/its Contractual Obligations. |
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1.11 |
PRC Laws shall mean the laws, regulations, rules, notices or other legally binding documents issued by any central or local legislative, administrative or judicial authority of Mainland China prior to or after the execution of this Agreement. |
1.12 |
Security Interest shall include mortgage, pledge, lien and any security over third party right or interest, any equity interest call option, acquisition right, right of first refusal, set-off right, ownership retention or other security arrangements. |
2. |
Pledge |
2.1 |
As a guarantee for the timely and complete payment of the Secured Indebtedness and the performance of the Contractual Obligations, the Pledgor hereby pledge the equity to the Pledgee who shall be repaid in the first order as agreed in this Agreement. Party C agrees that the Pledgor will pledge the equity to the Pledgee in accordance with this Agreement. |
2.2 |
The Parties understand and agree that the valuation of the currency resulting from or associated with the Secured Indebtedness until the date of final accounts (as defined in Article 2.4) is a variable and floating valuation. The Pledgor and the Pledgee may, by agreement of the Parties to amend and supplement this Agreement, adjust and confirm from time to time the maximum amount of the Secured Indebtedness to be secured before the Date of Final Accounts due to the change in the valuation of the Secured Indebtedness and the equity currency. |
2.3 |
In any of the following events (hereinafter referred to as Event of Final Accounts), the value of the Secured Indebtedness shall be determined on the basis of the total amount of the Secured Indebtedness due and unpaid by Party C and/or the Pledgor to the Pledgee on the Date of the Event of Final Accounts (hereinafter referred to as the Determined Indebtedness): |
(a) |
Where the Business Cooperation Agreement, the Exclusive Option Agreement or the Power of Attorney is terminated in accordance with the relevant provisions thereunder, resulting in the Pledgee serving to the Pledgor a written notice determining the Secured Indebtedness; |
(b) |
Where a Default Event under Article 7 hereof has occurred and has not been resolved, resulting in the Pledgee serving a Default Notice to the Pledgor in accordance with Article 7.3; |
(c) |
Where the Pledgee, through an appropriate investigation, reasonably believes that the Pledgor and/or Party C are/is insolvent or may be insolvent; or |
(d) |
Any other event requiring the determination of the Secured Indebtedness in accordance with the provisions of the PRC Laws. |
2.4 |
For the avoidance of doubt, the date of occurrence of the Event of Final Accounts shall be the date of final accounts (hereinafter referred to as the Date of Final Accounts). The Pledgee shall have the right to realize the pledge in accordance with Article 8 on or after the Date of Final Accounts. |
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2.5 |
During the Pledge Term, the Pledgee shall have the right to deposit any bonus, dividend or any other distributable benefit arising from the equity (hereinafter referred to as Interest) and to use it for the priority repayment of the Secured Indebtedness. The Pledgor shall, upon receipt of the written request of the Pledgee, deposit (or induce Party C to deposit) the Interest into the account designated in writing by the Pledgee, subject to the supervision of the Pledgee; the above Interest deposited in the account designated by the Pledgee in writing shall not be withdrawn by the Pledgor without the written consent of the Pledgee. |
2.6 |
During the term of this Agreement, the Pledgee shall not be liable for any reduction in the value of the equity unless due to the intentional or gross negligence of the Pledgee, and the Pledgor shall not have the right to pursue or make any claim against the Pledgee in any form. |
2.7 |
The equity pledge established hereunder is a continuous guarantee and its validity shall extend until any one of the circumstances as listed in Article 3.1 hereof happens. Any waiver or concession of any breach of contract by the Pledgor or any delay in the exercise by the Pledgee of any of its rights under the Transaction Agreements and this Agreement shall not affect the rights of the Pledgee under this Agreement, the Transaction Agreements and the relevant RPC Laws at any time thereafter to require the Pledgor and Party C to strictly perform their obligations under the Transaction Agreements and this Agreement or to exercise the rights of the Pledgee as a result of the subsequent breach of the Transactions Agreements and/or this Agreement by the Pledgor and Party C. |
3. |
Pledge Term |
3.1 |
The Pledge shall take effect from the date of registration of the pledged equity under this Agreement at the competent administration for market regulation (hereinafter referred to as the Registry) in the place where Party C is located, the term of the pledge (hereinafter referred to as the Pledge Term) shall be from the above effective date until: (a) the last Secured Indebtedness and Contractual Obligation secured by the pledge is fully repaid and fulfilled; (b) the Pledgee decides, subject to the PRC Laws, to purchase all the equity of Party C held by the Pledgor in accordance with the Exclusive Option Agreement, and all the equity of Party C has been transferred to the name of the Pledgee and/or its designated party, the Pledgee and/or its designated party and its subsidiaries and branches may legally engage in the business of Party C with above equity according to law; or (c) the Pledgee decides, subject to the PRC Laws, to purchase all the assets of Party C in accordance with the Exclusive Option Agreement, and all the assets of Party C have been transferred to the name of the Pledgee and/or its designated party, the Pledgee and/or its designated party and its subsidiaries and branches may legally engage in the business of Party C with above assets according to law; or (d) the Pledgee unilaterally requests the termination of this Contract (the right of the Pledgee to terminate this Agreement is the right without any restrictive conditions, and the right only belongs to the Pledgee, and the Pledgor or Party C does not have the right to terminate this Agreement unilaterally); or (e) the pledge shall be terminated in accordance with the applicable laws and regulations of China. |
3.2 |
During the Pledge Term, if the Pledgor and/or Party C fail to perform their Contractual Obligations or repay the Secured Indebtedness (including but not limited to the failure to pay the service fee in accordance with the Business Cooperation Agreement or failure to fulfill any other provision of any transaction agreement), the Pledgee shall have the right other than the obligation to dispose of the Pledge in accordance with this Agreement. |
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4. |
Registration of Pledge and Custody of Equity Records |
4.1 |
The Parties acknowledge that this Agreement and the Transaction Agreement are re-signed for the revision of the Original Pledge Agreement and the Original Transaction Agreements. Prior to the execution of this Agreement, the Parties have completed the registration of the equity pledge at the Registry for the Original Pledge Agreement. The Parties agree that, as this Agreement and the Original Pledge Agreement are consistent such registered matters as the company of the pledged equity, the amount of the pledged equity, the Pledgee, the part of the equity having already completed the pledge registration may not have a second equity pledge registration. In order to avoid ambiguity, for the purpose hereof, if any provision of the Original Pledge Agreement conflicts with any provision of this Agreement, the provision of this Agreement shall prevail, and the provision of the Original Pledge Agreement that does not conflict with this Agreement shall continue to be valid. In respect of the pledged equity due to change in Party Cs equity after the execution of the Original Pledge Agreement, for purpose of the registration of the equity pledge at the competent administration for industry and commerce, the Parties may sign a separate equity pledge registration agreement (hereinafter referred to as the Equity Pledge Registration Agreement). In order to avoid ambiguity, in the event of any conflict between the Equity Pledge Registration Agreement and this Agreement, this Agreement shall prevail. |
4.2 |
Within the Pledge Term as set forth herein, Party C/the Pledgor shall deliver the original of the certificate of equity contribution, the register of shareholders bearing the Pledge (in the form as set forth in Annex I) (and other documents reasonably required by the Pledgee, including but not limited to the registration notice of equity pledge establishment issued by the competent administration for market regulation) to the Pledgee for custody. The Pledgee shall keep such documents throughout the Pledge Term as provided herein. |
5. |
Representations and Warranties of the Pledgor and Party C |
The representations and warranties of the Pledgor to the Pledgee are as follows:
5.1 |
The Pledgor is a natural person with full capacity for civil conduct and capacity for civil rights, and has the right to execute, deliver and perform this Agreement, and can act as an independent subject of litigation. |
5.2 |
The Pledgor is the legal and beneficial owner of the Equity of Party C, and the Pledgor has the full right and capability to pledge the Equity to the Pledgee in accordance with the provisions of this Agreement, and the Pledgor has the right to dispose of the Equity and any part thereof. Except subject to this Agreement and the Transaction Agreements between the Pledgor and the Pledgee, it has legal and complete ownership of the Equity. |
5.3 |
The Pledgee shall have the right to dispose of and transfer the Equity as specified in this Agreement. |
5.4 |
Except for the Pledge hereunder, the Pledgor does not create any Security Interests or other encumbrance on the Equity, there is no dispute over the ownership of the Equity, there are no subscribed contributions, taxes, fees payable but unpaid in connection with the Equity, the Equity is not subject to any seizure or other legal proceedings or a similar threat and may be used for pledge and transfer under the applicable law. |
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5.5 |
The execution of this Agreement by the Pledgor and the exercise of its rights hereunder or the performance of its obligations hereunder shall not violate or contravene the PRC Laws, any judicial decisions, rulings of any arbitration agency, decisions of any administrative agency, any agreement or contract to which the Pledgor is a party or which is binding on its assets, or any undertaking made by the Pledgor to any third party. |
5.6 |
All documents, information, statements and documents provided by the Pledgor to the Pledgee, whether provided before or after the entry into force hereof and during the Pledge Term, are true, accurate, complete and valid. |
5.7 |
This Agreement constitutes a legal, valid and binding obligation to the Pledgor after this Agreement is duly executed by the Pledgor and has entered into force in accordance with the terms of this Agreement. |
5.8 |
The Pledgor has the full right and authority to execute and deliver this Agreement and all other documents relating to the transactions contemplated herein which it will execute, and to complete the transactions contemplated herein. |
5.9 |
Except for the registration of the creation of an equity pledge required to be made with the Registry, the consent, permission, waiver, authorization of any third party or the approval, permission, exemption of any governmental registry or filing formalities with any governmental agency (if required by law) as required for the execution and performance of this Agreement and the entry into force of the equity pledge hereunder have been obtained and shall remain in force and effect for the term hereof. |
5.10 |
The Pledge under this Agreement constitutes a first ranking Security Interest on the Equity. |
5.11 |
There are no pending or, to the knowledge of the Pledgor, threatened actions, legal proceedings or claims before any court or arbitral tribunal, and before any governmental authority or administrative authority against the Pledgor or its assets or Equity, which will have a material or adverse effect on the economic conditions of the Pledgor or the Pledgors ability to perform its obligations and security liability under this Agreement. |
5.12 |
Except as otherwise provided herein, there shall be no interference from any other party at any time upon the exercise by the Pledgee of the Pledge under this Agreement. |
The representations and warranties of Party C to the Pledgee are as follows:
5.13 |
Party C is a limited liability company incorporated and legally existing under the laws of China. It has the status of an independent legal person, can act independently as the subject of litigation of one party, has full and independent legal status and legal capacity, and has been duly authorized to sign, deliver and perform this Agreement. |
5.14 |
This Agreement constitutes a legal, valid and binding obligation to Party C after this Agreement is duly executed by Party C and has entered into force in accordance with the terms of this Agreement. |
5.15 |
Party C has the full right and authority to execute and deliver this Agreement and all other documents relating to the transactions contemplated herein which it will execute, and to complete the transactions contemplated herein. |
5.16 |
For assets owned by Party C, there is no significant Security Interest or other property right burden that may affect the rights and interests of the Pledgee in the equity (including but not limited to, any transfer of intellectual property or any assets worth more than RMB1 million of Party C, or any property right or right of use attached to such assets). |
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5.17 |
There are no pending or, to the knowledge of Party C, threatened actions, arbitration, administrative proceedings, administrative penalties or other legal proceedings before any court or arbitral tribunal, and before any governmental authority or administrative authority against the Equity, Party C or its assets, which will have a material or adverse effect on the economic conditions of Party C or the ability of the Pledgor or Party C to perform its obligations and security liability under this Agreement. |
5.18 |
The execution of this Agreement by Party C and the exercise of its rights hereunder or the performance of its obligations hereunder shall not violate or contravene the PRC Laws, any judicial decisions, rulings of any arbitration agency, decisions of any administrative agency, any agreement or contract to which Party C is a party or which is binding on its assets, or any undertaking made by Party C to any third party. |
5.19 |
All the documents, information, statements and certificates provided by Party C for the Pledgee, whether provided before or after the entry into force hereof and during the Pledge Term, are true, accurate, complete and valid. |
5.20 |
Except for the registration of the creation of an equity pledge required to be made with the Registry, the consent, permission, waiver, authorization of any third party or the approval, permission, exemption of any governmental registry or filing formalities with any governmental agency (if required by law) as required for the execution and performance of this Agreement and the entry into force of the equity pledge hereunder have been obtained and shall remain in force and effect for the term hereof. |
5.21 |
The Pledge under this Agreement constitutes a first ranking Security Interest on the Equity. |
5.22 |
Party C hereby warrants to the Pledgee that the above representations and warranties are true and correct at any time before the full performance of the Contractual Obligations or the full settlement of the Secured Indebtedness and will be fully complied with. |
6. |
The Undertakings and Further Agreement of the Pledgor and Party C |
The Undertakings and Further Agreement of the Pledgor are as follows:
6.1 |
During the term of this Agreement, the Pledgor hereby undertakes to the Pledgee that: |
6.1.1 |
Except for the performance of the Exclusive Option Agreement, without the prior written consent of the Pledgee, the Pledgor will not carry out or consent to the transfer of all or any part of the Equity, create or permit the existence of any Security Interest or other encumbrance that may affect the rights and interests of the Pledgee in the Equity. In terms of the equity transfer as approved by the Pledgee, the Pledgor shall first use the proceeds from the transfer of the Equity to pay off the Secured Indebtedness to the Pledgee in advance; |
6.1.2 |
The Pledgor will comply with and implement all the PRC Laws applicable to the pledge of the Equity and shall, within five (5) days after receiving any notice, order or recommendation on the Pledge issued or made by the competent authority concerned (or any other relevant authority), present such notice, order or recommendation to the Pledgee and will comply with such notice, order or recommendation or make objections and statements on the above matter at the reasonable request of the Pledgee or with the consent of the Pledgee. |
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6.1.3 |
The Pledgor will notify immediately the Pledgee of any event that may affect the rights of the Pledgee or any part thereof or the interests of the Pledgee under the Transaction Agreement and this Agreement (including but not limited to, any legal action, arbitration, other request, any third partys ownership dispute over the equity, or any other adverse effect on the Pledgees rights by or from any third party, any civil or criminal proceedings, administrative proceedings, arbitration or any other legal proceedings against the Pledgor or the equity, or any threat of any such action, arbitration or any other legal proceedings to the knowledge of the Pledgor) or any notice received by the Pledgor, any event that may affect any warranty or any other obligation arising from the Pledgor in this Agreement or any notice received by the Pledgor, and take all necessary measures to ensure the pledge interest of the Equity of the Pledgee in accordance with the reasonable requirements of the Pledgee. |
6.2 |
In order to protect or improve the Security Interests granted in this Agreement in the settlement of the Secured Indebtedness and in the performance of the Contractual Obligations, and to ensure the Pledgees interest in the Equity and the exercise and realization of such rights, the Pledgor hereby undertakes to execute in good faith and to cause other parties holding interests in the Equity to execute all documents (including but not limited to, supplementary agreements hereto), certificates, agreements, deeds and/or undertakings required by the Pledgee. |
6.3 |
The Pledgor hereby undertakes to the Pledgee that all warranties, undertakings, agreements, statements and conditions hereunder will be complied with and fulfilled. If the Pledgor fails to fulfil all or part of its undertakings, commitments, agreements, statements and conditions, the Pledgor shall indemnify the Pledgee for all losses suffered as a result. |
6.4 |
If the equity relates to any property preservation, enforcement or any coercive measure imposed by the court or any other governmental agency for any reason, or if the value of the equity is reduced or lost in any way sufficient to endanger the rights of the Pledgee, the Pledgor shall immediately notify the Pledgee in writing of such circumstances and take effective measures to safeguard the rights and interests of the Pledgee, including but not limited to the provision of additional property for mortgage or security. If the Pledgee fails to do so, the Pledgee may auction or sell the equity at any time, and use the price of the auction or sale to pay off the Secured Indebtedness or deposit in advance; any expenses arising therefrom shall be borne by the Pledgor. |
6.5 |
Without the prior written consent of the Pledgee, Party C shall not increase or decrease the registered capital, and the Pledgor shall not transfer the equity of Party C or impose any Security Interest, or any other encumbrance on it. Subject to this provision, the equity rights of Party C acquired by the Pledgor after the date of execution of this Agreement (that is, the future equity of Party C (including but not limited to the equity corresponding to the expanded registered capital formed by the capital increase) held by the Pledgor from time to time during the term of this Agreement, hereinafter referred to as the Additional Equity) shall also belong to the equity pledged by the Pledgor to the Pledgee in accordance with this Agreement. The Pledgor and Party C shall sign a supplementary Equity Pledge Agreement with the Pledgee on the Additional Equity before or at the same time as the Pledgor acquires the Additional Equity, and prompt the board of directors or executive director of Party C (as the case may be) and the shareholders meeting or shareholder of Party C (as the case may be) to approve the supplementary Equity Pledge Agreement, and shall submit to the Pledgor all documents required for the supplementary Equity Pledge Agreement, including but not limited to: (a) the original shareholder contribution certificate issued by Party C on the Additional Equity; (b) the register of shareholders recording the Additional Equity and pledge rights; and (c) other documents reasonably required by the Pledgee. The Pledgor and Party C shall, in accordance with the provisions of this Agreement, register the establishment (or change) of Additional Equity and deliver the relevant documents to the Pledgee for custody. |
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6.6 |
Unless the Pledgee has previously issued a written instruction to the contrary, the Pledgor and/or Party C agree that, if part or all of the equity is transferred between the Pledgor and any third party (hereinafter referred to as the Equity Transferee), the Pledgor and/ or Party C shall ensure that the Equity Transferee will unconditionally recognize the pledge and perform the necessary registration procedures for the change of pledge (including but not limited to, execution of the relevant documents) to ensure the existence of the Pledge. If the equity transfer referred to in this Article is a transfer in violation of this Agreement, the performance of the provisions of this Article by the Pledgor and/or Party C shall not be deemed to have waived the prosecution of the Pledgor and/or Party C for breach of contract. The Pledgee hereby expressly reserves the right to investigate the breach of contract by the Pledgor and/or Party C. |
6.7 |
If any transfer of equity arises as a result of the exercise of the Pledge hereunder, the Pledgor undertakes it will take all measures to achieve such transfer. |
6.8 |
Unless the Pledgee agrees, the Pledgor shall not dispose of the equity by any means, such as transfer, sale, pledge or mortgage, and/or give up the Interest arising from the holding of the equity, until the performance of the Contractual Obligations has been completed and the Secured Indebtedness has been fully paid off or this Agreement is cancelled. |
6.9 |
The Pledgor shall not execute any documents or make any relevant undertakings which are in conflict with any agreement or any other legal document that is executed and being performed by Party C and/or the Pledgee and/or its Affiliate; the Pledgor shall not cause any conflict of interest between the Pledgor and the Pledgee as well as its shareholders through any act or omission. In case of any such conflict of interest (the Pledgee shall have the right to decide unilaterally whether such conflict of interest arises), the Pledgor shall take measures in a timely manner to eliminate it as soon as possible with the consent of the Pledgee and/or its Affiliates. If the Pledgor refuses to take measures to eliminate the conflict of interest, the Pledgee shall be entitled to exercise its Call Options under the Exclusive Option Agreement; |
6.10 |
If, in accordance with applicable law, any amendment, supplement or renewal in respect of this Agreement shall take effect upon signature or seal by the Parties, the Pledgor shall, within five (5) days from the date of completion of such amendment, supplement or renewal, register such changes with the competent Registry. |
6.11 |
The Pledgor has made all appropriate arrangements and signed all necessary documents to ensure that in the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other circumstance that may affect the exercise of its equity, its heir, agent, guardian or shareholder or transferee holding the equity of Party C at that time shall be deemed to be a Party hereto, inheriting and assuming all the rights and obligations of the Pledgor hereunder. |
6.12 |
The Pledgor agrees to execute an irrevocable Power of Attorney granting all rights as the shareholder of Party C to Party A or the entity or individual designated of Party A, who may vote on all matters requiring the discussion of the shareholders meeting or decision of the shareholder (as the case may be), resolution by the shareholders meeting, and make and execute resolutions, minutes of meetings and other relevant documents, including but not limited to: appointing and electing directors, supervisors, and other senior management officers to be appointed and removed by shareholder or the shareholders meeting; disposing of the assets of the company; and amending the articles of association; taking over or managing Party Cs business, or dissolving or liquidating Party C and forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group in the liquidation period in accordance with the law. |
9
The Undertakings and Further Agreement of Party C:
6.13 |
If the consent, permission, waiver, authorization of any third party or the approval, permission, exemption of any governmental agency or the registration or filing formalities with any governmental agency (if required by law) is required for the execution and performance of this Agreement and the entry into force of the equity pledge hereunder, Party C will try its best to assist in obtaining the same and make it remain in force for the term hereof. If the business term of Party C expires within the term hereof, Party C shall complete the registration procedures for the extension of the business term before the expiration of its business term to ensure the continuity of the effect of this Agreement. |
6.14 |
Without the prior written consent of the Pledgee, Party C shall not transfer or sell its assets or set or allow the existence of significant Security Interest or any other encumbrance that may affect the rights and interests of the Pledgee in the equity (including but not limited to, any transfer of intellectual property or any assets worth more than RMB1 million of Party C, or any property right or right of use attached to such assets). |
6.15 |
In the event of any legal action, arbitration or any other request that may adversely affect the interests of Party Cs equity or the interest of the Pledgee under the Transaction Agreements and this Agreement, Party C shall undertake to notify the Pledgee in writing as soon as possible and in a timely manner, and take all necessary measures to ensure the Pledgees rights and interests in the equity at the reasonable request of the Pledgee. |
6.16 |
Party C shall not carry out or permit any act or action that may adversely affect the interests or equity of the Pledgee under the Transaction Agreement and this Agreement. |
6.17 |
Within 60 business days after the end of each financial year (hereinafter referred to as the Previous Financial Year) or at the request of the Pledgee, Party C shall provide the Pledgee with the audited consolidated financial statements of Party C for the Previous Financial Year and other information on the operating results and financial position of Party C, including but not limited to the balance sheet, income statement, and cash flow statement. |
6.18 |
Party C undertakes it will take all necessary measures and sign all necessary documents in accordance with the reasonable requirements of the Pledgee to ensure the exercise and realization of the Pledgees pledge of equity and such rights and interests. |
6.19 |
In the event that Party C is dissolved or liquidated as required by the PRC Laws, this Agreement shall terminate, and Party C and the Pledgor shall, to the extent permitted by the PRC Laws, transfer all the assets, including the equity, to Party A free of charge or at the lowest price permitted by the PRC Laws, or the liquidator at that time disposes of all the assets, including the equity, on the basis of protecting the interests of shareholders and/or creditors of the direct or indirect overseas parent company of Party A. |
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6.20 |
Each Party separately warrants to the other Parties that once the PRC Laws permit and the Pledgee decides to purchase all the equity of Party C held by the Pledgor in accordance with the Exclusive Option Agreement and all the Secured Indebtedness and Contractual Obligations are fully paid and fulfilled, the Parties hereto shall immediately terminate this Agreement. |
7. |
Default Event |
7.1 |
A Default Event shall be deemed to occur: |
7.1.1 |
in case of the breach or non-performance by the Pledgor of any of its Contractual Obligations under the Exclusive Option Agreement, Power of Attorney and/or this Agreement, and the breach or non-performance by Party C of any of its Contractual Obligations under the Exclusive Option Agreement, Power of Attorney, Business Cooperation Agreement and/or this Agreement; |
7.1.2 |
if any representation or warranty made by the Pledgor in Article 5 of this Agreement contains false statement or error, and/or the Pledgor breaches any warranty in Article 5 hereof and/or any undertaking in Article 6 hereof; |
7.1.3 |
if the Pledgor and Party C fail to complete the registration/change of registration/Additional Equity pledge registration at the Registry as agreed in this Agreement; |
7.1.4 |
if the Pledgor and Party C violate any provisions or terms of this Agreement; |
7.1.5 |
if the Pledgors own loan, guarantee, compensation, undertaking or other liability to any third party (a) is required to be repaid or fulfilled in advance due to the Pledgors default; or (b) is due but can not be repaid or fulfilled as scheduled; |
7.1.6 |
if any approval, license, consent, permission or authorization of a governmental agency that makes this Agreement enforceable, legal and effective is withdrawn, suspended, invalidated or substantially altered; |
7.1.7 |
if the enactment of the applicable law makes this Agreement illegal or prevents the Pledgor from continuing to perform its obligations hereunder; |
7.1.8 |
if the adverse changes in the property owned by the Pledgor result in the view of the Pledgee that the ability of the Pledgor to fulfil its obligations hereunder has been affected; |
7.1.9 |
if Party C or its successor or trustee may only partially perform or refuse to perform their payment obligations under the Business Cooperation Agreement or the Pledgor and/or Party C may only partially or refuse to pay off the Secured Indebtedness; and |
7.1.10 |
in any other circumstance where the Pledgee is not able to or may not be able to exercise its rights on the Pledge. |
7.2 |
The Pledgor and Party C shall promptly notify the Pledgee upon knowledge or discovery of any of the circumstances referred to in Article 7.1 or any event that may lead to the above. |
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7.3 |
The Pledgee may, at the time of or at any time after the occurrence of the breach, give a Default Notice to the Pledgor and exercise all its remedies rights and powers under the PRC Laws, the Transaction Agreements and this Agreement, including but not limited to: |
(a) |
requiring the Pledgor and/or Party C to pay immediately all outstanding amounts due and payable under the Business Cooperation Agreement, all arrears under the transaction agreement and all other amounts due and payable to the Pledgee, and/or to repay the loan; and/or |
(b) |
Disposing of the Pledge as provided for in Article 8 of this Agreement and/or otherwise disposing of the equity to the extent permitted by law (including but not limited to, discounting all or part of the equity, or giving priority to the repayment of the debt to the Pledgee with the amount from the auction or sale of the Equity). |
The Pledgee has the right to choose to exercise any of the above rights on the basis of its independent judgment. In this case, the other parties hereto shall unconditionally agree to cooperate fully. The Pledgee is not responsible for any loss caused by its reasonable exercise of such rights and powers.
7.4 |
The Pledgee shall have the right to appoint its lawyer or any other agent in writing to exercise any and all of its rights and powers mentioned above, and neither the Pledgor nor Party C shall object to this. |
7.5 |
The Pledgee shall have the right to choose to exercise at the same time or successively any remedy for breach of contract, and the Pledgee shall not have to exercise other relief for breach of contract before exercising the right to auction or sell equity under this Agreement. |
8. |
Exercise of Pledge |
8.1 |
The Pledgee may give written notice to the Pledgor when exercising its Pledge. |
8.2 |
When the Pledgee exercises the Pledge, the Pledgee shall, within the scope permitted and in accordance with applicable PRC Laws, have the right to dispose of the equity in accordance with law. All the payments received by the Pledgee in the exercise of its Pledge shall be dealt with in the following order: |
(a) |
paying all the costs incurred in relation to the disposition of the Equity and the exercise of the rights by the Pledgee (including payment of the attorneys fee and the commission for the agent); |
(b) |
paying taxes due to the disposition of the equity; and |
(c) |
repaying the Secured Indebtedness to the Pledgee. |
8.3 |
When the Pledgee disposes of the Pledge in accordance with this Agreement, the Pledgor and Party C shall provide the necessary assistance to enable the Pledgee to enforce the Pledge in accordance with this Agreement. |
8.4 |
All actual expenses, taxes and fees and all legal expenses related to the establishment of equity pledge hereunder and the realization of the rights of the Pledgee shall be borne by Party C, except those to be borne by the Pledgee according to the PRC Laws; and the Pledgee shall have the right to deduct such expenses actually incurred in the exercise of its rights from the amount gained through exercise of its rights. |
8.5 |
The amount of the Secured Indebtedness determined by the Pledgee in the exercise of its equity pledge in accordance with this Agreement shall be used as final evidence to determine the Secured Indebtedness hereunder. |
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9. |
Transfer |
9.1 |
The Pledgor shall not transfer or assign their rights and obligations hereunder without the prior written consent of the Pledgee. |
9.2 |
The Pledgor and Party C agree that, subject to the PRC Laws, after the Pledgee has notified the Pledgor and Party C, the Pledgee may, in any way and on such terms and conditions as it deems appropriate, assign or transfer to any third party any right it may exercise under this Agreement, the Transaction Agreements and other security documents. |
9.3 |
This Agreement shall be binding on the Pledgor and Party C and their respective successors and permitted transferees, if any, and shall be valid for the Pledgee and each of its successors and transferees. |
9.4 |
At any time, if the Pledgee transfers any and all of its rights and obligations under the Transaction Agreements to any party it designates, the transferee shall have and assume the rights and obligations of the Pledgee hereunder as if it were a Party hereto. Where the Pledgee transfers the rights and obligations under the transaction agreement, at the request of the Pledgee, the Pledgor and/or Party C shall execute the relevant agreement or other documents relating to such transfer. |
9.5 |
If the Pledgee changes as a result of the transfer of the Transaction Agreement and/or this Agreement, at the request of the Pledgee, the Pledgor and Party C shall sign a new Equity Pledge Agreement with the new Pledgee on the same terms and conditions as this Agreement and register the pledge accordingly. |
9.6 |
The Pledgor shall strictly abide by this Agreement and any other contract signed jointly or separately by the Parties hereto or any of them, including the Transaction Agreements, perform its obligations under this Agreement and other contracts (including the Transaction Agreements), and refrain from acts/omissions that may affect their validity and enforceability. The Pledgor shall not exercise any of its remaining rights in respect of the Equity unless otherwise directed in writing by the Pledgee. |
10. |
Termination |
At the expiration of the Pledge Term, this Agreement shall terminate and release the equity pledge hereunder, and the Pledgor and Party C shall record the cancellation of the equity pledge in the register of shareholders of Party C, and shall register the cancellation of the equity pledge with the relevant registry. The reasonable expenses arising from the release of equity pledge shall be borne by the Pledgor and Party C. Articles 12, 13 and 19.6 of this Agreement shall survive termination hereof.
11. |
Service Charges and other Expenses |
Party C shall bear all costs and actual expenses relating to this Agreement, including but not limited to attorneys fees, certificate costs, stamp duties and any other taxes and expenses. If the applicable PRC Laws require the Pledgee to bear a number of related taxes and expenses, the Pledgor shall cause Party C to repay in full the taxes and expenses paid by the Pledgee.
13
12. |
Liability for Confidentiality |
The Parties acknowledge that any oral or written information they exchange in connection with this Agreement is confidential. The Pledgor and Party C shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of Pledgee, other than the information: (a) known to the public (but not disclosed to the public by any recipient);(b) required to be disclosed by applicable law or by the rules or regulations of any stock exchange; or (c) required to be disclosed by the Pledgor and Party C to their legal or financial advisers, who shall be bound by a confidentiality obligation similar to the obligations in this Article, in respect of transactions as contemplated herein. The disclosure of any confidential information by the staff or agencies employed by the Pledgor and Party C shall be deemed to be the disclosure of such confidential information by such Party, which shall be liable for breach of this Agreement. This Article shall remain in force regardless of the invalidity or termination of this Agreement for any reason.
13. |
Applicable Law and Dispute Settlement |
13.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and the settlement of disputes hereunder shall be governed by the law of the Peoples Republic of China. |
13.2 |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Parties. If the any Party fails to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other Parties to settle such dispute through negotiation, any Party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Parties. The arbitral tribunal may rule on Party Cs equity interests, assets or property interests as the compensation or satisfaction to the pledgee for the losses caused by the breach of contract by other Parties hereto, rule on injunctive relief in respect of the relevant business or asset transfer, or order Party C to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where Party C is incorporated and where Party C or the Pledgees main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including but not limited to, restrictions on the operation of Party Cs business, restrictions on and/or disposition of Party Cs equity interests, assets or property interests (including but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of Party C, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling for the breaching party not to carry out acts that may lead to further expansion of the loss suffered by the Pledgee. |
13.3 |
In the event of any dispute arising from the interpretation and performance of this Agreement or any dispute being arbitrated, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder, except in the matter in dispute. |
14
13.4 |
After the date of execution hereof, if at any time, as a result of the promulgation of or change in any PRC Laws, statutes or regulations, or as a result of the interpretation or application of such PRC Laws, statutes or regulations, the following agreements shall apply: to the extent permitted by the PRC Laws, (a) if the change in law or the newly promulgated provisions are more favorable to the Pledgee than the relevant PRC Laws, statutes and regulations in force on the date of execution hereof (while the other Parties are not seriously adversely affected), the Parties shall promptly apply for benefits arising from the change or new provisions and do their best to obtain the approval of such application; or (b) if the Pledgees economic interests under this Agreement are directly or indirectly adversely affected by the above legal changes or newly promulgated provisions, this Agreement shall continue to be performed in accordance with the original terms, and the parties shall use all legal means to waive compliance with such change or provisions. If the adverse effects on the Pledgees economic interests can not be resolved in accordance with this Agreement, the Parties shall promptly negotiate and make all necessary amendments to this Agreement in order to maintain the Pledgees economic interests hereunder. |
14. |
Force Majeure |
14.1 |
Force Majeure means an event which is unforeseeable, unavoidable and insurmountable and which renders any partial or total default under this Agreement by one Party hereto. Such Force Majeure events include, but are not limited to, earthquakes, typhoons, floods, wars, strikes, riots, government actions, changes in legal provisions or the applicability of the legal provisions. |
14.2 |
In event of a Force Majeure event, the obligation of one party to be affected by such event under this Agreement shall automatically be suspended during the delay caused by such event, and its performance shall be automatically extended for the period of suspension. The party shall not be punished or liable for this. In the event of force majeure, the Parties shall immediately negotiate a fair solution and make every reasonable effort to minimize the impact of force majeure. |
15. |
Notices |
15.1 |
All notices and other correspondences required or permitted to be given under this Agreement shall be sent personally, by registered mail with postage prepaid, courier service, facsimile or e-mail to the address, fax number or e-mail of the other Party hereto as listed in Annex II hereto. An additional confirmation shall be sent by e-mail for each notice. Such notice shall be deemed to be duly served on: |
(1) |
If sent personally, by registered mail with postage prepaid, courier service, on the date of acceptance or refusal thereof at the recipients address specified for such notice; |
(2) |
If sent by fax, on the date of successful transmission (as evidenced by automatically generated confirmation of transmission); |
(3) |
If sent by e-mail, on the date of successful transmission. |
15.2 |
Any Party may, in accordance with the terms of this Article, change its receiving address, fax and/or email address at any time by giving notice to other Parties hereto. |
15
16. |
Severability |
If one or more of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any way under any applicable law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultations in good faith, seek to replace such invalid, illegal or unenforceable provisions with valid provisions to the maximum extent permitted by law and expected by the Parties, and the economic effects of such valid provisions shall be as similar as those of such invalid, illegal or unenforceable provisions to the extent possible.
17. |
Annex |
The annexes to this Agreement shall constitute an integral part of this Agreement.
18. |
Entry into force, Amendment, Modification, Supplementation and Counterparts |
18.1 |
This Agreement shall take effect from the date when the Parties hereto sign hereonto, and the pledge of the Equity hereunder shall take effect from the date of completion of the relevant registration procedures by the Registry. |
18.2 |
Any amendment, modification and supplement in respect of this Agreement shall be made in writing and shall take effect upon signature or seal by the Parties. |
18.3 |
Where the stock exchange or other regulatory agency of Hong Kong or NASDAQ of the United States proposes any amendment to this Agreement, or in case of any change in the listing rules or related requirements of Hong Kong or NASDAQ of the United States in relation to this Agreement, the Parties hereto shall amend this Agreement accordingly. |
18.4 |
This Agreement is made in six (6) counterparts. The Pledgor and the Pledgee holds one (1) counterpart respectively, and Party C shall hold two (2) counterparts. Each counterpart shall have the same legal effect. |
19. |
Miscellaneous |
19.1 |
This Agreement shall be binding on and shall be valid for the respective successors of the Parties and the permitted transferees of such Parties. |
19.2 |
Any Party hereto may waive the rights such Party is entitled to under this Agreement, provided that such waiver by the Pledgor and Party C must be in writing and signed by Pledgee. No waiver by any Party in respect of a breach by the other Parties in certain circumstances shall be deemed as a waiver of any similar breach in other circumstances. |
19.3 |
The headings of this Agreement are for ease of reading only and shall not be used to interpret, explain or otherwise affect the meaning of the provisions hereof. |
19.4 |
The Parties agree to execute in a timely manner documents or take further actions that are reasonably required for the implementation of the provisions and purposes of this Agreement or beneficial to such purposes. |
19.5 |
Without prejudice to the Transaction Agreements and other provisions hereof, if at any time, as a result of the promulgation or change of any PRC Laws, or as a result of any change in the interpretation or application of such PRC Laws, or as a result of change in the relevant registration procedures, the Pledgee considers it unlawful or contrary to such PRC Laws to maintain the entry into force of this Agreement, maintain the validity of the Pledge hereunder and/or dispose of the Equity in the manner provided for herein, the Pledgor and Party C shall immediately take any action, and/or sign any agreement or any other document, in accordance with the written instructions of the Pledgee and the reasonable request of the Pledgee, in order to:(a) maintain the validity of the Pledge hereunder and this Agreement; (b) facilitate the disposition of the Equity in the manner as specified in this Agreement; and/or (c) maintain or realize the security established or intended to be established by this Agreement. |
16
19.6 |
This Agreement is a legal document independent of the Transaction Agreements and other security documents. The invalidity of the Transaction Agreements or other security documents shall not affect the rights and obligations of the Parties hereunder. If the Transaction Agreements or other security documents are declared null and void and the Pledgor still has outstanding Contractual Obligations and/or still owes the Secured Indebtedness to the Pledgee, the Equity under this Agreement shall remain as a pledge security of the Contractual Obligations and Secured Indebtedness until the Pledgor pays off all the Secured Indebtedness and performs all Contractual Obligations. |
19.7 |
Except written amendments, supplementations or modifications made after the execution hereof, this Agreement shall constitute the entire agreement between the Parties hereto in respect of the subject matter hereunder and shall supersede all prior oral and written consultations, representations and contracts in respect of the subject matter hereunder. |
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[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY A:
HODE SHANGHAI LIMITED (COMPANY STAMP)
/s/ Hode Shanghai Limited | ||
By: |
/s/ Chen Rui |
|
Name: | Chen Rui | |
Title: | Legal Representative |
Signature page to Equity Pledge Agreement
[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
XU YI | ||
By: |
/s/ Xu Yi |
Signature page to Equity Pledge Agreement
[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
CHEN RUI | ||
By: |
/s/ Chen Rui |
Signature page to Equity Pledge Agreement
[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
LI NI | ||
By: |
/s/ Li Ni |
Signature page to Equity Pledge Agreement
[This page has no text and is the signature page of the Equity Pledge Agreement]
IN WITNESS WHEREOF, the parties have caused this Equity Pledge Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY C:
SHANGHAI HODE INFORMATION TECHNOLOGY CO., LTD. (COMPANY STAMP)
/s/ Shanghai Hode Information Technology Co., Ltd. | ||
By: |
/s/ Xu Yi |
|
Name: | Xu Yi | |
Title: | Legal Representative |
Signature page to Equity Pledge Agreement
List of Annex
Annex I | Register of Shareholders | |
Annex II | Contact Details of Parties |
Annex to Equity Pledge Agreement
Exclusive Business Cooperation Agreement
This Exclusive Business Cooperation Agreement (hereinafter referred to as this Agreement) is made and entered into by and among the following parties in Shanghai, China on December 23, 2020:
Party A: | HODE SHANGHAI LIMITED | |
Address: | Room 4031, 4/F, Building 1, No. 310 Fasai Road, China (Shanghai) Pilot Free Trade Zone | |
Party B: | SHANGHAI HODE INFORMATION TECHNOLOGY CO., LTD. | |
Address: | Room 905-906, No. 2277-1 Zuchongzhi Road, China (Shanghai) Pilot Free Trade Zone |
Party A and Party B are hereinafter individually referred to as the Party and collectively, the Parties.
Whereas:
1. |
Party A is a wholly foreign-owned enterprise established in the Peoples Republic of China (hereinafter referred to as the PRC). Its main business includes technology development, transfer, technical consultation and technical services, business information consultation, business management consultation, animation design and advertising in the field of information technology and network technology; |
2. |
Party B is a limited liability company established in the PRC, its main business includes value-added telecommunications service, radio and television program production and operation, online game operation, ticketing agency. All business activities operated and developed by Party B at present and at any time during the term hereof are hereinafter referred to as the Main Business; |
3. |
Party A agrees to make use of its human resource, technology and information advantages to provide Party B with the relevant exclusive technical services, technical consultations and other services as stipulated in the terms of this Agreement during the term hereof (see below for the specific scope), and Party B agrees to accept such services provided by Party A or its designated party (including Party As direct or indirect overseas parent company or a subsidiary directly or indirectly controlled by Party As direct or indirect overseas parent company) in accordance with the terms of this Agreement; |
4. |
The Parties have executed an Exclusive Technology Consulting and Services Agreement (hereinafter referred to as the Original Agreement) on October 10, 2017. The Parties hereby agree to amend and restate the terms and conditions of the Original Agreement and agree to execute this Agreement in lieu of the Original Agreement. |
THEREFORE, Party A and Party B hereby agree as follows through mutual negotiation:
1. |
Provision of Services by Party A |
1.1 |
Pursuant to the terms and conditions of this Agreement, Party B hereby appoints Party A as Party Bs exclusive service provider to provide Party B with comprehensive business support, technical services and consultation services, specifically including all or part of the services decided by Party A from time to time within the business scope of Party A, including, but not limited to, the contents listed in Annex I as well as other consultations and services related to the above and provided by Party A from time to time upon the request of Party B to the extent permitted by the PRC Laws (including any laws, regulations, rules, notices or other binding documents promulgated by any central or local legislative, administrative or judicial department of Mainland China before or after the execution of this Agreement, hereinafter PRC Laws) (hereinafter referred to as Services). |
1
1.2 |
Party B agrees to accept the consultations and services provided by Party A. Party B further agrees that except with Party As prior written consent, during the term hereof, Party B shall not accept, or cause its controlled subsidiaries to accept any consultation and/or services provided by any third party, and shall not cooperate with any third party, in respect of the consultations and services contemplated herein. Party A may appoint other parties, who may enter into some or all agreements described in Article 1.4 with Party B, to provide Party B with the consultations and/or services under this Agreement. |
1.3 |
In order to ensure that Party B meets the cash flow requirements in its daily operation and / or offset any losses arising from its operation, whether or not Party B actually incurs any such operating losses, Party A may, at its discretion, decide to provide Party B with financial support (only to the extent permitted by the PRC Laws). Party A may provide financial support to Party B in the form of loans permitted by the PRC Laws, and shall execute the contract in respect of such loan separately. |
1.4 |
Manner of Providing Services |
(1) |
In order to fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, the Parties may, directly or through their respective Affiliates with the corresponding service capabilities and resources, sign other technical service agreements and consulting service agreements for the purpose of providing services to Party B by Party A, and agree on the specific contents, methods, personnel and expenses in respect of specific services. For the purposes of this paragraph and this Agreement, the Affiliate means, in case of any specific subject, that specific subject directly or indirectly controlled through one or more intermediaries, or any other subject under the control of or the common control with such specific subject. |
(2) |
In order to perform this Agreement, Party A and Party B agree that, during the term hereof, the Parties may execute intellectual property (including but not limited to the copyright, trademark, patent, domain name, know-how, trade secret and otherwise) license agreements directly or through their respective Affiliates, which shall permit Party B to use the relevant intellectual properties owned by Party A and its Affiliates at any time based on Party Bs business needs, and Party A may charge the relevant fees (including the service fee stipulated in Article 2.1 below). |
(3) |
In order to perform this Agreement, Party A and Party B agree that during the term hereof, the Parties may execute the equipment lease agreement directly or through their respective Affiliates, which shall permit Party B to use the relevant equipment owned by Party A at any time based on Party Bs business needs, and Party A shall charge the relevant fees (including the service fee stipulated in Article 2.1 below). |
2
(4) |
In order to fulfill this Agreement, Party A and Party B agree that during the term of this Agreement, the Parties may, directly or through their respective Affiliates, sign other agreements for the purpose of providing services by Party A to Party B. |
(5) |
Party A may, at its own discretion, decide to appoint any third party with the service capability and resources to provide all or part of the services under this Agreement, but Party A shall be prudently responsible for the selection of such third party. Party A agrees to bear its legal liability under this Agreement for the work products of such third party, except where Party B and such third party agree otherwise. Party B hereby acknowledges that Party A shall have the right to transfer its rights and obligations under this Agreement to any third party. |
1.5 |
In order to fulfill this agreement, Party A and Party B shall communicate and exchange all kinds of information related to their business and/or their customers in a timely manner. |
The services provided by Party A in this Agreement are exclusive. Party B may continue to perform the agreement in respect of the same or similar services provided to Party B by a third party as to those provided by Party A on the date of execution hereof, subject to the written approval of Party A; Party A does not agree, Party B shall promptly cancel such agreement with such third party and bear any costs and liabilities arising from the cancellation thereof. Party B shall continue to perform other contracts that Party B is performing or other legal documents which are binding upon Party B, and Party B shall not amend, modify or terminate such contracts or legal documents without Party As prior written consent.
1.6 |
In order to clarify the rights and obligations of the Parties and to enable the above-mentioned service agreement to be performed in practice, the Parties agree, subject to the provisions of the PRC Laws: |
(1) |
Party B shall operate based on Party As opinions or suggestions under Article 1.1 hereof. |
(2) |
Except that Party Bs former directors, supervisors and senior management officers agreed by Party A may remain in office, Party B shall, in accordance with the procedures prescribed by PRC laws, appoint Party As recommended candidates as Party Bs directors and supervisors, and shall, subject to the PRC laws, appoint Party As recommended personnel as Party Bs general manager, chief financial officer and other senior management officers to be responsible for and supervise Party Bs business and operation. Subject to the PRC Laws, Party B shall not remove the directors, supervisors and senior management officers of its company recommended by Party A for any other reason except for reasons of retirement, resignation, incompetence or death, unless with the prior written consent of Party A. |
(3) |
Party B agrees to cause Party Bs directors, supervisors and senior management officers to exercise or perform their authorities or obligations under the PRC Laws and Party Bs articles of association as instructed by Party A. |
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(4) |
Party A has the right to set up and adjust Party Bs organization and conduct the human resource management. |
(5) |
Party A shall have the right to carry out service-related business in the name of Party B. Party B shall provide Party A with all necessary support and facilities for the smooth development of the business, including, but not limited to, issuing to Party A all necessary authorizations for the provision of the relevant services. |
(6) |
Subject to the PRC Laws, Party A shall have the right to check Party Bs accounts regularly and at any time, and Party B shall keep accounts in a timely and accurate manner and provide Party A with its accounts as required by Party A. Within the term hereof, Party B agrees to cooperate with Party A and Party As legal person shareholders (only referred to Hode HK Limited and its controlled subsidiaries, the same as follows) to conduct audits (including but not limited to related transaction audits and other types of audits), to provide Party A and Party As legal person shareholders and/or auditors entrusted by Party A with relevant data and information on Party Bs operations, business, customers, finance, employees, etc., and to agree that Party As shareholders disclose such data and information in order to meet the requirements of securities supervision. |
(7) |
Party B agrees that the relevant certificates and company seals important to Party Bs daily operation, including Party Bs business license, qualification certificate, official seal, contract seal, financial special seal and legal representative seal involved in the operation of the business, shall be kept by Party Bs directors, legal representative, general manager, chief financial officer and other senior management officers recommended by Party A and appointed by Party B in accordance with the legal procedures. |
1.7 |
The Parties agree that the services provided by Party A to Party B hereunder shall also apply to the subsidiaries controlled by the Parties, and the Parties shall urge their controlled subsidiaries to exercise their rights and perform their obligations in accordance with this Agreement. |
2. |
Calculation of Service Charges, Payment Methods, Financial Statements, Audit and Taxation |
2.1 |
For the services provided by Party A in accordance with this Agreement, and subject to the PRC Laws, during the term of this Agreement, after Party B and its controlled subsidiaries shall, after the end of each financial year, make up for the losses of the previous year (if necessary) and deduct the necessary costs, expenses, taxes and fees incurred in the corresponding financial year, and draw the statutory provident funds that must be drawn according to law, the incomes of Party B and its controlled subsidiaries (including the accumulated incomes of the previous financial year) shall be equal to the combined net profits and shall be paid to Party A as service charges (hereinafter referred to as Service Charges); and Party A shall have the right to determine the above deductible items. The amount of such Service Charges shall be determined by Party A, and their calculation and adjustment shall take into account, but not limited to, the following factors, and Party A shall have the right to decide independently to adjust such Service Charges: (a) the difficulty of the management and technology provided by Party A and the complexity of the management and technical advice and other services provided; (b) the time required for Party As related personnel to provide such management and technical advice and other services; (c) the specific content and commercial value of the management and technical advice and other services provided by Party A; (d) the specific content and commercial value of the intellectual property license and lease service provided by Party A; and (e) the market price of the same kind of services. The above Service Charges shall be transferred by Party B to the bank account designated by Party A by remittance or any other means approved by the Parties within five (5) business days after Party A issues payment instructions to Party B. Party A may change such payment instructions from time to time. The Parties agree that the payment of the above Service Charges shall not, in principle, cause any difficulty in the operation of either Party in the current year. For the above purpose, Party A shall have the right to agree to Party Bs deferred payment to avoid any financial difficulties of the Party B. Party A shall also have the right to make any other adjustment to the Service Charges that it deems reasonable, but shall notify Party B in writing in advance. |
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2.2 |
Party A agrees that, in case of Party Bs operating losses or serious operating difficulties, it will have the right to decide to provide financial support for Party B; in the event of the foregoing, only Party A shall have the right to decide whether Party B will continue to operate and Party B shall unconditionally approve and agree to Party As above decision. |
2.3 |
Party B shall, within 60 business days after the end of each financial year (hereinafter referred to as the Previous Financial Year) or at the request of Party A, (a) provide Party A with the Party Bs audited consolidated financial statements in the Previous Financial Year, which shall be audited by an independent certified public accountant approved by Party A; (b) if the audited financial statements show any deficiency in the total amount of the Service Charges paid by Party B to Party A during the Previous Financial Year, Party B shall pay the difference to Party A within 5 days from the date Party A or Party B finds the difference. |
2.4 |
Party B shall, in accordance with the applicable laws, generally recognized accounting standards and commercial practices, prepare financial statements that meet the requirements of Party A. |
2.5 |
Upon prior notice from Party A, Party A and/or its designated auditor shall have the right to review Party Bs relevant books and records at Party Bs main office and copy the required books and records in order to verify Party Bs income amount and the accuracy of the statements. Party B shall, in accordance with the requirements of Party A, provide relevant information and materials concerning Party Bs operation, business, customers, finance, employees, etc., and agree that Party A or Party As legal person shareholders may disclose or publish such information and materials if necessary. |
2.6 |
The tax burden arising from the performance of this Agreement shall be borne by the Parties. |
3. |
Intellectual Property and Confidentiality |
3.1 |
In order to perform this Agreement, Party A and Party B agree that, during the term hereof, the Parties and their respective Affiliates may execute the licensing agreement of intellectual property (including but not limited to copyright, trademark, patent, domain name, know-how, trade secret and otherwise) directly or through their respective Affiliates, which shall permit either Party to use the relevant intellectual properties owned by the other Party. In particular, Party A or its Affiliates shall have the right to use the intellectual property owned by Party B or its Affiliates free of charge in accordance with such agreement. |
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3.2 |
Unless with the prior written consent of Party A, on basis of the provision of the services hereunder for Party B and its controlled subsidiaries, Party A shall have unique and proprietary rights and interests in any right, title, equity and intellectual property including but not limited to all present and future copyrights, patents (including invention patents, utility model patents and design patents), trademarks, trade names, brands, software, know-hows, trade secrets, all related goodwill, domain names and any other similar rights (hereinafter referred to as Such Rights) arising or created during the performance of this Agreement by Party B and its controlled subsidiaries, whether developed by Party A or by Party B. Party B shall not claim any of Such Rights from Party A. Party B shall sign all the documents required to make Party A the owner of Such Rights and take all actions necessary to make Party A the owner of Such Rights. Party B warrants that there are no defects in Such Rights and will compensate Party A for any losses caused by such defects (if any). |
3.3 |
Without the written consent of Party A, Party B shall not, and shall compel its controlled subsidiaries not to, transfer, assign, pledge, licence or dispose of any of Such Rights and any intellectual property Party B and its controlled subsidiaries are entitled to as of the execution date hereof, including but not limited to all the present and future copyrights, patents (including invention patents, utility model patents and design patents), trademarks, trade names, brands, software, know-hows, trade secrets, all relevant goodwill, domain names and any other similar right (hereinafter referred to as Corresponding Rights). |
3.4 |
Party B shall dispose of any corresponding rights in accordance with Party As instructions from time to time, including, but not limited to, the transfer or authorization of the corresponding rights to Party A or its designated person without violating the PRC Laws. |
3.5 |
The Parties hereto acknowledge that any oral or written information they exchange in connection with this Agreement is confidential. Party B shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of Party A, other than the information: (a) known to the public (but not disclosed to the public by any recipient); (b) required to be disclosed by applicable law or by the rules or regulations of any stock exchange; or (c) required to be disclosed by Party B to their legal or financial advisers, who shall be bound by a confidentiality obligation similar to the obligations in this Article, in respect of transactions as contemplated herein. The disclosure of any confidential information by the staff or agencies employed by Party B shall be deemed to be the disclosure of such confidential information by Party B, which shall be liable for breach of this Agreement. This Article shall remain in force regardless of the termination of this Agreement for any reason. |
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3.6 |
Party B shall not execute any document or make any relevant undertaking which is in conflict with any agreement or any other legal document that is executed and being performed by Party A and/or its Affiliates; Party B shall not cause any conflict of interest between Party B and Party A as well as its Affiliates through any act or omission. In case of any such conflict of interest (Party A shall have the right to decide unilaterally whether such conflict of interest arises), Party B shall take measures in a timely manner to eliminate it as soon as possible with the consent of Party A and/or its Affiliates. If Party B refuses to take measures to eliminate conflicts of interest, Party A shall have the right to exercise its call options under the Exclusive Option Agreement (hereinafter referred to as the Exclusive Option Agreement) executed with Party B and Party Bs shareholders on the execution date hereof. |
3.7 |
Within the term hereof, all customer information and other relevant information related to Party Bs business and the services provided by Party A shall be owned by Party A. |
3.8 |
The Parties hereto agree that, this Article 3 hereto shall survive the change, cancellation or termination hereof. |
4. |
Representations and Warranties |
4.1 |
The representations and warranties of Party A are as follows: |
(1) |
Party A is a wholly foreign-owned enterprise (WFOE) duly registered and validly existing under the PRC Laws with the independent legal person qualification; has full and independent legal status and legal capacity, and has obained appropriate authorization to execute, deliver and perform this Agreement, and can act as an independent subject of litigation; |
(2) |
Party A signs and performs this Agreement within its legal personality and the scope of its business operations and has the permission, record and qualification required to provide the services as stipulated herein. Party A has taken the necessary corporate actions and has been duly authorized and obtained the consent and approval (if necessary) of third parties and government agencies to complete the transactions mentioned herein and will not violate the laws or other restrictions binding or affecting Party A. |
(3) |
After its execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of Party A and may be enforced in accordance with the terms of this Agreement. |
(4) |
Party A has no litigation, arbitration or any other judicial or administrative procedure having occurred and outstanding that will affect Party As ability to perform its obligations hereunder, and to the best of its knowledge no one threatens to take such action. |
4.2 |
The representations, warranties and undertakings of Party B are as follows: |
(1) |
Party B is a limited liability company duly registered and validly existing under the PRC Laws with the independent legal person qualification; has full and independent legal status and legal capacity, and has obained appropriate authorization to execute, deliver and perform this Agreement, and can act as an independent subject of litigation. |
(2) |
Party Bs acceptance of the services provided by Party A will not violate any PRC Laws. Party B will sign and perform this Agreement within its legal personality and the scope of its business operations and Party B has taken the necessary corporate actions and has been duly authorized and obtained the consent, approval or filing of third parties and government agencies to complete the transactions mentioned herein and will not violate the laws or other restrictions binding or affecting Party B. |
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(3) |
After its execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of Party B and may be enforced in accordance with the terms of this Agreement. |
(4) |
Party B has no litigation, arbitration or any other judicial or administrative procedure having occurred and outstanding that will affect Party Bs ability to perform its obligations hereunder, and to the best of its knowledge no one threatens to take such action. If any litigation, arbitration or any other judicial proceeding or administrative punishment occurs or may occur in relation to Party Bs assets, business or income, Party B will notify Party A immediately after knowing such litigation, arbitration or any other judicial proceeding or administrative punishment, and will only reach a settlement on such proceedings with the prior written consent of Party A. |
(5) |
In accordance with this Agreement, Party B shall pay Party A the Service Charges in full and on time, and maintain the continuous validity of the license and qualification related to the business of Party B and its controlled subsidiaries within the service period. In all the matters necessary for Party A to effectively perform its duties and obligations hereunder, Party B will assist Party A, provide Party A with full cooperation and actively work with the services provided by Party A, and accept Party As reasonable opinions and suggestions on the business of Party B and its controlled subsidiaries. |
(6) |
Without the prior written consent of Party A, from the execution date hereof, Party B will not, and shall urge its controlled subsidiaries not to sell, transfer, mortgage or otherwise dispose of legal rights and interests in any assets (including tangible assets or intangible assets, excluding assets within RMB 1 million as required in the normal business operations), business, operation right or income, or cause any Security Interest or other encumbrance to be placed on the same. For the purpose of this Paragraph and this Agreement, the Security Interest shall include mortgage, pledge, lien and any security over third party right or interest, including any equity interest call option, acquisition right, right of first refusal, set-off right, ownership retention or other security arrangements. |
(7) |
Without the prior written consent of Party A, except for the reasonable expenses in the normal course of operation, Party B shall not pay any fee to any third party in any name, shall not exempt any third party from its debts, shall not lend or borrow a loan to any third party, or provide a security or guarantee for any third party, or allow any third party to establish any other Security Interest in its assets or interests. |
(8) |
Without the prior written consent of Party A, from the execution date hereof, Party B shall not, and shall cause its controlled subsidiaries not to, incur, inherit, guarantee or permit the existence of any debt , (except (i) the debts incurred in the normal course of business but not through loans; and (ii) the debts that have been disclosed to and consented in writing by Party A). |
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(9) |
Without the prior written consent of Party A, from the execution date hereof, Party B shall not, and shall cause its controlled subsidiaries not to, execute any major contract other than those executed in the course of normal business and those executed between Party B with Party A and its Affiliates (in this Paragraph, a contract shall be deemed as a major contract if its value exceeds RMB 1 million). |
(10) |
Without the prior written consent of Party A, from the execution date hereof, Party B shall not, and shall cause its controlled subsidiaries not to: (a) be merged, consolidated with or become a united entity with any third party; (b) invest or acquire any third party or be invested, acquired or controlled by any third party; (c) increase or decrease its registered capital, or otherwise change the form of the company or its registered capital structure or accept the investment or capital increase of Party B by the existing shareholders or third parties ; (d) be liquidated and dissolved. |
(11) |
Subject to the applicable PRC Laws, Party B shall appoint the person recommended by Party A as its director, supervisor or senior management officer; Party B shall not, for any other reason, refuse to appoint the person recommended by Party A unless with the prior written consent of Party A or as otherwise agreed herein. |
(12) |
Party B shall hold any and all governmental permits, licenses, authorizations and approvals necessary for its business within the term of this Agreement and shall ensure that all such governmental permits, licenses, authorizations and approvals will continue to be valid and legal throughout the term of this Agreement. Any and all government licenses, permits, authorizations and approvals necessary for Party Bs business to be changed and/or increased as a result of changes in the provisions of the competent governmental authorities shall be changed and/or obtained by Party B in accordance with the requirements of the applicable laws during the term of this Agreement. |
(13) |
Party B shall promptly inform Party A of the circumstances that have or may have a significant adverse effect on the business and operation of Party A, and shall do its utmost to prevent the occurrence and/or expansion of such circumstance. |
(14) |
Without the prior written consent of Party A, Party B and/or its controlled subsidiaries shall not amend the articles of association or change the main business or make major adjustments to the business scope, model, profit model, marketing strategy, business policy or customer relationship of Party B and/or its controlled subsidiaries. |
(15) |
Without the prior written consent of Party A, Party B and / or its controlled subsidiaries shall not enter into any partnership or joint venture or profit sharing arrangement with any third party, or any other arrangement for the purpose of transfer of benefits or the realization of profit sharing in the form of royalties, service fees or consultancy fees. |
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(16) |
At the request of Party A from time to time, Party B shall provide Party A with information on Party Bs operation, management and financial situation. |
(17) |
Without the prior written consent of Party A, Party B shall not announce or distribute bonuses, dividends or any other benefit to its shareholders. |
(18) |
Party B shall provide Party A with any technical or other information it deems necessary or useful to provide services hereunder, and allow Party A to use Party Bs relevant facilities, data or information it deems necessary or useful to provide services hereunder. |
4.3 |
In the event of divorce, incapacity, declared disappearance/death, death, bankruptcy or any other circumstance that may affect the holding of Party Bs equity, Party B shall guarantee that such circumstance shall not affect its performance of this Agreement. |
4.4 |
Either Party A or Party B respectively guarantee to the other Party that once the PRC Laws allow Party A to hold directly and Party A decides that it directly or designates its Affiliate to hold Party Bs equity and Party A and / or its Affiliate may legally engage in Party Bs business, the Parties shall terminate this Agreement upon the request of Party A after Party A or its designated Affiliate has formally registered as Party Bs shareholder at the competent administration for industry and commerce. |
5. |
Effect and Term |
This Agreement shall enter into force on the date when it is executed by and between the Parties and shall remain in force unless this Agreement terminates in accordance with Article 6.1.
6. |
Termination |
6.1 |
This Agreement shall be terminated in any of the following circumstances: |
(a) |
On the date of bankruptcy, liquidation, termination or dissolution according to law if Party B goes bankrupt, is liquidated, terminated or dissolved according to law during the term of this Agreement; |
(b) |
On the date on which all the shares or assets of Party B have been transferred to Party A or the Affiliate designated by Party A in accordance with the Exclusive Option Agreement; |
(c) |
On the date when Party A or its designated Affiliate is formally registered as Party Bs shareholder at the competent administration for industry and commerce once the PRC Laws allow Party A to hold the shares of Party B directly and Party A and its subsidiaries can legally engage in Party Bs business; |
(d) |
On the date of the expiration of such written notice when Party A terminates this Agreement by giving Party B a written notice thirty (30) days in advance at any time within the term hereof; |
(e) |
Earlier termination according to Article 7 hereof. |
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6.2 |
Within the term hereof, Party B shall not cancel this Agreement unilaterally. Party A may terminate this Agreement in accordance with Article 6.1(d) above without any liability for breach of contract for its unilateral cancellation hereof. |
6.3 |
After the termination of this Agreement, the rights and obligations of the Parties under Articles 3, 8, 10, 11, 16.3 shall remain in force. |
6.4 |
The early termination of this Agreement for any reason does not exempt either Party from all the payment obligations hereunder (including, but not limited to, the payment of Service Charges) arising from or due to this Agreement prior to the termination hereof, nor does it exempt any liability for breach of contract arising prior to the termination hereof. Party B shall pay Party A the Service Charges payable before the termination hereof within fifteen (15) business days from the date of termination hereof. |
7. |
Liability for Breach |
7.1 |
Except as otherwise provided herein, if a party (hereinafter referred to as the Breaching Party) fails to perform an obligation hereunder or violates this Agreement in other manner, the other Party (hereinafter referred to as the Aggrieved Party) may (a) send a written notice to the Breaching Party indicating the nature and scope of the breach and requesting the Breaching Party to remedy it at its own cost within the reasonable period provided in the notice (hereinafter referred to as the Remedy Period); if the Breaching Party fails to remedy it during the Remedy Period, the Aggrieved Party shall have the right to request the Breaching Party to assume all liabilities caused by its breach and compensate the Aggrieved Party for all actual economic losses caused to the Aggrieved Party by its breach, including but not limited to lawyers fees, litigation or arbitration fees arising from any litigation or arbitration proceedings relating to such breach, and furthermore, the Aggrieved Party shall also have the right to request the Breaching Party to enforce this Agreement and request the competent arbitral institution or court to order specific performance and/or enforcement of the terms agreed herein; (b) terminate this Agreement, and request the Breaching Party to assume all liabilities caused by its breach, and provide all damages; or (c) discount, auction or sell off the pledged equity interests as agreed in the Equity Pledge Agreement entered into by the Parties and the existing shareholders of Party B on the execution date hereof, and have priority in compensation with the proceeds from the discounting, auctioning or selling off and request the Breaching Party to assume all losses caused thereby. The exercise of the aforesaid remedial rights by the Aggrieved Parties shall not prevent them from exercise of other remedial rights pursuant to the provisions of this Agreement and the laws. |
7.2 |
The Parties hereto agree and acknowledge that except as compulsorily provided by the PRC Laws, if Party B is a Breaching Party, Party A shall have the right to unilaterally terminate this Agreement immediately and request the Breaching Party to provide the liquidated damages. If Party A is the Breaching Party, Party B shall waive Party As obligation to provide damages, and unless otherwise provided by the laws, Party B shall not in any event have any right to terminate or cancel this Agreement. |
8. |
Applicable Law, Dispute Settlement and Law Change |
8.1 |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and the settlement of disputes hereunder shall be governed by the law of the Peoples Republic of China. |
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8.2 |
Any dispute arising from the interpretation and performance hereof shall be settled through friendly negotiation between the Parties hereto. If the Parties fail to reach an agreement on the settlement of such dispute within thirty (30) days after either Party requests the other parties to settle such dispute through negotiation, any Party may submit such dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Parties hereto. The arbitral tribunal may rule on Party Bs equity interests, assets or property interests as the compensation or satisfaction to Party A for the losses caused by the breach of contract by Party B, rule on injunctive relief in respect of the relevant business or asset transfer, or order Party B to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court in the place where Party B is incorporated and where Party B or Party As main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of Party Bs business, restrictions on and/or disposition of Party Bs equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of Party B, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling for the breaching party not to carry out acts that may lead to further expansion of the loss suffered by Party A. |
8.3 |
In the event of any dispute arising from the interpretation and performance of this Agreement or any dispute being arbitrated, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder, except in the matter in dispute. |
8.4 |
After the date of execution hereof, if at any time, as a result of the promulgation of or change in any PRC Laws, or as a result of the interpretation or application of such PRC Laws, the following agreements shall apply: to the extent permitted by the PRC Laws, (a) if the change in law or the newly promulgated provisions are more favorable to Party A than the relevant PRC Laws in force on the date of execution hereof (while Party B is not seriously adversely affected), the Parties shall promptly apply for benefits arising from the change or new provisions and do their best to obtain the approval of such application; or (b) if Party As economic interests under this Agreement are directly or indirectly adversely affected by the above changes of the PRC Laws or newly promulgated provisions, this Agreement shall continue to be performed in accordance with the original terms, and the parties shall use all legal means to waive compliance with such change or provisions. If the adverse effect on Party As economic interests can not be resolved in accordance with this Agreement, the Parties hereto shall promptly negotiate and make all necessary amendments hereto in order to maintain Party As economic interests hereunder. |
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9. |
Force Majeure |
9.1 |
Force Majeure means an event which is unforeseeable, unavoidable and insurmountable and which renders any partial or total default under this Agreement by one Party hereto. Such Force Majeure events include, but are not limited to, earthquakes, typhoons, floods, wars, strikes, riots, government actions, changes in legal provisions or the applicability of the legal provisions. |
9.2 |
In event of a Force Majeure event, the obligation of one party to be affected by such event under this Agreement shall automatically be suspended during the delay caused by such event, and its performance shall be automatically extended for the period of suspension. The party shall not be punished or liable for this. In the event of force majeure, the Parties shall immediately negotiate a fair solution and make every reasonable effort to minimize the impact of force majeure. |
10. |
Indemnification |
Party B shall indemnify Party A for any loss, damage, liability or expense caused by or arising from any action, claim or any other demand against Party A in respect of any consultation or service provided by Party A at the request of Party B, and shall hold Party A free from damage, unless such loss, damage, liability or expense is caused by Party As gross negligence or intentional misconduct.
11. |
Notices |
11.1 |
All notices and other correspondences required or permitted to be given under this Agreement shall be sent personally, by registered mail with postage prepaid, courier service, facsimile or e-mail to the address, fax number or e-mail of the other Party hereto as listed in Annex II hereto. An additional confirmation shall be sent by e-mail for each notice. Such notice shall be deemed to be duly served on: |
(1) |
If sent personally, by registered mail with postage prepaid, courier service, on the date of acceptance or refusal thereof at the recipients address specified for such notice; |
(2) |
If sent by fax, on the date of successful transmission (as evidenced by automatically generated confirmation of transmission); |
(3) |
If sent by e-mail, on the date of successful transmission. |
11.2 |
Any Party may, in accordance with the terms of this Article, change its receiving address, fax and/or email address at any time by giving notice to other Parties hereto. |
12. |
Transfer |
12.1 |
Party B may not assign its respective rights and obligations hereunder to any third party without the prior written consent of Party A. |
12.2 |
Party B agrees that Party A may transfer its rights and obligations hereunder to any third party by giving Party B prior written notice without Party Bs consent. |
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13. |
Severability |
If one or more of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any way under any applicable law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultations in good faith, seek to replace such invalid, illegal or unenforceable provisions with valid provisions to the maximum extent permitted by law and expected by the Parties, and the economic effects of such valid provisions shall be as similar as those of such invalid, illegal or unenforceable provisions to the extent possible.
14. |
Modification and Supplement |
14.1 |
Any amendment or supplement hereto shall be made in writing. The amendment agreement and supplementary agreement relating hereto by the Parties hereto shall be an indivisible part hereof and shall have the same legal effect as this Agreement. |
14.2 |
Where the stock exchange or other regulatory agency of Hong Kong or NASDAQ of the United States proposes any amendment to this Agreement, or where the listing rules or other relevant regulations, rules, codes, guidelines of Hong Kong or NASDAQ of the United States require amending this Agreement or any arrangement hereunder, the Parties hereto shall amend this Agreement accordingly. |
15. |
Counterparts |
This Agreement is made in two (2) counterparts. Each party holds one (1) counterpart respectively, and all of them shall have the same legal effect.
16. |
Miscellaneous |
16.1 |
Except written amendments, supplementations or modifications made after the signing hereof, this Agreement shall constitute the entire agreement between the Parties hereto in respect of the cooperation hereunder and shall supersede all prior oral and written consultations, representations and contracts in respect of the cooperation hereunder. |
16.2 |
This Agreement shall be binding on the respective successors of the Parties hereto and the permitted assignees of the Parties hereto. |
16.3 |
Any Party hereto may waive the rights it is entitled to under this Agreement, provided that such waiver by Party B must be in writing and signed by Party A. No waiver by any Party in respect of a breach by the other Party hereto in a certain circumstance shall be deemed as a waiver of any similar breach in any other circumstance. |
16.4 |
The headings of this Agreement are for ease of reading only and shall not be used to interpret, explain or otherwise affect the meaning of the provisions hereof. |
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[This page has no text and is the signature page of the Exclusive Business Cooperation Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Business Cooperation Agreement to be executed as of the date and place set forth at the beginning hereof.
HODE SHANGHAI LIMITED (COMPANY STAMP)
/s/ Hode Shanghai Limited
By: | /s/ Chen Rui | |
Name: | Chen Rui | |
Title: | Legal Representative |
Signature page to Exclusive Business Cooperation Agreement
[This page has no text and is the signature page of the Exclusive Business Cooperation Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Business Cooperation Agreement to be executed as of the date and place set forth at the beginning hereof.
SHANGHAI HODE INFORMATION TECHNOLOGY CO., LTD. (COMPANY STAMP)
/s/ Shanghai Hode Information Technology Co., Ltd.
By: | /s/ Xu Yi | |
Name: | Xu Yi | |
Title: | Legal Representative |
Signature page to Exclusive Business Cooperation Agreement
List of Annex
Annex I | List of Technical Consultations and Services | |
Annex II | Contact Details of Parties |
Annex to Exclusive Business Cooperation Agreement
Exclusive Option Agreement
This Exclusive Option Agreement (hereinafter referred to as this Agreement) is made and entered into by and among the following parties in Shanghai, China on December 23, 2020:
Party A: | HODE SHANGHAI LIMITED, a wholly foreign-owned enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 4031, 4/F, Building 1, No. 310 Fasai Road, China (Shanghai) Pilot Free Trade Zone. | |
Party B: | XU YI, a citizen of the PRC with ID card no. ***; | |
CHEN RUI, a citizen of the PRC with ID card no. ***; | ||
LI NI, a citizen of the PRC with ID card no. ***; | ||
Party C: | SHANGHAI HODE INFORMATION TECHNOLOGY CO., LTD., a limited liability enterprise duly incorporated and validly existing under the law of the Peoples Republic of China, with its address at Room 905-906, No. 2277-1 Zuchongzhi Road, China (Shanghai) Pilot Free Trade Zone. |
In this Agreement, Party A, Party B and Party C shall hereinafter be individually referred to as a Party and collectively as the Parties.
Whereas:
1 |
Party C is a limited liability company registered in Shanghai, China. Party B are shareholders of Party C on the date of execution hereof and hold a total of 100% equity interests in Party C, of which Xu Yi holds 44.3080% shares of Party C, Chen Rui holds 52.3030% shares of Party C, and Li Ni holds 3.3890% shares of Party C; |
2 |
Party B intends to grant Party A an irrevocable and exclusive option to purchase all or part of the equity interests in Party C held by Party B; |
3 |
Party C intends to grant Party A an irrevocable and exclusive option to purchase all or part of the assets held by Party C; and |
4 |
The Parties and related parties have signed an Exclusive Option Agreement (hereinafter referred to as the Original Agreement) on October 10, 2017. The Parties hereby agree to amend and restate the terms and conditions of the Original Agreement and agree to execute this Agreement in lieu of the Original Agreement. |
NOW, THEREFORE, the Parties hereby agree as follows:
1. |
Sale and Purchase of Equity Interests and Assets |
1.1 |
Granting of Options |
Party B severally and jointly agree that they shall hereby irrevocably and unconditionally grant to Party A, an irrevocable and exclusive option, during the term of this Agreement, to purchase by itself or designate a related party (hereinafter the Designee, including the direct or indirect overseas parent company of Party A or the subsidiary directly or indirectly controlled by Party As direct or indirect overseas parent company) to purchase from Party B all or part of the equity interests in Party C held by Party B from time to time in one time or multiple times, at the price referred to in Article 1.3 hereof and in line with the exercise steps at the election of Party A under Article 1.2, to the extent permitted by the PRC Laws (including any laws, regulations, rules, notices or other binding documents promulgated by any central or local legislative, administrative or judicial department of Mainland China before or after the execution of this Agreement, hereinafter PRC Laws)(hereinafter Equity Call Option). Party C hereby irrevocably and unconditionally grants to Party A, an irrevocable and exclusive option, during the term of this Agreement, to purchase by itself or cause the Designee to purchase all or part of the assets of Party C from time to time in one time or multiple times at the price referred to in Article 1.3 hereof and in line with the exercise steps determined by Party A under Article 1.2 (hereinafter Assets Call Option, together with the Equity Call Option, collectively referred to as the Call Options), to the extent permitted by the PRC Laws. No third party other than Party A and the Designee shall have the Call Options or other rights related to Party Bs ownership of Party Cs equity interests and assets. Party C hereby agrees that Party B may grant the Equity Call Option to Party A, and Party B hereby agrees that Party C may grant the Assets Call Option to Party A. The term person under this paragraph and this Agreement means a natural person, a legal person or an unincorporated organization. The term assets referred to in this Article includes tangible and intangible assets.
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For the sake of clarity, all shares of Party C held by Party B under this Article shall be 100% of the registered capital of Party C, also include the registered capital of Party C held by Party B from time to time in the future in any form during the term of this Agreement (including but not limited to the expanded registered capital formed by capital increase).
1.2 |
Exercise Steps |
The exercise by Party A of its Call Options shall be subject to the provisions of the PRC Laws. In exercising its Call Options under Article 1.1, Party A shall give written notice to Party B and/or Party C (hereinafter referred to as the Notice of Equity Interest Purchase or Notice of Assets Purchase). The Notice of Equity Purchase or Notice of Assets Purchase shall specify: (a) Party As decision on the exercise of the Call Options; (b) the equities to be purchased from Party B by Party A and/or the Designee (hereinafter referred to as Purchased Equity Interests) and/or the assets to be purchased from Party C by Party A and/or the Designee (hereinafter referred to as Purchased Assets); and (c) the date of purchase/transfer of the Purchased Equity Interests and/or Purchased Assets. Party B and/or Party C shall, upon receipt of the Notice of Equity Interest Purchase or Notice of Assets Purchase, transfer the Purchased Equity Interests and/or Purchased Assets to Party A and/or the Designee pursuant to such notice in the manner set forth in Article 1.4 hereof.
1.3 |
Purchase Price and Payment |
Where Party A decides to exercise its Call Options under this Agreement, the purchase price of the Purchased Equity Interests and/or Purchased Assets (hereinafter referred to as Purchase Price) shall be zero or nominal price, provided that it is the minimum price to the satisfaction of the price requirement otherwise provided by the competent governmental authority or the PRC Laws. Nevertheless, Party B and Party C hereby severally and jointly irrevocably undertake that, subject to the provisions and requirements of the PRC Laws in force at that time, all of the payment made by Party A at any such price to Party B and/or Party C shall be returned by Party B and/or Party C to Party A or the Designee within seven (7) days; where such return is not allowed in accordance with the PRC Laws in force at that time, Party B and Party C undertake to trust such payment for Party A in the form of trusteeship, and to cooperate with Party A in signing the trusteeship agreement or other relevant legal documents. After necessary tax deduction and withholding is made in respect of the Purchase Price in accordance with the PRC Laws, Party A shall transfer the Purchase Price to the account designated by Party B and/or Party C within seven (7) days after the Purchased Equity Interests and/or Purchased Assets are duly transferred to Party A.
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1.4 |
Transfer of the Purchased Equity Interests and/or Purchased Assets |
At each exercise of the Call Options by Party A,
1.4.1 |
Party B shall cause Party C to hold the shareholders meeting in a timely manner or make the decision by the shareholder (as the case may be); at such meeting, a resolution/decision shall be made to approve Party B and/ Party C to transfer the Purchased Equity Interests and/or Purchased Assets to Party A and/or the Designee; |
1.4.2 |
Party B and/or Party C shall enter into the equity transfer contract and/or assets transfer contract and other relevant legal documents with Party A and/or the Designee in respect of each transfer pursuant to this Agreement and the Notice of Equity Interest Purchase and/or Notice of Assets Purchase; |
1.4.3 |
The relevant Parties shall execute all other necessary contracts, agreements or documents (including but not limited to the amendments to the articles of association of Party C), obtain all necessary internal approvals, authorizations, governmental approvals, licenses, consents and permits, and take all necessary actions, to transfer the valid title of the Purchased Equity Interests and/or Purchased Assets to Party A and/or the Designee and cause Party A and/or the Designee to become the registered owner of the Purchased Equity Interests (subject to the completion of the industrial and commercial registration) or the owner of the Purchased Assets, free from any Security Interest. For the purposes of this paragraph and this Agreement, the Security Interest includes mortgage, pledge, lien and any security over third party rights or interests, any equity interest call option, acquisition right, right of first refusal, set-off right, ownership retention or other security arrangements; for the avoidance of doubt, it does not include any Security Interest incurred under this Agreement and the Equity Pledge Agreement. The Equity Pledge Agreement under this paragraph and this Agreement means the Equity Pledge Agreement entered into by and among Party A, Party B and Party C at the date of execution of this Agreement. Pursuant to the Equity Pledge Agreement, Party B shall pledge to Party A all its equity interests in Party C held by Party B in order to guarantee Party C may perform the Exclusive Business Cooperation Agreement (hereinafter referred to as the Business Cooperation Agreement) executed between Party C and Party A on the date of execution hereof and the power of attorney issued by Party B on the date of execution hereof and its obligations hereunder. |
2. |
Undertakings |
2.1 |
Undertakings of Party B and Party C |
Party B (as the shareholders of Party C) and Party C hereby jointly and severally undertake that:
2.1.1 |
Without the prior written consent of Party A, they will not supplement, modify or amend the articles of association and internal regulations of Party C in any form, increase or decrease its registered capital, change its registered capital structure in any other manner, or take any action of dividing or dissolving Party Cs company or changing its form; |
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2.1.2 |
In accordance with good financial and commercial standards and practice, they will maintain the existence of Party C, prudently and effectively operate its business and handle its affairs, and procure Party C to perform its obligations under the Business Cooperation Agreement; |
2.1.3 |
Without the prior written consent of Party A, from the date of execution hereof, they shall not sell, transfer, mortgage or otherwise dispose of legal rights and interests in any assets (including tangible assets or intangible assets, excluding assets within RMB 1 million as required in the normal business operations), business or income, or cause any Security Interest or other encumbrance to be placed on the same; |
2.1.4 |
Unless required by the PRC Laws, Party C shall not be dissolved or liquidated without the written consent of Party A; after the statutory liquidation set forth in Article 3.6 hereof, Party B irrevocably undertakes, subject to the provisions and requirements of the PRC Laws in force at that time, Party B shall pay Party A or the Designee all proceeds of the distribution of surplus assets received arising from the shares of Party C held by Party B or facilitate such payment. Where such payment is not allowed in accordance with the PRC Laws in force at that time, Party B undertakes to trust such payment for Party A in the form of trusteeship, and to cooperate with Party A in signing the trusteeship agreement or other relevant legal documents; |
2.1.5 |
Party C shall not incur, inherit, guarantee or permit the existence of any debts without the prior written consent of Party A, other than (i) the debts incurred in the normal course of business but not through loans; and (ii) the debts that have been disclosed to and consented in writing by Party A; |
2.1.6 |
They will conduct all of Party Cs business in the normal course of business to maintain Party Cs asset value, and will not engage in any act/omission that may have adverse effect on the state of operation and asset value of Party C; and Party A will have the right to supervise Party Cs assets and assess whether it has the right to control Party Cs assets. If Party A determines that Party Cs operational activity affects the value of its assets or Party As control of Party Cs assets, Party A shall engage a legal adviser or other professionals to handle such issue and Party B and Party C shall take any necessary action to cooperate in such handling; |
2.1.7 |
Without the prior written consent of Party A, they shall not cause Party C to execute any major contract other than those executed in the course of normal business and those executed between Party C and Party A, its direct or indirect overseas parent company or subsidiaries directly or indirectly controlled by Party As overseas parent company (hereinafter referred to as Party As Affiliates) (in this paragraph, a contract shall be deemed as a major contract if the value of such contract exceeds RMB 1 million); |
2.1.8 |
Without the prior written consent of Party A, they shall not cause Party C to provide any form of guarantee such as loan, financial aid or mortgage or pledge to any person, or to permit a third party to create any Security Interest in their assets or equity; |
2.1.9 |
Within 60 business days after the end of each financial year (hereinafter referred to as the Previous Financial Year) or at the request of Party A, they shall provide Party A with the audited consolidated financial statements of Party C for the Previous Financial Year and other information on the operating results and financial position of Party C; |
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2.1.10 |
At the request of Party A, Party C shall procure and maintain insurance on the assets and business of Party C from the insurer recognized by Party A. The amount and type of such insurance shall be the same or have the same effect as the amount and type of insurance normally maintained by a company operating similar business and owning similar property or assets in China; |
2.1.11 |
Without the prior written consent of Party A, they shall not cause or permit Party C to enter into merger, partnership, joint venture or alliance with or acquire or invest in any person; |
2.1.12 |
They shall immediately notify Party A of any ongoing or potential lawsuit, arbitration or administrative procedures relating to Party Cs assets, business or revenues, and take all necessary actions reasonably requested by Party A, and shall not settle such procedures without the prior written consent of Party A; |
2.1.13 |
They shall execute all documents, take all actions and file all complaints or defend all claims necessary or appropriate to maintain Party Cs ownership of all of its assets; |
2.1.14 |
Without the prior written consent of Party A, Party C shall not pay dividends to its shareholders in any form, but upon the written request of Party A, Party C shall immediately distribute all distributable profits to its shareholders and require and cause the shareholders to comply with Article 2.2.5 hereof; |
2.1.15 |
They shall, at the request of Party A, appoint a party designated by Party A to act as the directors, supervisors and/or senior management officers of Party C and/or remove the directors, supervisors and/or senior management officers of Party C from office and perform all relevant resolutions and filing procedures; Party A shall have the right to require Party B and Party C to replace the above-mentioned personnel; |
2.1.16 |
If the failure by any of Party Cs shareholders or Party C to perform its tax obligations under any applicable PRC Laws prevents Party A from exercising its Call Options, Party A shall have the right to request Party C or its shareholder to perform such tax obligations, or request Party C or its shareholder to pay such tax amount to Party A who will make the payment on its behalf; |
2.1.17 |
Party B and Party C shall, in respect of the undertakings applicable to Party C under this Article 2.1, cause the subsidiaries of Party C to comply with such undertakings as if they were parties to this Agreement; and |
2.1.18 |
They shall take all measures to ensure that all qualification certificates relating to Party Cs main business are legal, valid and renewed on time in accordance with the law; any and all government permission, licenses, authorizations and approvals necessary for Party Cs business to be changed and/or increased as a result of changes in the provisions of the competent governmental authorities shall be changed and/or obtained in accordance with the requirements of the applicable laws during the term of this Agreement. |
2.2 |
Further Undertakings of Party B |
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Party B hereby irrevocably undertakes that:
2.2.1 |
Without the prior written consent of Party A, Party B shall not sell, transfer, mortgage or otherwise dispose of any beneficial interests in its equity interests in Party C or create any Security Interest or other encumbrance on the them from the effective date of this agreement, except for the pledge created on the equity interests in Party C pursuant to the Equity Pledge Agreement; |
2.2.2 |
Party B shall not engage in any business or any other action which will have adverse impact on Party Cs reputation; |
2.2.3 |
Party B shall not execute any documents or make any relevant undertakings which are in conflict with any agreements and other legal documents that are executed and being performed by Party C or Party A and its Designee; Party B shall not cause any conflict of interest between Party B and Party A as well as its shareholders through any act or omission. In case of any such conflict of interest (Party A shall have the right to decide unilaterally whether such conflict of interest arises), Party B shall take measures in a timely manner to eliminate it as soon as possible with the consent of Party A or the Designee. If Party B refuses to take measures to eliminate the conflict of interest, Party A shall be entitled to exercise its Call Options hereunder; |
2.2.4 |
Without the prior written consent of Party A, Party B shall not, in any way, directly or indirectly participate in or engage in any business that is or may be competitive with the business of Party A, Party As Affiliates, Party C and Party Cs controlled subsidiaries, or hold the rights and interests in, or assets of, the relevant entities whose business is or may be competitive with the business of Party A, Party As Affiliates, Party C and Party Cs controlled subsidiaries (except that Party B has no more than 5% of the rights and interests in such relevant entities, or that such relevant entities are controlled by Party A and Party As Affiliates, or other cases approved by Party A), and Party A shall have the right to decide whether the above circumstances exist or may exist to Party B; |
2.2.5 |
Unless requested by Party A in writing, Party B shall not require Party C to grant bonus or conduct other profit distribution with respect to Party Bs equity interests in Party C, or make any proposal of the shareholders meeting related thereto, vote in favour of such resolution or make a decision related thereto (as the case may be). In any case, if Party B receives any of Party Cs gains, profit distribution or bonus, to the extent permitted by the PRC Laws, Party B shall waive the receipt thereof, and immediately pay or transfer such gains, profit distribution or bonus to Party A or the Designee; |
2.2.6 |
Party B shall cause the shareholders meeting or shareholder of Party C (as the case may be) and/or the board of directors or the executive director of Party C (as the case may be) not to approve the sale, transfer, mortgage, creating any Security Interest over or otherwise disposal of any legal or beneficial interests in its equity interests in Party C, without the prior written consent of Party A, except for the pledge created on the equity interests in Party C pursuant to the Equity Pledge Agreement; |
2.2.7 |
Party B shall cause the shareholders meeting or shareholder of Party C (as the case may be) and/or the board of directors or the executive director of Party C (as the case may be) not to approve Party Cs merger, partnership, joint venture or alliance with any person, or acquisition or investment in any person, Party Cs division, amendment to the articles of association of Party C, change to its registered capital or company form, without the prior written consent of Party A; |
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2.2.8 |
Party B shall immediately notify Party A of any ongoing or potential lawsuit, arbitration or administrative procedures relating to its equity interests in Party C, and take all necessary actions reasonably requested by Party A, and shall not settle such procedures without the prior written consent of Party A; |
2.2.9 |
Party B shall cause the shareholders meeting or shareholder of Party C (as the case may be) and/or the board of directors or the executive director of Party C (as the case may be) to vote for the transfer of the Purchased Equity Interests and/or Purchased Assets provided herein and take any and all other actions that Party A may request; |
2.2.10 |
Upon requested by Party A from time to time, Party B and/or Party C shall immediately and unconditionally transfer its equity interests in and/or assets of Party C to Party A or its Designee pursuant to the Call Options hereunder, and Party B hereby waives its right of first refusal with respect to the transfer of equity interests by other shareholders of Party C (if any); |
2.2.11 |
Party B shall strictly comply with the provisions of this Agreement and other agreements jointly and severally executed by Party B, Party C and Party A, including but not limited to the Equity Pledge Agreement and the Business Cooperation Agreement, perform its obligations under this Agreement and such other agreements, and shall not engage in any act/omission that may affect the validity and enforceability thereof. If Party B has any remaining right to the equity interests under this Agreement or the Equity Pledge Agreement or the power of attorney granted in favor or Party A, it shall not exercise such right unless instructed by Party A in writing; |
2.2.12 |
If Party A (or its Designee) has paid Party B the Purchase Price of the equity interests but the relevant changes of industrial and commercial registration have not been completed prior to dissolution of Party C, upon or after the dissolution of Party C, Party B shall timely and gratuitously deliver to Party A (or the Designee) all of the proceeds of the remaining property distribution it receives by the reason of holding Party Cs equity interests. In this case, Party B shall not make any claim for the proceeds of the remaining property distribution, except for the exercise as instructed by Party A; |
2.2.13 |
Party B shall promptly fulfill their tax obligations under the applicable PRC Laws to ensure the smooth exercise of the Call Options by Party A; |
2.2.14 |
Party B agrees to execute an irrevocable power of attorney granting all rights of Party B as the shareholder of Party C to Party A or the Designee, who may exercise voting rights on all matters required to be discussed at the shareholders meeting or decided by the shareholders (as the case may be) and resolved, and make and sign resolutions, minutes and other relevant documents, including but not limited to, appointing and electing directors, supervisors, and other officers to be appointed and removed by shareholders or the board of shareholders; disposing of the assets of the company; and amending the articles of association; taking over or managing Party Cs business, or dissolving or liquidating Party C and forming a liquidation group on behalf of the shareholders and exercising the functions and powers of the liquidation group in the liquidation period in accordance with the law; and |
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2.2.15 |
Party B shall ensure that Party C will be validly existing, not be terminated, liquidated or dissolved (except with the prior written consent of Party A). |
3. |
Representations and Warranties |
Party B and Party C hereby jointly and severally represents and warrants to Party A on the date of execution of this Agreement and each date of transfer of the Purchased Equity Interests and Purchased Assets that:
3.1 |
Party B is a natural person with full capacity for civil conduct and capacity for civil rights, and has the right to execute, deliver and perform this Agreement, and can act as an independent subject of litigation; |
3.2 |
Party C is a limited liability company duly registered and validly existing under the PRC Laws with the independent legal person qualification; has full and independent legal status and legal capacity to execute, deliver and perform this Agreement, and can act as an independent subject of litigation; |
3.3 |
Party B and Party C have the right and capacity to execute and deliver this Agreement and any transfer contract to which each of them is a party and relating to the Purchased Equity Interests and/or Purchased Assets to be transferred (hereinafter Transfer Contract) thereunder, and perform its obligations under this Agreement and any Transfer Contract. Each of Party B and Party C agrees to execute a Transfer Contract consistent with the terms of this Agreement when Party A exercises its Call Options. This Agreement and any Transfer Contract to which it is a party constitute or will constitute its legal, valid and binding obligations and are enforceable against it pursuant to the terms thereof; |
3.4 |
Neither the execution and delivery nor the performance of the obligations under this Agreement or any Transfer Contract may or will result in: (i) violation of any applicable PRC Laws; (ii) contravention of Party Cs articles of association, regulations or other constitutional documents; (iii) violation of or default under any contract or instrument to which it is a party or by which it is bound; (iv) violation of any condition of granting any party any license or permit and/or the continued validity thereof; or (v) suspension, revocation of or attachment with additional conditions to any license or permit granted to any Party; |
3.5 |
Party B has ownership of its equity interests in Party C. Party B does not have any Security Interests and other encumbrance on its equity interests in Party C, except for the pledge created on such equity interests under the Equity Pledge Agreement; |
3.6 |
Party C has ownership of all its assets and does not create any Security Interests or other encumbrance on them; |
3.7 |
Party C does not have any outstanding debts, other than (i) the debts incurred in the normal course of business but not through loans; and (ii) the debts that have been disclosed to and consented in writing by Party A; |
3.8 |
If Party C is dissolved or liquidated as required by the PRC Laws, (i) Party B shall, to the extent permitted by the applicable Chinese laws and regulations, set up a liquidation group within fifteen (15) days from the date of the occurrence of the dissolution cause, and authorize the person or entity recommended by Party A to preside over the liquidation and administer the property of Party C; (ii) Party C shall, subject to and to the extent permitted by the PRC Laws, sell all its assets to Party A or the Designee at the lowest price permitted by the PRC Laws, whether or not the provisions of Item (i) of this Article are enforced. Party C shall, to the extent permitted by the PRC Laws in force at that time, exempt Party A or its designated eligible entity from any payment obligation incurred thereby; any proceeds arising from such transactions shall be paid to Party A or the Designee as part of the service charge under the Business Cooperation Agreement to the extent permitted by the PRC Laws in force at that time; |
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3.9 |
Party C complies with all PRC Laws applicable to the acquisition of equity or assets; |
3.10 |
Except as expressly disclosed to Party A in writing, there is no ongoing, pending or potential litigation, arbitration or other administrative proceedings in respect of the equity interests of Party C or assets of Party C, or Party C; |
3.11 |
Where Party B is divorced, incapacitated, declared lost/dead, dead, bankrupt or suffers from any other situation which may affect its exercise of holding Party Cs equity interests, its successor, agent, guardian, or the shareholder or assignee of Party Cs equity interests shall be deemed as a party to this Agreement, inherit exercise and perform all rights and obligations of Party B hereunder, and transfer related equity interests to Party A or the Designee in accordance with the applicable laws then in force and this Agreement; Party B has made all appropriate arrangements and executed all necessary documents to ensure that, in the foregoing circumstances, the successors, guardians, creditors, spouses or otherwise of Party B, who may thus acquire the equity interests, assets or related rights of Party C, shall not affect or hinder the performance of this Agreement; |
3.12 |
The equity interests in Party C held by Party B are not the common property of Party B and the spouse of Party B (where applicable), Party Bs spouse(where applicable) does not have nor control such equity interests in Party C; Party Bs operating and management of Party C and other voting matters based on the equity interests held by Party B in Party C shall not be influenced by the spouse of Party B (where applicable). |
4. |
Effective Date |
This Agreement shall enter into force on the date of execution by the Parties and shall remain effective until the date on which all the Purchased Equity Interests and/or Purchased Assets held by Party B are transferred to Party A and/or the Designee (in case of the Purchased Equity Interests, subject to the date of completion of the change of industrial and commercial registration) and Party A and its subsidiaries and branches may legally engage in the business of Party C. Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement unilaterally and immediately by giving written notice to Party B and Party C at any time, without any liability for breach of contract for its unilateral termination hereof. Unless compulsorily provided by the PRC Laws, Party B and Party C shall not have the right to terminate this Agreement unilaterally.
5. |
Liability for Breach |
5.1 |
Except as otherwise provided herein, if a party (hereinafter the Breaching Party) fails to perform an obligation hereunder or violates this Agreement in other manner, the other parties (hereinafter the Aggrieved Parties) may (a) send a written notice to the Breaching Party indicating the nature and scope of the breach and requesting the Breaching Party to remedy at its own cost within the reasonable period provided in the notice (hereinafter Remedy Period); if the Breaching Party fails to remedy it during the Remedy Period, the Aggrieved Parties shall have the right to request the Breaching Party to assume all liabilities caused by its breach and compensate the Aggrieved Parties for all actual economic losses caused to the Aggrieved Parties by its breach, including but not limited to lawyers fees, litigation or arbitration fees arising from any litigation or arbitration proceedings relating to such breach, and furthermore, the Aggrieved Parties shall also have the right to request the Breaching Party to enforce this Agreement and request the competent arbitral institution or court to order specific performance and/or enforcement of the terms agreed herein; (b) terminate this Agreement, and request the Breaching Party to assume all liabilities caused by its breach, and provide all damages; or (c) discount, auction or sell off the pledged equity interests as agreed in the Equity Pledge Agreement, and have priority in compensation with the proceeds from the discounting, auctioning or selling off and request the Breaching Party to assume all losses caused thereby. The exercise of the aforesaid remedial rights by the Aggrieved Parties shall not prevent them from exercise of other remedial rights pursuant to the provisions of this Agreement and the laws. |
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5.2 |
Each of the Parties agrees and acknowledges that except as compulsorily provided by the PRC Laws, if Party B or Party C is the Breaching Party, Party A shall have the right to unilaterally terminates this Agreement immediately and request the Breaching Party to provide the damages. If Party A is the Breaching Party, Party B or Party C shall waive Party As obligation to provide damages, and unless otherwise provided by the laws, Party B or Party C shall not in any event have any right to terminate or cancel this Agreement. |
6. |
Applicable Law and Dispute Settlement |
6.1 |
Applicable Law |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and the settlement of disputes hereunder shall be governed by the law of the Peoples Republic of China.
6.2 |
Dispute Settlement |
Any dispute arising from the interpretation and performance hereof shall be first settled through friendly negotiation among the Parties. If the Parties fail to reach an agreement on the settlement of such dispute within thirty (30) days after any Party requests the other parties to settle such dispute through negotiation, any Party may submit such dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules in force at that time. The arbitration shall be conducted in Beijing and the language of arbitration shall be Chinese. The arbitral award shall be final and binding on the Parties. The arbitral tribunal may rule on Party Cs equity interests, assets or property interests as the compensation or satisfaction to Party A for the losses caused by the breach of contract by other Parties hereto, rule on injunctive relief in respect of the relevant business or asset transfer, or order Party C to carry out bankruptcy liquidation. After the arbitral award comes into effect, any Party shall have the right to apply to the competent court for enforcement of the arbitral award. The court in Mainland China, Hong Kong, the Cayman Islands or any other court with competent jurisdiction (including the court at the place where Party C is incorporated and where Party C or Party As main assets are located shall be deemed to have competent jurisdiction) shall have the right to enforce the award made by the arbitral tribunal, including, but not limited to, restrictions on the operation of Party Cs business, restrictions on and/or disposition of Party Cs equity interests, assets or property interests (including, but not limited to, applying the same as compensation), prohibition of assignment or disposition or other relevant reliefs in respect thereof, liquidation of Party C, and have the right to make a ruling or judgment during the waiting period for the constitution of the arbitral tribunal or in other appropriate circumstances to provide interim reliefs to the party initiating the arbitration, including but not limited to the ruling or judgment for the breaching party to immediately stop the breach or the ruling that the Breaching Party not to carry out acts that may lead to further expansion of the loss suffered by Party A.
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6.3 |
In the event of any dispute arising from the interpretation and performance of this Agreement or any dispute being arbitrated, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder, except for the matter in dispute. |
6.4 |
After the date of execution hereof, if at any time, as a result of the promulgation of or change in any PRC Law, or as a result of the interpretation or application of such PRC Laws, the following agreements shall apply: to the extent permitted by the PRC Laws, (a) if the change in law or the newly promulgated provisions are more favorable to Party A than the relevant PRC Laws in force on the date of execution hereof (while the other Parties are not seriously adversely affected), the Parties shall promptly apply for benefits arising from the change or new provisions and do their best to obtain the approval of such application; or (b) if Party As economic interests under this Agreement are directly or indirectly adversely affected by the above legal changes or newly promulgated provisions, this Agreement shall continue to be performed in accordance with the original terms, and the Parties shall use all legal means to waive compliance with such change or provisions. If the adverse effects on Party As economic interests can not be resolved in accordance with this Agreement, the Parties shall promptly negotiate and make all necessary amendments to this Agreement in order to maintain Party As economic interests hereunder. |
7. |
Taxes and Fees |
Each Party shall, in accordance with the PRC Laws, pay any and all taxes, costs and expenses incurred by or levied on such Party in respect of the preparation and execution of this Agreement and the Transfer Contract and the completion of the transactions contemplated under this Agreement and the Transfer Contract.
8. |
Notices |
8.1 |
All notices and other correspondence required or permitted to be given under this Agreement shall be sent personally, by registered mail with postage prepaid, courier service, facsimile or e-mail to the address, fax numbers and e-mail addresses of the Parties listed in Annex I. An additional confirmation shall be sent by e-mail for each notice. Such notice shall be deemed to be duly served on: |
8.1.1 |
If sent personally, by registered mail with postage prepaid, courier service, on the date of acceptance or refusal thereof at the recipients address specified for such notice; |
8.1.2 |
If sent by fax, on the date of successful transmission (as evidenced by automatically generated confirmation of transmission); |
8.1.3 |
If sent by e-mail, on the date of successful transmission. |
8.2 |
Any Party may, in accordance with the terms of this Article, change its receiving address, fax and/or email address at any time by giving notice to other Parties hereto. |
11
9. |
Liability for Confidentiality |
The Parties acknowledge that any oral or written information they exchange in connection with this Agreement is confidential. Party B and Party C shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of Party A, other than the information: (a) known to the public (but not disclosed to the public by any recipient);(b) required to be disclosed by applicable law or by the rules or regulations of any stock exchange; or (c) required to be disclosed by Party B and Party C to their legal or financial advisers, who shall be bound by a confidentiality obligation similar to the obligations in this Article, in respect of transactions as contemplated herein. The disclosure of any confidential information by the staff or agencies employed by Party B and Party C shall be deemed to be the disclosure of such confidential information by such Party, which shall be liable for breach of this Agreement. This Article shall remain in force regardless of the invalidity or termination of this Agreement for any reason.
10. |
Further Warranties |
The Parties agree to execute in a timely manner documents or take further actions that are reasonably required for the implementation of the provisions and purposes of this Agreement or beneficial to such purposes.
11. |
Force Majeure |
11.1 |
Force Majeure means an event which is unforeseeable, unavoidable and insurmountable and which renders any partial or total default under this Agreement by one Party hereto. Such Force Majeure events include, but are not limited to, earthquakes, typhoons, floods, wars, strikes, riots, government actions, changes in legal provisions or the applicability of the legal provisions. |
11.2 |
In event of a Force Majeure event, the obligation of one party to be affected by such event under this Agreement shall automatically be suspended during the delay caused by such event, and its performance shall be automatically extended for the period of suspension. The party shall not be punished or liable for this. In the event of force majeure, the Parties shall immediately negotiate a fair solution and make every reasonable effort to minimize the impact of force majeure. |
12. |
Miscellaneous |
12.1 |
Amendment, Modification and Supplementation |
Any matter not contained herein shall be subject to further negotiation among the Parties hereto. No amendment, modification or supplementation shall be effective unless a written agreement is executed by the Parties hereto. The amendment agreement and supplementary agreement relating to this Agreement and its annex duly executed by the Parties hereto are an integral part of this Agreement and shall have the same legal effect as this Agreement.
Where the stock exchange or other regulatory agency of Hong Kong or NASDAQ of the United States proposes any amendment to this Agreement, or in case of any change in the listing rules or related requirements of Hong Kong or NASDAQ of the United States in relation to this Agreement, the Parties hereto shall amend this Agreement accordingly.
12
12.2 |
Entire Agreement |
Except written amendments, supplementations or modifications made after the execution hereof, this Agreement shall constitute the entire agreement among the Parties in respect of the matters related hereto or the subject matter hereof and shall supersede all prior oral and written consultations, representations and contracts in respect of the matters related hereto or the subject matter hereof.
12.3 |
Headings |
The headings of this Agreement are for ease of reading only and shall not be used to interpret, explain or otherwise affect the meaning of the provisions hereof.
12.4 |
Counterparts |
This Agreement is made in five (5) counterparts. Party A, Party B and Party C each holds one (1) counterpart respectively, and all of them shall have the same legal effect.
12.5 |
Severability |
If one or more of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any way under any applicable law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultations in good faith, seek to supersede such invalid, illegal or unenforceable provisions with valid provisions to the maximum extent permitted by law and expected by the Parties, and the economic effects of such valid provisions shall be as similar as those of such invalid, illegal or unenforceable provisions to the extent possible.
12.6 |
Successors |
This Agreement shall be binding on and shall be valid for the respective successors of the Parties and the permitted assignees of such Parties.
12.7 |
Survival |
12.7.1 |
Any obligations arising out of or to be performed prior to the termination of this Agreement shall survive the termination hereof. |
12.7.2 |
The provisions of Articles 6, 8, 9, 12.7 and 12.8 shall survive the termination hereof. |
12.8 |
Waiver |
Any Party hereto may waiver the rights such Party is entitled to under this Agreement, provided that such waiver by Party B and Party C must be made in writing and executed by Party A for confirmation. No waiver by any Party in respect of a breach by the other Parties in certain circumstances shall be deemed as a waiver of any similar breach in other circumstances.
13
12.9 |
Transfer of Rights |
Without the prior written consent of Party A, Party C and/or Party B shall not transfer to any third party any of their rights and/or obligations under this Agreement. Party C and Party B hereby agree that Party A shall have the right to transfer any of its rights and/or obligations hereunder to any third party without the consent of Party C and Party B by giving written notice to Party C and Party B, and Party B and Party C shall execute a supplementary agreement with the transferee or an agreement of the same substance as this Agreement.
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14
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY A:
HODE SHANGHAI LIMITED (COMPANY STAMP)
/s/ Hode Shanghai Limited
By: |
/s/ Chen Rui |
|
Name: Chen Rui Title: Legal Representative |
Signature Page to Exclusive Option Agreement
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
XU YI
By: |
/s/ Xu Yi |
Signature Page to Exclusive Option Agreement
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
CHEN RUI
By: |
/s/ Chen Rui |
Signature Page to Exclusive Option Agreement
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY B:
LI NI
By: |
/s/ Li Ni |
Signature Page to Exclusive Option Agreement
[This page has no text and is the signature page of the Exclusive Option Agreement]
IN WITNESS WHEREOF, the parties have caused this Exclusive Option Agreement to be executed as of the date and place set forth at the beginning hereof.
PARTY C:
SHANGHAI HODE INFORMATION TECHNOLOGY CO., LTD. (COMPANY STAMP)
/s/ Shanghai Hode Information Technology Co., Ltd.
By: |
/s/ Xu Yi |
Name: Xu Yi
Title: Legal Representative
Signature Page to Exclusive Option Agreement
List of Annex
Annex I | Contact Details of Parties |
Annex to Exclusive Option Agreement
Letter of Undertakings
Whereas:
1. |
I, Hu Wenyan (a Chinese citizen, ID card no.***), the spouse of Xu Yi, a natural person, (ID card no.***) who holds 44.3080% equity in Shanghai Hode Information Technology Co., Ltd. (the Company) (hereinafter referred to as the Target Equity); |
2. |
In respect the aforesaid Target Equity, on December 23, 2020, Hode Shanghai Limited respectively: (1) executed the Exclusive Business Cooperation Agreement with the Company; (2) executed the Exclusive Option Agreement with the Company and all its shareholders; (3) executed the Equity Pledge Agreement with the Company and all its shareholders; (4) all shareholders of the Company executed the Power of Attorney, which constitutes the contractual arrangements in respect of the Company, together with the aforesaid Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and the Equity Pledge Agreement (hereinafter referred to as the Contractual Arrangements). |
I hereby acknowledge and unconditionally and irrevocably undertake:
1. |
I acknowledge that the aforesaid Target Equity shall be attributable to Xu Yi regardless of the circumstances, and Xu Yi may mortgage, sell or otherwise dispose of the Target Equity in accordance with the Contractual Arrangements without my consent. |
2. |
I acknowledge that the foresaid Target Equity is not the common property of me and Xu Yi, and that I do not enjoy any interests in the foresaid Target Equity (including rights acquired through the relevant Contractual Arrangements), and that I will not take any action to interfere with the Contractual Arrangements, including but not limited to any claim for the foresaid Target Equity and rights obtained through the Contractual Arrangements. |
3. |
I undertake that I have not and will not plan to actually participate in the management of the Company and will not claim any interest relating to the equity and assets of the Company. |
4. |
Xu Yi may execute any amendment or change document to the Contractual Arrangements on the Target Equity without my signature, confirmation, consent or affirmation. If necessary, I undertake to execute all necessary documents and take all necessary actions to ensure that the Contractual Arrangements revised from time to time are properly performed. If, for any reason, I directly or indirectly acquire part or all of the Target Equity, my successor, agent and/or assets administrator and I agree unconditionally to be bound by this Letter of Undertakings and the Contractual Arrangements. To this end, I agree to cooperate in all necessary actions and execute all necessary documents. |
5. |
I acknowledge and agree that, after the execution hereof, the equity of the Company newly acquired by Xu Yi will also be bound by this Letter of Undertakings and the Contractual Arrangements. |
6. |
I further undertake and warrant that, under no circumstances, directly or indirectly, actively or passively, will I take any action or make any claim or lawsuit with the intention which conflicts with the above arrangement, or act or not act as an obstacle to the continued validity and performance of the Contractual Arrangement. If the regulatory agency requests me to amend the contents of this Letter of Undertakings, I will cooperate unconditionally and promptly. At the same time, I undertake that this Letter of Undertakings, once executed, shall supersede any other legal documents previously issued or executed by me on the same subject matter. |
7. |
I acknowledge that the above undertaking is my true intention without any coercion or threat. I fully understand the contents and legal consequences of this Letter of Undertakings and agree to execute this Letter of Undertakings. |
8. |
I further acknowledge that the undertaking, acknowledgement, consent and authorization contained herein are unconditional and irrevocable and shall not be revoked, derogated, void or otherwise adversely affected by my loss of civil capacity, limitation of civil capacity, my death, my divorce or other similar events. |
This Letter of Undertakings shall take effect immediately upon my signature and shall remain in force and effect.
(The remainder of this page is intentionally left blank)
[This page has no text and is the signature page of the Letter of Undertakings]
Signature: |
/s/ Hu Wenyan |
|
December 23, 2020 |
Signature page of Letter of Undertakings
Letter of Undertakings
Whereas:
1. |
I, Yang Qitao (a Chinese citizen, ID card no.***), the spouse of Chen Rui, a natural person, (ID card no.***) who holds 52.3030% equity in Shanghai Hode Information Technology Co., Ltd. (the Company) (hereinafter referred to as the Target Equity); |
2. |
In respect the aforesaid Target Equity, on December 23, 2020, Hode Shanghai Limited respectively: (1) executed the Exclusive Business Cooperation Agreement with the Company; (2) executed the Exclusive Option Agreement with the Company and all its shareholders; (3) executed the Equity Pledge Agreement with the Company and all its shareholders; (4) all shareholders of the Company executed the Power of Attorney, which constitutes the contractual arrangements in respect of the Company, together with the aforesaid Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and the Equity Pledge Agreement (hereinafter referred to as the Contractual Arrangements). |
I hereby acknowledge and unconditionally and irrevocably undertake:
1. |
I acknowledge that the aforesaid Target Equity shall be attributable to Chen Rui regardless of the circumstances, and Chen Rui may mortgage, sell or otherwise dispose of the Target Equity in accordance with the Contractual Arrangements without my consent. |
2. |
I acknowledge that the foresaid Target Equity is not the common property of me and Chen Rui, and that I do not enjoy any interests in the foresaid Target Equity (including rights acquired through the relevant Contractual Arrangements), and that I will not take any action to interfere with the Contractual Arrangements, including but not limited to any claim for the foresaid Target Equity and rights obtained through the Contractual Arrangements. |
3. |
I undertake that I have not and will not plan to actually participate in the management of the Company and will not claim any interest relating to the equity and assets of the Company. |
4. |
Chen Rui may execute any amendment or change document to the Contractual Arrangements on the Target Equity without my signature, confirmation, consent or affirmation. If necessary, I undertake to execute all necessary documents and take all necessary actions to ensure that the Contractual Arrangements revised from time to time are properly performed. If, for any reason, I directly or indirectly acquire part or all of the Target Equity, my successor, agent and/or assets administrator and I agree unconditionally to be bound by this Letter of Undertakings and the Contractual Arrangements. To this end, I agree to cooperate in all necessary actions and execute all necessary documents. |
5. |
I acknowledge and agree that, after the execution hereof, the equity of the Company newly acquired by Chen Rui will also be bound by this Letter of Undertakings and the Contractual Arrangements. |
6. |
I further undertake and warrant that, under no circumstances, directly or indirectly, actively or passively, will I take any action or make any claim or lawsuit with the intention which conflicts with the above arrangement, or act or not act as an obstacle to the continued validity and performance of the Contractual Arrangement. If the regulatory agency requests me to amend the contents of this Letter of Undertakings, I will cooperate unconditionally and promptly. At the same time, I undertake that this Letter of Undertakings, once executed, shall supersede any other legal documents previously issued or executed by me on the same subject matter. |
7. |
I acknowledge that the above undertaking is my true intention without any coercion or threat. I fully understand the contents and legal consequences of this Letter of Undertakings and agree to execute this Letter of Undertakings. |
8. |
I further acknowledge that the undertaking, acknowledgement, consent and authorization contained herein are unconditional and irrevocable and shall not be revoked, derogated, void or otherwise adversely affected by my loss of civil capacity, limitation of civil capacity, my death, my divorce or other similar events. |
This Letter of Undertakings shall take effect immediately upon my signature and shall remain in force and effect.
(The remainder of this page is intentionally left blank)
[This page has no text and is the signature page of the Letter of Undertakings]
Signature: |
/s/ Yang Qitao |
|
December 23, 2020 |
Signature page of Letter of Undertakings
LIST OF SIGNIFICANT SUBSIDIARIES AND PRINCIPAL CONSOLIDATED AFFILIATED ENTITIES*
Significant Subsidiaries |
Jurisdiction of
Incorporation |
|||
Bilibili HK Limited |
Hong Kong | |||
Hode HK Limited |
Hong Kong | |||
Bilibili Co., Ltd. |
Japan | |||
Shanghai Bilibili Technology Co., Ltd. |
PRC | |||
Hode Shanghai Limited |
PRC | |||
Consolidated Variable Interest Entity |
||||
Shanghai Kuanyu Digital Technology Co., Ltd. |
PRC | |||
Shanghai Hode Information Technology Co., Ltd. |
PRC | |||
Subsidiary of Consolidated Variable Interest Entity |
||||
Sharejoy Network Technology Co., Ltd. |
PRC | |||
Shanghai Hehehe Culture Communication Co., Ltd. |
PRC | |||
Shanghai Anime Tamashi Cultural Media Co., Ltd. |
PRC |
* |
Other entities of Bilibili Inc. have been omitted from this list since, considered in the aggregate as a single entity, they would not constitute a significant subsidiary. |
CERTIFICATION BY THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Rui Chen, certify that:
1. I have reviewed this annual report on Form 20-F of Bilibili Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: March 5, 2021
By: |
/s/ Rui Chen |
|
Name: Rui Chen | ||
Title: Chief Executive Officer |
CERTIFICATION BY THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Xin Fan, certify that:
1. I have reviewed this annual report on Form 20-F of Bilibili Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.
Date: March 5, 2021
By: |
/s/ Xin Fan |
|
Name: Xin Fan | ||
Title: Chief Financial Officer |
CERTIFICATION BY THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Bilibili Inc. (the Company) on Form 20-F for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Rui Chen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 5, 2021
By: |
/s/ Rui Chen |
|
Name: Rui Chen | ||
Title: Chairman of the Board and Chief Executive Officer |
Exhibit 13.2
CERTIFICATION BY THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Bilibili Inc. (the Company) on Form 20-F for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Xin Fan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 5, 2021
By: |
/s/ Xin Fan |
|
Name: Xin Fan | ||
Title: Chief Financial Officer |
5 MARCH 2021 | Our Ref: JWYL/KH/B4480-H20228 |
Bilibili Inc.
Building 3, Guozheng Center
No. 485 Zhenli Road
Yangpu District
Shanghai, 200433
Peoples Republic of China
Dear Sirs,
Form 20-F
We consent to the reference to our firm under the heading Item 10.E. Additional InformationTaxation Cayman Islands Taxation in the Annual Report on Form 20-F of Bilibili Inc. for the year ended 31 December 2020 (the Annual Report), which will be filed with the U.S. Securities and Exchange Commission (the Commission) on 5 March 2021 under the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act).
We also consent to the filing with the Commission of this consent letter as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under the Exchange Act, or the Rules and Regulations of the Commission thereunder.
Yours faithfully
/s/ WALKERS (HONG KONG) |
WALKERS (HONG KONG) |
10/F, CPIC Plaza, No. 28 Fengsheng Lane, Xicheng District, Beijing 100032, China
Tel: 86 10 5776 3888 Fax: 86 10 5776 3777
March 5, 2021
Bilibili Inc.
Building 3, Guozheng Center
No. 485 Zhengli Road,
Yangpu District, Shanghai, China
as the Company
Dear Sirs,
We consent to the references to our firm under the heading Item 3. Key Information - D. Risk Factors -Risks Related to Our Business and Industry, Item 3. Key Information - D. Risk Factors - Risks Related to Our Corporate Structure, Item 4. Information on the Company - B. Business Overview and Item 4. - Information on the Company - C. Organizational Structure in Bilibili Inc.s Annual report on Form 20-F for the year ended December 31, 2020 (the Annual Report), which is filed with the Securities and Exchange Commission (the SEC) on March 5, 2021. We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report.
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.
Yours faithfully, | ||
/s/ Tian Yuan Law Firm |
||
Tian Yuan Law Firm |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-226216) and Form F-3 (No. 333-230660) of Bilibili Inc. of our report dated March 5, 2021 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Zhong Tian LLP |
PricewaterhouseCoopers Zhong Tian LLP |
Beijing, the Peoples Republic of China |
March 5, 2021 |